DEUTSCHE MORTGAGE SECURITIES, INC.
Depositor
and
▇▇▇▇▇ FARGO BANK, N.A.
Master Servicer and Securities Administrator
and
HSBC BANK USA
Trustee
_____________________
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2004
_____________________
Mortgage Pass-Through Certificates
Series 2004-2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................5
Section 1.2 Allocation of Certain Interest Shortfall.......................42
ARTICLE II
CONVEYANCE OF TRUST FUND; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Trust Fund.......................................44
Section 2.2 Acceptance by Trustee..........................................44
Section 2.3 Repurchase or Substitution of Loans............................44
Section 2.4 Authentication and Delivery of Certificates; Designation
of Certificates as REMIC Regular and Residual Interests........47
Section 2.5 Representations and Warranties of the Master Servicer..........47
Section 2.6 Establishment of the Trust.....................................49
ARTICLE III
ADMINISTRATION AND SERVICING OF THE LOANS; ACCOUNTS
Section 3.1 Master Servicer................................................50
Section 3.2 REMIC-Related Covenants........................................51
Section 3.3 Monitoring of Servicers........................................51
Section 3.4 Fidelity Bond..................................................52
Section 3.5 Power to Act; Procedures.......................................52
Section 3.6 Due-on-Sale Clauses; Assumption Agreements.....................53
Section 3.7 Release of Mortgage Files......................................54
Section 3.8 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee................................54
Section 3.9 Standard Hazard Insurance and Flood Insurance Policies.........55
Section 3.10 Presentment of Claims and Collection of Proceeds...............56
Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.........56
Section 3.12 Trustee to Retain Possession of Certain Insurance
Policies and Documents.........................................56
Section 3.13 Realization Upon Defaulted Loans...............................57
Section 3.14 Compensation for the Master Servicer...........................57
Section 3.15 REO Property...................................................57
Section 3.16 Annual Officer's Certificate as to Compliance..................58
Section 3.17 Annual Independent Accountant's Servicing Report...............59
-i-
Section 3.18 Reports Filed with Securities and Exchange Commission..........59
Section 3.19 UCC............................................................60
Section 3.20 Obligation of the Master Servicer in respect of
Compensating Interest..........................................60
Section 3.21 Reserved.......................................................60
Section 3.22 Protected Accounts.............................................60
Section 3.23 Distribution Account...........................................62
Section 3.24 Permitted Withdrawals and Transfers from the
Distribution Account...........................................63
Section 3.25 Reserve Fund...................................................64
Section 3.26 Prepayment Penalty Verification................................66
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS; ADVANCES; STATEMENTS AND REPORTS
Section 4.1 Distributions to Certificateholders............................67
Section 4.2 Allocation of Realized Losses..................................72
Section 4.3 Statements to Certificateholders...............................73
Section 4.4 Advances.......................................................76
Section 4.5 Compliance with Withholding Requirements.......................77
ARTICLE V
THE CERTIFICATES
Section 5.1 The Certificates...............................................80
Section 5.2 Certificates Issuable in Classes; Distributions of Principal
and Interest; Authorized Denominations.........................80
Section 5.3 Registration of Transfer and Exchange of Certificates..........80
Section 5.4 Mutilated, Destroyed, Lost or Stolen Certificates..............86
Section 5.5 Persons Deemed Owners..........................................86
ARTICLE VI
THE DEPOSITOR, MASTER SERVICER AND THE CREDIT RISK MANAGER
Section 6.1 Liability of the Depositor and the Master Servicer.............87
Section 6.2 Merger or Consolidation of the Depositor or the
Master Servicer................................................87
Section 6.3 Limitation on Liability of the Depositor, the Master Servicer,
the Servicers, the Securities Administrator and Others.........87
Section 6.4 Limitation on Resignation of the Master Servicer...............88
Section 6.5 Assignment of Master Servicing.................................88
Section 6.6 Rights of the Depositor in Respect of the Master Servicer......89
Section 6.7 Duties of the Credit Risk Manager..............................90
-ii-
Section 6.8 Limitation Upon Liability of the Credit Risk Manager...........90
Section 6.9 Removal of the Credit Risk Manager.............................90
ARTICLE VII
DEFAULT
Section 7.1 Master Servicer Events of Default..............................91
Section 7.2 Trustee to Act; Appointment of Successor.......................92
Section 7.3 Notification to Certificateholders.............................93
Section 7.4 Waiver of Master Servicer Events of Default....................93
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 8.1 Duties of Trustee and Securities Administrator.................95
Section 8.2 Certain Matters Affecting Trustee and Securities
Administrator..................................................96
Section 8.3 Trustee and Securities Administrator not Liable for
Certificates or Loans..........................................98
Section 8.4 Trustee and Securities Administrator May Own Certificates......98
Section 8.5 Fees and Expenses of Trustee and Securities Administrator......98
Section 8.6 Eligibility Requirements for Trustee and Securities
Administrator..................................................99
Section 8.7 Resignation and Removal of Trustee and Securities
Administrator..................................................99
Section 8.8 Successor Trustee or Securities Administrator.................100
Section 8.9 Merger or Consolidation of Trustee or Securities
Administrator.................................................101
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................101
Section 8.11 Appointment of Office or Agency...............................102
Section 8.12 Representations and Warranties of the Trustee.................102
ARTICLE IX
TERMINATION
Section 9.1 Termination Upon Purchase or Liquidation of All Loans.........104
Section 9.2 Additional Termination Requirements...........................106
ARTICLE X
REMIC PROVISIONS
Section 10.1 REMIC Administration..........................................107
Section 10.2 Prohibited Transactions and Activities........................109
Section 10.3 Indemnification...............................................110
-iii-
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Amendment.....................................................111
Section 11.2 Recordation of Agreement; Counterparts........................112
Section 11.3 Limitation on Rights of Certificateholders....................112
Section 11.4 Governing Law.................................................113
Section 11.5 Notices.......................................................113
Section 11.6 Severability of Provisions....................................113
Section 11.7 Notice to Rating Agencies.....................................114
Section 11.8 Article and Section References................................114
Section 11.9 Grant of Security Interest....................................114
-iv-
EXHIBITS
Exhibit A-1 - Forms of Class A-[1][2][3][4][5][6] Certificates
Exhibit A-2 - Forms of Class A-IO Certificates
Exhibit A-3 - Forms of Class [M-1][M-2][M-3] Certificates
Exhibit A-4 - Forms of Class CE Certificates
Exhibit A-5 - Forms of Class P Certificates
Exhibit A-6 - Forms of Class R Certificates
Exhibit B - [Reserved]
Exhibit C - Form of Transfer Affidavit
Exhibit D - Form of Transferor Certificate
Exhibit E - Form of Investment Letter (Non-Rule 144A)
Exhibit F - Form of Rule 144A Investment Letter
Exhibit G - Form of Benefit Plan Affidavit
Schedule One - Loan Schedule
Schedule Two - Prepayment Charge Schedule
This Pooling and Servicing Agreement, dated and effective as of
February 1, 2004 (this "Agreement"), is executed by and among Deutsche Mortgage
Securities, Inc., as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank, N. A., as
master servicer (the "Master Servicer") and securities administrator (the
"Securities Administrator"), and HSBC Bank USA, as trustee (the "Trustee").
Capitalized terms used in this Agreement and not otherwise defined have the
meanings ascribed to such terms in Article I hereof.
PRELIMINARY STATEMENT
The Depositor at the Closing Date is the owner of the Loans and the
other property being conveyed by it to the Trustee for inclusion in the Trust
Fund. On the Closing Date, the Depositor will acquire the Certificates from the
Trust Fund as consideration for its transfer to the Trust Fund of the Loans and
certain other assets and will be the owner of the Certificates. The Depositor
has duly authorized the execution and delivery of this Agreement to provide for
the conveyance to the Trustee of the Loans and the issuance to the Depositor of
the Certificates representing in the aggregate the entire beneficial ownership
of the Trust Fund. All covenants and agreements made by the Depositor, the
Master Servicer, the Securities Administrator and the Trustee herein with
respect to the Loans and the other property constituting the Trust Fund are for
the benefit of the Holders from time to time of the Certificates. The Depositor,
the Master Servicer and the Securities Administrator are entering into this
Agreement, and the Trustee is accepting the trust created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
The Certificates issued hereunder, other than the Class CE, Class P and
Class R Certificates, have been offered for sale pursuant to a Prospectus, dated
January 28, 2004, and a Prospectus Supplement, dated February 24, 2004 of the
Depositor (together, the "Prospectus"). The Trust Fund created hereunder is
intended to be the "Trust" as described in the Prospectus and the Certificates
are intended to be the "Certificates" described therein.
REMIC I
-------
As provided herein, the Trustee shall elect to treat the segregated
pool of assets consisting of the Loans and other related assets (other than the
Reserve Fund) in the Trust Fund subject to this Agreement as multiple REMICs for
federal income tax purposes, and such segregated pool of assets shall be
designated as "REMIC I." Component R-1 of the Class R Certificate shall
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions under federal income tax law. The following table irrevocably
sets forth the designation, the Uncertificated REMIC I Pass-Through Rate, the
initial Uncertificated Principal Balance, and solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for each of the Uncertificated REMIC I Regular Interests. None of the
Uncertificated REMIC I Regular Interests will be certificated.
Initial
Uncertificated Uncertified REMIC 1 Assumed Final Maturity
Designation Principal Balance Pass-Through Rate Date(1)
----------- ----------------- ------------------- ----------------------
LTI-1 $238,313,120 Variable(2) January 25, 2034
LTI-IO-1 $6,809,000 Variable(2) January 25, 2034
LTI-IO-2 $6,809,000 Variable(2) January 25, 2034
-1-
LTI-IO-3 $6,809,000 Variable(2) January 25, 2034
LTI-IO-4 $4,085,000 Variable(2) January 25, 2034
LTI-IO-5 $9,533,000 ▇▇▇▇▇▇▇▇(▇) ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇-▇ $100 Variable(2) January 25, 2034
_______________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC I.
(2) Calculated in accordance with the definition of "Uncertified REMIC I
Pass-Through Rate" herein.
REMIC II
--------
As provided herein, the Trustee shall elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets shall be
designated as "REMIC II". Component R-2 of the Class R Certificate shall
represent the sole class of "residual interests" in REMIC II for purposes of the
REMIC Provisions under federal income tax law. The following table irrevocably
sets forth the designations, the Uncertificated REMIC II Pass-Through Rate, the
initial Uncertificated Principal Balance, and solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for each of the Uncertificated REMIC II Regular Interests. None of the
Uncertificated REMIC II Regular Interests will be certificated.
Uncertificated Uncertificated Initial Latest
REMIC II Regular REMIC II Uncertificated Possible
Interest Designation Pass-Through Rate Principal Balance Maturity(1)
-------------------- ----------------- ----------------- ----------------
LTII-AA (2) $266,910,957.60 January 25, 2034
LTII -A1 (2) $ 934,110.00 January 25, 2034
LTII -A2 (2) $ 284,000.00 January 25, 2034
LTII -A3 (2) $ 487,190.00 January 25, 2034
LTII -A4 (2) $ 357,350.00 January 25, 2034
LTII -A5 (2) $ 238,780.00 January 25, 2034
LTII -A6 (2) $ 272,360.00 January 25, 2034
LTII -M1 (2) $ 72,170.00 January 25, 2034
LTII -M2 (2) $ 47,660.00 January 25, 2034
LTII -M3 (2) $ 20,430.00 January 25, 2034
LTII -ZZ (2) $ 2,733,112.40 January 25, 2034
LTII -IO-A(3) (2) (4) January 25, 2034
LTII -IO-B(5) (2) (6) January 25, 2034
LTII-P (2) $ 100.00 January 25, 2034
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Uncertificated REMIC II
Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC
II Pass-Through Rate" herein. (3) REMIC II Regular Interest LTII-IO-A
will accrue interest at a rate of (i) for the first twelve
distribution dates,1.00% and (ii) thereafter, 0.00%.
(4) REMIC II Regular Interest LTII-IO-A will not have an Uncertificated
Principal Balance, but will accrue interest on its Uncertificated
Notional Amount, as defined herein.
(5) REMIC II Regular Interest LTII-IO-B will accrue interest at a rate of
(i) for the first twenty-four distribution dates ,3.50% and (ii)
thereafter, 0.00%.
-2-
(6) REMIC II Regular Interest LTII-IO-B will not have an Uncertificated
Principal Balance, but will accrue interest on its Uncertificated
Notional Amount, as defined herein.
REMIC III
As provided herein, the Trustee shall elect to treat the segregated
pool of assets consisting of the REMIC II Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets shall be
designated as "REMIC III". Component R-3 of the Class R Certificate shall
represent the sole class of "residual interests" in REMIC III for purposes of
the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designations, the Remittance Rate and initial Class
Principal Balance for each Class of Certificates which, together with the Class
R-3 Component, constitute the entire beneficial interests in REMIC III.
Determined solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each Class of
Certificates shall be the first Distribution Date that is two years after the
end of the remaining amortization schedule of the Loan in the Mortgage Pool that
has, as of the Closing Date, the longest remaining amortization schedule,
irrespective of its scheduled maturity:
Initial
Certificate Assumed Final
Class Designation Principal Balance Pass-Through Rate Maturity Date/1
----------------- ----------------- ----------------- ----------------
Class A-1 $93,411,000 LIBOR + 0.17% (2) January 25, 2034
Class A-2 $28,400,000 3.08% (2) January 25, 2034
Class A-3 $48,719,000 3.78% (2) January 25, 2034
Class A-4 $35,735,000 4.87% (2) January 25, 2034
Class A-5 $23,878,000 5.66% (2) January 25, 2034
Class A-6 $27,236,000 4.68% (2) January 25, 2034
Class A-IO $34,045,000 4.50% (2) February 25, 2006
Class M-1 $ 7,217,000 5.09% (2) January 25, 2034
Class M-2 $ 4,766,000 5.54% (2) January 25, 2034
Class M-3 $ 2,043,000 6.15% (2) January 25, 2034
Class CE $ 953,120 (4) January 25, 2034
Class P $ 00 N/A(5) January 25, 2034
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates.
(2) Subject to a rate cap as described herein.
(3) The Class A-IO Certificates will accrue interest at their Pass-Through
Rate on the Notional Amount of the Class A-IO Certificates calculated
in accordance with the definition of "Notional Amount" herein. The
Class A-IO Certificates will not be entitled to distributions in
respect of principal. For federal income tax purposes, the Class A-IO
Certificates will not have a Notional Amount, but will be entitled to
100% of amounts distributed on REMIC II Regular Interest LTII-IO-A and
REMIC II Regular Interest LTII-IO-B.
(4) The Class CE Certificates will not accrue interest on their Certificate
Principal Balance, but will accrue interest at their Pass-Through Rate
on the Notional Amount of the Class CE Certificates outstanding from
time to time which shall equal the aggregate of the Uncertificated
Principal Balances of the REMIC II
------------------------
1 The Distribution date in the month after the maturity date for the
latest maturing Loan
-3-
Regular Interests (other than REMIC II Regular Interest LTII-P, REMIC
II Regular Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B).
(5) The Class P Certificates are not entitled to distributions in respect
of interest.
-4-
W I T N E S S E T H
-------------------
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS.
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article:
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Loan, as
applicable, those customary mortgage servicing practices of prudent mortgage
servicing institutions that master service mortgage loans of the same type and
quality as such Loan in the jurisdiction where the related Mortgaged Property is
located, to the extent applicable to the Master Servicer (except in its capacity
as successor to a Servicer).
ACCOUNT: The Distribution Account and any Protected Account as the
context may require.
ADVANCE: Either (i) a Monthly Advance made by a Servicer as such term
is defined in and pursuant to the related Servicing Agreement or (ii) an advance
made by the Master Servicer pursuant to Section 4.4.
AFFILIATE: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Trustee may obtain
and rely on an Officer's Certificate of the Servicer or the Depositor to
determine whether any Person is an Affiliate of such party.
AGGREGATE CERTIFICATE PRINCIPAL BALANCE: At any given time, the sum of
the then current Class Principal Balances of all Classes of Certificates.
AGREEMENT: This Pooling and Servicing Agreement and all amendments and
supplements hereto.
ANNIVERSARY: Each anniversary of the Cut-Off Date.
APPRAISED VALUE: The amount set forth in an appraisal made by or for
the mortgage originator in connection with its origination of each Loan.
ASSIGNMENT: 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
-5-
Property is located to reflect of record the sale and assignment of the 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.
ASSIGNMENT AGREEMENTS: Shall mean (i) the Assignment, Assumption and
Recognition Agreement, dated as of February 27, 2004, among the Seller, the
Depositor and GMAC, pursuant to which the GMAC Servicing Agreement was assigned
to the Depositor, (ii) the Assignment, Assumption and Recognition Agreement,
dated as of February 27, 2004, among the Seller, the Depositor and Greenpoint
pursuant to which the Greenpoint Servicing Agreement was assigned to the
Depositor, (iii) the Assignment, Assumption and Recognition Agreement, dated as
of February 27, 2004, among the Seller, the Depositor and M&T, pursuant to which
the M&T Servicing Agreement was assigned to the Depositor and (iv) the
Assignment, Assumption and Recognition Agreement, dated as of February 27, 2004,
among the Seller, the Depositor and National City pursuant to which the National
City Servicing Agreement was assigned to the Depositor.
AUTHORIZED DENOMINATION: With respect to the Class A Certificates and
the Class M Certificates, minimum initial Certificate Principal Balances of
$25,000 and integral multiples of $1.00 in excess thereof. With respect to the
Class P Certificates, minimum initial Certificate Principal Balances of $20 and
integral multiples thereof. With respect to the Class CE Certificates, minimum
initial Certificate Principal Balances of $10,000 and integral multiples of
$1.00 in excess thereof.
AVAILABLE DISTRIBUTION AMOUNT: With respect to a Distribution Date, the
sum of the following amounts:
(1) the total amount of all cash received by or on behalf of each
Servicer with respect to the Loans serviced by it by the Determination Date for
such Distribution Date and not previously distributed (including Liquidation
Proceeds and Insurance Proceeds), except:
(a) all Prepaid Monthly Payments;
(b) all Curtailments received after the applicable Prepayment
Period;
(c) all Payoffs received after the applicable Prepayment
Period;
(d) Insurance Proceeds and Liquidation Proceeds on such Loans
received after the applicable Prepayment Period;
(e) all amounts which are due and reimbursable to the related
Servicer pursuant to the terms of the related Servicing Agreement or to the
Master Servicer, the Securities Administrator, the Trustee or the Custodian
pursuant to the terms of this Agreement;
(f) the Servicing Fee, the Master Servicing Fee and the Credit
Risk Management Fee for each such Loan for such Distribution Date;
-6-
(g) all investment earnings, if any, on amounts on deposit in
the Distribution Account and each Protected Account; and
(h) the amount of any Prepayment Charges collected by the
related Servicer in connection with the Principal Prepayment of any of the
Loans.
(2) to the extent advanced by a Servicer and/or the Master Servicer and
not previously distributed, the amount of any Advance made by a Servicer and/or
the Master Servicer with respect to such Distribution Date relating to the
Loans;
(3) to the extent advanced by the related Servicer and/or the Master
Servicer and not previously distributed, any amount payable as Compensating
Interest by the related Servicer and/or the Master Servicer on such Distribution
Date relating to the Loans; and
(4) the total amount, to the extent not previously distributed, of all
cash received by the Distribution Date by the Trustee or the Master Servicer, in
respect of a Purchase Obligation under Section 2.3 or any permitted repurchase
of a Loan.
BANKRUPTCY LOSS: A loss on a Loan as reported by the related Servicer,
arising out of (i) a reduction in the scheduled Monthly Payment for such Loan by
a court of competent jurisdiction in a case under the United States Bankruptcy
Code, other than any such reduction that arises out of clause (ii) of this
definition of "Bankruptcy Loss," including, without limitation, any such
reduction that results in a permanent forgiveness of principal, or (ii) with
respect to any Loan, a valuation, by a court of competent jurisdiction in a case
under such Bankruptcy Code, of the related Mortgaged Property in an amount less
than the then outstanding Principal Balance of such Loan.
BENEFICIAL HOLDER: A Person holding a beneficial interest in any
Book-Entry Certificate as or through a Depository Participant or an Indirect
Depository Participant or a Person holding a beneficial interest in any
Definitive Certificate.
BOOK-ENTRY CERTIFICATES: The Class A Certificates and the Class M
Certificates beneficial ownership and transfers of which shall be made through
book entries as described in Section 5.1 and Section 5.3.
BUSINESS DAY: Any day other than a Saturday, a Sunday, or a day on
which banking institutions in Maryland, Minnesota or New York are authorized or
obligated by law or executive order to be closed.
CAP CONTRACT: Shall mean the Cap Contract between the Trustee and
Deutsche Bank AG New York Branch, together with any successor thereto, for the
benefit of the Holders of the Class A-1 Certificates.
CERTIFICATE: Any one of the Certificates issued pursuant to this
Agreement, executed and authenticated by or on behalf of the Securities
Administrator hereunder in substantially one of the forms set forth in Exhibits
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-6 hereto.
-7-
CERTIFICATE PRINCIPAL BALANCE: The Certificate Principal Balance with
respect to a Senior Certificate (other than the Class A-IO Certificates, which
have no Certificate Principal Balance), Class M Certificate or Class P
Certificate outstanding at any time, represents the then maximum amount that the
holder of such certificate is entitled to receive as distributions allocable to
principal from the cash flow on the Loans and the other assets in the Trust
Fund. The Certificate Principal Balance of a Senior Certificate, Class M
Certificate or Class P Certificate as of any date of determination is equal to
the initial Certificate Principal Balance of such Certificate reduced by the
aggregate of (i) all amounts allocable to principal previously distributed with
respect to that Certificate and (ii) with respect to the Class M Certificates,
any reductions in the Certificate Principal Balance of such certificate deemed
to have occurred in connection with allocations of Realized Losses, if any. The
Certificate Principal Balance of the Class CE Certificates as of any date of
determination is equal to the excess, if any, of (i) the then aggregate
Principal Balance of the Loans over (ii) the then aggregate Certificate
Principal Balance of the Senior Certificates, the Class M Certificates and the
Class P Certificates. The initial Certificate Principal Balance of each Class of
Certificates is set forth in the Preliminary Statement hereto.
CERTIFICATE REGISTER: The register maintained pursuant to Section 5.3.
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 pursuant to this Agreement, any Certificate registered in the
name of the Depositor, the Master Servicer, the Securities Administrator, the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite percentage of Percentage Interests necessary
to effect any such consent has been obtained. The Trustee or the Securities
Administrator may conclusively rely upon a certificate of the Depositor, the
Seller or the Master Servicer in determining whether a Certificate is held by an
Affiliate thereof. All references herein to "Holders" or "Certificateholders"
shall reflect the rights of Certificate Owners as they may indirectly exercise
such rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee or the
Securities Administrator shall be required to recognize as a "Holder" or
"Certificateholder" only the Person in whose name a Certificate is registered in
the Certificate Register.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate as reflected on the books of the
Depository or on the books of a Depository Participant or on the books of an
Indirect Depository Participant.
CLASS: All Certificates having the same priority and rights to payments
from the Available Distribution Amount, designated as a separate Class, as set
forth in the forms of Certificates attached hereto as Exhibits ▇-▇, ▇-▇, ▇-▇,
▇-▇, ▇-▇ and A-6, as applicable.
CLASS A CERTIFICATES: The Class ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-IO
Certificates, collectively, and designated as such on the face thereof in
substantially the forms attached hereto as Exhibits A-1 or A-2, as applicable.
CLASS A-6 LOCKOUT DISTRIBUTION AMOUNT: For any Distribution Date shall
be the Class A-6 Lockout Distribution Percentage for that Distribution Date
multiplied by the product of (x) a fraction, the numerator of which is the
Certificate Principal Balance of the Class A-6 Certificates
-8-
and the denominator of which is the aggregate Certificate Principal Balance of
all of the Senior Certificates, in each case immediately prior to such
Distribution Date and (y) the Senior Principal Distribution Amount for such
Distribution Date.
CLASS A-6 LOCKOUT DISTRIBUTION PERCENTAGE: For each Distribution Date,
the applicable percentage set forth below:
DISTRIBUTION DATES CLASS A-6 LOCKOUT DISTRIBUTION
------------------ PERCENTAGE
----------
March 2004 through and including 0%
February 2007
March 2007 through and including 45%
February 2009
March 2009 through and including 80%
February 2010
March 2010 through and including 100%
February 2011
March 2011 and thereafter 300%
CLASS M CERTIFICATES: The Class M-1, Class M-2 and Class M-3
Certificates, collectively, and designated as such on the face thereof in
substantially the form attached hereto as EXHIBIT A-3.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: will be, with respect to any
Distribution Date (i) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Senior Principal Distribution Amount or (ii) on or after the Stepdown Date
if a Trigger Event is not in effect for that Distribution Date, the lesser of:
o the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Senior Principal
Distribution Amount; and
o the excess of (A) the aggregate Certificate Principal Balance
of the Class M-1 Certificates immediately prior to that
Distribution Date over (B) the positive difference between (i)
the aggregate Principal Balance of the Loans as of the last
day of the related Due Period (after reduction for Realized
Losses incurred during the related Prepayment Period) and (ii)
the sum of (x) the aggregate Certificate Principal Balance of
the Class A Certificates (after taking into account the
payment of the Senior Principal Distribution Amount for such
Distribution Date) and (y) the product of (a) the aggregate
Principal Balance of the Loans as of the last day of the
related Due Period (after reduction for Realized Losses
incurred during the related Prepayment Period) and (b) the sum
of 5.00% and the Required Overcollateralization Percentage.
-9-
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: will be, with respect to any
Distribution Date (i) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Senior Principal Distribution Amount and the Class M-1 Principal
Distribution Amount or (ii) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:
o the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Senior Principal
Distribution Amount and the Class M-1 Principal Distribution
Amount; and
o the excess of (A) the aggregate Certificate Principal Balance
of the Class M-2 Certificates immediately prior to that
Distribution Date over (B) the positive difference between (i)
the aggregate Principal Balance of the Loans as of the last
day of the related Due Period (after reduction for Realized
Losses incurred during the related Prepayment Period) and (ii)
the sum of (x) the aggregate Certificate Principal Balance of
the Class A Certificates and the Class M-1 Certificates (after
taking into account the payment of the Senior Principal
Distribution Amount and the Class M-1 Principal Distribution
Amount for such Distribution Date) and (y) the product of (a)
the aggregate Principal Balance of the Loans as of the last
day of the related Due Period (after reduction for Realized
Losses incurred during the related Prepayment Period) and (b)
the sum of 1.50% and the Required Overcollateralization
Percentage.
CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT: will be, with respect to any
Distribution Date (i) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect for that Distribution Date, the remaining
Principal Distribution Amount for that Distribution Date after distribution of
the Senior Principal Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount or (ii) on or after the
Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:
o the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Senior Principal
Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount; and
o the excess of (A) the aggregate Certificate Principal Balance
of the Class M-3 Certificates immediately prior to that
Distribution Date over (B) the positive difference between (i)
the aggregate Principal Balance of the Loans as of the last
day of the related Due Period (after reduction for Realized
Losses incurred during the related Prepayment Period) and (ii)
the sum of (x) the aggregate Certificate Principal Balance of
the Class A, Class M-1 and Class M-2 Certificates (after
taking into account the payment of the Senior Principal
Distribution Amount, the Class M-1 Distribution Amount and the
Class M-2 Distribution Amount for such Distribution Date) and
(y) the product of (a) the aggregate Principal Balance of the
Loans as of the last day of the related Due Period (after
reduction for Realized Losses incurred during the related
Prepayment Period) and (b) the Required Overcollateralization
Percentage.
-10-
CLASS PRINCIPAL BALANCE: For any Class of Certificates (other than the
Class A-IO Certificates), the applicable initial Class Principal Balance set
forth in the Preliminary Statement hereto, corresponding to the rights of such
Class in payments of principal due to be passed through to Certificateholders
from principal payments on the Loans, as reduced from time to time by (x)
distributions allocable to principal made thereon and (y) with respect to the
Class M Certificates and Class CE Certificates the portion of Realized Losses
allocated thereto pursuant to Section 4.2 with respect to a given Distribution
Date. For any Distribution Date, the reduction of the Class Principal Balance of
any Class of Certificates pursuant to Section 4.2 shall be deemed effective
prior to the determination and distribution of principal on such Class pursuant
to Section 4.1(a). The Class Principal Balance for the Class A-1 Certificates
shall be referred to as the "Class A-1 Principal Balance", the Class Principal
Balance for the Class A-2 Certificates shall be referred to as the "Class A-2
Principal Balance" and so on. The Class Principal Balances of the Class A-IO
Certificates shall be zero.
CLASS R CERTIFICATE: The Certificate designated as "Class R" on the
face thereof in substantially the form attached hereto as EXHIBIT A-6, which has
been designated as the sole class of "residual interests" in REMIC I, REMIC II
and REMIC III, respectively, pursuant to Section 2.4.
CLASS R CERTIFICATEHOLDER: The registered Holder of the Class R
Certificate.
CLEARING AGENCY: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
which initially shall be the Depository.
CLOSING DATE: February 27, 2004.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST: For any Distribution Date, (i) with respect to
each Mortgage Loan serviced by National City, the aggregate Prepayment Interest
Shortfalls and Curtailment Shortfalls for such Loans for such Distribution Date,
(ii) with respect to each Mortgage Loan serviced by M&T, Greenpoint and GMAC, an
amount equal to the lesser of (a) the aggregate Prepayment Interest Shortfalls
and Curtailment Shortfalls for such Loans for such Distribution Date and (b) the
Servicing Fee payable to such Servicer, for such Distribution Date and (iii)
with respect to the Master Servicer, the amount described in Section 3.20 for
such Distribution Date.
COMPONENT R-1: The uncertificated residual interest in REMIC I.
COMPONENT R-2: The uncertificated residual interest in REMIC II.
COMPONENT R-3: The uncertificated residual interest in REMIC I.
CORPORATE TRUST OFFICE: The principal corporate trust office of the
Trustee or the Securities Administrator, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at (i) with respect to the Trustee, HSBC Bank USA, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other address as the Trustee
may
-11-
designate from time to time by notice to the Certificateholders, the Depositor,
the Master Servicer and the Securities Administrator, or (ii) with respect to
the Securities Administrator, (A) for Certificate transfer and surrender
purposes, ▇▇▇▇▇ Fargo Bank, N.A., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: DMSI 2004-2 and (B) for all other
purposes, ▇▇▇▇▇ Fargo Bank, N.A., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: DMSI 2004-2, or at such other address as the Securities
Administrator may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Trustee.
CORRESPONDING CERTIFICATE: With respect to:
(i) REMIC II Regular Interest LTII-A1, the Class A-1
Certificates,
(ii) REMIC II Regular Interest LTII-A2, the Class A-2
Certificates,
(iii) REMIC II Regular Interest LTII-A3, the Class A-3
Certificates,
(iv) REMIC II Regular Interest LTII-A4, the Class A-4
Certificates,
(v) REMIC II Regular Interest LTII-A5, the Class A-5
Certificates,
(vi) REMIC II Regular Interest LTII-A6, the Class A-6
Certificates,
(vii) REMIC II Regular Interest LTII-M1 the Class M-1
Certificates,
(viii) REMIC II Regular Interest LTII-M2, the Class M-2
Certificates,
(ix) REMIC II Regular Interest LTII-M3, the Class M-3
Certificates, and
(x) REMIC II Regular Interest LTII-P, the Class P
Certificates.
CREDIT ENHANCEMENT PERCENTAGE: For any Class of Certificates and any
Distribution Date, the percentage by dividing (x) the sum of (i) the aggregate
Certificate Principal Balances of the Class or Classes of Certificates
subordinate to such Certificate and (ii) the Overcollateralization Amount by (y)
the aggregate Principal Balance of the Loans, calculated after taking into
account distributions of principal on the Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.
CREDIT RISK MANAGEMENT AGREEMENT OR CREDIT RISK MANAGEMENT AGREEMENTS:
Each agreement between the Credit Risk Manager and a Servicer or the Master
Servicer, regarding the loss mitigation and advisory services to be provided by
the Credit Risk Manager.
CREDIT RISK MANAGEMENT FEE: The amount payable to the Credit Risk
Manager on each Distribution Date as compensation for all services rendered by
it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under any Credit Risk Management Agreement, which amount
shall equal one twelfth of the product of (i) the Credit Risk
-12-
Management Fee Rate multiplied by (ii) the Scheduled Principal Balance of the
Loans and any related REO Properties as of the first day of the related Due
Period.
CREDIT RISK MANAGEMENT FEE RATE: 0.01% per annum.
CREDIT RISK MANAGER: The Murrayhill Company, a Colorado corporation,
and its successors and assigns.
CURTAILMENT: Any voluntary payment of principal on a Loan, made by or
on behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid
Monthly Payment or a Payoff, which is applied to reduce the outstanding
Principal Balance of the Loan.
CURTAILMENT SHORTFALL: With respect to any Distribution Date and any
Curtailment received during the related Prepayment Period, an amount equal to
one month's interest on such Curtailment at the applicable Mortgage Interest
Rate on such Loan, net of the related Servicing Fee Rate.
CUSTODIAL AGREEMENT: The Custodial Agreement dated as of February 1,
2004, among the Trustee, ▇▇▇▇▇ Fargo as Custodian, GMAC, M&T, National City and
Greenpoint as such agreement may be amended or supplemented from time to time,
or any other custodial agreement entered into after the date hereof with respect
to any Loan subject to this Agreement.
CUSTODIAN: Either ▇▇▇▇▇ Fargo or any other custodian appointed under
any custodial agreement entered into after the date of this Agreement.
CUT-OFF DATE: February 1, 2004; except that with respect to each
Substitute Loan, the Cut-Off Date shall be the date of substitution.
DEFINITIVE CERTIFICATES: As defined in Section 5.3.
DELETED LOAN: A Loan replaced or to be replaced by a Substitute Loan.
DELINQUENCY PERCENTAGE: As of the last day of the related Due Period,
the percentage equivalent of a fraction, the numerator of which is the Principal
Balance of all Loans that, as of the last day of the previous calendar month,
are 60 or more days delinquent, are in foreclosure, have been converted to REO
Properties or have been discharged by reason of bankruptcy, and the denominator
of which is the aggregate Principal Balance of the Loans and REO Properties as
of the last day of the previous calendar month.
DEPOSITOR: Deutsche Mortgage Securities, Inc., a Delaware corporation,
or its successor-in-interest.
DEPOSITORY: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry Certificates, is CEDE &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York and a
Clearing Agency.
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇: The Letter of Representations, dated February 26,
2004 by and among the Depository, the Depositor and the Trustee.
DEPOSITORY PARTICIPANT: A broker, dealer, bank, other financial
institution or other Person for whom the Depository effects book-entry transfers
and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to each Servicer, the day of the month
set forth as the Determination Date in the related Servicing Agreement.
DISQUALIFIED ORGANIZATION: A "disqualified organization" as defined in
Section 860E(e)(5) of the Code, and, for purposes of Article V herein, any
Person which is not a Permitted Transferee; provided, that a Disqualified
Organization does not include any Pass-Through Entity which owns or holds a
Class R Certificate and if which a Disqualified Organization, directly or
indirectly, may be a stockholder, partner or beneficiary.
DISTRIBUTION ACCOUNT: The trust account or accounts created and
maintained by the Securities Administrator pursuant to Section 3.23 for the
benefit of the Certificateholders and designated "▇▇▇▇▇ Fargo Bank, N.A., as
Securities Administrator, in trust for registered holders of Deutsche Mortgage
Securities, Inc. Mortgage Loan Trust, Series 2004-2". Funds in the Distribution
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement. The Distribution Account must be an
Eligible Account.
DISTRIBUTION ACCOUNT DEPOSIT DATE: The Business Day prior to such
Distribution Date.
DISTRIBUTION DATE: With respect to distributions on the Certificates,
the 25th day (or, if such 25th day is not a Business Day, the Business Day
immediately succeeding such 25th day) of each month, with the first such date
being March 25, 2004. The "related Due Date" for any Distribution Date is the
Due Date immediately preceding such Distribution Date.
DUE DATE: The first day of each calendar month, which is the day on
which the Monthly Payment for each Loan is due, exclusive of any days of grace.
The "related Due Date" for any Distribution Date is the Due Date immediately
preceding such Distribution Date.
DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Any account or accounts held and established by the
Securities Administrator in trust for the Certificateholders at any Eligible
Institution.
ELIGIBLE INSTITUTION: An institution having (i) the highest short-term
debt rating, and one of the two highest long-term debt ratings of each Rating
Agency, (ii) with respect to the Distribution Account, an unsecured long-term
debt rating of at least one of the two highest unsecured long-term debt ratings
of each Rating Agency, or (iii) the approval of each Rating Agency.
-14-
ELIGIBLE INVESTMENTS: Any one or more of the following obligations or
securities payable on demand or having a scheduled maturity on or before the
Business Day preceding the following Distribution Date (or, with respect to the
Distribution Account maintained with the Securities Administrator, having a
scheduled maturity on or before the following Distribution Date; provided that,
such Eligible Investments shall be managed by, or an obligation of, the
institution that maintains the Distribution Account if such Eligible Investments
mature on the Distribution Date), regardless of whether any such obligation is
issued by the Depositor, the applicable Servicer, the Trustee, the Master
Servicer, the Securities Administrator or any of their respective Affiliates and
having at the time of purchase, or at such other time as may be specified, the
required ratings, if any, provided for in this definition:
(a) direct obligations of, or guaranteed as to full and timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided, that such obligations are backed by the full
faith and credit of the United States of America;
(b) direct obligations of, or guaranteed as to timely payment
of principal and interest by, ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or the Federal Farm Credit
System, provided, that any such obligation, at the time of purchase or
contractual commitment providing for the purchase thereof, is qualified by each
Rating Agency as an investment of funds backing securities rated "AAA" in the
case of S&P and ▇▇▇▇▇'▇ (the initial rating of the Class A Certificates);
(c) demand and time deposits in or certificates of deposit of,
or bankers' acceptances issued by, any bank or trust company, savings and loan
association or savings bank, provided, that the short-term deposit ratings
and/or long-term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institutions in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company) have, in the case of commercial paper, the
highest rating available for such securities by each Rating Agency and, in the
case of long-term unsecured debt obligations, one of the two highest ratings
available for such securities by each Rating Agency, or in each case such lower
rating as will not result in the downgrading or withdrawal of the rating or
ratings then assigned to any Class of Certificates by any Rating Agency but in
no event less than the initial rating of the Senior Certificates;
(d) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving one of the two
highest long-term debt ratings available for such securities by each Rating
Agency, or such lower rating as will not result in the downgrading or withdrawal
of the rating or ratings then assigned to any Class of Certificates by any
Rating Agency;
(e) commercial or finance company paper (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the date
of issuance thereof) that is rated by each Rating Agency in its highest
short-term unsecured rating category at the time of such investment or
contractual commitment providing for such investment, and is issued by a
corporation the outstanding senior long-term debt obligations of which are then
rated by each Rating Agency in one of its two highest long-term unsecured rating
categories, or such lower rating as will not result in the downgrading or
withdrawal of the rating or ratings then assigned to any Class of
-15-
Certificates by any Rating Agency but in no event less than the initial rating
of the Senior Certificates;
(f) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation rated in one of the two highest rating
levels available to such issuers by each Rating Agency at the time of such
investment, provided, that any such agreement must by its terms provide that it
is terminable by the purchaser without penalty in the event any such rating is
at any time lower than such level;
(g) repurchase obligations with respect to any security
described in clause (a) or (b) above entered into with a depository institution
or trust company (acting as principal) meeting the rating standards described in
(c) above;
(h) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United States of
America or any State thereof and rated by each Rating Agency in one of its two
highest long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment; provided, however, that
securities issued by any such corporation will not be Eligible Investments to
the extent that investment therein would cause the outstanding principal amount
of securities issued by such corporation that are then held as part of the
Distribution Account to exceed 20% of the aggregate principal amount of all
Eligible Investments then held in the Distribution Account;
(i) units of taxable money market funds (including those for
which the Trustee, the Securities Administrator, the Master Servicer or any
affiliate thereof receives compensation with respect to such investment) which
funds have been rated by each Rating Agency rating such fund in its highest
rating category or which have been designated in writing by each Rating Agency
as Eligible Investments with respect to this definition;
(j) if previously confirmed in writing to the Trustee and the
Securities Administrator, any other demand, money market or time deposit, or any
other obligation, security or investment, as may be acceptable to each Rating
Agency as a permitted investment of funds backing securities having ratings
equivalent to the initial rating of the Class A Certificates; and
(k) such other obligations as are acceptable as Eligible
Investments to each Rating Agency;
provided, however, that such instrument continues to qualify as a "cash flow
investment" pursuant to Code Section 860G(a)(6) and that no instrument or
security shall be an Eligible Investment if (i) such instrument or security
evidences a right to receive only interest payments or (ii) the right to receive
principal and interest payments derived from the underlying investment provides
a yield to maturity in excess of 120% of the yield to maturity at par of such
underlying investment.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
-16-
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the lesser of (i) the Net Monthly Excess Cashflow for such Distribution
Date and (ii) the Overcollateralization Increase Amount for such Distribution
Date.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇, formerly known as the Federal National Mortgage
Association, or any successor thereto.
FDIC: Federal Deposit Insurance Corporation, or any successor thereto.
▇▇▇▇▇▇▇ MAC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
GMAC: GMAC Mortgage Corporation, or any successor thereto.
GMAC SERVICING AGREEMENT: The Servicing Agreement, dated as of April 1,
2003 between the Seller and GMAC.
GREENPOINT: Greenpoint Mortgage Funding, Inc. or any successor thereto.
GREENPOINT SERVICING AGREEMENT: Shall mean the Master Mortgage Loan
Purchase and Servicing Agreement, dated as of August 1, 2003, between the Seller
and Greenpoint, as amended by Amendment Number One, dated as of August 1, 2003,
between the Seller and Greenpoint (as modified pursuant to the related
Assignment Agreement).
INDEPENDENT: When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, each Servicer and the
Master Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Depositor, either Servicer or the
Master Servicer or any Affiliate of either and (iii) is not connected with the
Depositor, either Servicer or the Master Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
INDIRECT DEPOSITORY PARTICIPANTS: Entities such as banks, brokers,
dealers or trust companies that clear through or maintain a custodial
relationship with a Depository Participant, either directly or indirectly.
INSURANCE PROCEEDS: Proceeds of any title policy, hazard policy or
other insurance policy covering a Loan, to the extent such proceeds are not to
be applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the applicable Servicing Agreement.
INTEREST ACCRUAL PERIOD: With respect to the Certificates and each
Distribution Date, other than the Class A-1, Class P and Class R Certificates,
the calendar month preceding the month in which that Distribution Date occurs.
The Interest Accrual Period for the Class A-1 Certificates shall be (a) as to
the Distribution Date in March 2004, the period commencing on the Closing Date
and ending on the day preceding the Distribution Date in March 2004, and (b) as
to any Distribution Date after the Distribution Date in March 2004, the period
commencing on the Distribution Date in the month immediately preceding the month
in which that Distribution Date occurs and ending on the day preceding that
Distribution Date. Interest on the Certificates, other than the Class A-1, Class
P and Class R Certificates, will be calculated based on a 360-day year
-17-
consisting of twelve 30-day months. Interest on the Class A-1 Certificates will
be calculated based on a 360-day year and the actual number of days elapsed in
the related Interest Accrual Period.
INTEREST CARRY FORWARD AMOUNT: With respect to any Distribution Date
and any Class of Class A Certificates or Class M Certificates, the sum of (i)
the amount, if any, by which (a) the Interest Distribution Amount for such Class
of Certificates as of the immediately preceding Distribution Date exceeded (b)
the actual amount distributed on such Class of Certificates in respect of
interest on such immediately preceding Distribution Date and (ii) the amount of
any Interest Carry Forward Amount for such Class of Certificates remaining
unpaid from the previous Distribution Date, plus accrued interest on such sum
calculated at the related Pass-Through Rate for the most recently ended Interest
Accrual Period.
INTEREST DISTRIBUTION AMOUNT: On any Distribution Date, for any Class
of Certificates (other than the Class P Certificates and the Class R
Certificates), the amount of interest accrued on such Class during the related
Interest Accrual Period which shall be equal to (a) the product of (1) 1/12th of
the Pass-Through Rate for such Class and (2) the Class Principal Balance or
Notional Amount, as applicable, for such Class before giving effect to
allocations of Realized Losses in connection with such Distribution Date or
distributions to be made on such Distribution Date, REDUCED BY (b) Uncompensated
Interest Shortfalls allocated to such Class pursuant to Section 1.2 and the
interest portion of Realized Losses allocated to such Class pursuant to Section
1.2.
INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date is
that portion of the Available Distribution Amount attributable to interest
received or advanced on the Loans.
INVESTMENT WITHDRAWAL DISTRIBUTION DATE: As defined in Section 3.23(c).
LAST SCHEDULED DISTRIBUTION DATE: With respect to each Class of
Certificates other than the Class A-IO Certificates, January 25, 2034. With
respect to the Class A-IO Certificates, February 25, 2006.
LIBOR: For the initial Interest Accrual Period, on the Closing Date,
the Securities Administrator will determine the One-Month LIBOR for such
Interest Accrual Period based on information available on the second business
day preceding the Closing Date with respect to the Class A-1 Certificates, and
for any Interest Accrual Period thereafter, the one month rate which appears on
the Dow ▇▇▇▇▇ Telerate System, page 3750, as of 11:00 a.m., London time on the
LIBOR Determination Date. If such rate is not provided, LIBOR shall mean the
rate determined by the Securities Administrator (or a calculation agent on its
behalf) in accordance with the following procedure:
(i) The Securities Administrator on the LIBOR Determination
Date will request the principal London offices of each of four major Reference
Banks in the London interbank market, as selected by the Securities
Administrator, to provide the Securities Administrator with its offered
quotation for deposits in United States dollars for the upcoming one-month
period, commencing on the second LIBOR Business Day immediately following such
LIBOR Determination Date, to prime banks in the London interbank market at
approximately 11:00 a.m. London time on such LIBOR Determination Date and in a
principal amount that is
-18-
representative for a single transaction in United States dollars in such market
at such time. If at least two such quotations are provided, LIBOR determined on
such LIBOR Determination Date will be the arithmetic mean of such quotations.
(ii) If fewer than two quotations are provided, LIBOR
determined on such LIBOR Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m. in New York City on such LIBOR
Determination Date by three major banks in New York City selected by the
Securities Administrator for one-month United States dollar loans to lending
European banks, in a principal amount that is representative for a single
transaction in United States dollars in such market at such time; provided,
however, that if the banks so selected by the Securities Administrator are not
quoting as mentioned in this sentence, LIBOR determined on such LIBOR
Determination Date will continue to be LIBOR as then currently in effect on such
LIBOR Determination Date.
LIBOR BUSINESS DAY: Any day on which dealings in United States dollars
are transacted in the London interbank market.
LIBOR DETERMINATION DATE: The second LIBOR Business Day before the
first day of the related Interest Accrual Period.
LIQUIDATED LOAN: A Loan as to which a Servicer has determined in
accordance with its customary servicing practices that all amounts which it
expects to recover from or on account of such Loan, whether from Insurance
Proceeds, Liquidation Proceeds or otherwise, have been recovered. For purposes
of this definition, acquisition of a Mortgaged Property by the Trust Fund shall
not constitute final liquidation of the related Loan.
LIQUIDATION PROCEEDS: The amount (other than Insurance Proceeds or
amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the applicable Servicer pursuant to the related
Servicing Agreement or the Master Servicer in connection with (i) the taking of
all or a part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation, (ii) the liquidation of a defaulted Loan through a trustee's
sale, foreclosure sale or otherwise, or (iii) the repurchase, substitution or
sale of a Loan or an REO Property pursuant to or as contemplated by Section 2.3
or Section 9.1.
LOAN DOCUMENTS: The documents evidencing or relating to each Loan
delivered to the Custodian under the Custodial Agreement on behalf of the
Trustee.
LOAN SCHEDULE: The schedule, as amended from time to time, of Loans,
attached hereto as Schedule One, which shall set forth as to each Loan the
following, among other things:
(i) the loan number of the Loan and name of the related
Mortgagor;
(ii) the street address of the Mortgaged Property
including city, state and zip code;
(iii) the Mortgage Interest Rate as of the Cut-Off Date;
(iv) the original term and maturity date of the related
Mortgage Note;
-19-
(v) the original Principal Balance;
(vi) the first payment date;
(vii) the Monthly Payment in effect as of the Cut-Off Date;
(viii) the date of the last paid installment of interest;
(ix) the unpaid Principal Balance as of the close of
business on the Cut-Off Date;
(x) the Loan-to-Value ratio at origination;
(xi) the type of property and the Original Value of the
Mortgaged Property;
(xii) whether a primary mortgage insurance policy is in
effect as of the Cut-Off Date;
(xiii) the nature of occupancy at origination; and
(xiv) a code indicating whether the Loan is subject to
Prepayment Charge, the term of such Prepayment Charge
and the amount of such Prepayment Charge.
LOANS: The Mortgages and the related Mortgage Notes, each transferred
and assigned to the Trustee pursuant to the provisions hereof as from time to
time are held as part of the Trust Fund, as so identified in the Loan Schedule.
Each of the Loans is referred to individually in this Agreement as a "Loan".
LOAN-TO-VALUE RATIO: The original principal amount of a Loan divided by
the Original Value; however, references to "current Loan-to-Value Ratio" shall
mean the then current Principal Balance of a Loan divided by the Original Value.
M&T: M&T Mortgage Corporation, a New York banking corporation, or any
successor thereto.
M&T SERVICING AGREEMENT: The Interim Servicing and Servicing Rights
Purchase Agreement, dated as of December 1, 2003 between the Seller and M&T.
MARKER RATE: With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the REMIC II Remittance Rate for each of REMIC II Regular Interest LTII-A1,
REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II
Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5, REMIC II Regular
Interest LTII-A6, REMIC II Regular Interest LTII-M1, Regular Interest LTII-M2,
Regular Interest LTII-M3 and Regular Interest LTII-ZZ, with the rate on each
such REMIC II Regular Interest (other than REMIC II Regular Interest LTII-ZZ)
subject to a cap equal to Pass-Through Rate for the Corresponding Certificate,
and with the rate on REMIC II Regular Interest LTII-ZZ subject to a cap of zero
for the purpose of this calculation; provided however, each such cap for REMIC
II Regular Interest LTII-A1 shall be multiplied by a fraction
-20-
the numerator of which is the actual number of days in the related Interest
Accrual Period and the denominator of which is 30.
MASTER SERVICER: As of the Closing Date, ▇▇▇▇▇ Fargo Bank, N.A. and
thereafter, its respective successors in interest who meet the qualifications of
this Agreement. The Master Servicer and the Securities Administrator shall at
all times be the same Person.
MASTER SERVICER EVENT OF DEFAULT: One or more of the events described
in Section 7.1 hereof.
MASTER SERVICING FEE RATE: 0.0175% per annum.
MASTER SERVICING FEE: As to each Loan and any Distribution Date, an
amount equal to one twelfth of the product of the Master Servicing Fee Rate
multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in
the month preceding the month of such Distribution Date.
MONTHLY PAYMENT: The scheduled payment of principal and interest on a
Loan which is due on any Due Date for such Loan after giving effect to any
reduction in the amount of interest collectible from any Mortgagor pursuant to
the Relief Act.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
MORTGAGE FILE: The Loan Documents pertaining to a particular Loan.
MORTGAGE INTEREST RATE: For any Loan, the per annum rate at which
interest accrues on such Loan pursuant to the terms of the related Mortgage Note
without regard to any reduction thereof as a result of the Relief Act.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of February 27, 2004, between the Depositor and the Seller.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Loan.
MORTGAGE POOL: All of the Loans.
MORTGAGED PROPERTY: With respect to any Loan, the real property,
together with improvements thereto, securing the indebtedness of the Mortgagor
under the related Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NATIONAL CITY: National City Mortgage Co., or any successor thereto.
NATIONAL CITY SERVICING AGREEMENT: The Master Seller's Warranties and
Servicing Agreement, dated as of October 1, 2002 between the Seller and National
City as amended by
-21-
Amendment Number One dated as of October 1, 2002 between the Seller and National
City (as modified pursuant to the related Assignment Agreement).
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, the
sum of (i) any Overcollateralization Reduction Amount and (ii) the excess of (x)
the Available Distribution Amount over (y) the sum for such Distribution Date of
(A) the aggregate Senior Interest Distribution Amounts payable to the holders of
the Senior Certificates, (B) the aggregate Interest Distribution Amounts payable
to the holders of the Class M Certificates and (C) the Principal Remittance
Amount.
NET MORTGAGE RATE: For each Loan and for any date of determination, a
per annum rate equal to the Mortgage Interest Rate for such Loan less the
Servicing Fee Rate, the Master Servicing Fee Rate and the Credit Risk Management
Fee Rate.
NET WAC PASS-THROUGH RATE: For (a) the March 2004 Distribution Date
through the February 2006 Distribution Date, a per annum rate equal to (1) the
weighted average of the Net Mortgage Rates of the Loans as of the first day of
the month preceding the month in which such Distribution Date occurs minus (2)
the Pass-Through Rate for the Class A-IO Certificates for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount of the
Class A-IO Certificates immediately prior to such Distribution Date, and the
denominator of which is the aggregate Scheduled Principal Balance of the Loans
before giving effect to distributions on such Distribution Date, and (b) with
respect to any subsequent Distribution Date, the weighted average of the Net
Mortgage Rates of the Loans as of the first day of the month preceding the month
in which such Distribution Date occurs. The Net WAC Pass-Through Rate for the
Class A-1 Certificates shall be adjusted for the actual number of days in the
related Interest Accrual Period. For federal income tax purposes, the Net WAC
Rate, with respect to any Distribution Date, shall be expressed as the weighted
average of the Uncertificated REMIC II Pass-Through Rates on each REMIC II
Regular Interest (other than REMIC II Regular Interest LTII-IO-A and REMIC II
Regular Interest LTII-IO-B) weighted on the basis of the Uncertificated
Principal Balance of the REMIC II Regular Interests.
NET WAC RATE CARRYOVER AMOUNT: With respect to the Class A Certificates
(other than the Class A-IO Certificates) and the Class M Certificates and any
Distribution Date on which the pass-through rate is limited to the applicable
Net WAC Pass-Through Rate, an amount equal to the sum of (i) the excess of (x)
the amount of interest the Class A Certificates or Class M Certificates would
have been entitled to receive on such Distribution Date if the Net WAC
Pass-Through Rate had not been applicable to such Certificates on such
Distribution Date over (y) the amount of interest accrued on such Distribution
Date at the applicable Net WAC Pass-Through Rate plus (ii) the related Net WAC
Rate Carryover Amount for the previous Distribution Date not previously
distributed together with interest thereon at a rate equal to the related
Pass-Through Rate for such Class of Certificates for the most recently ended
Interest Accrual Period.
NONRECOVERABLE ADVANCE: With respect to any Loan, any Advance or
Servicing Advance which the related Servicer shall have determined to be a
Nonrecoverable Advance as defined in and pursuant to the related Servicing
Agreement, or which the Master Servicer shall have determined to be
nonrecoverable pursuant to Section 4.4, respectively, and which was or is
proposed to be made by such Servicer or the Master Servicer.
-22-
NON-U.S. PERSON: A Person that is not a U.S. Person.
NOTIONAL AMOUNT: With respect to the Class A-IO Certificates will be as
follows: the lesser of (x) from and including the 1st Distribution Date through
and including the 6th Distribution Date, $34,045,000; from and including the 7th
Distribution Date through and including the 16th Distribution Date, $27,236,000;
from and including the 17th Distribution Date through and including the 19th
Distribution Date, $20,427,000; from and including the 20th Distribution Date
through and including the 23rd Distribution Date, $13,618,000; and on the 24th
Distribution Date, $9,533,000; thereafter $0 and (y) the then aggregate
principal balance of the Loans (prior to giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period). For federal income tax purposes, the Class A-IO Certificates will not
have a Notional Amount, but will be entitled to 100% of amounts distributed on
REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B.
With respect to the Class CE Certificates, immediately prior to any Distribution
Date, the aggregate of the Uncertificated Principal Balances of the REMIC II
Regular Interests (other than REMIC II Regular Interest LTII-P).
OFFICER'S CERTIFICATE: With respect to any Person, a certificate signed
by the Chairman of the Board, the President or a Vice-President, however
denominated, of such Person (or, in the case of a Person which is not a
corporation, signed by the person or persons having like responsibilities), and
delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor, a Servicer, the Securities
Administrator or the Master Servicer, acceptable to the Trustee, except that any
opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or
(b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.
ORIGINAL VALUE: With respect to any Loan other than a Loan originated
for the purpose of refinancing an existing mortgage debt, the lesser of (a) the
Appraised Value (if any) of the Mortgaged Property at the time the Loan was
originated or (b) the purchase price paid for the Mortgaged Property by the
Mortgagor. With respect to a Loan originated for the purpose of refinancing
existing mortgage debt, the Original Value shall be equal to the lesser of (a)
the Appraised Value of the Mortgaged Property at the time the Loan was
originated or (b) the appraised value at the time the refinanced mortgage debt
was incurred.
OTS: The Office of Thrift Supervision, or any successor thereto.
OVERCOLLATERALIZATION AMOUNT: Initially, approximately $953,220. With
respect to any Distribution Date following the Closing Date, the excess, if any,
of (a) the aggregate Principal Balances of the Loans and REO Properties
immediately following such Distribution Date over (b) the sum of the aggregate
Certificate Principal Balances of the Senior Certificates, the Class M
Certificates and the Class P Certificates as of such Distribution Date (after
taking into account all payments of principal on such Distribution Date).
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any Distribution
Date, will be the amount, if any, by which the Required Overcollateralization
Amount exceeds the
-23-
Overcollateralization Amount (calculated for this purpose only after assuming
that 100% of the Principal Remittance Amount on such Distribution Date has been
distributed).
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any
Distribution Date, is the lesser of (i) the Principal Remittance Amount and (ii)
the excess, if any, of (a) the Overcollateralization Amount for such
Distribution Date (calculated for this purpose only after assuming that 100% of
the Principal Remittance Amount on such Distribution Date has been distributed
over (b) the Required Overcollateralization Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal zero.
OWNERSHIP INTEREST: With respect to any Residual Certificate, any
ownership or security interest in such Residual Certificate, including any
interest in a Residual Certificate as the Holder thereof and any other interest
therein whether direct or indirect, legal or beneficial, as owner or as pledge.
PASS-THROUGH ENTITY: Any regulated investment company, real estate
investment trust, common trust fund, partnership, trust or estate, and any
organization to which Section 1381 of the Code applies.
PASS-THROUGH RATE: With respect to the Class A Certificates (other than
the Class A-IO Certificates) and Class M Certificates and any Distribution Date,
the lesser of (i) the interest rate listed in the Preliminary Statement hereto
and (ii) the Net WAC Pass-Through Rate; provided, that with respect to the Class
A-5, Class A-6 and Class M Certificates, the interest rate listed in the
Preliminary Statement hereto shall be increased by 0.50% per annum on the
Distribution Date following the first possible optional termination date. With
respect to the Class A-IO Certificates (i) for the first twelve Distribution
Dates, 4.50% per annum, (ii) for the next twelve Distribution Dates, 3.50% per
annum and (iii) for any Distribution Date thereafter, 0.00%. For federal income
tax purposes, however, the Class A-IO Certificates will not have a Class A-IO
Pass-Through Rate, and the Interest Distribution Amount for the Class A-IO
Certificates and any Distribution Date will be deemed to be 100% of the amount
distributed on REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest
LTII-IO-B for such Distribution Date.
With respect to the Class CE Certificates, on any Distribution Date, a
per annum rate equal to the percentage equivalent of a fraction, the numerator
of which is (x) the sum of the amounts calculated pursuant to clauses (A)
through (L) below, and the denominator of which is (y) the aggregate of the
Uncertificated Principal Balances of the REMIC II Regular Interests (other than
REMIC II Regular Interest LTII-P). For purposes of calculating the Pass-Through
Rate for the Class CE Certificates, the numerator is equal to the sum of the
following components:
(A) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-AA minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-AA;
(B) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A1 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A1;
-24-
(C) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A2 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A2;
(D) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A3 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A3;
(E) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A4 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A4;
(F) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A5 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A5;
(G) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-A6 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-A6;
(H) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-M1 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-M1;
(I) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-M2 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-M2;
(J) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-M3 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-M3;
(K) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LTII-ZZ minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC II Regular Interest LTII-ZZ; and
(L) 100% of the interest distributable on REMIC II Regular
Interest LTII-P.
PAYOFF: Any voluntary payment of principal on a Loan by a Mortgagor
equal to the entire outstanding Principal Balance of such Loan, if received in
advance of the last scheduled Due Date for such Loan and is not accompanied by
scheduled interest due on any date or dates in any month or months subsequent to
the month of such payment-in-full.
PERCENTAGE INTEREST: With respect to any Class of Certificates (other
than the Residual Certificates), the undivided percentage ownership in such
Class evidenced by such Certificate, expressed as a percentage, the numerator of
which is the initial Certificate Principal Balance
-25-
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance or Notional Amount of all of the
Certificates of such Class. Each Certificate is issuable only in minimum
Percentage Interests corresponding to the Authorized Denomination of the related
Class of Certificates; provided, however, that a single Certificate of each such
Class of Certificates may be issued having a Percentage Interest corresponding
to the remainder of the aggregate initial Certificate Principal Balance of such
Class or to an otherwise Authorized Denomination for such Class plus such
remainder. With respect to any Residual Certificate, the undivided percentage
ownership in such Class evidenced by such Certificate, is as set forth on the
face of such Certificate.
PERMITTED TRANSFEREE: With respect to the holding or ownership of any
Residual Certificate, any Person other than (i) the United States, a State or
any political subdivision thereof, or any agency or instrumentality of any of
the foregoing, (ii) a foreign government or International Organization, or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from the taxes imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Code Section 1381(a)(2)(C), (v) any electing large partnership under Section 775
of the Code, (vi) any Person from whom the Trustee or the Securities
Administrator has not received an affidavit to the effect that it is not a
"disqualified organization" within the meaning of Section 860E(e)(5) of the
Code, and (vii) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the transfer of an Ownership Interest in a Residual
Certificate to such Person may cause the Trust Fund to fail to qualify as a
REMIC at any time that the Certificates are outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in Code Section 7701 or successor provisions. A corporation shall not be
treated as an instrumentality of the United States or of any State or political
subdivision thereof if all of its activities are subject to tax, and, with the
exception of the ▇▇▇▇▇▇▇ Mac, a majority of its board of directors is not
selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PLAN: As defined in Section 5.3.
PREPAID MONTHLY PAYMENT: Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Loan on its scheduled
Due Date and held in the related Protected Account until the related Servicer
Remittance Date following its scheduled Due Date.
PREPAYMENT CHARGE: With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Loan pursuant to the terms of the related Mortgage
Note.
PREPAYMENT CHARGE SCHEDULE: As of any date, the list of Loans providing
for a Prepayment Charge included in the Trust Fund on such date, attached hereto
as Schedule Two (including the prepayment charge summary attached thereto). The
Depositor shall deliver or cause the delivery of the Prepayment Charge Schedule
to the Master Servicer, the Trustee and
-26-
the Credit Risk Manager on the Closing Date. The Prepayment Charge Schedule
shall set forth the following information with respect to each Prepayment
Charge:
(i) the Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the date on which the first Monthly Payment was due
on the related Mortgaged Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Principal Balance of the related Loan;
and
(vi) the Principal Balance of the related Loan as of the
Cut-off Date.
PREPAYMENT INTEREST SHORTFALL: For any Distribution Date and any Loan
on which a Payoff was made by a Mortgagor during the related Prepayment Period,
an amount equal to one month's interest at the applicable Net Mortgage Rate on
such Loan less the amount of interest actually paid by the Mortgagor with
respect to such Payoff.
PREPAYMENT PERIOD: For any Distribution Date, the calendar month
immediately preceding such Distribution Date.
PRINCIPAL BALANCE: For any Loan and at the time of any determination,
the principal balance of such Loan remaining to be paid at the close of business
on the Cut-Off Date, after deduction of all principal payments due on or before
the Cut-Off Date whether or not received, reduced by the principal portion of
all amounts received with respect to such Loan after the Cut-Off Date and
distributed or to be distributed to Certificateholders through the Distribution
Date in the month of such determination. In the case of a Substitute Loan,
"Principal Balance" shall mean, at the time of any determination, the principal
balance of such Substitute Loan on the related Cut-Off Date, reduced by the
principal portion of all amounts received with respect to such Loan after the
Cut-Off Date and distributed or to be distributed to Certificateholders through
the Distribution Date in the month of determination. The Principal Balance of a
Liquidated Loan shall be zero.
PRINCIPAL DISTRIBUTION AMOUNT: On any Distribution Date, the sum of (i)
the principal portion of all scheduled Monthly Payments on the Loans due during
the related Due Period, whether or not received on or prior to the related
Determination Date, (ii) the principal portion of repurchase proceeds received
with respect to any Loan which was repurchased by the Depositor pursuant to a
Purchase Obligation or as permitted by this Agreement prior to such Distribution
Date or, in the case of a substitution, certain amounts representing a principal
adjustment and (iii) any other unscheduled payments of principal which were
received with respect to any Loan during the applicable Prepayment Period,
including Payoffs, Curtailments and Liquidation Proceeds, to the extent applied
as recoveries of principal on the Loans; minus (iv) the amount of any
Overcollateralization Reduction Amount for such Distribution Date and any
amounts payable or reimbursable therefrom to the Servicers, the Trustee, the
Custodian, the Master Servicer or the Securities Administrator prior to
distributions being made on the Certificates. In
-27-
no event will the Principal Distribution Amount with respect to any Distribution
Date be (x) less than zero or (y) greater than the outstanding Certificate
Principal Balance of the Class A Certificates and the Class M Certificates.
PRINCIPAL PREPAYMENT: Any payment of principal on a Loan which
constitutes a Payoff or a Curtailment.
PRINCIPAL PREPAYMENT AMOUNT: On any Distribution Date and for the
Loans, the sum of (i) Curtailments received during the related Prepayment Period
and (ii) Payoffs received during the related Prepayment Period.
PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date will
be the sum of the amounts described in clauses (i) through (iii) of the
definition of Principal Distribution Amount net of any amounts payable or
reimbursable therefrom to the Trustee, the Custodian, the Securities
Administrator or the Servicers pursuant to this Agreement or the Custodial
Agreement.
PROTECTED ACCOUNT: An account or accounts established and maintained
for the benefit of the Certificateholders by each Servicer with respect to the
related Loans and with respect to REO Property pursuant to the applicable
Servicing Agreement.
PURCHASE OBLIGATION: An obligation of the Depositor to repurchase Loans
under the circumstances and in the manner provided in Section 2.3.
PURCHASE PRICE: With respect to any Loan to be purchased pursuant to a
Purchase Obligation, or any Loan to be purchased or repurchased relating to an
REO Property, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee and the Securities Administrator, an amount equal to the
sum of (i) 100% of the Principal Balance thereof as of the date of purchase (or
such other price as provided in Section 9.1), (ii) in the case of (x) a Loan,
accrued interest on such Principal Balance at the applicable Net Mortgage Rate
from the date interest was last paid by the related Mortgagor or the date an
Advance by the applicable Servicer or the Master Servicer, which payment or
Advance had as of the date of purchase been distributed pursuant to Section 4.1,
through the end of the calendar month in which the purchase is to be effected
and (y) an REO Property, the sum of (1) accrued interest on such Principal
Balance at the applicable Net Mortgage Rate from the date interest was last paid
by the related Mortgagor or the date an Advance by the applicable Servicer or
the Master Servicer through the end of the calendar month immediately preceding
the calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and Advances that as
of the date of purchase had been distributed as or to cover REO Imputed Interest
in accordance with the applicable Servicing Agreement, (iii) any unreimbursed
Servicing Advances and Advances (including Nonrecoverable Advances) and any
unpaid Servicing Fees or Master Servicing Fees allocable to such Loan or REO
Property and (iv) in the case of a Loan required to be purchased pursuant to
Section 2.3, expenses reasonably incurred or to be incurred by the Master
Servicer, the Servicers, the Trustee or the Securities Administrator in respect
of the breach or defect giving rise to a Purchase Obligation and any costs and
damages incurred by the Trust Fund in
-28-
connection with any violation by any such Mortgage Loan of any predatory or
abusive lending law.
RATE CHANGE DATE: With respect to a REMIC II Regular Interest
Component, the first month in which the pass-through rate for such component is
equal to 0.00%.
RATING AGENCY: Initially, each of S&P and ▇▇▇▇▇'▇; thereafter, each
nationally recognized statistical rating organization that has rated the
Certificates at the request of the Depositor, or their respective successors in
interest.
RATINGS: As of any date of determination, the ratings, if any, of the
Certificates as assigned by each Rating Agency.
REALIZED LOSS: For any Distribution Date and any Loan which became a
Liquidated Loan during the related Prepayment Period, the sum of (i) the
Principal Balance of such Loan remaining outstanding (after all recoveries of
principal have been applied thereto) and the principal portion of Advances which
have been reimbursed with respect to such Loan, and (ii) the accrued interest on
such Loan remaining unpaid and the interest portion of Advances which have been
reimbursed from Liquidation Proceeds with respect to such Loan. The amounts
described in clause (i) shall be the principal portion of Realized Losses and
the amounts described in clause (ii) shall be the interest portion of Realized
Losses. For any Distribution Date and any Loan which is not a Liquidated Loan,
the amount of any Bankruptcy Loss incurred with respect to such Loan as of the
related Due Date shall be treated as a Realized Loss.
RECORD DATE: With respect to each Distribution Date and the
Certificates, other than Class A-1 Certificates, the last Business Day of the
month immediately preceding the month of the related Distribution Date; with
respect to the Class A-1 Certificates, the Business Day, preceding the related
Distribution Date.
REGULAR INTEREST CERTIFICATES: The Certificates, other than the Class R
Certificate.
RELIEF ACT: The Servicemembers Civil Relief Act, as amended, or similar
state laws.
RELIEF ACT INTEREST SHORTFALL: With respect to any Distribution Date
and a Loan, the reduction in the amount of interest collectible on such Loan for
the most recently ended calendar month immediately preceding such Distribution
Date as a result of the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC I: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of: (i) the Loans (exclusive of payments of
principal and interest due on or before the Cut-off Date, if any, received by
the Master Servicer which shall not constitute an asset of the Trust Fund) as
from time to time are subject to this Agreement and all payments under and
proceeds of the Loans (exclusive of any Prepayment Charges and late payment fees
received on the Loans), together with all documents included in the related
Mortgage File, subject to Section 2.1; (ii) such funds or assets as from time to
time are deposited in the related
-29-
Distribution Account in respect of a Loan and belonging to the Trust Fund; (iii)
any REO Property in respect of a Loan; (iv) the primary hazard insurance
policies, if any, the primary insurance policies, if any, and all other
insurance policies with respect to the Loans; (v) the Depositor's interest in
respect of the representations and warranties made by the Seller in the Mortgage
Loan Purchase Agreement as assigned to the Trustee pursuant to Section 2.1
hereof; and (vi) the Cap Contract.
REMIC I REGULAR INTEREST LTI-1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-2 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-3: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-3 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-4: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-4 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-5: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-5 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
-30-
REMIC I REGULAR INTEREST LTI-P: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-P shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest LTI-1, REMIC I
Regular Interest LTI-IO-1, REMIC I Regular Interest LTI-IO-2, REMIC I Regular
Interest LTI-IO-3, REMIC I Regular Interest LTI-IO-4, REMIC I Regular Interest
LTI-IO-5 and REMIC I Regular Interest LTI-▇.
▇▇▇▇▇ ▇▇: The pool of assets consisting of the REMIC I Regular
Interests and all payments of principal or interest on or with respect to the
REMIC I Regular Interests after the Cut-Off Date.
REMIC II INTEREST LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC II Remittance Rate for REMIC II Regular Interest
II-LTAA minus the Marker Rate, divided by (b) 12.
REMIC II OVERCOLLATERALIZATION AMOUNT: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II Regular Interests minus (ii) the aggregate of the Uncertificated
Balances of REMIC II Regular Interest LTII-A1, REMIC II Regular Interest
LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest LTII-A4,
REMIC II Regular Interest LTII-A5, REMIC II Regular Interest LTII-A6, REMIC II
Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular
Interest LTII-M3 and REMIC Regular Interest LTII-P, in each case as of such date
of determination.
REMIC II OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the Required
Overcollateralization Amount.
REMIC II PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Principal Balances of REMIC II Regular Interest
LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3,
REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5, REMIC II
Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II Regular
Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular
Interest LTII-ZZ.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest LTII-AA, REMIC II
Regular Interest LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular
Interest LTII-A3, REMIC II Regular Interest LTII-A4, REMIC II Regular Interest
LTII-A5, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3, REMIC II
Regular Interest LTII-IO-A, REMIC II Regular Interest LTII-IO-B, , REMIC II
Regular Interest LTII-ZZ and REMIC II Regular Interest LTII-P.
-31-
REMIC II REGULAR INTEREST LTII-AA: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-AA shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A4: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A4 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A5: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A5 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A6: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A6 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of
-32-
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LTII-IO-A: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
LTII-IO-A shall accrue interest as provided herein and shall not be entitled to
distributions of principal.
REMIC II REGULAR INTEREST LTII-IO-B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
LTII-IO-B shall accrue interest as provided herein and shall not be entitled to
distributions of principal.
REMIC II REGULAR INTEREST LTII-M1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-P: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-P shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-ZZ: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-ZZ shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
-33-
REMIC II REGULAR INTEREST LTII-ZZ MAXIMUM INTEREST DEFERRAL AMOUNT:
With respect to any Distribution Date, the excess of (i) accrued interest at the
Uncertificated REMIC II Pass-Through Rate applicable to REMIC II Regular
Interest LTII-ZZ for such Distribution Date on a balance equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-ZZ minus the
REMIC II Overcollateralization Amount, in each case for such Distribution Date,
over (ii) Uncertificated Accrued Interest on REMIC II Regular Interest LTII-A1,
REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II
Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5, REMIC II Regular
Interest LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II Regular Interest
LTII-M2 and REMIC II Regular Interest LTII-M3 for such Distribution Date, with
the rate on each such REMIC II Regular Interest subject to a cap equal to the
related Pass-Through Rate.
REMIC III: The pool of assets consisting of the REMIC II Regular
Interests and all payments of principal or interest on or with respect to the
REMIC II Regular Interests after the Cut Off Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of the Code, and related provisions, and proposed, temporary and final
regulations and published rulings, notices and announcements promulgated
thereunder, as the foregoing may be in effect from time to time.
REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II Regular
Interest or a Regular Interest Certificate.
REMITTANCE REPORT: A report by the Securities Administrator pursuant to
Section 4.3.
REO DISPOSITION: The sale or other disposition of an REO Property on
behalf of REMIC I.
REO IMPUTED INTEREST: As to any REO Property, for any calendar month
during which such REO Property was at any time part of REMIC I, one month's
interest at the applicable Net Mortgage Rate on the Scheduled Principal Balance
of such REO Property (or, in the case of the first such calendar month, of the
related Loan, if appropriate) as of the close of business on the Distribution
Date in such calendar month.
REO PROPERTY: A Mortgaged Property, title to which has been acquired by
a Servicer on behalf of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise.
REQUIRED OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date following the Closing Date, shall be an amount equal to $953,253.
REQUIRED OVERCOLLATERALIZATION PERCENTAGE: For any Distribution Date, a
percentage equal to (a) the Required Overcollateralization Amount divided by (b)
the aggregate Principal Balance of the Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period).
-34-
RESIDUAL CERTIFICATE: The Class R Certificate, which is being issued in
a single class. Components R-1, R-2 and R-3 of the Class R Certificate are
hereby each designated the sole Class of "residual interests" in REMIC I, REMIC
II and REMIC III, respectively, for purposes of Section 860G(a)(2) of the Code.
RESERVE FUND: Shall mean the separate trust account created and
maintained by the Securities Administrator pursuant to Section 3.25 hereof.
RESERVE INTEREST RATE: The rate per annum that the Securities
Administrator determines to be either (i) the arithmetic mean of the one-month
U.S. dollar lending rates which New York City banks selected by the Securities
Administrator are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or (ii)
in the event that the Securities Administrator can determine no such arithmetic
mean, the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Securities Administrator are quoting on such Interest
Determination Date to leading European banks.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
in the corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject. When used with respect to the Master Servicer or the Securities
Administrator, 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 Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust
Officer, the Controller, any Assistant Controller or any other officer
customarily performing functions similar to those performed by any of the
above-designated officers and in each case having direct responsibility for the
administration of this Agreement, and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject. When used with respect
to the Depositor or any other Person, the Chairman or Vice-Chairman of the Board
of Directors, the Chairman or Vice-Chairman of any executive committee of the
Board of Directors, the President, any Vice-President, the Secretary, any
Assistant Secretary, the Treasurer, any Assistant Treasurer, or any other
officer of the Depositor customarily performing functions similar to those
performed by any of the above-designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
S&P: Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc. provided, that at any time it is a Rating Agency.
SCHEDULED PRINCIPAL BALANCE: With respect to any Loan and a Due Date,
the unpaid principal balance of such Loan as specified in the amortization
schedule (before any adjustment to such schedule by reason of bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) for such
Due Date, after giving effect to any previously applied
-35-
Curtailments, the payment of principal on such Due Date and any reduction of the
principal balance of such Loan by a bankruptcy court, irrespective of any
delinquency in payment by the related Mortgagor.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: As of the Closing Date, ▇▇▇▇▇ Fargo Bank,
N.A. and thereafter, its respective successors in interest who meet the
qualifications of this Agreement. The Securities Administrator and the Master
Servicer shall at all times be the same Person.
SELLER: Deutsche Bank AG New York Branch, or its successor in interest,
in its capacity as seller under the Mortgage Loan Purchase Agreement and in its
capacity as assignor under the Assignment Agreements.
SENIOR CERTIFICATES: The Class A Certificates.
SENIOR INTEREST DISTRIBUTION AMOUNT: With respect to any Distribution
Date, an amount equal to the sum of (i) the Interest Distribution Amount for
such Distribution Date for the Class A Certificates and (ii) the Interest Carry
Forward Amount, if any, for such Distribution Date for the Class A Certificates.
SENIOR PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date (i) prior to the Stepdown Date or on or after the Stepdown Date if a
Trigger Event is in effect, the Principal Distribution Amount or (ii) on or
after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(a) the Principal Distribution Amount for that Distribution
Date; and
(b) the excess of (A) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to that Distribution Date
over (B) the positive difference between (i) the aggregate Principal Balance of
the Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) and (ii) the
product of (x) the aggregate Principal Balance of the Loans as of the last day
of the related Due Period (after reduction for Realized Losses incurred during
the related Prepayment Period) and (y) the sum of 10.30% and the Required
Overcollateralization Percentage.
SERVICER: GMAC, M&T, National City or Greenpoint, as applicable, or any
successor appointed under the applicable Servicing Agreement.
SERVICER REMITTANCE DATE: With respect to each Distribution Date shall
mean (i) with respect to GMAC and M&T, the 18th day of the calendar month in
which such Distribution Date occurs or, if such 18th day is not a Business Day,
the Business Day immediately preceding such 18th day, (ii) with respect to
National City, the 18th day of the calendar month in which such Distribution
Date occurs or, if such 18th day is not a Business Day, the Business Day
immediately following such 18th day and (ii) with respect to Greenpoint, the
10th day of the calendar month in which such Distribution Date occurs or, if
such 10th day is not a Business Day, the Business Day immediately preceding such
10th day.
-36-
SERVICING ADVANCES: The customary reasonable and necessary
"out-of-pocket" costs and expenses incurred by the applicable Servicer in
connection with a default, delinquency or other unanticipated event by the
applicable Servicer in the performance of its servicing obligations, including,
but not limited to, the cost of (i) the preservation, restoration and protection
of a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, in respect of a particular Loan and (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property. No Servicer shall be required to make any Servicing Advance in respect
of a Loan or REO Property that, in the good faith business judgment of such
Servicer, would not be ultimately recoverable from related Insurance Proceeds or
Liquidation Proceeds on such Loan or REO Property as provided herein.
SERVICING AGREEMENT: The GMAC Servicing Agreement, the M&T Servicing
Agreement, the National City Servicing Agreement or the Greenpoint Servicing
Agreement.
SERVICING FEE: With respect to each Loan and for any Distribution Date,
an amount equal to one twelfth of the product of the Servicing Fee Rate
multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in
the month preceding the month of such Distribution Date. The Servicing Fee is
payable solely from collections of interest on the Loans or as otherwise
provided in the related Servicing Agreement.
SERVICING FEE RATE: 0.25% per annum.
SERVICING OFFICER: Any individual involved in, or responsible for, the
administration and servicing of the Loans whose name and specimen signature
appear on a list of servicing officers furnished to the Trustee, the Depositor
and the Securities Administrator on the Closing Date by each Servicer and the
Master Servicer, as such lists may from time to time be amended.
STARTUP DAY: With respect to the REMIC, the day designated as such
pursuant to Section 10.1(b) hereof.
STEPDOWN DATE: The earlier to occur of (i) the later to occur of (a)
the Distribution Date occurring in March 2007 and (b) the first Distribution
Date on which the Credit Enhancement Percentage (calculated for this purpose
only after taking into account distributions of principal on the Loans but prior
to any distribution of the Principal Distribution Amount to the
Certificateholders then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 11.00% and (ii) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Senior Certificates has been reduced to zero.
SUBSTITUTE LOAN: A mortgage loan substituted for a Deleted Loan
pursuant to the terms of this Agreement which must, on the date of such
substitution, (i) have an outstanding principal balance, after application of
all scheduled payments of principal and interest due during or prior to the
month of substitution, not in excess of the Scheduled Principal Balance of the
Deleted Loan as of the Due Date in the calendar month during which the
substitution occurs, (ii) have a Mortgage Interest Rate not less than (and not
more than one percentage point in excess of) the Mortgage Interest Rate of the
Deleted Loan, (iii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Loan, (iv) have the same Due
Date as the Due Date on the Deleted Loan, (v) have a Loan-to-Value Ratio as of
the date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Loan as of such date,
-37-
(vi) have a risk grading at least equal to the risk grading assigned on the
Deleted Loan, (vii) is a "qualified mortgage" as defined in the REMIC Provisions
and (vii) conform to each representation and warranty set forth in Section 6 of
the Mortgage Loan Purchase Agreement applicable to the Deleted Loan. In the
event that one or more mortgage loans are substituted for one or more Deleted
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Interest Rates described in
clause (ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates, the terms described in clause (iii) hereof shall be determined
on the basis of weighted average remaining term to maturity, the Loan-to-Value
Ratios described in clause (v) hereof shall be satisfied as to each such
mortgage loan, the risk gradings described in clause (vi) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (vii) hereof must be satisfied as to each Substitute Loan or in the
aggregate, as the case may be. In the event that the Deleted Loan is a Discount
Loan, the Substitute Loan(s) shall be deemed to be a Discount Loan(s) regardless
of the Net Mortgage Rate thereof.
TAX MATTERS PERSON: The Holder of the Class R Certificates issued
hereunder or any Permitted Transferee of such Class R Certificateholder shall be
the initial "tax matters person" for REMIC I, REMIC II and REMIC III within the
meaning of Section 6231(a)(7) of the Code. For tax years commencing after any
transfer of the Class R Certificate, the holder of the greatest Percentage
Interest in the Class R Certificate at year end shall be designated as the Tax
Matters Person with respect to that year. If the Tax Matters Person becomes a
Disqualified Organization, the last preceding Holder of such Authorized
Denomination of the Class R Certificate that is not a Disqualified Organization
shall be Tax Matters Person pursuant to Section 5.3(e). If any Person is
appointed as tax matters person by the Internal Revenue Service pursuant to the
Code, such Person shall be Tax Matters Person.
TERMINATION PRICE: As defined in Section 9.1.
TERMINATOR: As defined in Section 9.1.
TRANSFER: Any direct or indirect transfer, sale, pledge or other
disposition of, or directly or indirectly transferring, selling or pledging, any
Ownership Interest in a Class CE Certificate, Class P Certificate or Residual
Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership
Interest in a Class CE Certificate, Class P Certificate or Residual Certificate.
TRIGGER EVENT: A Trigger Event has occurred with respect to a
Distribution Date if (x) the Delinquency Percentage exceeds 55% of the Credit
Enhancement Percentage of the Class A Certificates for the prior Distribution
Date or (y) the aggregate amount of Realized Losses incurred since the Cut-Off
Date through the last day of the related Due Period divided by the aggregate
Principal Balance of the Loans as of the Cut-Off exceeds the applicable
percentages set forth below with respect to such Distribution Date:
Distribution Date Percentage
----------------- ----------
March 2007 to February 2008 0.75%
-38-
March 2008 to February 2009 0.95%
March 2009 to February 2010 1.20%
March 2010 to February 2011 1.35%
March 2011 and thereafter 1.50%
TRUST FUND: Collectively, all of the assets of REMIC I, REMIC II and
REMIC III, and the Reserve Fund and any amounts on deposit therein and any
proceeds thereof, the Prepayment Charges and the Cap Contract.
TRUSTEE: HSBC Bank USA, a New York banking corporation, or its
successor in interest, or any successor trustee appointed as herein provided.
UNCERTIFICATED ACCRUED INTEREST: With respect to each Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Prepayment Interest Shortfalls and shortfalls resulting from
application of the Relief Act (allocated to such REMIC Regular Interests as set
forth in Sections 1.2 and 4.5).
UNCERTIFICATED NOTIONAL AMOUNT: With respect to REMIC II Regular
Interest LTII-IO-A and (i) each Distribution Date from and including the
Distribution Date in March 2004 to and including the Distribution Date in August
2004, the aggregate Uncertificated Principal Balances of REMIC I Regular
Interest LTI-IO-1 through REMIC I Regular Interest LTI-IO-5, (ii) each
Distribution Date from and including the Distribution Date in September 2004 to
and including the Distribution Date in June 2005, the aggregate Uncertificated
Principal Balances of REMIC I Regular Interest LTI-IO-2 through REMIC I Regular
Interest LTI-IO-5, (iii) each Distribution Date from and including the
Distribution Date in July 2005 to and including the Distribution Date in
September 2005, the aggregate Uncertificated Principal Balances of REMIC I
Regular Interest LTI-IO-3 through REMIC I Regular Interest LTI-IO-5, (iv) each
Distribution Date from and including the Distribution Date in October 2005 to
and including the Distribution Date in January 2006, the aggregate
Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-4 and REMIC
I Regular Interest LTI-IO-5, (v) the Distribution Date in February 2006, the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-IO-5, and (vi)
each Distribution Date thereafter, $0.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC Regular
Interest (other than REMIC II Regular Interest LTII-IO-A and REMIC II Regular
Interest LTII-IO-B, the principal amount of such REMIC Regular Interest
outstanding as of any date of determination. As of the Closing Date, the
Uncertificated Principal Balance of each REMIC Regular Interest (other than
REMIC I Regular Interest LTII-IO) shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC
Regular Interest shall be reduced by all distributions of principal made on such
REMIC Regular Interest on such Distribution Date pursuant to Section 4.5 and, if
and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 4.2. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero.
-39-
REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B will
not have Uncertificated Principal Balances.
UNCERTIFICATED REMIC I PASS-THROUGH RATE: A per annum rate equal to the
average of the Net Mortgage Rates of the Mortgage Loans as of the first day of
the related Due Period, weighted on the basis of the Stated Principal Balances
as of the first day of the related Due Period.
UNCERTIFICATED REMIC II PASS-THROUGH RATE: With respect to REMIC II
Regular Interest LTII-AA, REMIC II Regular Interest LTII-A1, REMIC II Regular
Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest
LTII-A4, REMIC II Regular Interest LTII-A5, REMIC II Regular Interest LTII-A6,
REMIC II Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II
Regular Interest LTII-M3 and REMIC II Regular Interest LTII-ZZ, a per annum rate
(but not less than zero) equal to the weighted average of: (x) with respect to
REMIC I Regular Interest LTI-1 and REMIC I Regular Interest LTI-P, the
Uncertificated REMIC I Pass-Through Rate for such REMIC I Regular Interest for
each such Distribution Date, and (y) with respect to REMIC I Regular Interest
LTI-IO-1 through REMIC I Regular Interest LTI-IO-5 for each Distribution Date
listed below, the weighted average of the rates listed below for each such REMIC
I Regular Interest listed below, weighted on the basis of the Uncertificated
Principal Balance of each such REMIC I Regular Interest:
Distribution
Date Remic I Regular Interests Rate
---- ------------------------- ----
1 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC IAN Pass-Through Rate over (b) 4.50%
2 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
3 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
4 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
5 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
6 LTI-IO-1 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
7 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
8 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
9 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
10 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
11 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
12 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 4.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
13 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
14 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
15 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
16 LTI-IO-2 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 Uncertificated REMIC I Pass-Through Rate
17 LTI-IO-3 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 and LTI-IO-2 Uncertificated REMIC I Pass-Through Rate
18 LTI-IO-3 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 and LTI-IO-2 Uncertificated REMIC I Pass-Through Rate
19 LTI-IO-3 through LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1 and LTI-IO-2 Uncertificated REMIC I Pass-Through Rate
20 LTI-IO-4 and LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
-40-
LTI-IO-1, LTI-IO-2 and LTI-IO-3 Uncertificated REMIC I Pass-Through Rate
21 LTI-IO-4 and LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1, LTI-IO-2 and LTI-IO-3 Uncertificated REMIC I Pass-Through Rate
22 LTI-IO-4 and LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1, LTI-IO-2 and LTI-IO-3 Uncertificated REMIC I Pass-Through Rate
23 LTI-IO-4 and LTI-IO-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1, LTI-IO-2 and LTI-IO-3 Uncertificated REMIC I Pass-Through Rate
24 LT-IO-III-5 (a) Uncertificated REMIC I Pass-Through Rate over (b) 3.50%
LTI-IO-1, LTI-IO-2, LTI-IO-3,LTI-IO-4 and Uncertificated REMIC I Pass-Through Rate
25 and LTI-IO-1, LTI-IO-2, LTI-IO-3, Uncertificated REMIC I Pass-Through Rate
thereafter LTI-IO-4 and LTI-IO-5
With resepect to REMIC II Regular Interest LTII-IO-A, (i) for the first twelve
distribution dates, 1.00% and (ii) thereafter, 0.00%. With respect to REMIC II
Regular Interest LTII-IO-B, (i) for the first twenty-four distribution dates,
3.50% and (ii) thereafter, 0.00%.
UNCERTIFICATED REMIC REGULAR INTEREST: The REMIC I Regular Interests
and the REMIC II Regular Interests.
UNCOLLECTED INTEREST: With respect to any Distribution Date, the sum of
(i) the aggregate Prepayment Interest Shortfalls with respect to the Loans for
such Distribution Date and (ii) the aggregate Curtailment Shortfalls with
respect to the Loans for such Distribution Date.
UNCOMPENSATED INTEREST SHORTFALL: For any Distribution Date, the
excess, if any, of (i) the sum of (a) the related Uncollected Interest for such
Distribution Date, and (b) any shortfall in interest collections for the Loans
in the calendar month immediately preceding such Distribution Date resulting
from a Relief Act Interest Shortfall over (ii) the aggregate Compensating
Interest paid by the Servicers and the Master Servicer with respect to the Loans
for such Distribution Date, which excess shall be allocated to each Class of
Certificates, pro rata, according to the amount of interest accrued thereon in
reduction thereof.
UNDERWRITER: Deutsche Bank Securities Inc.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.9.
U.S. PERSON: A citizen or resident of the United States, a corporation
or partnership (including an entity treated as a corporation or partnership for
federal income tax purposes) created or organized in, or under the laws of, the
United States or any state thereof or the District of Columbia (except, in the
case of a partnership, to the extent provided in regulations) or an estate whose
income is subject to United States federal income tax regardless of its source,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more such U.S.
Persons have the authority to control all substantial decisions of the trust. To
the extent prescribed in regulations by the Secretary of the Treasury, which
have not yet been issued, a trust which was in existence on August 20, 1996
(other than a trust treated as owned by the grantor under subpart E of part 1 of
subchapter J of chapter 1 of the Code), and which was treated as a U.S. Person
on August 20, 1996 may elect to continue to be treated as a U.S. Person
notwithstanding the previous sentence.
▇▇▇▇▇ FARGO: ▇▇▇▇▇ Fargo Bank, N.A., or any successor thereto.
-41-
Section 1.2 ALLOCATION OF CERTAIN INTEREST SHORTFALL.
For purposes of calculating the Interest Distribution Amount for the
Class A Certificates, the Mezzanine Certificates, the Class A-IO Certificates
and the Class CE Certificates for any Distribution Date, (1) the aggregate
amount of any Prepayment Interest Shortfalls and Curtailment Interest Shortfalls
to the extent not covered by payment by the Servicers pursuant to the related
Servicing Agreement or the Master Servicer pursuant to Section 3.20 shall first
reduce the Net Monthly Excess Cashflow for such Distribution Date, second,
reduce the Interest Distribution Amount payable to the Class CE Certificates,
third, reduce the Interest Distribution Amount payable to the Class M-3
Certificates, fourth, reduce the Interest Distribution Amount payable to the
Class M-2 Certificates, fifth, reduce the Interest Distribution Amount payable
to the Class M-1 Certificates and sixth, reduce the Interest Distribution Amount
payable to the Class A Certificates, in that order, in each case on a PRO RATA
basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount, as applicable of each such Certificate and (2) the
aggregate amount of any Realized Losses allocated to the Mezzanine Certificates
and Net WAC Rate Carryover Amount paid to the Class A Certificates, other than
the Class A-IO Certificates, and the Mezzanine Certificates incurred for any
Distribution Date shall be allocated to the Class CE Certificates on a PRO RATA
basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the Certificate Principal Balance
thereof on any Distribution Date, any Relief Act Interest Shortfalls shall be
allocated to the Certificates on a pro rata basis based on their respective
Interest Distribution Amount before such reduction.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Unpaid Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to REMIC I
Regular Interest LTI-1 and REMIC I Regular Interest LTI-P, to the extent of one
month's interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the Uncertificated Principal Balance of each such REMIC I
Regular Interest; and then, to REMIC I Regular Interest LTI-IO-1, REMIC I
Regular Interest LTI-IO-2, REMIC I Regular Interest LTI-IO-3, REMIC I Regular
Interest LTI-IO-4 and REMIC I Regular Interest LTI-IO-5, in each case to the
extent of one month's interest at the then applicable respective Uncertificated
REMIC I Pass-Through Rate on the respective Uncertificated Principal Balance of
each such REMIC I Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Unpaid Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to
Uncertificated Accrued Interest payable to REMIC II Regular Interest LTII-AA and
REMIC II Regular Interest LTII-ZZ up to an aggregate amount equal to the REMIC
II Interest Loss Allocation Amount, 98% and 2%, respectively, and thereafter
among REMIC II Regular Interest LTII-A1, REMIC II Regular Interest LTII-A2,
REMIC II Regular Interest LTII-A3, REMIC II Regular Interest LTII-A4, REMIC II
Regular Interest LTII-A5, REMIC II Regular Interest LTII-A6, REMIC II Regular
Interest LTII-M1, REMIC II Regular Interest LTII-
-42-
M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular Interest LTII-ZZ, pro
rata based on, and to the extent of, one month's interest at the then applicable
respective Uncertificated REMIC II Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC II Regular Interest.
-43-
ARTICLE II
CONVEYANCE OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 CONVEYANCE OF TRUST FUND. The Depositor, concurrently with
the execution and delivery hereof, does hereby transfer, assign, set over and
otherwise convey to the Trustee, on behalf of the Trust, without recourse, for
the benefit of the Certificateholders all the right, title and interest of the
Depositor, including any security interest therein for the benefit of the
Depositor, in and to the Loans identified on the Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement and the Assignment
Agreements (including, without limitation the right to enforce the obligations
of the other parties thereto thereunder), and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or the applicable Servicer on or with respect to the
Loans (other than payments of principal and interest due on such Loans on or
before the Cut-Off Date). The Depositor herewith delivers to the Trustee
executed copies of the Mortgage Loan Purchase Agreement, the Servicing
Agreements and the Assignment Agreements.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement the documents with respect to each Loan as described under Section 2
of the Custodial Agreement (the " Loan Documents"). In connection with such
delivery and as further described in the Custodial Agreement, the Custodian will
be required to review such Loan Documents and deliver to the Trustee, the
Depositor, the Master Servicer and the Seller certifications (in the forms
attached to the Custodial Agreement) with respect to such review with exceptions
noted thereon. In addition, the Depositor under the Custodial Agreement will
have to cure certain defects with respect to the Loan Documents for the related
Loans after the delivery thereof by the Depositor to the Custodian as more
particularly set forth therein.
Section 2.2 ACCEPTANCE BY TRUSTEE.
The Trustee acknowledges receipt, subject to the provisions of Section
2.1 hereof and Section 2 of the Custodial Agreement, of the Loan Documents and
all other assets included in the definition of "REMIC I" under clauses (i),
(iii), (iv) and (v) (to the extent of amounts deposited into the Distribution
Account) and declares that it holds (or the Custodian on its behalf holds) and
will hold such documents and the other documents delivered to it constituting a
Loan Document, and that it holds (or the Custodian on its behalf holds) or will
hold all such assets and such other assets included in the definition of "REMIC
I" in trust for the exclusive use and benefit of all present and future
Certificateholders.
Section 2.3 REPURCHASE OR SUBSTITUTION OF LOANS.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Loan that materially and
adversely affects the value of such Loan or the interest therein of the
Certificateholders, the Trustee shall promptly notify the Seller of such defect,
missing document or breach and request that the Seller deliver such missing
document, cure such defect
-44-
or breach within 60 days from the date the Seller was notified of such missing
document, defect or breach, and if the Seller does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Trustee shall enforce the obligations of the Seller under the
Mortgage Loan Purchase Agreement to repurchase such Loan from REMIC I at the
Purchase Price within 90 days after the date on which the Seller was notified of
such missing document, defect or breach, if and to the extent that the Seller is
obligated to do so under the Mortgage Loan Purchase Agreement. The Purchase
Price for the repurchased Loan shall be deposited in the Distribution Account
and the Trustee, upon receipt of written certification from the Securities
Administrator of such deposit and receipt by the Custodian of a properly
completed request for release for such Loan in the form of EXHIBIT 3 to the
Custodial Agreement, shall release or cause the Custodian to release to the
Seller the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Seller shall furnish to it and as shall be
necessary to vest in the Seller any Loan released pursuant hereto, and the
Trustee shall not have any further responsibility with regard to such Mortgage
File. In lieu of repurchasing any such Loan as provided above, if so provided in
the Mortgage Loan Purchase Agreement, the Seller may cause such Loan to be
removed from REMIC I (in which case it shall become a Deleted Loan) and
substitute one or more Substitute Loans in the manner and subject to the
limitations set forth in Section 2.3(b). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any
Loan as to which a document is missing, a material defect in a constituent
document exists or as to which such a breach has occurred and is continuing
shall constitute the sole remedy respecting such omission, defect or breach
available to the Trustee and the Certificateholders.
In addition, should the Master Servicer become aware of or in
the event of its receipt of notice by a Responsible Officer of the Master
Servicer of the breach of the representation or covenant of the Seller set forth
in Section 5(x) of the Mortgage Loan Purchase Agreement which materially and
adversely affects the interests of the Holders of the Class P Certificates in
any Prepayment Charge, the Master Servicer shall promptly notify the Seller and
the Trustee of such breach. The Trustee shall enforce the obligations of the
Seller under the Mortgage Loan Purchase Agreement to remedy such breach to the
extent and in the manner set forth in the Mortgage Loan Purchase Agreement.
(b) Any substitution of Substitute Loans for Deleted Loans
made pursuant to Section 2.3(a) must be effected prior to the date which is two
years after the Startup Day for the REMIC I.
As to any Deleted Loan for which the Seller, substitutes a
Substitute Loan or Loans, such substitution shall be effected by the Seller
delivering to the Trustee or the Custodian on behalf of the Trustee, for such
Substitute Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2 of the Custodial Agreement,
as applicable, together with an Officers' Certificate providing that each such
Substitute Loan satisfies the definition thereof and specifying the Substitution
Shortfall Amount (as described below), if any, in connection with such
substitution. The Custodian on behalf of the Trustee shall acknowledge receipt
of such Substitute Loan or Loans and, within ten Business Days thereafter,
review such documents and deliver to the Depositor, the Trustee and the Master
Servicer, with respect to such
-45-
Substitute Loan or Loans, an initial certification pursuant to the Custodial
Agreement, with any applicable exceptions noted thereon. Within one year of the
date of substitution, the Custodian on behalf of the Trustee shall deliver to
the Depositor, the Trustee and the Master Servicer a final certification
pursuant to the Custodial Agreement with respect to such Substitute Loan or
Loans, with any applicable exceptions noted thereon. Monthly Payments due with
respect to Substitute Loans in the month of substitution are not part of REMIC I
and shall be retained by the Seller. For the month of substitution,
distributions to Certificateholders shall reflect the Monthly Payment due on
such Deleted Loan on or before the Due Date in the month of substitution, and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Loan. The Depositor shall give or cause to
be given written notice to the Certificateholders that such substitution has
taken place, shall amend the Loan Schedule to reflect the removal of such
Deleted Loan from the terms of this Agreement and the substitution of the
Substitute Loan or Loans and shall deliver a copy of such amended Loan Schedule
to the Trustee and the Master Servicer. Upon such substitution, such Substitute
Loan or Loans shall constitute part of the Trust Fund and shall be subject in
all respects to the terms of this Agreement and the Mortgage Loan Purchase
Agreement including all applicable representations and warranties thereof
included herein or in the Mortgage Loan Purchase Agreement.
For any month in which the Seller substitutes one or more
Substitute Loans for one or more Deleted Loans, the Master Servicer shall
determine the amount (the "Substitution Shortfall Amount"), if any, by which the
aggregate Purchase Price of all such Deleted Loans exceeds the aggregate of, as
to each such Substitute Loan, the Scheduled Principal Balance thereof as of the
Due Date in the month of substitution, together with one month's interest on
such Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding Advances and Servicing Advances (including Nonrecoverable Advances)
related thereto. On the date of such substitution, the Seller shall deliver or
cause to be delivered to the Securities Administrator for deposit in the
Distribution Account an amount equal to the Substitution Shortfall Amount, if
any, and the Trustee or the Custodian on behalf of the Trustee, upon receipt of
the related Substitute Loan or Loans and certification by the Securities
Administrator of such deposit and receipt by the Custodian of a properly
completed request for release for such Loan in the form of EXHIBIT 3 to the
Custodial Agreement, shall release to the Seller the related Mortgage File or
Files and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any REMIC,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any REMIC to fail
to qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Seller, the Master
Servicer or the Trustee that any Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall within two Business Days give written notice thereof to the other
parties. In connection therewith, the Seller shall repurchase or substitute one
or more Substitute Loans for the affected Loan within 90 days of the earlier of
-46-
discovery or receipt of such notice with respect to such affected Loan. Such
repurchase or substitution shall be made by (i) the Seller, if the affected
Loan's status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Seller under the Mortgage Loan
Purchase Agreement or (ii) the Depositor, if the affected Loan's status as a
non-qualified mortgage does not result from a breach of representation or
warranty. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.3(a). The Trustee shall reconvey to the Seller or the
Depositor the Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Loan repurchased for breach of a
representation or warranty.
(d) Within 90 days of the earlier of discovery by the Master
Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.5 which materially and adversely affects the interests of the
Certificateholders in any Loan or Prepayment Charge, the Master Servicer shall
cure such breach in all material respects.
Section 2.4 AUTHENTICATION AND DELIVERY OF CERTIFICATES; DESIGNATION OF
CERTIFICATES AS REMIC REGULAR AND RESIDUAL INTERESTS.
(a) The Trustee acknowledges the transfer to the extent
provided herein and assignment to it of the Trust Fund and, concurrently with
such transfer and assignment, has caused the Securities Administrator to execute
and authenticate and has delivered to or upon the order of the Depositor, in
exchange for the Trust Fund, Certificates evidencing the entire ownership of the
Trust Fund.
(b) This Agreement shall be construed so as to carry out the
intention of the parties that each of REMIC I, REMIC II, and REMIC III be
treated as a REMIC at all times prior to the date on which the Trust Fund is
terminated. The "regular interests" (within the meaning of Section 860G(a)(1) of
the Code) in REMIC III shall consist of the Class A Certificates, the Mezzanine
Certificates, the Class CE Certificates and the Class P Certificate. The
"residual interest" (within the meaning of Section 860G(a)(2) of the Code) in
REMIC III shall consist of the Class R-3 Interest. The "regular interests"
(within the meaning of Section 860G(a)(1) of the Code) of REMIC II shall consist
of the REMIC II Regular Interest. The "residual interest" (within the meaning of
Section 860(G)(a)(2) of the Code) of REMIC II shall consist of the Class R-2
Interest. The "regular interests" (within the meaning of Section 860G(a)(1) of
the Code) of REMIC I shall consist the REMIC I Regular Interests. The "residual
interest" (within the meaning of Section 860(G)(a)(2) of the Code) of REMIC I
shall consist of the Class R-1 Interest.
Section 2.5 REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER.
The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificateholders and the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the
United States of America and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer;
-47-
(ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Master Servicer has duly authorized
the execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Depositor and the Trustee,
constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the
Master Servicer, the consummation by the Master Servicer of any other
of the transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business
of the Master Servicer and will not (A) result in a breach of any term
or provision of charter and by-laws of the Master Servicer or (B)
conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material agreement or
instrument to which the Master Servicer is a party or by which it may
be bound, or any statute, order or regulation applicable to the Master
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and the
Master Servicer is not a party to, bound by, or in breach or violation
of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it, which materially and adversely affects or, to the Master
Servicer's knowledge, would in the future materially and adversely
affect, (x) the ability of the Master Servicer to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of the Master Servicer taken
as a whole;
(iv) The Master Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant made by it and contained in this Agreement;
(v) No litigation is pending against the Master Servicer that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master Servicer
to perform any of its other obligations hereunder in accordance with
the terms hereof,
(vi) There are no actions or proceedings against, or
investigations known to it of, the Master Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit
or materially and adversely affect the performance by the Master
Servicer of its obligations under, or validity or enforceability of,
this Agreement; and
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance
-48-
by the Master Servicer of, or compliance by the Master Servicer with,
this Agreement or the consummation by it of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.5 shall inure to the benefit of the
Trustee, the Depositor and the Certificateholders.
Section 2.6 ESTABLISHMENT OF THE TRUST.
The Depositor does hereby establish, pursuant to the further provisions
of this Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "Deutsche Mortgage Securities, Inc., Mortgage Loan
Trust, Series 2004-2" and does hereby appoint HSBC Bank USA, as Trustee in
accordance with the provisions of this Agreement.
-49-
ARTICLE III
ADMINISTRATION AND SERVICING OF THE LOANS; ACCOUNTS
Section 3.1 MASTER SERVICER. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicers to service and administer
their respective Loans in accordance with the terms of the applicable Servicing
Agreement and shall have full power and authority to do any and all things which
it may deem necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with each Servicer as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by each Servicer and shall cause each
Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by such Servicer under the applicable Servicing Agreement.
The Master Servicer shall independently and separately monitor each Servicer's
servicing activities with respect to each related Loan, reconcile the results of
such monitoring with such information provided in the previous sentence on a
monthly basis and coordinate corrective adjustments to the Servicers' and Master
Servicer's records, and based on such reconciled and corrected information,
prepare the statements specified in Section 4.3 and any other information and
statements required to be provided by the Master Servicer hereunder. The Master
Servicer shall reconcile the results of its Loan monitoring with the actual
remittances of the Servicers to the Distribution Account pursuant to the
applicable Servicing Agreements.
Notwithstanding anything in this Agreement or any Servicing Agreement
to the contrary, the Master Servicer shall not have any duty or obligation to
enforce any Credit Risk Management Agreement that a Servicer is a party to (a
"Servicer Credit Risk Management Agreement") or to supervise, monitor or oversee
the activities of the Credit Risk Manager under any such Servicer Credit Risk
Management Agreement with respect to any action taken or not taken by the
applicable Servicer pursuant to a recommendation of the Credit Risk Manager.
The Trustee shall furnish the Servicers and the Master Servicer with
any limited powers of attorney and other documents in form as provided to it
necessary or appropriate to enable the Servicers and the Master Servicer to
service or master service and administer the related Loans and REO Property. The
Trustee shall have no responsibility for any action of the Master Servicer or
any Servicer pursuant to any such limited power of attorney and shall be
indemnified by the Master Servicer or such Servicer for any cost, liability or
expense arising from the misuse thereof by the Master Servicer or such Servicer.
The Trustee, the Custodian and the Securities Administrator shall
provide access to the records and documentation in possession of the Trustee,
the Custodian or the Securities Administrator regarding the related Loans and
REO Property and the servicing thereof to the Certificateholders, the FDIC, and
the supervisory agents and examiners of the FDIC, such access being afforded
only upon reasonable prior written request and during normal business hours at
the office of the Trustee, the Custodian or the Securities Administrator;
provided, however, that, unless otherwise required by law, none of the Trustee,
the Custodian or the Securities Administrator shall be required to provide
access to such records and documentation if the
-50-
provision thereof would violate the legal right to privacy of any Mortgagor. The
Trustee, the Custodian and the Securities Administrator shall allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers the Trustee's, the Custodian's or the Securities Administrator's actual
costs.
The Trustee shall execute and deliver to the related Servicer or the
Master Servicer upon request any court pleadings, requests for trustee's sale or
other documents necessary or desirable and, in each case, provided to the
Trustee by such Servicer or Master Servicer to (i) the foreclosure or trustee's
sale with respect to a Mortgaged Property; (ii) any legal action brought to
obtain judgment against any Mortgagor on the Mortgage Note or any other Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or any other
Loan Document or otherwise available at law or equity.
Section 3.2 REMIC-RELATED COVENANTS. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall treat such REMIC as a
REMIC, and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the related Servicer or the Master Servicer to assure
such continuing treatment. In particular, the Trustee shall not (a) sell or
permit the sale of all or any portion of the Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Loans pursuant to this Agreement or the Trustee has received an Opinion of
Counsel stating that such sale will not result in an Adverse REMIC Event as
defined in Section 10.1(f) hereof prepared at the expense of the Trust Fund; and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreements, the Assignment Agreements or Section 2.3 of this Agreement,
as applicable, accept any contribution to any REMIC after the Startup Day
without receipt of an Opinion of Counsel stating that such contribution will not
result in an Adverse REMIC Event as defined in Section 10.1(f) hereof.
Section 3.3 MONITORING OF SERVICERS.
(a) The Master Servicer shall be responsible for monitoring
the compliance by each Servicer with its duties under the related Servicing
Agreement. In the review of each Servicer's activities, the Master Servicer may
rely upon an officer's certificate of any Servicer with regard to such
Servicer's compliance with the terms of its Servicing Agreement. In the event
that the Master Servicer, in its judgment, determines that a Servicer should be
terminated in accordance with its Servicing Agreement, or that a notice should
be sent pursuant to such Servicing Agreement with respect to the occurrence of
an event that, unless cured, would constitute grounds for such termination, the
Master Servicer shall notify the Seller and the Trustee thereof and the Master
Servicer shall issue such notice or take such other action as it deems
appropriate.
(b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of such
Servicer thereunder and act as servicer of the related Loans or to cause the
Trustee to enter in to a new Servicing Agreement with a successor Servicer
selected by the
-51-
Master Servicer; provided, however, it is understood and acknowledged by the
parties hereto that there will be a period of transition (not to exceed 90 days)
before the actual servicing functions can be fully transferred to such successor
Servicer. Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Servicing 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 Master Servicer, in its good faith business judgment,
would require were it the owner of the related Loans. The Master Servicer shall
pay the costs of such enforcement at its own expense, provided that the Master
Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received indemnity reasonably
acceptable to it for its costs and expenses in pursuing such action.
(c) To the extent that the costs and expenses of the Master
Servicer related to any termination of a Servicer, appointment of a successor
Servicer or the transfer and assumption of servicing by the Master Servicer with
respect to any Servicing Agreement (including, without limitation, (i) all legal
costs and expenses and all due diligence costs and expenses associated with an
evaluation of the potential termination of the Servicer as a result of an event
of default by such Servicer and (ii) all costs and expenses associated with the
complete transfer of servicing, including all servicing files and all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
servicer to service the Loans in accordance with the related Servicing
Agreement) are not fully and timely reimbursed by the terminated Servicer, the
Master Servicer shall be entitled to reimbursement of such costs and expenses
from the Distribution Account.
(d) The Master Servicer shall require each Servicer to comply
with the remittance requirements and other obligations set forth in the related
Servicing Agreement.
(e) If the Master Servicer acts as Servicer, it shall not
assume liability for the representations and warranties of the Servicer, if any,
that it replaces.
Section 3.4 FIDELITY BOND. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees. Any such errors and omissions policy and fidelity bond may not be
cancelable without thirty (30) days' prior written notice to the Trustee.
Section 3.5 POWER TO ACT; PROCEDURES. The Master Servicer shall master
service the Loans and shall have full power and authority, subject to the REMIC
Provisions and the provisions of Article X hereof, to do any and all things that
it may deem necessary or desirable in connection with the master servicing and
administration of the Loans, including but not limited to the power and
authority (i) to execute and deliver, on behalf of the Certificateholders and
the Trustee, customary consents or waivers and other instruments and documents,
(ii) to consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related
-52-
Mortgages, (iii) to collect any Insurance Proceeds and Liquidation Proceeds, and
(iv) to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Loan, in each case, in accordance with the
provisions of this Agreement and the related Servicing Agreement, as applicable;
provided, however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.3, shall not permit any Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC or result in the imposition of a tax upon the Trust Fund
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code) unless the Master Servicer, the Securities
Administrator has received an Opinion of Counsel (but not at the expense of the
Master Servicer, the Securities Administrator) to the effect that the
contemplated action will not cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC or result in the imposition of a tax upon REMIC I, REMIC II
or REMIC III, as the case may be. The Trustee shall furnish the Master Servicer,
upon written request from a Servicing Officer, with any powers of attorney
empowering the Master Servicer or any Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal, prosecute or defend in any court action relating to the Loans or the
Mortgaged Property, in accordance with the applicable Servicing Agreement and
this Agreement, and the Trustee shall execute and deliver such other documents,
as the Master Servicer or applicable Servicer may request, to enable the Master
Servicer to master service and administer the Loans and carry out its duties
hereunder, in each case in accordance with Accepted Master Servicing Practices
(and the Trustee shall have no liability for the misuse of any such powers of
attorney by the Master Servicer or any Servicer and shall be indemnified by the
Master Servicer or such Servicer for any costs, liabilities or expenses incurred
by the Trustee in connection with such misuse). If the Master Servicer or the
Trustee has been advised that it is likely that the laws of the state in which
action is to be taken prohibit such action if taken in the name of the Trustee
or that the Trustee would be adversely affected under the "doing business" or
tax laws of such state if such action is taken in its name, the Master Servicer
shall join with the Trustee in the appointment of a co-trustee pursuant to
Section 8.10 hereof. In the performance of its duties hereunder, the Master
Servicer shall be an independent contractor and shall not, except in those
instances where it is taking action authorized pursuant to this Agreement to be
taken by it in the name of the Trustee, be deemed to be the agent of the
Trustee.
Section 3.6 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in the applicable Servicing Agreement and to the extent Loans contain
enforceable due-on-sale clauses, the Master Servicer shall cause the Servicers
to enforce such clauses in accordance with the applicable Servicing Agreement.
If applicable law prohibits the enforcement of a due-on-sale clause or such
clause is otherwise not enforced in accordance with the applicable Servicing
Agreement, and, as a consequence, a Loan is assumed, the original Mortgagor may
be released from liability in accordance with the applicable Servicing
Agreement.
-53-
Section 3.7 RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Loan, or
the receipt by any Servicer of a notification that payment in full has been
escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the applicable Servicer will
(or if the Servicer does not, the Master Servicer may), if required under the
applicable Servicing Agreement, promptly furnish to the Custodian, on behalf of
the Trustee, two copies of a request for release substantially in the form
attached to the Custodial Agreement, and signed by a Servicing Officer or in a
mutually agreeable electronic format which will, in lieu of a signature on its
face, originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Protected Account maintained by
the applicable Servicer pursuant to its Servicing Agreement have been or will be
so deposited) and shall request that the Custodian, on behalf of the Trustee,
deliver to the applicable Servicer the related Mortgage File. Upon receipt of
such certification and request, the Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage File to the applicable Servicer and the
Trustee and Custodian shall have no further responsibility with regard to such
Mortgage File. Upon any such payment in full, each Servicer is authorized to
give, as agent for the Trustee, as the mortgagee under the Mortgage that secured
the Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the Mortgaged Property subject to the Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of such
payment, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Distribution Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Loan and in accordance with the applicable Servicing
Agreement, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by a Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of a Servicer or the Master Servicer, and delivery to the Custodian, on
behalf of the Trustee, of two copies of a request for release signed by a
Servicing Officer substantially in the form attached to the Custodial Agreement
(or in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from a Servicing Officer), release the related Mortgage
File held in its possession or control to the Servicer or the Master Servicer,
as applicable. Such request for release shall obligate the Servicer or the
Master Servicer to return the Mortgage File to the Custodian on behalf of the
Trustee, when the need therefor by the Servicer or the Master Servicer no longer
exists unless the Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
Mortgage File shall be released by the Custodian, on behalf of the Trustee, to
the Servicer or the Master Servicer.
Section 3.8 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR TRUSTEE.
(a) The Master Servicer shall transmit and each Servicer (to
the extent required by the related Servicing Agreement) shall transmit to the
Trustee or Custodian such documents and instruments coming into the possession
of the Master Servicer or such Servicer
-54-
from time to time as are required by the terms hereof, or in the case of the
Servicers, the applicable Servicing Agreement, to be delivered to the Trustee or
Custodian. Any funds received by the Master Servicer or by a Servicer in respect
of any Loan or which otherwise are collected by the Master Servicer or by a
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any Loan
shall be held for the benefit of the Trustee and the Certificateholders subject
to the Master Servicer's right to retain or withdraw from the Distribution
Account the Master Servicing Compensation and other amounts provided in this
Agreement, and to the right of each Servicer to retain its Servicing Fee and
other amounts as provided in the applicable Servicing Agreement. The Master
Servicer shall, and (to the extent provided in the applicable Servicing
Agreement) shall cause each Servicer to, provide access to information and
documentation regarding the Loans to the Trustee, its agents and accountants at
any time upon reasonable request and during normal business hours, and to
Certificateholders that are savings and loan associations, banks or insurance
companies, the OTS, the FDIC and the supervisory agents and examiners of such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
OTS or other regulatory authority, such access to be afforded without charge but
only upon reasonable request in writing and during normal business hours at the
offices of the Master Servicer designated by it. In fulfilling such a request
the Master Servicer shall not be responsible for determining the sufficiency of
such information.
(b) All Mortgage Files and funds collected or held by, or
under the control of, the Master Servicer, in respect of any Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and each Servicer shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
such Servicer under this Agreement or the applicable Servicing Agreement.
Section 3.9 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.
(a) For each Loan, the Master Servicer shall enforce any
obligation of the Servicers under the related Servicing Agreements to maintain
or cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreements. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
(b) Pursuant to Section 3.23, any amounts collected by the
Master Servicer, or by any Servicer, under any insurance policies (other than
amounts to be applied to the restoration or repair of the property subject to
the related Mortgage or released to the Mortgagor in accordance with the
applicable Servicing Agreement) shall be deposited into the Distribution
Account, subject to withdrawal pursuant to Section 3.24. Any cost incurred by
the Master Servicer or any Servicer in maintaining any such insurance if the
Mortgagor defaults in its
-55-
obligation to do so shall be added to the amount owing under the Loan where the
terms of the Loan so permit; provided, however, that the addition of any such
cost shall not be taken into account for purposes of calculating the
distributions to be made to Certificateholders and shall be recoverable by the
Master Servicer or such Servicer pursuant to Section 3.24.
Section 3.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in the applicable Servicing
Agreement) cause the related Servicer to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under any insurance policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Master Servicer (or disbursed
to a Servicer and remitted to the Master Servicer) in respect of such policies,
bonds or contracts shall be promptly deposited in the Distribution Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Loan to the insurer under any applicable
insurance policy need not be so deposited (or remitted).
Section 3.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take, or permit any Servicer
(to the extent such action is prohibited under the applicable Servicing
Agreement) to take, any action that would result in noncoverage under any
primary mortgage insurance policy of any loss which, but for the actions of such
Master Servicer or Servicer, would have been covered thereunder. The Master
Servicer shall use its best reasonable efforts to cause each Servicer (to the
extent required under the related Servicing Agreement) to keep in force and
effect (to the extent that the Loan requires the Mortgagor to maintain such
insurance), primary mortgage insurance applicable to each Loan in accordance
with the provisions of this Agreement and the related Servicing Agreement, as
applicable. The Master Servicer shall not, and shall not permit any Servicer (to
the extent required under the related Servicing Agreement) to, cancel or refuse
to renew any primary mortgage insurance policy that is in effect at the date of
the initial issuance of the Mortgage Note and is required to be kept in force
hereunder except in accordance with the provisions of this Agreement and the
related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to cause each Servicer (to the
extent required under the related Servicing Agreement) to present, on behalf of
the Trustee and the Certificateholders, claims to the insurer under any primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Loans. Pursuant to Section 3.22 and 3.23, any
amounts collected by the Master Servicer or any Servicer under any primary
mortgage insurance policies shall be deposited by the related Servicer in its
Protected Account or by the Master Servicer in the Distribution Account, subject
to withdrawal pursuant to Sections 3.22 or 3.24, as applicable.
Section 3.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES
AND DOCUMENTS.
The Trustee or the applicable Custodian, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate
-56-
of insurance if applicable, and any certificates of renewal as to the foregoing
as may be issued from time to time as contemplated by this Agreement. Until all
amounts distributable in respect of the Certificates have been distributed in
full and the Master Servicer otherwise has fulfilled its obligations under this
Agreement, the Trustee or the Custodian shall also retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
of this Agreement and the Custodial Agreement. The Master Servicer shall
promptly deliver or cause to be delivered to the Trustee or the Custodian, upon
the execution or receipt thereof the originals of any primary mortgage insurance
policies, any certificates of renewal, and such other documents or instruments
that constitute Loan Documents that come into the possession of the Master
Servicer from time to time.
Section 3.13 REALIZATION UPON DEFAULTED LOANS. The Master Servicer
shall cause each Servicer (to the extent required under the related Servicing
Agreement) to foreclose upon, repossess or otherwise comparably convert the
ownership of Mortgaged Properties securing such of the Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, all in accordance with the applicable
Servicing Agreement.
Section 3.14 COMPENSATION FOR THE MASTER SERVICER.
(a) In addition to the Master Servicer's right to receive its
Master Servicing Fee, all income and gain realized from any investment of funds
in the Distribution Account shall be for the benefit of the Master Servicer as
compensation. Servicing compensation in the form of assumption fees, if any,
late payment charges, as collected, if any, or otherwise (but not including any
Prepayment Charges) shall be retained by the applicable Servicer and shall not
be deposited in the Protected Account. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder and
shall not be entitled to reimbursement therefor except as provided in this
Agreement.
(b) The amount of the aggregate compensation payable as set
forth in Section 3.14(a) (the "Master Servicing Compensation") to the Master
Servicer in respect of any Distribution Date shall be reduced in accordance with
Section 3.20.
Section 3.15 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
applicable Servicing Agreement, cause the applicable Servicer to sell any REO
Property as expeditiously as possible and in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable. Further, the
Master Servicer shall, to the extent provided in the related Servicing
Agreement, cause the applicable Servicer to sell any REO Property prior to three
years after the end of the calendar year of its acquisition by REMIC I unless
(i) the Trustee, the Securities Administrator shall have been supplied with an
Opinion of Counsel to the effect that the holding by the Trust Fund of such REO
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of any REMIC hereunder as defined in
section 860F of the Code or cause any REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the
-57-
Trust Fund may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel) or (ii) the applicable Servicer
shall have applied for, prior to the expiration of such three-year period, an
extension of such three-year period in the manner contemplated by Section
856(e)(3) of the Code, in which case the three-year period shall be extended by
the applicable extension period. The Master Servicer shall cause the applicable
Servicer (to the extent provided in the related Servicing Agreement) to protect
and conserve, such REO Property in the manner and to the extent required by the
applicable Servicing Agreement, in accordance with the REMIC Provisions and in a
manner that does not result in a tax on "net income from foreclosure property"
or cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by the
related Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the Protected Account.
(c) The Master Servicer and the applicable Servicer, upon the
final disposition of any REO Property, shall be entitled to reimbursement for
any related unreimbursed Advances and other unreimbursed advances as well as any
unpaid Servicing Fees from Liquidation Proceeds received in connection with the
final disposition of such REO Property; provided, that any such unreimbursed
Advances as well as any unpaid Servicing Fees may be reimbursed or paid, as the
case may be, prior to final disposition, out of any net rental income or other
net amounts derived from such REO Property.
(d) To the extent provided in the related Servicing Agreement,
the Liquidation Proceeds from the final disposition of the REO Property, net of
any payment to the Master Servicer and the applicable Servicer as provided above
shall be deposited in the Protected Account on or prior to the Determination
Date in the month following receipt thereof and be remitted by wire transfer in
immediately available funds to the Master Servicer for deposit into the
Distribution Account on the next succeeding Remittance Date.
Section 3.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 15 of each year, commencing on March 15,
2005, an Officer's Certificate signed by a Servicing Officer, certifying that
with respect to the period ending December 31 of the prior year: (i) such
Servicing Officer has reviewed the activities of such Master Servicer during the
preceding calendar year or portion thereof and its performance under this
Agreement, (ii) to the best of such Servicing Officer's knowledge, based on such
review, such Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of any
such duties, responsibilities or obligations, specifying each such default known
to such Servicing Officer and the nature and status thereof, (iii) nothing has
come to the attention of such Servicing Officer to lead such Servicing Officer
to believe that any Servicer has failed to perform any of its duties,
responsibilities and obligations under its Servicing Agreement in all material
respects throughout such year, or, if there has been a material default in the
performance or fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof.
-58-
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
Section 3.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Loans, then the Master Servicer at its expense shall cause a nationally
recognized firm of independent certified public accountants to furnish a
statement to the Trustee, the Rating Agencies and the Seller on or before March
15 of each year, commencing on March 15, 2005 to the effect that, with respect
to the most recently ended fiscal year, such firm has examined certain records
and documents relating to the Master Servicer's performance of its servicing
obligations under this Agreement and pooling and servicing and trust agreements
in material respects similar to this Agreement and to each other and that, on
the basis of such examination conducted substantially in compliance with the
audit program for mortgages serviced for ▇▇▇▇▇▇▇ Mac or the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
Master Servicer's activities have been conducted in compliance with this
Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by ▇▇▇▇▇▇▇ Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies (unless
(i) the Master Servicer shall have failed to provide the Trustee with such
statement or (ii) the Trustee shall be unaware of the Master Servicer's failure
to provide such statement). If such report discloses exceptions that are
material, the Master Servicer shall advise the Trustee whether such exceptions
have been or are susceptible of cure, and shall take prompt action to do so.
Section 3.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
(a) Within 15 days after each Distribution Date, the Master
Servicer shall, in accordance with industry standards, file with the Commission
via the Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"), a Form 8-K
with a copy of the statement to be furnished by the Securities Administrator to
the Certificateholders for such Distribution Date as an exhibit thereto. Prior
to January 30, 2005, the Master Servicer shall, in accordance with industry
standards, file a Form 15 Suspension Notice with respect to the Trust Fund, if
applicable. Prior to March 30, 2005 and annually thereafter (if required), the
Master Servicer shall file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust Fund. Such Form 10-K shall include, to the
extent available, as exhibits (i) each applicable Servicer's annual statement of
compliance described under the related Servicing Agreement, (ii) each applicable
Servicer's accountant's report described under the related Servicing Agreement,
(iii) the Master Servicer's accountant's report described in Section 3.17, if
applicable, in each case to the extent timely delivered, if applicable, to the
Master Servicer, and (iv) a written certification signed by an officer of the
Master Servicer that complies with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 as in effect
on the date of this Agreement and the February 3, 2003, Statement by the Staff
of the Division of
-59-
Corporation Finance of the Commission Regarding Compliance by Asset-Backed
Issuers with Exchange Act Rules 13a-14 and 15d-14 as in effect as of the date of
this Agreement. The Depositor hereby grants to the Master Servicer a limited
power of attorney to execute and file each Form 8-K and Form 10-K on behalf of
the Depositor. Such power of attorney shall continue until either the earlier of
(i) receipt by the Master Servicer from the Depositor of written termination of
such power of attorney and (ii) the termination of the Trust Fund. The Depositor
and the Trustee each agree to promptly furnish to the Master Servicer, from time
to time upon request, such further information, reports and financial statements
within its control related to this Agreement and the Loans as the Master
Servicer reasonably deems appropriate to prepare and file all necessary reports
with the Commission. The Master Servicer shall cooperate with the Depositor in
connection with any additional filings with respect to the Trust Fund as the
Depositor deems necessary under the Exchange Act. Copies of all reports filed by
the Master Servicer under the Exchange Act shall be sent to the Depositor.
(b) The Master Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective officers, directors and Affiliates
from and against any losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon a breach of the Master Servicer's
obligations under this Section 3.18 or the Master Servicer's negligence, bad
faith or willful misconduct in connection therewith. Fees and expenses incurred
by the Master Servicer in connection with this Section 3.18 shall not be
reimbursable from the Trust Fund.
Section 3.19 UCC. The Depositor shall file any financing statements or
amendments thereto required by any change in the Uniform Commercial Code. The
Depositor agrees to file continuation statements for any such Uniform Commercial
Code financing statements which the Seller or the Depositor filed in connection
with the Trust Fund.
Section 3.20 OBLIGATION OF THE MASTER SERVICER IN RESPECT OF
COMPENSATING INTEREST. The Master Servicer shall deposit in the Distribution
Account not later than each Distribution Account Deposit Date an amount equal to
the lesser of (i) the aggregate amounts required to be paid by the Servicers
under the Servicing Agreements with respect to Compensating Interest on the
related Loans for the related Distribution Date, and not so paid by the related
Servicers and (ii) the Master Servicing Fee for such Distribution Date without
reimbursement therefor.
Section 3.21 RESERVED.
Section 3.22 PROTECTED ACCOUNTS.
(a) The Master Servicer shall enforce the obligation of each
Servicer to establish and maintain a Protected Account in accordance with the
applicable Servicing Agreement, with records to be kept with respect thereto on
a Loan by Loan basis, into which accounts shall be deposited within 48 hours (or
as of such other time specified in the related Servicing Agreement) of receipt
all collections of principal and interest on any Loan and with respect to any
REO Property received by a Servicer, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, and advances made from the Servicer's own funds
(less servicing compensation as permitted by the applicable Servicing Agreement
in the case of any Servicer) and all other amounts to be deposited in the
Protected Account. Each Servicer is hereby authorized to make withdrawals from
and deposits to the related Protected Account for purposes
-60-
required or permitted by the related Servicing Agreement. To the extent provided
in the related Servicing Agreement, the Protected Account shall be held in a
depository institution and segregated on the books of such institution in the
name of the Trustee for the benefit of Certificateholders.
(b) To the extent provided in the related Servicing Agreement,
amounts on deposit in a Protected Account may be invested in Eligible
Investments in the name of the Trustee for the benefit of Certificateholders
and, except as provided in the preceding paragraph, not commingled with any
other funds, such Eligible Investments to mature, or to be subject to redemption
or withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Distribution Account, and shall be held until
required for such deposit. The income earned from Eligible Investments made
pursuant to this Section 3.22 shall be paid to the related Servicer under the
applicable Servicing Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the related Servicer. The related Servicer (to the
extent provided in the Servicing Agreement) shall deposit the amount of any such
loss in the Protected Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
(c) To the extent provided in the related Servicing Agreement
and subject to this Article III, on or before each Servicer Remittance Date, the
related Servicer shall withdraw or shall cause to be withdrawn from the
Protected Accounts and shall immediately deposit or cause to be deposited in the
Distribution Account amounts representing the following collections and payments
(other than with respect to principal of or interest on the Loans due on or
before the Cut-Off Date):
(i) Monthly Payments on the Loans received or any related
portion thereof advanced by the Servicers pursuant to the Servicing
Agreements which were due on or before the related Due Date, net of the
amount thereof comprising the Servicing Fees;
(ii) Principal Prepayments, Liquidation Proceeds received by
the Servicers with respect to such Loans in the related Prepayment
Period, Compensating Interest and the amount of any related Prepayment
Charges; and
(iii) Any amount to be used as an Advance.
(d) Withdrawals may be made from an Account only to make
remittances as provided in Section 3.22(c), 3.23 and 3.24 or as otherwise
provided in the Servicing Agreements; to reimburse the Master Servicer or a
Servicer for Advances which have been recovered by subsequent collection from
the related Mortgagor; to remove amounts deposited in error; to remove fees,
charges or other such amounts deposited on a temporary basis; or to clear and
terminate the account at the termination of this Agreement in accordance with
Section 9.1. As provided in Sections 3.22(c) and 3.23(b) or as otherwise
provided in the Servicing Agreements certain amounts otherwise due to the
Servicers may be retained by them and need not be deposited in the Distribution
Account.
-61-
Section 3.23 DISTRIBUTION ACCOUNT.
(a) The Securities Administrator shall establish and maintain,
for the benefit of the Certificateholders, the Distribution Account as a
segregated trust account or accounts. The Master Servicer shall deposit in the
Distribution Account as identified by the Master Servicer and as received by the
Master Servicer, the following amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Advance and any amounts in respect of Prepayment
Interest Shortfalls;
(iii) Any Insurance Proceeds or Liquidation Proceeds received
by or on behalf of the Master Servicer;
(iv) The Purchase Price with respect to any Loans purchased by
the Seller pursuant to Section 2.3 and all proceeds of any Loans or
property acquired with respect thereto purchased by the Master Servicer
pursuant to Section 9.1;
(v) Any amounts required to be deposited by the Master
Servicer or any Servicer with respect to losses on investments of
deposits in an Account; and
(vi) Any other amounts received by or on behalf of the Master
Servicer and required to be deposited in the Distribution Account
pursuant to this Agreement.
(b) All amounts deposited to the Distribution Account shall be
held by the Securities Administrator in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement. The requirements for crediting the Distribution Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges or assumption,
tax service, statement account or payoff, substitution, satisfaction, release
and other like fees and charges, need not be credited by the Master Servicer or
the related Servicer to the Distribution Account. In the event that the Master
Servicer shall deposit or cause to be deposited to the Distribution Account any
amount not required to be credited thereto, the Securities Administrator, upon
receipt of a written request therefor signed by a Servicing Officer of the
Master Servicer, shall promptly transfer such amount to the Master Servicer, any
provision herein to the contrary notwithstanding.
(c) The Distribution Account shall constitute a trust account
of the Trust Fund segregated on the books of the Securities Administrator and
held by the Securities Administrator in trust in its Corporate Trust Office, and
the Distribution Account and the funds deposited therein shall not be subject
to, and shall be protected from, all claims, liens, and encumbrances of any
creditors or depositors of the Securities Administrator (whether made directly,
or indirectly through a liquidator or receiver of the Securities Administrator).
The amount at any time credited to the Distribution Account shall be invested in
the name of the Master Servicer, in such Eligible Investments selected by the
Master Servicer or deposited in demand deposits with such depository
institutions as selected by the Master Servicer, provided that time deposits of
such depository institutions would be an Eligible Investment. All Eligible
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the Distribution
-62-
Date following the date of the investment of such funds (the "Investment
Withdrawal Distribution Date") if the obligor for such Eligible Investment is
the Securities Administrator or, if such obligor is any other Person, the
Business Day preceding such Investment Withdrawal Distribution Date. All
investment earnings on amounts on deposit in the Distribution Account from time
to time shall be for the account of the Master Servicer. The Master Servicer
shall be permitted to receive distribution of any and all investment earnings
from the Distribution Account on each Distribution Date. If there is any loss on
an Eligible Investment or demand deposit, the Master Servicer shall deposit such
amount in the Distribution Account. With respect to the Distribution Account and
the funds deposited therein, the Securities Administrator shall take such action
as may be necessary to ensure that the Certificateholders shall be entitled to
the priorities afforded to such a trust account (in addition to a claim against
the estate of the Securities Administrator) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.
Section 3.24 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT.
(a) The Securities Administrator shall, from time to time on
demand of the Master Servicer make or cause to be made such withdrawals or
transfers from the Distribution Account as the Master Servicer has designated
for such transfer or withdrawal pursuant to the Servicing Agreements for the
following purposes, not in any order of priority:
(i) to reimburse the Master Servicer or any Servicer for any
Advance of its own funds, the right of the Master Servicer or a
Servicer to reimbursement pursuant to this subclause (i) being limited
to amounts received on a particular Loan (including, for this purpose,
the Purchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late payments or recoveries of the principal
of or interest on such Loan respecting which such Advance was made;
(ii) to reimburse the Master Servicer or any Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Loan for amounts expended by the Master Servicer or such Servicer in
good faith in connection with the restoration of the related Mortgaged
Property which was damaged by an Uninsured Cause or in connection with
the liquidation of such Loan;
(iii) to reimburse the Master Servicer or any Servicer from
Insurance Proceeds relating to a particular Loan for insured expenses
incurred with respect to such Loan and to reimburse the Master Servicer
or such Servicer from Liquidation Proceeds from a particular Loan for
Liquidation Expenses incurred with respect to such Loan;
(iv) to pay the Master Servicer or any Servicer, as
appropriate, from Liquidation Proceeds or Insurance Proceeds received
in connection with the liquidation of any Loan, the amount which it or
such Servicer would have been entitled to receive under subclause
(viii) of this Subsection (a) as servicing compensation on account of
each defaulted scheduled payment on such Loan if paid in a timely
manner by the related Mortgagor;
-63-
(v) to pay the Master Servicer or any Servicer from the
Purchase Price for any Loan, the amount which it or such Servicer would
have been entitled to receive under subclause (x) of this Subsection
(a) as servicing compensation;
(vi) to reimburse the Master Servicer or any Servicer for any
Nonrecoverable Advance, after a Realized Loss has been allocated with
respect to the related Loan if the Advance or Servicing Advance has not
been reimbursed pursuant to clause (i);
(vii) to pay the Master Servicing Fee to the Master Servicer
and the Credit Risk Management Fee to the Credit Risk Manager for such
Distribution Date and the amount of any income or gain realized from
investments of funds on deposit in the Distribution Account pursuant to
Section 3.14 hereof and to reimburse the Master Servicer for expenses,
costs and liabilities incurred by and reimbursable to it pursuant to
Sections 3.3, 6.3, 8.5 and 10.1;
(viii) to reimburse or pay any Servicer any such amounts as
are due thereto under the applicable Servicing Agreement and have not
been retained by or paid to the Servicer, to the extent provided in the
related Servicing Agreement;
(ix) to reimburse the Trustee, the Custodian and the
Securities Administrator for expenses, costs and liabilities, if any,
incurred by or reimbursable to such parties pursuant to this Agreement;
(x) to remove amounts deposited in error; and
(xi) to clear and terminate the Distribution Account pursuant
to Section 9.1.
(b) The Master Servicer shall keep and maintain separate
accounting, on a Loan by Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(v), inclusive, or with respect to any such amounts which would have been
covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Distribution Account under Section
3.23(b).
(c) On each Distribution Date, the Securities Administrator
shall distribute the Available Distribution Amount to the Holders of the
Certificates in accordance with Section 4.1.
Section 3.25 RESERVE FUND.
(a) No later than the Closing Date, the Securities
Administrator shall establish and maintain a separate, segregated trust account
titled, "Reserve Fund, ▇▇▇▇▇ Fargo Bank, N.A., in trust for the registered
holders of Deutsche Mortgage Securities, Inc. Mortgage Loan Trust, Series
2004-2, Mortgage Pass-Through Certificates." On the Closing Date, the Depositor
will deposit, or cause to be deposited, into the Reserve Fund $1,000. In
addition, the amount deposited in the Reserve Fund shall be increased by any
payments received by the Securities Administrator under the Cap Contract and
deposited into the Reserve Fund for the benefit of the Class A-1 Certificates.
-64-
(b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates or the Class M
Certificates, the Securities Administrator will deposit into the Reserve Fund
the amounts described in Section 4.1(a)(iii)(E), rather than distributing such
amounts to the Class CE Certificateholders. On each such Distribution Date, the
Securities Administrator shall hold all such amounts for the benefit of the
Holders of the Class A Certificates, other than the Class A-IO Certificates, and
the Class M Certificates, and will distribute such amounts to the Holders of the
Class A Certificates, other than the Class A-IO Certificates, and the Class M
Certificates in the amounts and priorities set forth in the last paragraph of
Section 4.1(a)(iii). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Securities Administrator shall deposit, based on the
instructions received by it from the Securities Administrator, into the Reserve
Fund on behalf of the Class CE Certificateholders, from amounts otherwise
distributable to the Class CE Certificateholders, an amount such that when added
to other amounts already on deposit in the Reserve Fund, the aggregate amount on
deposit therein is equal to $1,000.
(c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by REMIC III to the Holders
of the Class CE Certificates. Upon the termination of the Trust Fund, or the
payment in full of the Class A Certificates and the Class M Certificates, all
amounts remaining on deposit in the Reserve Fund will be released by the Trust
Fund and distributed to the Class CE Certificateholders or their designees. The
Reserve Fund will be part of the Trust Fund but not part of any REMIC and any
payments to the Holders of the Class A Certificates or the Class M Certificates
of Net WAC Rate Carryover Amounts will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860(G)(a)(1).
(d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees that the Securities Administrator will deposit
into the Reserve Fund the amounts described above on each Distribution Date
rather than distributing such amounts to the Class CE Certificateholders. By
accepting a Class CE Certificate, each Class CE Certificateholder further agrees
that its agreement to such action by the Securities Administrator is given for
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by such acceptance.
(e) The Securities Administrator shall direct any depository
institution maintaining the Reserve Fund to invest the funds in such account in
one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the
Securities Administrator or an Affiliate manages or advises such investment, and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Securities Administrator or
an Affiliate manages or advises such investment. All income and gain earned upon
such investment shall be deposited into the Reserve Fund. In no event shall the
Securities Administrator be liable for any investments made pursuant to this
clause (e).
-65-
(f) For federal tax return and information reporting, the
right of the Class A Certificateholders and the Class M Certificateholders to
receive payments from the Reserve Fund in respect of any Net WAC Rate Carryover
Amount shall be assigned a value of zero.
Section 3.26 PREPAYMENT PENALTY VERIFICATION.
On or prior to each Servicer Remittance Date, each Servicer
shall, to the extent provided in the respective Servicing Agreement, provide in
an electronic format acceptable to the Master Servicer the data necessary for
the Master Servicer to perform its verification duties agreed to by the Master
Servicer and the Depositor. The Master Servicer or a third party reasonably
acceptable to the Master Servicer and the Depositor (the "Verification Agent")
will perform such verification duties and will use its best efforts to issue its
findings in a report (the "Verification Report") delivered to the Master
Servicer and the Depositor within ten (10) Business Days following the related
Distribution Date; provided, however, that if the Verification Agent is unable
to issue the Verification Report within ten (10) Business Days following the
Distribution Date, the Verification Agent may issue and deliver to the Master
Servicer and the Depositor the Verification Report upon the completion of its
verification duties. The Master Servicer shall forward the Verification Report
to the respective Servicer and shall notify such Servicer if the Master Servicer
has determined that such Servicer did not deliver the appropriate Prepayment
Charges to the Master Servicer in accordance with the respective Servicing
Agreement. Such written notification from the Master Servicer shall include the
loan number, prepayment penalty code and prepayment penalty amount as calculated
by the Master Servicer or the Verification Agent, as applicable, of each Loan
for which there is a discrepancy. If the respective Servicer agrees with the
verified amounts, such Servicer shall adjust the immediately succeeding
Remittance Report and the amount remitted to the Master Servicer with respect to
prepayments accordingly. If the respective Servicer disagrees with the
determination of the Master Servicer, such Servicer shall, within five (5)
Business Days of its receipt of the Verification Report, notify the Master
Servicer of such disagreement and provide the Master Servicer with detailed
information to support such Servicer's position. The respective Servicer and the
Master Servicer shall cooperate to resolve any discrepancy on or prior to the
immediately succeeding Servicer Remittance Date, and such Servicer will indicate
the effect of such resolution on the related Remittance Report and shall adjust
the amount remitted with respect to prepayments on such Servicer Remittance Date
accordingly.
During such time as the respective Servicer and the Master
Servicer are resolving discrepancies with respect to the Prepayment Charges, no
payments in respect of any disputed Prepayment Charges will be remitted to the
Distribution Account and the Master Servicer shall not be obligated to remit
such payments, unless otherwise required pursuant to Section 7.01 hereof. In
connection with such duties, the Master Servicer shall be able to rely solely on
the information provided to it (if any) by the respective Servicer in accordance
with this Section. The Master Servicer shall not be responsible for verifying
the accuracy of any of the information provided to it by the respective
Servicer.
-66-
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS; ADVANCES;
STATEMENTS AND REPORTS
Section 4.1 DISTRIBUTIONS TO CERTIFICATEHOLDERS.
(a) On each Distribution Date, the Securities Administrator,
to the extent on deposit therein and based solely upon the Remittance Report for
such Distribution Date, shall withdraw from the Distribution Account the
Available Distribution Amount for such Distribution Date and distribute to each
Certificateholder, as applicable, by wire transfer in immediately available
funds for the account of the Certificateholder or by any other means of payment
acceptable to each Certificateholder of record on the immediately preceding
Record Date (other than as provided in Section 9.1 respecting the final
distribution) as specified by each such Certificateholder and at the address of
such Holder appearing in the Certificate Register, from the amount so withdrawn
and to the extent of such Available Distribution Amount, such
Certificateholder's Percentage Interest of the following amounts and in
following order and priority:
(i) On each Distribution Date, the Securities Administrator
shall distribute the Interest Remittance Amount for such Distribution
Date in the following order and priority:
(A) first, to the holders of each Class of
Senior Certificates, the related Senior
Interest Distribution Amount for such
Distribution Date and such Class on a pro
rata basis based on the entitlement of each
such Class;
(B) second, to the holders of the Class M-1
Certificates, the Interest Distribution
Amount allocable to the Class M-1
Certificates to the extent of the Interest
Remittance Amount for such Distribution Date
remaining after the distributions to the
Senior Certificates of the Senior Interest
Distribution Amount;
(C) third, to the holders of the Class M-2
Certificates, the Interest Distribution
Amount allocable to the Class M-2
Certificates to the extent of the Interest
Remittance Amount after distribution of the
Senior Interest Distribution Amount to the
Senior Certificates and the Interest
Distribution Amount to the Class M-1
Certificates;
(D) fourth, to the holders of the Class M-3
Certificates, the Interest Distribution
Amount allocable to the Class M-3
Certificates to the extent of the Interest
Remittance Amount after distribution of the
Senior Interest Distribution Amount to the
Senior Certificates and the Interest
Distribution Amount to the Class M-1
Certificates and the Class M-2 Certificates;
-67-
(ii) On each Distribution Date, the Securities Administrator
shall distribute the Principal Distribution Amounts in the
Certificates, other than the Class A-IO Certificates and Class P
Certificates, in the following order and priority:
(A) The Senior Principal Distribution Amount
will be distributed as follows:
(1) first, to the Class A-6
Certificates, an amount up to the Class A-6
Lockout Distribution Amount for that
Distribution Date, until the Certificate
Principal Balance thereof has been reduced
to zero; and
(2) second, any remaining Senior
Principal Distribution Amount after the
distributions described above, sequentially:
(a) to the Class A-1 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero;
(b) to the Class A-2 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero;
(c) to the Class A-3 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero;
(d) to the Class A-4 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero;
(e) to the Class A-5 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero; and
(f) to the Class A-6 Certificates, until the
Certificate Principal Balance thereof has
been reduced to zero.
(B) Holders of the Class M-1 Certificates will
be entitled to receive on each Distribution
Date, to the extent of the portion of the
Principal Distribution Amount remaining
after the Senior Principal Distribution
Amount has been distributed, the Class M-1
Principal Distribution Amount in reduction
of the Certificate Principal Balance
thereof, until the Certificate Principal
Balance of the Class M-1 Certificates has
been reduced to zero.
(C) Holders of the Class M-2 Certificates will
be entitled to receive on each Distribution
Date, to the extent of the portion of the
Principal Distribution Amount remaining
after the sum of the Senior Principal
Distribution Amount and the Class M-1
Principal Distribution Amount has been
distributed, the Class M-2 Principal
Distribution Amount in reduction of the
Certificate Principal Balance thereof, until
the
-68-
Certificate Principal Balance of the Class
M-2 Certificates has been reduced to zero.
(D) Holders of the Class M-3 Certificates will
be entitled to receive on each Distribution
Date, to the extent of the portion of the
Principal Distribution Amount remaining
after the sum of the Senior Principal
Distribution Amount, the Class M-1 Principal
Distribution Amount and the Class M-2
Principal Distribution Amount has been
distributed, the Class M-3 Principal
Distribution Amount in reduction of the
Certificate Principal Balance thereof, until
the Certificate Principal Balance of the
Class M-3 Certificates has been reduced to
zero.
(iii) On each Distribution Date, the Securities Administrator
shall distribute any Net Monthly Excess Cashflow for such Distribution
Date in the following order of priority:
(A) to the holders of the Class A Certificates
(other than the Class A-IO Certificates) and
Class M Certificates an amount equal to the
Extra Principal Distribution Amount for such
Distribution Date in accordance with clause
(iv) below;
(B) to the Holders of the Class M-1
Certificates, in an amount equal to the
Interest Carry Forward Amount allocable to
such Class of Certificates;
(C) to the Holders of the Class M-2
Certificates, in an amount equal to the
Interest Carry Forward Amount allocable to
such Class of Certificates;
(D) to the Holders of the Class M-3
Certificates, in an amount equal to the
Interest Carry Forward Amount allocable to
such Class of Certificates;
(E) to the Reserve Fund, an amount equal to (a)
with respect to the Class A Certificates,
(other than the Class A-1 Certificates and
the Class A-IO Certificates) and the Class M
Certificates, and the sum of the Net WAC
Rate Carryover Amounts, if any, and (b) with
respect to the Class A-1 Certificates, the
amount by which the sum of the Net WAC Rate
Carryover Amounts with respect to the Class
A-1 Certificates exceeds the sum of any
amounts received by the Securities
Administrator with respect to the Cap
Agreement since the prior Distribution
Date.;
(F) to the Holders of the Class CE Certificates,
the Interest Distribution Amount and any
Overcollateralization Reduction Amount for
such Distribution Date; and
(G) to the Holders of the Class R Certificates,
in respect of the Class R-III Interest, any
remaining amounts; provided that if such
Distribution Date is the Distribution Date
immediately following the expiration of the
latest Prepayment Charge term as identified
on the Loan Schedule
-69-
or any Distribution Date thereafter, then
any such remaining amounts will be
distributed first, to the Holders of the
Class P Certificates, until the Certificate
Principal Balance thereof has been reduced
to zero; and second, to the Holders of the
Class R Certificates.
On each Distribution Date, the Securities Administrator, after making
the required distributions of interest and principal to the Certificates as
described in Section 4.1(a)(i) and (ii) above and after the distribution of the
Net Monthly Excess Cashflow as described in Section 4.1(a)(iii), the Securities
Administrator will withdraw from the Reserve Fund the amounts on deposit therein
and distribute such amounts to the Class A Certificates (other than the Class
A-IO Certificates) and the Class M Certificates in respect of any Net WAC Rate
Carryover Amounts due to each such Class in the following manner and order of
priority: first, concurrently to the Class A Certificates, other than the Class
A-IO Certificates, on a pro rata basis, the related Net WAC Rate Carryover
Amount for such Distribution Date for each such Class; second, to the Class M-1
Certificates, the related Net WAC Rate Carryover Amount for such Distribution
Date for such Class; third, to the Class M-2 Certificates, the related Net WAC
Rate Carryover Amount for such Distribution Date for such Class; and fourth, to
the Class M-3 Certificates, the related Net WAC Rate Carryover Amount for such
Distribution Date for such Class.
(iv) (A) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Extra Principal
Distribution Amount shall be distributed in the following order of
priority:
(1) first, to the Holders of the Class A-6
Certificates, up to the Class A-6 Lockout Distribution Amount
and then sequentially to the Holders of the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Certificates, in that
order, until the Certificate Principal Balance of each such
Class has been reduced to zero;
(2) second, to the Holders of the Class M-1
Certificates, until the Certificate Principal Balance of such
Class has been reduced to zero;
(3) third, to the Holders of the Class M-2
Certificates, until the Certificate Principal Balance of such
Class has been reduced to zero; and
(4) fourth, to the Holders of the Class M-3
Certificates, until the Certificate Principal Balance of such
Class has been reduced to zero.
(B) On each Distribution Date (a) on or after the
Stepdown Date and (b) on which a Trigger Event is not
in effect, distributions of principal to the extent
of the Extra Principal Distribution Amount shall be
distributed in the following order of priority:
-70-
(1) the lesser of (x) the Extra Principal
Distribution Amount and (y) the Class A-6 Lockout Distribution
Amount, until the Certificate Principal Balance of such Class
has been reduced to zero;
(2) the lesser of (x) the Extra Principal
Distribution Amount and (y) the Senior Principal Distribution
Amount, shall be distributed to the Holders of the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, in that order, until the Certificates Principal
Balance of each such Class has been reduced to zero;
(3) the lesser of (x) the excess of (i) the Extra
Principal Distribution Amount over (ii) the amount distributed
to the Holders of the Class A Certificates pursuant to clauses
(1) and (2) above and (y) the Class M-1 Principal Distribution
Amount, shall be distributed to the Holders of the Class M-1
Certificates, until the Certificate Principal Balance of such
Class has been reduced to zero;
(4) the lesser of (x) the excess of (i) the Extra
Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class A Certificates
pursuant to clauses (1) and (2) above and to the Holders of
the Class M-1 Certificates pursuant to clause (3) above and
(y) the Class M-2 Principal Distribution Amount, shall be
distributed to the Holders of the Class M-2 Certificates,
until the Certificate Principal Balance of such Class has been
reduced to zero; and
(5) the lesser of (x) the excess of (i) the Extra
Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class A Certificates
pursuant to clauses (1) and (2) above, to the Holders of the
Class M-1 Certificates pursuant to clause (3) above and to the
Holders of the Class M-2 Certificates pursuant to clause (4)
above and (y) the Class M-3 Principal Distribution Amount,
shall be distributed to the Holders of the Class M-3
Certificates, until the Certificate Principal Balance of such
Class has been reduced to zero.
(b) On each Distribution Date, the Securities Administrator
shall withdraw any amounts then on deposit in the Distribution Account that
represent Prepayment Charges and shall distribute such amounts to the Class P
Certificateholders as described above.
(c) All reductions in the Certificate Principal Balance of a
Certificate effected by distributions of principal or allocations of Realized
Losses with respect to Loans made on any Distribution Date shall be binding upon
all Holders of such Certificate and of any Certificate issued upon the
registration of transfer or exchange therefor or in lieu thereof, whether or not
such distribution is noted on such Certificate. The final distribution of
principal of each Certificate (and the final distribution with respect to the
Class R Certificate upon termination of the Trust Fund) shall be payable in the
manner provided above only upon presentation and
-71-
surrender thereof on or after the Distribution Date therefor at the office or
agency of the Securities Administrator specified in the notice delivered
pursuant to Section 4.1(d) or Section 9.1.
(d) Whenever, on the basis of Curtailments, Payoffs and
Monthly Payments on the Loans and Insurance Proceeds and Liquidation Proceeds
received and expected to be received during the applicable Prepayment Period,
the Securities Administrator believes that the entire remaining unpaid Class
Principal Balance of any Class of Certificates shall become distributable on the
next Distribution Date, the Securities Administrator shall, no later than the
Determination Date of the month of such Distribution Date, mail or cause to be
mailed to each Person in whose name a Certificate to be so retired is registered
at the close of business on the Record Date, to the Underwriter and to each
Rating Agency a notice to the effect that:
(i) it is expected that funds sufficient to make such final
distribution shall be available in the Distribution Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution
shall be payable on such Distribution Date, but only upon presentation
and surrender of such Certificate at the office or agency of the
Securities Administrator maintained for such purpose (the address of
which shall be set forth in such notice), and (B) no interest shall
accrue on such Certificate after such Distribution Date.
Section 4.2 ALLOCATION OF REALIZED LOSSES.
Prior to each Distribution Date, the Master Servicer, based solely on
the information provided by the related Servicer, shall determine the amount of
Realized Losses, if any, with respect to each Loan.
Realized Losses on the Loans for any Distribution Date will first,
cause a reduction in Net Monthly Excess Cash Flow for that Distribution Date and
second, cause a reduction in the Certificate Principal Balance of the Class CE
Certificates for that Distribution Date, until the Certificate Principal Balance
thereof has been reduced to zero. To the extent that Realized Losses on a
Distribution Date cause the aggregate Certificate Principal Balance of the Class
A Certificates (other than the Class A-IO Certificates) and the Class M
Certificates, after taking into account all distributions on such Distribution
Date to exceed the aggregate Principal Balance of the Loans as of the last day
of the related Due Period, such excess will be allocated first, to the Class M-3
Certificates; second, to the Class M-2 Certificates; and third, to the Class M-1
Certificates in each case to reduce the Certificate Principal Balance thereof
until it has been reduced to zero.
Any allocation of Realized Losses to a Class M Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated as of such Distribution Date after all
distributions on such Distribution Date have been made. Any allocation of
Realized Losses to a Class CE Certificates shall be made by reducing the amount
otherwise payable in respect thereof pursuant to Section 4.1(a)(iii)(F). No
allocations of Realized Losses shall be made to the Senior Certificates or the
Class P Certificates. Notwithstanding anything to the contrary in this
Agreement, in no event will the Certificate Principal Balance of any Class M
Certificate be reduced more than once in respect of any particular amount both
(i)
-72-
allocable to the Class M Certificate in respect of Realized Losses and (ii)
payable as principal to the Holder of the Certificate from Net Monthly Excess
Cashflow.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.
The principal portion of all Realized Losses on the Mortgage
Loans shall be allocated on each Distribution Date first, to REMIC I Regular
Interest LTI-1 and REMIC I Regular Interest LTI-P, until the Uncertificated
Principal Balances have been reduced to zero and then to REMIC I Regular
Interest LTI-IO-1, REMIC I Regular Interest LTI-IO-2, REMIC I Regular Interest
LTI-IO-3, REMIC I Regular Interest LTI-IO-4 and REMIC I Regular Interest
LTI-IO-5, until the Uncertificated Principal Balances have been reduced to zero.
All Realized Losses on the REMIC I Regular Interests shall be
allocated on each Distribution Date to the following REMIC II Regular Interests
in the specified percentages, as follows: first, to Uncertificated Accrued
Interest payable to the REMIC II Regular Interest LTII-AA and REMIC II Regular
Interest LTII-ZZ up to an aggregate amount equal to the REMIC II Interest Loss
Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Principal Balances of the REMIC II Regular Interest LTII-AA and REMIC II Regular
Interest LTII-ZZ up to an aggregate amount equal to the REMIC II Principal Loss
Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-AA, 98%, to REMIC II
Regular Interest LTII-M3, 1% and to REMIC II Regular Interest LTII-ZZ, 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M3 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II Regular
Interest LTII-M2 and REMIC II Regular Interest LTII-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II Regular
Interest LTII-M1 and REMIC II Regular Interest LTII-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M1 has been reduced to zero.]
Section 4.3 STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Securities Administrator shall
provide or make available, upon request to each Holder of the Regular Interest
Certificates and the Credit Risk Manager, a statement (each, a "Remittance
Report") as to the distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal and the amount of the distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to Prepayment
Charges;
-73-
(ii) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
interest;
(iii) The aggregate Servicing Fee received by each Servicer
and Master Servicing Fee received by the Master Servicer during the
related Due Period;
(iv) The number and aggregate Principal Balance of the Loans
delinquent one, two and three months or more;
(v) The (A) number and aggregate Principal Balance of Loans
with respect to which foreclosure proceedings have been initiated, and
(B) the number and aggregate Principal Balance of Mortgaged Properties
acquired through foreclosure, deed in lieu of foreclosure or other
exercise of rights respecting the Trustee's security interest in the
Loans;
(vi) The aggregate Principal Balance of the Loans as of the
close of business on the last day of the related Prepayment Period;
(vii) The aggregate amount of Principal Prepayments made
during the related Prepayment Period and the aggregate amount of any
Prepayment Charges received in respect thereof;
(viii) The amount of Realized Losses with respect to the Loans
allocable to the Certificates on the related Distribution Date and the
cumulative amount of Realized Losses incurred and allocated to the
Certificates since the Cut-Off Date;
(ix) The amount of interest accrued but not paid to each Class
of Certificates entitled to interest since (a) the prior Distribution
Date and (b) the Closing Date;
(x) The amount of funds advanced by each Servicer and the
Master Servicer for such Distribution Date;
(xi) The total amount of Payoffs and Curtailments received
during the related Prepayment Period;
(xii) with respect to any Loan that became an REO Property
during the preceding calendar month, the loan number of such Loan, the
unpaid principal balance and the Scheduled Principal Balance of such
Loan;
(xiii) to the extent provided by the Servicer, the book value
of any REO Property as of the close of business on the last Business
Day of the calendar month preceding the Distribution Date;
(xiv) the aggregate amount of extraordinary Trust Fund
expenses withdrawn from the Distribution Account for such Distribution
Date;
-74-
(xv) the Class Principal Balance of each Class of
Certificates, after giving effect to the distributions and allocations
of Realized Losses made on such Distribution Date, separately
identifying any reduction thereof due to allocations of Realized
Losses;
(xvi) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not covered by
payments by the Master Servicer pursuant to Section 3.20; and
(xvii) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date.
(xviii) the Required Overcollateralization Amount and the
Credit Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) the Net WAC Rate Carryover Amount, if any, for such
Distribution Date;
(xxii) the Net WAC Rate Carryover Amount, if any, outstanding
after reimbursements therefor on such Distribution Date and any amounts
received under the Cap Contract;
(xxiii) the respective Pass-Through Rates applicable to the
Class A Certificates, the Class M Certificates and the Class CE
Certificates for such Distribution Date;
(xxiv) the amount of any deposit to the Reserve Fund
contemplated by Section 3.25;
(xxv) the balance of the Reserve Fund prior to the deposit or
withdrawal of any amounts on such Distribution Date;
(xxvi) the amount of any withdrawal from the Reserve Fund
pursuant to the last paragraph of Section 4.1(a)(iii); and
(xxvii) the balance of the Reserve Fund after all deposits and
withdrawals on such Distribution Date.
The Securities Administrator shall make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to the Certificateholders, the Trustee and the
Rating Agencies via the Securities Administrator's internet website. The
Securities Administrator's internet website shall initially be located at
http:\\▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at ▇-▇▇▇-▇▇▇-▇▇▇▇.
Parties that are unable to
-75-
use the above distribution option are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Securities Administrator shall have the right to change the way such
statements are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Securities Administrator
shall provide timely and adequate notification to all above parties regarding
any such changes.
In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall be expressed as a dollar amount per single
Certificate of the relevant Class.
Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Interest Certificate a statement
containing the information set forth in subclauses (i) and (ii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Securities
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.
Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.
The Securities Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide.
On each Distribution Date the Securities Administrator shall provide
Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each
Class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Securities Administrator and Bloomberg.
Section 4.4 ADVANCES.
If the Monthly Payment on a Loan or a portion thereof is delinquent as
of its Due Date, other than as a result of interest shortfalls due to bankruptcy
proceedings or application of the Relief Act, and the related Servicer fails to
make an advance of the delinquent amount pursuant to the related Servicing
Agreement, the Master Servicer shall deposit in the Distribution Account, from
its own funds or from amounts on deposit in the Distribution Account that are
held for future distribution, not later than the Distribution Account Deposit
Date immediately preceding the related Distribution Date an amount equal to such
delinquency, net of the Servicing Fee and Master Servicing Fee for such Loan
except to the extent the Master Servicer determines any such advance to be
nonrecoverable from Liquidation Proceeds, Insurance
-76-
Proceeds or future payments on the Loan for which such Advance was made. Any
amounts held for future distribution and so used shall be appropriately
reflected in the Master Servicer's records and replaced by the Master Servicer
by deposit in the Distribution Account on or before any future Distribution
Account Deposit Date to the extent that the Available Distribution Amount for
the related Distribution Date (determined without regard to Advances to be made
on the Distribution Account Deposit Date) shall be less than the total amount
that would be distributed to the Classes of Certificateholders pursuant to
Section 4.1 on such Distribution Date if such amounts held for future
distributions had not been so used to make Advances. Subject to the foregoing,
the Master Servicer shall continue to make such Advances through the date that
the related Servicer is required to do so under its Servicing Agreement. If
applicable, on the Distribution Account Deposit Date, the Master Servicer shall
present an Officer's Certificate to the Trustee (i) stating that the Master
Servicer elects not to make an Advance in a stated amount and (ii) detailing the
reason it deems the advance to be nonrecoverable.
Section 4.5 COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount that the Trustee and the Securities Administrator reasonably
believe are applicable under the Code. The consent of Certificateholders shall
not be required for such withholding. In the event the Securities Administrator
does withhold any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Securities Administrator shall indicate the amount withheld to
such Certificateholders.
(a) On each Distribution Date, the following amounts, in the
following order of priority and in accordance with the Remittance Report, shall
be distributed by REMIC I to REMIC II on account of the REMIC I Regular
Interests or withdrawn from the Distribution Account and distributed to the
Holders of the Class R Certificates, as the case may be:
(i) first, to the Holders of REMIC I Regular Interest
LTI-IO-1, REMIC I Regular Interest LTI-IO-2, REMIC I Regular Interest
LTI-IO-3, REMIC I Regular Interest LTI-IO-4 and REMIC I Regular
Interest LTI-IO-5, in an amount equal to (A) the Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates and second,
to the Holders of REMIC I Regular Interest LTI-1 and REMIC I Regular
Interest LTI-P, in an amount equal to (A) the Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates;
(ii) to the Holders of the REMIC I Regular Interest LTI-P, on
the Distribution Date immediately following the expiration of the
latest Prepayment Change term as identified on the Loan Schedule or any
Distribution Date thereafter until $100 has been distributed pursuant
to this clause;
(iii) on each Distribution Date, the remainder of the
Available Funds for such Distribution Date after the distributions made
pursuant to clause (i) and clause (ii) above, first, to the Holders of
REMIC I Regular Interest LTI-1 until the Uncertificated Principal
Balance of such REMIC I Regular Interest is reduced to zero, and
second, to
-77-
the Holders of REMIC I Regular Interest LTI-IO-1, REMIC I Regular
Interest LTI-IO-2, REMIC I Regular Interest LTI-IO-3, REMIC I Regular
Interest LTI-IO-4 and REMIC I Regular Interest LTI-IO-5, until the
Uncertificated Principal Balance of each such REMIC I Regular Interest
is reduced to zero; and
(iv) to the Holders of the Class R Certificates (in respect of
Component R-1), any amounts remaining after the distributions pursuant
to clauses (i) through (iii) above.
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Mortgage Loans received during the related Prepayment Period
will be distributed by REMIC I to the Holders of REMIC I Regular Interest LTI-P.
The payment of the foregoing amounts to the Holders of REMIC I Regular Interest
LTI-P shall not reduce the Uncertificated Principal Balance thereof.
(b) On each Distribution Date, the following amounts, in the
following order of priority and in accordance with the Remittance Report, shall
be distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests or withdrawn from the Distribution Account and distributed to the
Holders of the Class R Certificates, as the case may be:
(i) first, to the Holders of REMIC II Regular Interest
LTII-IO-A and REMIC Regular Interest LTII-IO-B, in an amount equal to
(A) the Uncertificated Accrued Interest for such REMIC II Regular
Interest for such Distribution Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates and then to
Holders of REMIC II Regular Interest LTII-AA, REMIC II Regular Interest
LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular Interest
LTII-A3, REMIC II Regular Interest LTII-A4, REMIC II Regular Interest
LTII-A5, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest
LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular Interest
LTII-M3, REMIC II Regular Interest LTII-ZZ and REMIC II Regular
Interest LTII-P, pro rata, in an amount equal to (A) the Uncertificated
Accrued Interest for each such REMIC II Regular Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates. Amounts payable as
Uncertificated Accrued Interest in respect of REMIC II Regular Interest
LTII-ZZ shall be reduced and deferred when the REMIC II
Overcollateralization Amount is less than the REMIC II
Overcollateralization Target Amount, by the lesser of (x) the amount of
such difference and (y) the REMIC II Regular Interest LTII-ZZ Maximum
Interest Deferral Amount and such amount will be payable to the Holders
of REMIC II Regular Interest LTII-A1, REMIC II Regular Interest
LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest
LTII-A4, REMIC II Regular Interest LTII-A5, REMIC II Regular Interest
LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II Regular Interest
LTII-M2, REMIC II Regular Interest LTII-M3 in the same proportion as
the Overcollateralization Increase Amount is allocated to the
Corresponding Certificates, provided, however, that the Uncertificated
Principal Balance of REMIC II Regular Interest LTII-ZZ is increased by
such amount;
-78-
(ii) second, to the Holders of REMIC II Regular Interests, in
an amount equal to the remainder of the Available Distribution Amount
for such Distribution Date after the distributions made pursuant to
clause (i) above, allocated as follows:
(a) to the Holders of REMIC II Regular Interest LTII-AA and
REMIC II Regular Interest LTII-P, 98.00% of such remainder (other than amounts
payable under clause (d) below), until the Uncertificated Principal Balance of
such REMIC II Regular Interest is reduced to zero, provided, however, that the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-P shall not
be reduced until the Distribution Date in February 2009 or any Distribution Date
thereafter, at which point such amount shall be distributed to REMIC II Regular
Interest LTII-P, until $100 has been distributed pursuant to this clause;
(b) to the Holders of REMIC Regular Interest LTII-A1, REMIC
Regular Interest LTII-A2, REMIC Regular Interest LTII-A3, REMIC Regular Interest
LTII-A4, REMIC Regular Interest LTII-A5, REMIC Regular Interest LTII-A6, REMIC
II Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular
Interest LTII-M3, 1.00% of such remainder (other than amounts payable under
clause (d) below), in the same proportion as principal payments are allocated to
the Corresponding Certificates, until the Uncertificated Principal Balances of
such REMIC II Regular Interests are reduced to zero;
(c) to the Holders of REMIC II Regular Interest LTII-ZZ, 1.00%
of such remainder (other than amounts payable under the proviso below), until
the Uncertificated Principal Balance of such REMIC II Regular Interest is
reduced to zero; then
(d) any remaining amount to the Holders of the Class R
Certificates (in respect of Component R-2); and
(iii) third, to REMIC II Regular Interest LTII-P, 100% of the
amount paid in respect of REMIC I Regular Interest LTI-P;
provided, however, that (i) 98.00% and (ii) 2.00% of any principal
payments that are attributable to an Overcollateralization Release Amount shall
be allocated to Holders of (i) REMIC II Regular Interest LTII-AA and REMIC II
Regular Interest LTII-P, in that order and (ii) REMIC II Regular Interest
LTII-ZZ, respectively; provided that REMIC II Regular Interest LTII-P shall not
be reduced until the Distribution Date in November 2008, at which point such
amount shall be distributed to REMIC II Regular Interest LTII-P, until $100 has
been distributed pursuant to this clause.
-79-
ARTICLE V
THE CERTIFICATES
Section 5.1 THE CERTIFICATES.
(a) Each of the Certificates shall be substantially in the
forms annexed hereto as exhibits, and shall, on original issue, be executed and
authenticated by the Securities Administrator and delivered by the Trustee to or
upon the receipt of a written order to authenticate from the Depositor
concurrently with the sale and assignment to the Trustee of the Trust Fund. The
Certificates shall be issuable in Authorized Denominations.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trust Fund by a Responsible Officer of the Securities
Administrator. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time such signatures were affixed, authorized to
sign on behalf of the Securities Administrator shall bind the Trust Fund,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificate. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
such Certificate shall have been manually authenticated by the Securities
Administrator substantially in the form provided for herein, 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.
Subject to Section 5.3, the Class A Certificates and Class M Certificates shall
be Book-Entry Certificates. On the Closing Date, the Class CE, Class P and Class
R Certificates shall not be Book-Entry Certificates but shall be issued in fully
registered certificate form.
(b) Neither the Trustee nor the Securities Administrator shall
have any liability to the Trust Fund and shall be indemnified by the Trust Fund
for, any cost, liability or expense incurred by them arising from a registration
of a Certificate or transfer, pledge sale or other disposition of a Certificate
in reliance upon a certification, Officer's Certificate, affidavit, ruling or
Opinion of Counsel described in this Article V.
Section 5.2 CERTIFICATES ISSUABLE IN CLASSES; DISTRIBUTIONS OF
PRINCIPAL AND INTEREST; AUTHORIZED DENOMINATIONS. The aggregate principal amount
of Certificates that may be authenticated and delivered under this Agreement is
limited to the aggregate Principal Balance of the Loans as of the Cut-Off Date,
as specified in the Preliminary Statement to this Agreement, except for
Certificates authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Certificates pursuant to Section 5.3. Such
aggregate principal amount shall be allocated among one or more Classes having
designations, types of interests, initial per annum Pass-Through Rates, initial
Class Principal Balances and last scheduled Distribution Dates as specified in
the Preliminary Statement to this Agreement. The aggregate Percentage Interest
of each Class of Certificates of which the Class Principal Balance equals zero
as of the Cut-Off Date that may be authenticated and delivered under this
Agreement is limited to 100%. Certificates shall be issued in Authorized
Denominations.
Section 5.3 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a)
The Securities Administrator shall cause to be kept at its Corporate Trust
Office a Certificate Register in which,
-80-
subject to such reasonable regulations as it may prescribe, the Securities
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office of the Securities Administrator maintained for such
purpose pursuant to the foregoing paragraph for certificate transfer and
surrender purposes, and, in the case of the Class CE Certificates, the Class P
Certificates or the Class R Certificates, upon satisfaction of the conditions
set forth in Sections 5.3(c), (d) and (e) below, as applicable, the Securities
Administrator on behalf of the Trust shall execute, authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in Authorized Denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Securities Administrator shall execute, authenticate and deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Trustee or the Securities
Administrator) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Securities Administrator duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(a) Except as provided herein, 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 such Certificates may not be
transferred by the Trustee or the Securities Administrator 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
Certificates; (iii) ownership and transfers of registration of such 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 and the
Securities Administrator shall for all purposes deal with the Depository as
representative of the Certificate Owners of the Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; (vi)
the Trustee and the Securities Administrator 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; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee, the
Securities Administrator and either the Trustee's or the Securities
Administrator's agents, employees, officers and directors as the absolute owner
of the Certificates for all purposes whatsoever.
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
-81-
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners that it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures. The parties hereto are hereby authorized to execute a Letter
of Representations with the Depository or take such other action as may be
necessary or desirable to register a Book-Entry Certificate to the Depository.
In the event of any conflict between the terms of any such Letter of
Representation and this Agreement, the terms of this Agreement shall control.
(b) If (i)(x) the Depository or the Depositor advises the
Securities Administrator in writing that the Depository is no longer willing or
able to discharge properly its responsibilities as Depository and (y) the
Securities Administrator or the Depositor is unable to locate a qualified
successor, (ii) the Depositor, at its sole option, with the consent of the
Securities Administrator, elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Master Servicer Event of Default,
the Certificate Owners of the Book-Entry Certificates representing Percentage
Interests of such Classes aggregating not less than 66% advise the Securities
Administrator and Depository through the Depository Participants in writing that
the continuation of a book-entry system through the Depository is no longer in
the best interests of the Certificate Owners, the Securities Administrator shall
notify all Holders of Book-Entry Certificates of the occurrence of any such
event and of the availability of definitive, fully registered Certificates
("Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Securities Administrator of the Book-Entry Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Securities Administrator shall, at the Depositor's expense, in
the case of (i) and (ii) above, or the Master Servicer's expense, in the case of
(iii) above, execute on behalf of the Trust and authenticate the Definitive
Certificates. None of the Depositor, the Master Servicer, the Trustee or the
Securities Administrator shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Trustee,
the Securities Administrator, the Master Servicer and the Depositor shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
(c) No Transfer of a Class CE Certificate, Class P Certificate
or Class R Certificate shall be made unless such Transfer is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act") and any applicable state securities laws or is exempt from the
registration requirements under the 1933 Act and such state securities laws. In
the event of any such transfer in reliance upon an exemption from the 1933 Act
and such state securities laws, in order to assure compliance with the 1933 Act
and such state securities laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective Transferee shall each certify
to the Trustee and the Securities Administrator in writing the facts surrounding
the Transfer in substantially the forms set forth in EXHIBIT D (the "TRANSFEROR
CERTIFICATE") and (x) deliver a letter in substantially the form of either
EXHIBIT E (the "Investment Letter") or EXHIBIT F (the "Rule 144A Letter") or (y)
there shall be delivered to the Trustee, the Depositor and the Securities
Administrator an Opinion of Counsel acceptable to and in form reasonably
satisfactory to the Trustee, the Depositor and the Securities Administrator that
such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor, the Seller,
the Master Servicer, the Securities Administrator or the Trustee. Each Holder of
a Class CE Certificate,
-82-
Class P Certificate or Class R Certificate desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Seller, the Securities Administrator and the Master Servicer against any
liability that may result if the Transfer is not so exempt or is not made in
accordance with such federal and state laws.
(d) No transfer of a Class CE Certificate, Class P Certificate
or Class R Certificate or any interest therein shall be made to any Plan subject
to ERISA or Section 4975 of the Code (each, a "Plan"), any Person acting,
directly or indirectly, on behalf of any such Plan or any Person acquiring such
Certificates with "Plan Assets" of a Plan within the meaning of the Department
of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets"), as
certified by each such Transferee in the form of EXHIBIT G, unless the
Securities Administrator is provided with an Opinion of Counsel for the benefit
of the Depositor, the Master Servicer, the Trustee, the Securities Administrator
and the Master Servicer and on which they may rely which establishes to the
satisfaction of each of them that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, any Servicer or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator or the Trust Fund. Neither a certification nor an
Opinion of Counsel will be required in connection with the initial transfer of
any such Certificate by the Depositor to an affiliate of the Depositor (in which
case, the Depositor or any affiliate thereof shall have deemed to have
represented that such affiliate is not a Plan or a Person investing Plan Assets)
and the Trustee and the Securities Administrator shall be entitled to
conclusively rely upon a representation (which, upon the request of the Trustee
or the Securities Administrator, shall be a written representation) from the
Depositor of the status of such transferee as an affiliate of the Depositor.
Each Transferee of a Class M Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE 2000-58,
65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41 67 Fed. Reg. 54487
(August 22, 2002) (the "Exemption"), and that it understands that there are
certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in U.S. Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (iii) the conditions set forth
in Sections I and III of PTCE 95-60 have been satisfied.
If any Class M Certificate, Class CE Certificate, Class P Certificate
or Class R Certificate or any interest therein is acquired or held in violation
of the provisions of this Section 5.3(d), the next preceding permitted
beneficial owner will be treated as the beneficial owner of that Certificate
retroactive to the date of transfer to the purported beneficial owner. Any
purported beneficial owner whose acquisition or holding of any such Certificate
or interest therein was
-83-
effected in violation of the provisions of the two preceding paragraphs shall
indemnify and hold harmless the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Trust from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.
(e) Each Transferee of a Class R Certificate shall be deemed
by the acceptance or acquisition of the related Ownership Interest to have
agreed to be bound by the following provisions and to have irrevocably appointed
the Depositor or its designee as its attorney-in-fact to negotiate the terms of
any mandatory sale under clause (v) below and to execute all instruments of
transfer and to do all other things necessary in connection with any such sale,
and the rights of each Transferee of a Class R Certificate are expressly subject
to the following provisions:
(i) Each such Transferee shall be a Permitted Transferee and
shall promptly notify the Securities Administrator of any change or
impending change in its status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class
R Certificate unless such Ownership Interest is a PRO RATA undivided
interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Class R Certificate, the Securities
Administrator shall as a condition to registration of the transfer,
require delivery to it, in form and substance satisfactory to it, of
each of the following:
(A) an affidavit in the form of EXHIBIT C hereto from
the proposed Transferee to the effect that such Transferee is
a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Class R Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed Transferee to the
effect that the proposed Transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the Class
R Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section shall be absolutely null and void and shall vest no rights
in the purported Transferee. If any purported Transferee shall, in
violation of the provisions of this Section, become a Holder of a Class
R Certificate, then the prior Holder of such Class R Certificate that
is a Permitted Transferee shall, upon discovery that the registration
of transfer of such Class R Certificate was not in fact permitted by
this Section, be restored to all rights as Holder thereof retroactive
to the date of registration of transfer of such Class R Certificate.
The Securities Administrator shall be under no liability to any Person
for any registration of transfer of a Class R Certificate that is in
fact not permitted by this Section or for making any distributions due
on such Class R Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this
Agreement so long as the Securities Administrator received the
documents specified in clause (iii).
-84-
The Securities Administrator shall be entitled to recover from any
Holder of a Class R Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions
made on such Class R Certificate. Any such distributions so recovered
by the Securities Administrator shall be distributed and delivered by
the Securities Administrator to the prior Holder of such Class R
Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Securities Administrator shall
have the right but not the obligation, without notice to the Holder of
such Class R Certificate or any other Person having an Ownership
Interest therein, to notify the Depositor to arrange for the sale of
such Class R Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if
any, will be remitted by the Securities Administrator to the previous
Holder of such Class R Certificate that is a Permitted Transferee,
except that in the event that the Securities Administrator determines
that the Holder of such Class R Certificate may be liable for any
amount due under this Section or any other provisions of this
Agreement, the Securities Administrator may withhold a corresponding
amount from such remittance as security for such claim. The terms and
conditions of any sale under this clause (v) shall be determined in the
sole discretion of the Securities Administrator and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Securities Administrator upon
receipt of reasonable compensation will provide to the Internal Revenue
Service, and to the persons specified in Sections 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 Class R interests to
Disqualified Organizations.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Securities Administrator, in form and substance satisfactory to
the Securities Administrator, (i) written notification from each Rating Agency
that the removal of the restrictions on transfer set forth in this Section will
not cause such Rating Agency to downgrade its rating of the Certificates and
(ii) an Opinion of Counsel to the effect that such removal will not cause any
REMIC created hereunder to fail to qualify as a REMIC. The Holder of the Class R
Certificate issued hereunder, while not a Disqualified Organization, is the Tax
Matters Person.
(f) No service charge shall be made for any registration of
transfer or exchange of Certificates of any Class, but the Securities
Administrator may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
-85-
All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Securities Administrator and disposed of pursuant to
its standard procedures.
Section 5.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Securities Administrator, or (ii) the Trustee or the Securities Administrator
receives evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee and the Securities
Administrator such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Securities Administrator
that such Certificate has been acquired by a protected purchaser, the Securities
Administrator shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Percentage Interest. Upon the issuance of any new
Certificate under this Section 5.4, the Trustee or the Securities Administrator
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any replacement Certificate issued pursuant to
this Section 5.4 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost or
stolen Certificate shall be found at any time.
Section 5.5 PERSONS DEEMED OWNERS.
The Depositor, the Securities Administrator, the Master Servicer, the
Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.1 and for all other purposes
whatsoever, and none of the Depositor, the Securities Administrator, the Master
Servicer, the Trustee, or any agent of the Depositor, the Securities
Administrator, the Master Servicer or the Trustee shall be affected by notice to
the contrary.
-86-
ARTICLE VI
THE DEPOSITOR, MASTER SERVICER AND THE CREDIT RISK MANAGER
Section 6.1 LIABILITY OF THE DEPOSITOR AND THE MASTER SERVICER.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and
Master Servicer and undertaken hereunder by the Depositor and the Master
Servicer herein.
Section 6.2 MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE MASTER
SERVICER.
Subject to the following paragraph, the Depositor shall keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer shall keep in full effect its existence, rights and franchises
as a corporation under the laws of the jurisdiction of its formation. The
Depositor and the Master Servicer each shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Loans and to
perform its respective duties under this Agreement.
The Depositor or the Master Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, the Rating Agencies' ratings of the
Certificates in effect immediately prior to such merger or consolidation will
not be qualified, reduced or withdrawn as a result thereof (as evidenced by a
letter to such effect from the Rating Agencies).
Section 6.3 LIMITATION ON LIABILITY OF THE DEPOSITOR, THE MASTER
SERVICER, THE SERVICERS, THE SECURITIES ADMINISTRATOR AND OTHERS.
None of the Depositor, the Master Servicer, the Securities
Administrator, the Servicers or any of the directors, officers, employees or
agents of the Depositor, the Master Servicer, the Securities Administrator or
the Servicers shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement or the Servicing Agreements, or
for errors in judgment; provided, however, that this provision shall not protect
the Depositor, the Master Servicer, the Securities Administrator or any such
person against any breach of warranties, representations or covenants made
herein or in the Servicing Agreements, or against any specific liability imposed
on the Master Servicer, the Securities Administrator or the Servicers pursuant
hereto or pursuant to the Servicing Agreements, or against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder or under the Servicing
-87-
Agreements. The Depositor, the Master Servicer, the Securities Administrator,
the Servicers and any director, officer, employee or agent of the Depositor, the
Master Servicer, the Securities Administrator or the Servicers may rely in good
faith on any document of any kind which, PRIMA FACIE, is properly executed and
submitted by any Person respecting any matters arising hereunder or under the
Servicing Agreements. The Depositor, the Master Servicer, the Servicers, the
Securities Administrator, the Custodian and any director, officer, employee or
agent of the Depositor, the Master Servicer, the Servicers, the Custodian or the
Securities Administrator shall be indemnified and held harmless by the Trust
Fund against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement, the Certificates or any Servicing
Agreement, or any loss, liability or expense incurred by any of such Persons
other than by reason of such Person's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of reckless
disregard of its obligations and duties hereunder. None of the Depositor, the
Master Servicer, the Securities Administrator, the Custodian or any Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement, the
Custodial Agreement or the applicable Servicing Agreement and, in its opinion,
does not involve it in any expense or liability; provided, however, that each of
the Depositor, the Master Servicer, the Custodian and the Securities
Administrator may in its discretion undertake any such action which it may deem
necessary or desirable with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom (except any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Master Servicer, the Custodian, the Servicers and the Securities
Administrator shall be entitled to be reimbursed therefor from the Distribution
Account as and to the extent provided in Article III, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Distribution Account.
Section 6.4 LIMITATION ON RESIGNATION OF THE MASTER SERVICER.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Section 6.5 ASSIGNMENT OF MASTER SERVICING.
The Master Servicer may sell and assign its rights and delegate its
duties and obligations in its entirety as Master Servicer under this Agreement;
provided, however, that: (i) the purchaser or transferee accepting such
assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; (b) shall have a net worth
of
-88-
not less than $15,000,000 (unless otherwise approved by each Rating Agency
pursuant to clause (ii) below); (c) shall be reasonably satisfactory to the
Trustee (as evidenced in a writing signed by the Trustee); and (d) shall execute
and deliver to the Trustee an agreement, in form and substance reasonably
satisfactory to the Trustee, which contains an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by it as master servicer under this Agreement, any
custodial agreement from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded, qualified or withdrawn as a result of such assignment,
sale and delegation, as evidenced by a letter to such effect delivered to the
Master Servicer and the Trustee; and (iii) the Master Servicer assigning and
selling the master servicing shall deliver to the Trustee an officer's
certificate and an Opinion of Independent counsel, each stating that all
conditions precedent to such action under this Agreement have been completed and
such action is permitted by and complies with the terms of this Agreement. No
such assignment or delegation shall affect any liability of the Master Servicer
arising prior to the effective date thereof.
Section 6.6 RIGHTS OF THE DEPOSITOR IN RESPECT OF THE MASTER SERVICER.
The Master Servicer shall afford the Depositor and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer in respect of the Master Servicer's rights and
obligations hereunder and access to officers of the Master Servicer responsible
for such obligations. Upon request, the Master Servicer shall furnish to the
Depositor and the Trustee the most recent financial statements of its parent and
such other information relating to the Master Servicer's capacity to perform its
obligations under this Agreement as it possesses. To the extent such information
is not otherwise available to the public, the Depositor and the Trustee shall
not disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee or the Trust Fund, and in any case, the Depositor or the
Trustee, as the case may be, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. The Depositor
may, but is not obligated to, enforce the obligations of the Master Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer under this
Agreement or exercise the rights of the Master Servicer under this Agreement;
provided that the Master Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the Depositor
or its designee. The Depositor shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
-89-
Section 6.7 DUTIES OF THE CREDIT RISK MANAGER.
For and on behalf of the Depositor, pursuant to the Credit Risk
Management Agreements the Credit Risk Manager will provide reports and
recommendations concerning certain delinquent and defaulted Loans, and as to the
collection of any Prepayment Charges with respect to the Loans. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the related Credit Risk Management Agreement, and the Credit
Risk Manager shall look solely to the related Servicer for all information and
data (including loss and delinquency information and data) relating to the
servicing of the related Loans. Upon any termination of the Credit Risk Manager
or the appointment of a successor Credit Risk Manager, the Depositor shall give
written notice thereof to the Servicers, the Master Servicer, the Trustee each
Rating Agency. Notwithstanding the foregoing, the termination of the Credit Risk
Manager pursuant to this Section shall not become effective until the
appointment of a successor Credit Risk Manager.
Section 6.8 LIMITATION UPON LIABILITY OF THE CREDIT RISK MANAGER.
Neither the Credit Risk Manager, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by a Servicer under a Credit Risk Management
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Credit Risk Manager or any such person against liability
that would otherwise be imposed by reason of willful malfeasance or bad faith in
its performance of its duties. The Credit Risk Manager and any director,
officer, employee, or agent of the Credit Risk Manager may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder, and may rely in good faith upon
the accuracy of information furnished by a Servicer pursuant to a Credit Risk
Management Agreement in the performance of its duties thereunder and hereunder.
Section 6.9 REMOVAL OF THE CREDIT RISK MANAGER.
The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders evidencing, in aggregate, not less than 66 2/3% of the
aggregate Percentage Interests of all Classes of Certificates, in the exercise
of its or their sole discretion. The Certificateholders shall provide written
notice of the Credit Risk Manager's removal to the Trustee. Upon receipt of such
notice, the Trustee shall provide written notice to the Credit Risk Manager of
its removal, which shall be effective upon receipt of such notice by the Credit
Risk Manager.
-90-
ARTICLE VII
DEFAULT
Section 7.1 MASTER SERVICER EVENTS OF DEFAULT.
(a) "Master Servicer Event of Default," wherever used herein,
means any one of the following events:
(i) [Reserved];
(ii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in this
Agreement, or the breach by the Master Servicer of any representation
and warranty contained in Section 2.5, which continues unremedied for a
period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Master Servicer by the Depositor or the Trustee or to the Master
Servicer, the Depositor and the Trustee by the Holders of Certificates
evidencing, in aggregate, not less than 25% of the Trust Fund; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to it or of or relating to all or substantially all of
its property; or
(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) any failure of the Master Servicer to make any Advance on
any Distribution Account Deposit Date required to be made from its own
funds pursuant to Section 4.4 which continues unremedied until 3:00
p.m. New York time on the Business Day immediately following the
Distribution Account Deposit Date.
If a Master Servicer Event of Default described in clauses (ii) through (v) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
evidencing, in aggregate, not less than 51% of the Trust Fund, the
-91-
Trustee shall, by notice in writing to the Master Servicer (and to the Depositor
if given by the Trustee or to the Trustee if given by the Depositor) with a copy
to each Rating Agency, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Loans and the proceeds thereof. Except as
otherwise provided in Section 7.4, if a Master Servicer Event of Default
described in clause (vi) hereof shall occur, the Trustee shall, by notice in
writing to the Master Servicer and the Depositor, terminate all of the rights
and obligations of the Master Servicer in its capacity as Master Servicer under
this Agreement and in and to the Loans and the proceeds thereof. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section, and, without limitation, the Trustee is hereby authorized and
empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf
of and at the expense of the Master Servicer, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Loans and related
documents, or otherwise. The Master Servicer agrees promptly (and in any event
no later than ten Business Days subsequent to such notice) to provide the
Trustee with all documents and records requested by it to enable it to assume
the Master Servicer's functions under this Agreement, and to cooperate with the
Trustee in effecting the termination of the Master Servicer's responsibilities
and rights under this Agreement (provided, however, that the Master Servicer
shall continue to be entitled to receive all amounts accrued or owing to it
under this Agreement on or prior to the date of such termination, whether in
respect of Advances or otherwise, and shall continue to be entitled to the
benefits of Section 6.3, notwithstanding any such termination, with respect to
events occurring prior to such termination). For purposes of this Section 7.1,
the Trustee shall not be deemed to have knowledge of a Master Servicer Event of
Default unless a Responsible Officer of the Trustee assigned to and working in
the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a Master Servicer Event of
Default is received by the Trustee and such notice references the Certificates,
the Trust or this Agreement. The Trustee shall promptly notify the Rating
Agencies of the occurrence of a Master Servicer Event of Default of which it has
knowledge as provided above.
Section 7.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.3 and the obligation to deposit amounts in respect of
losses pursuant to Section 3.23(c)) by the terms and provisions hereof
including, without limitation, the Master Servicer's obligations to make
Advances no later than each Distribution Date pursuant to Section 4.4; provided,
however, that if the Trustee is prohibited by law or regulation from obligating
itself to make advances regarding delinquent mortgage loans, then the Trustee
shall not be obligated to make Advances pursuant to Section 4.4; and provided
further, that any failure to perform such duties or responsibilities caused by
the
-92-
Master Servicer's failure to provide information required by Section 7.1
shall not be considered a default by the Trustee as successor to the Master
Servicer hereunder. As compensation therefor, the Trustee shall be entitled to
the Master Servicing Fee and all funds relating to the Loans, investment
earnings on the Distribution Account and all other remuneration to which the
Master Servicer would have been entitled if it had continued to act hereunder.
Notwithstanding the above and subject to the immediately following paragraph,
the Trustee may, if it shall be unwilling to so act, or shall, if it is unable
to so act or if it is prohibited by law from making advances regarding
delinquent mortgage loans or if the Holders of Certificates evidencing, in
aggregate, not less than 51% of the Trust Fund so request in writing promptly
appoint or petition a court of competent jurisdiction to appoint, an established
mortgage loan servicing institution acceptable to each Rating Agency and having
a net worth of not less than $15,000,000, as the successor to the Master
Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer under this
Agreement.
No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Loans as it and such successor shall agree; PROVIDED, HOWEVER, that
no such compensation shall be in excess of that permitted the Master Servicer as
such hereunder. The Depositor, the Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Pending appointment of a successor to the Master Servicer under
this Agreement, the Trustee shall act in such capacity as hereinabove provided.
The transition costs and expenses incurred by the Trustee in connection with the
replacement of the Master Servicer shall be reimbursed out of the Trust.
Section 7.3 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of the Master Servicer pursuant to
Section 7.1 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.2 above, the Trustee shall give prompt written notice
thereof to the Certificateholders at their respective addresses appearing in the
Certificate Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Holders of Certificates notice
of each such occurrence, unless such default or Master Servicer Event of Default
shall have been cured or waived.
Section 7.4 WAIVER OF MASTER SERVICER EVENTS OF DEFAULT.
The Holders evidencing, in aggregate, not less than 66 2/3% of the
aggregate Percentage Interests of all Classes of Certificates affected by any
default or Master Servicer Event of Default hereunder may waive such default or
Master Servicer Event of Default; PROVIDED, HOWEVER, that a default or Master
Servicer Event of Default under clause (i) or (vi) of Section 7.1 may be waived
only by all of the Holders of the Regular Interest Certificates. Upon any such
waiver of a default or Master Servicer Event of Default, such default or Master
Servicer Event of Default
-93-
shall cease to exist and shall be deemed to have been remedied for every purpose
hereunder. No such waiver shall extend to any subsequent or other default or
Master Servicer Event of Default or impair any right consequent thereon except
to the extent expressly so waived.
-94-
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 8.1 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
The Trustee, prior to the occurrence of a Master Servicer Event of
Default and after the curing or waiver of all Master Servicer Events of Default
which may have occurred, and the Securities Administrator each undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement as duties of the Trustee and the Securities Administrator,
respectively. During the continuance of a Master Servicer Event of Default, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
Each of the Trustee and the Securities Administrator, upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to it, 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. If any such instrument is found not to conform on its face to the
requirements of this Agreement, the Trustee or the Securities Administrator, as
the case may be, shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, the Securities Administrator shall provide notice to the Trustee
thereof and the Trustee shall provide notice to the Certificateholders.
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 misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of a Master Servicer Event of
Default, and after the curing or waiver of all such Master Servicer
Events of Default which may have occurred with respect to the Trustee
and at all times with respect to the Securities Administrator, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, neither the Trustee nor the
Securities Administrator shall 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 or the Securities Administrator and, in
the absence of bad faith on the part of the Trustee or the Securities
Administrator, respectively, the Trustee or the Securities
Administrator, respectively, 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 or the
Securities Administrator, respectively, that conform to the
requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator
shall be liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or an
officer or officers of the Securities Administrator,
-95-
respectively, unless it shall be proved that the Trustee or the
Securities Administrator, respectively, was negligent in ascertaining
the pertinent facts; and
(iii) Neither the Trustee nor the Securities Administrator
shall be liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the direction of the
Holders of Certificates evidencing, in aggregate, not less than 25% of
the Trust Fund relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or the Securities
Administrator or exercising any trust or power conferred upon the
Trustee or the Securities Administrator under this Agreement.
Section 8.2 CERTAIN MATTERS AFFECTING TRUSTEE AND SECURITIES
ADMINISTRATOR.
(a) Except as otherwise provided in Section 8.1:
(i) The Trustee and the Securities Administrator 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 reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may consult
with counsel of its selection and any advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(iii) Neither the Trustee nor the Securities Administrator
shall be under any 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 or the Securities Administrator, as the case may be,
reasonable security or indemnity satisfactory to it 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 a Master Servicer Event of Default
(which has not been cured or waived), 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) Neither the Trustee nor the Securities Administrator
shall 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;
-96-
(v) Prior to the occurrence of a Master Servicer Event of
Default hereunder and after the curing or waiver of all Master Servicer
Events of Default which may have occurred with respect to the Trustee
and at all times with respect to the Securities Administrator, neither
the Trustee nor the Securities Administrator shall be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates
evidencing, in aggregate, not less than 25% of the Trust Fund;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the
Trustee or the Securities Administrator 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 or the Securities
Administrator, as applicable, not reasonably assured to the Trustee or
the Securities Administrator by such Certificateholders, the Trustee or
the Securities Administrator, as applicable, may require reasonable
indemnity satisfactory to it against such expense, or liability from
such Certificateholders as a condition to taking any such action;
(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 and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(vii) The Securities Administrator shall not be liable for any
loss resulting from the investment of funds held in the Distribution
Account at the direction of the Master Servicer pursuant to Section
3.23(c);
(viii) Neither the Trustee nor the Securities Administrator
shall be liable for any action taken, suffered, or omitted to be taken
by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(ix) the Trustee shall not be deemed to have notice of any
default or Master Servicer Event of Default unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written
notice of any event which is in fact such a default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Certificates and this Agreement;
(x) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, each
agent, custodian and other Person employed to act hereunder; and
(b) The Trustee is hereby directed by the Depositor to execute
the Cap Contract on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents of the Cap Contract,
including, without limitation, the representations and warranties contained
therein. Any funds payable by the Trustee under the Cap Contract at closing
shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contract, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contract.
-97-
(c) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.3 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR LOANS.
The recitals contained herein and in the Certificates (other than the
signature of the Securities Administrator, the authentication of the Securities
Administrator on the Certificates, the acknowledgments of the Trustee contained
in Article II and the representations and warranties of the Trustee in Section
8.12) shall be taken as the statements of the Depositor and neither the Trustee
nor the Securities Administrator assumes any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 8.12) or of the
Certificates (other than the signature of the Securities Administrator and
authentication of the Securities Administrator on the Certificates) or of any
Loan or related document. The Trustee shall not be accountable for the use or
application by the Depositor 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 Master Servicer in respect of the Loans or deposited in or
withdrawn from the Distribution Account.
Section 8.4 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES.
Each of the Trustee and the Securities Administrator in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
and may transact business with other interested parties and their Affiliates
with the same rights it would have if it were not Trustee or the Securities
Administrator.
Section 8.5 FEES AND EXPENSES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
The fees of the Trustee and the Securities Administrator hereunder and
of ▇▇▇▇▇ Fargo under the Custodial Agreement shall be paid in accordance with a
side letter agreement with the Master Servicer and at the sole expense of the
Master Servicer. In addition, the Trustee, the Securities Administrator, the
Custodian and any director, officer, employee or agent of the Trustee, the
Securities Administrator and the Custodian shall be indemnified by the Trust and
held harmless against any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee or the Securities
Administrator in connection with any default administration to be performed by
the Trustee or the Securities Administrator pursuant to this Agreement or other
agreements related hereto and any claim or legal action or any pending or
threatened claim or legal action arising out of or in connection with the
acceptance or administration of its respective obligations and duties under this
Agreement or the Cap Contract, including other agreements related hereto, other
than any loss, liability or expense (i) for which the Trustee is indemnified by
the Master Servicer, (ii) that constitutes a specific liability of the Trustee
or the Securities Administrator pursuant to Section 10.1(g) or (iii) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder by reason of reckless
disregard of obligations and duties hereunder. The Master Servicer agrees to
indemnify the Trustee, from, and hold the Trustee
-98-
harmless against, any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee by reason of the Master
Servicer's willful misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement or by reason of the Master Servicer's
reckless disregard of its obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any payment hereunder made by the Master
Servicer to the Trustee shall be from the Master Servicer's own funds, without
reimbursement from REMIC I therefor.
Section 8.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and the Securities Administrator shall at all times be a
corporation or an association (other than the Depositor, the Seller, the Master
Servicer or any Affiliate of the foregoing) organized and doing business under
the laws of any 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 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee or the
Securities Administrator, as applicable, shall cease to be eligible in
accordance with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 8.7.
Section 8.7 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and the Securities Administrator may at any time resign and
be discharged from the trust hereby created by giving written notice thereof to
the Depositor, to the Master Servicer, to the Securities Administrator (or the
Trustee, if the Securities Administrator resigns) and to the Certificateholders.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor trustee or successor securities administrator by written instrument,
in duplicate, which instrument shall be delivered to the resigning Trustee or
Securities Administrator, as applicable, and to the successor trustee or
successor securities administrator, as applicable. A copy of such instrument
shall be delivered to the Certificateholders, the Trustee, the Securities
Administrator and the Master Servicer by the Depositor. If no successor trustee
or successor securities administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator, as the case may
be, may, at the expense of the Trust Fund, petition any court of competent
jurisdiction for the appointment of a successor trustee, successor securities
administrator, Trustee or Securities Administrator, as applicable.
If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 8.6 and shall fail
to resign after written request therefor by the Depositor, or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer
-99-
shall take charge or control of the Trustee or the Securities Administrator or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Trustee or the Securities
Administrator, as applicable and appoint a successor trustee or successor
securities administrator, as applicable, by written instrument, in duplicate,
which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator.
The Holders of Certificates evidencing, in aggregate, not less than 51%
of the Trust Fund may at any time remove the Trustee or the Securities
Administrator and appoint a successor trustee or successor securities
administrator 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 or the Securities Administrator so removed and one complete set to the
successor so appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee (in the case of the removal of the Securities
Administrator), the Securities Administrator (in the case of the removal of the
Trustee) and the Master Servicer by the Depositor. All costs and expenses
incurred by the Trustee in connection with its removal without cause hereunder
shall be reimbursed to it by the Trust Fund.
Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.8.
Notwithstanding anything to the contrary contained herein, the Master
Servicer and the Securities Administrator shall at all times be the same Person.
Section 8.8 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.
Any successor trustee or successor securities administrator appointed
as provided in Section 8.7 shall execute, acknowledge and deliver to the
Depositor and its predecessor trustee or predecessor securities administrator an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee or predecessor securities administrator
shall become effective and such successor trustee or successor securities
administrator 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 or securities
administrator herein. The predecessor trustee or predecessor securities
administrator shall deliver to the successor trustee or successor securities
administrator all Loan Documents and related documents and statements to the
extent held by it hereunder, as well as all moneys, held by it hereunder, and
the Depositor and the predecessor trustee or predecessor securities
administrator 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 or successor securities administrator all
such rights, powers, duties and obligations.
No successor trustee or successor securities administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or successor securities administrator shall be eligible
under the provisions of Section 8.6 and the appointment
-100-
of such successor trustee or successor securities administrator shall not result
in a downgrading of any Class of Certificates by any Rating Agency, as evidenced
by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee or successor
securities administrator 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. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.
Section 8.9 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.
Any corporation or association into which the Trustee or the Securities
Administrator may be merged or converted or with which it may be consolidated or
any corporation or association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator shall be a
party, or any corporation or association succeeding to the business of the
Trustee or the Securities Administrator shall be the successor of the Trustee or
the Securities Administrator hereunder, provided such corporation or association
shall be eligible under the provisions of Section 8.6, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 8.10 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 REMIC I or property securing the same may at the time be located, the Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of REMIC I, and to vest in such Person or Persons, in such capacity,
and for the benefit of the Holders of the Certificates, such title to REMIC I,
or any part thereof, and, subject to the other provisions of this Section 8.10,
such powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
8.6 hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.8 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 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 by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I 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.
-101-
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 VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee, or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee or co-trustee.
Section 8.11 APPOINTMENT OF OFFICE OR AGENCY.
The Securities Administrator shall appoint an office or agency in the
City of Minneapolis located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, where the Certificates may be surrendered for registration of
transfer or exchange, and presented for final distribution and where notices and
demands to or upon the Securities Administrator in respect of the Certificates
and this Agreement may be served.
Section 8.12 REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.
The Trustee hereby represents and warrants to the Master Servicer, the
Securities Administrator and the Depositor as applicable, as of the Closing
Date, that:
(i) It is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
will not violate its articles of incorporation or bylaws or constitute
a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which
is applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it in accordance with the
terms hereof, subject to (A) applicable
-102-
bankruptcy, insolvency, receivership, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in its good faith and reasonable judgment, is likely
to affect materially and adversely either the ability of it to perform
its obligations under this Agreement or its financial condition.
(vi) No litigation is pending or, to the best of its
knowledge, threatened against it, which would prohibit it from entering
into this Agreement or, in its good faith reasonable judgment, is
likely to materially and adversely affect either the ability of it to
perform its obligations under this Agreement or its financial
condition.
-103-
ARTICLE IX
TERMINATION
Section 9.1 TERMINATION UPON PURCHASE OR LIQUIDATION OF ALL LOANS.
(a) Subject to Section 9.2, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Securities Administrator and the Trustee (other than the obligations of the
Master Servicer to the Securities Administrator pursuant to Section 8.5 and of
the Master Servicer to pay Compensating Interest to the Securities Administrator
and the Securities Administrator to make payments in respect of REMIC I Regular
Interests or the Classes of Certificates as hereinafter set forth) shall
terminate upon payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur of (i) the purchase by the Terminator (as defined below) of all Loans and
each REO Property remaining in REMIC I and (ii) the final payment or other
liquidation (or any advance with respect thereto) of the last Loan or REO
Property remaining in REMIC I; PROVIDED, HOWEVER, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the date
hereof. The purchase by the Terminator of all Loans and each REO Property
remaining in REMIC I shall be at a price (the "Termination Price") equal to the
sum of (i) the aggregate Purchase Price of all the Loans included in REMIC I,
plus the fair market value of each REO Property, if any, included in REMIC I,
such valuation to be conducted by an appraiser mutually agreed upon by the
Terminator and the Securities Administrator in their reasonable discretion plus
(ii) any amounts due the Servicers and the Master Servicer in respect of unpaid
Servicing Fees, Master Servicing Fees and outstanding Advances and Servicing
Advances.
(b) The Master Servicer shall have the right (the party
exercising such right, the "Terminator"), to purchase all of the Loans and each
REO Property remaining in REMIC I pursuant to clause (i) of the preceding
paragraph no later than the Determination Date in the month immediately
preceding the Distribution Date on which the Certificates will be retired;
PROVIDED, HOWEVER, that the Terminator may elect to purchase all of the Loans
and each REO Property remaining in REMIC I pursuant to clause (i) above only if
the aggregate Scheduled Principal Balance of the Loans and each REO Property
remaining in the Trust Fund at the time of such election is reduced to less than
10% of the aggregate Scheduled Principal Balance of the Loans as of the Cut-Off
Date.
(c) Notice of the liquidation of the Certificates shall be
given promptly by the Securities Administrator by letter to the
Certificateholders mailed (a) in the event such notice is given in connection
with the purchase of the Loans and each REO Property by the Terminator, not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of REMIC I Regular Interests or the Certificates will be made upon presentation
and surrender of
-104-
the related Certificates at the office of the Securities Administrator therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of REMIC I Regular Interests or Certificates from and
after the Interest Accrual Period relating to the final Distribution Date
therefor and (iv) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Securities Administrator. In the event
such notice is given in connection with the purchase of all of the Loans and
each REO Property remaining in the REMIC I by the Terminator, the Terminator
shall deliver to the Securities Administrator for deposit in the Distribution
Account not later than the last Business Day of the month next preceding the
month of the final distribution on the Certificates an amount in immediately
available funds equal to the above-described Termination Price. The Securities
Administrator shall remit (a) to the Master Servicer from such funds deposited
in the Distribution Account (i) any amounts which the Master Servicer notifies
it in writing that the Master Servicer would be permitted to withdraw and retain
from the Distribution Account pursuant to Section 3.24 and (ii) any other
amounts otherwise payable by the Securities Administrator to the Master Servicer
from amounts on deposit in the Distribution Account pursuant to the terms of
this Agreement and notified by the Master Servicer in writing and (b) to the
Servicers, any amounts reimbursable to the Servicers pursuant to the Servicing
Agreements, in each case prior to making any final distributions pursuant to
Section 9.1(d) below. Upon certification to the Trustee and the Securities
Administrator by a Servicing Officer of the making of such final deposit, the
Trustee shall promptly release to the Terminator the Mortgage Files for the
remaining Loans, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effectuate such transfer in each case without
recourse, representation or warranty.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Securities Administrator
shall distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.1 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 9.1 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Securities Administrator shall mail
a second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Securities Administrator
shall pay to the Depositor all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Securities Administrator as a result of such Certificateholder's failure
to surrender its Certificate(s) for final payment thereof in accordance with
this Section 9.1. Any such amounts held in trust by the Securities Administrator
shall be
-105-
held in an Eligible Account and the Securities Administrator may direct
any depository institution maintaining such account to invest the funds in one
or more Eligible Investments. All income and gain realized from the investment
of funds deposited in such accounts held in trust by the Securities
Administrator shall be for the benefit of the Securities Administrator;
PROVIDED, HOWEVER, that the Securities Administrator shall deposit in such
account the amount of any loss of principal incurred in respect of any such
Eligible Investment made with funds in such accounts immediately upon the
realization of such loss.
Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.
Section 9.2 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event that the Terminator purchases all the Loans
and each REO Property or the final payment on or other liquidation of the last
Loan or REO Property remaining in REMIC I pursuant to Section 9.1, the Trust
Fund shall be terminated in accordance with the following additional
requirements:
(i) The Securities Administrator shall specify the first day
in the 90-day liquidation period in a statement attached to each
REMIC's final Tax Return pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained by and at the expense of
the Terminator;
(ii) During such 90-day liquidation period and, at or prior to
the time of making of the final payment on the Certificates, the
Securities Administrator shall sell all of the assets of REMIC I to the
Terminator for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Securities Administrator shall distribute or credit,
or cause to be distributed or credited, to the Holders of the Residual
Certificates all cash on hand in the Trust Fund (other than cash
retained to meet claims), and the Trust Fund shall terminate at that
time.
(b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 9.1, at the expense
of the Trust Fund), the Terminator shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each REMIC pursuant to this Section 9.2.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Securities Administrator to specify the 90-day
liquidation period for each REMIC, which authorization shall be binding upon all
successor Certificateholders.
-106-
ARTICLE X
REMIC PROVISIONS
Section 10.1 REMIC ADMINISTRATION.
(a) The Trustee shall elect to treat each REMIC under the Code
and, if necessary, under applicable state law and as instructed by the
Securities Administrator. Each such election shall be made by the Securities
Administrator on Form 1066 or other appropriate federal tax or information
return or any appropriate state return for the taxable year ending on the last
day of the calendar year in which the Certificates are issued. For the purposes
of the REMIC election in respect of REMIC I, the REMIC I Regular Interests shall
be designated as the Regular Interests in REMIC I and Component R-1 shall be
designated as the Residual Interest in REMIC I. The REMIC II Regular Interest
shall be designated as the Regular Interests in REMIC II and Component R-2 shall
be designated as the Residual Interest in REMIC II. The Certificates (other than
the Class R Certificates) shall be designated as the Regular Interests in REMIC
III and Component R-3 shall be designated as the Residual Interest in REMIC III.
The Trustee shall not permit the creation of any "interests" in each Trust REMIC
(within the meaning of Section 860G of the Code) other than the REMIC I Regular
Interests, REMIC II Regular Interests and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Securities Administrator shall be reimbursed for any
and all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to each REMIC that involve the Internal Revenue Service or state
tax authorities), including the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Securities Administrator, as agent for
each REMIC's tax matters person shall (i) act on behalf of the Trust Fund in
relation to any tax matter or controversy involving any REMIC and (ii) represent
the Trust Fund in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto.
The holder of the largest Percentage Interest of each class of Residual
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.
(d) The Securities Administrator shall prepare and file and
the Trustee shall sign all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.
(e) The Securities Administrator shall perform on behalf of
each REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue
-107-
Service or any state or local taxing authority. Among its other duties, as
required by the Code, the REMIC Provisions or other such compliance guidance,
the Securities Administrator shall provide (i) to any Transferor of a Residual
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any Person who is not a
Permitted Transferee upon receipt of additional reasonable compensation, (ii) to
the Certificateholders such information or reports as are required by the Code
or the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who shall serve as the representative of each
REMIC. The Depositor shall provide or cause to be provided to the Securities
Administrator, within ten (10) days after the Closing Date, all information or
data that the Securities Administrator reasonably determines to be relevant for
tax purposes as to the valuations and issue prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flow of the Certificates.
(f) To the extent in the control of the Trustee or the
Securities Administrator, each such Person (i) shall take such action and shall
cause each REMIC created hereunder to take such action as shall be necessary to
create or maintain the status thereof as a REMIC under the REMIC Provisions,
(ii) shall not take any action, cause the Fund to take any action or fail to
take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (A) endanger the status of each
Trust REMIC as a REMIC or (B) result in the imposition of a tax upon the Trust
Fund (including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless such action or inaction is permitted under this Agreement or the
Trustee and the Securities Administrator have received an Opinion of Counsel,
addressed to them (at the expense of the party seeking to take such action but
in no event at the expense of the Trustee or the Securities Administrator) to
the effect that the contemplated action will not, with respect to any REMIC,
endanger such status or result in the imposition of such a tax, nor (iii) shall
the Securities Administrator take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action; provided that the Securities
Administrator may conclusively rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion of
Counsel. In addition, prior to taking any action with respect to any REMIC or
the respective assets of each, or causing any REMIC to take any action, which is
not contemplated under the terms of this Agreement, the Securities Administrator
shall consult with the Trustee or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
any REMIC, and the Securities Administrator shall not take any such action or
cause any REMIC to take any such action as to which the Trustee has advised it
in writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any
-108-
contributions to any such REMIC after the Startup Day therefor pursuant to
Section 860G(d) of the Code, or any other tax is imposed by the Code or any
applicable provisions of state or local tax laws, such tax shall be charged (i)
to the Trustee pursuant to Section 10.3 hereof, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Article X, (ii) to the Securities Administrator pursuant to Section 10.3 hereof,
if such tax arises out of or results from a breach by the Securities
Administrator of any of its obligations under this Article X, (iii) to the
Master Servicer pursuant to Section 10.3 hereof, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
Article III or under this Article X, or (iv) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) The Trustee and the Securities Administrator shall, for
federal income tax purposes, maintain books and records with respect to each
REMIC on a calendar year and on an accrual basis.
(i) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any REMIC other than in connection with any
Substitute Loan delivered in accordance with Section 2.3 unless it shall have
received an Opinion of Counsel addressed to it to the effect that the inclusion
of such assets in the Trust Fund will not cause the related REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding or subject
such REMIC to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.
(k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.
Section 10.2 PROHIBITED TRANSACTIONS AND ACTIVITIES.
None of the Depositor, the Securities Administrator, the Master
Servicer or the Trustee shall sell, dispose of or substitute for any of the
Loans (except in connection with (i) the foreclosure of a Loan, including but
not limited to, the acquisition or sale of a Mortgaged Property acquired by deed
in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Loans pursuant to Article
II of this Agreement), nor acquire any assets for any REMIC (other than REO
Property acquired in respect of a defaulted Loan), nor sell or dispose of any
investments in the Distribution Account for gain, nor accept any contributions
to any REMIC after the Closing Date (other than a Substitute Loan delivered in
accordance with Section 2.3), unless it has received an Opinion of Counsel,
addressed to the Trustee (at the expense of the party seeking to cause such
sale, disposition, substitution, acquisition or contribution but in no event at
the expense of the Trustee) that such sale, disposition,
-109-
substitution, acquisition or contribution will not (a) affect adversely the
status of any REMIC as a REMIC or (b) cause any REMIC to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
Section 10.3 INDEMNIFICATION.
(a) The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Securities Administrator or the
Master Servicer including, without limitation, any reasonable attorneys fees
imposed on or incurred by the Trust Fund, the Depositor, the Securities
Administrator or the Master Servicer as a result of the Trustee's failure to
perform its covenants set forth in this Article X in accordance with the
standard of care of the Trustee set forth in this Agreement.
(b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of the Master Servicer's failure
to perform its covenants set forth in Article III in accordance with the
standard of care of the Master Servicer set forth in this Agreement.
(c) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor or the Trustee
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor or the Trustee as a result of the
Securities Administrator's failure to perform its covenants set forth in this
Article X in accordance with the standard of care of the Securities
Administrator set forth in this Agreement.
-110-
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 AMENDMENT. This Agreement may be amended from time to
time, by the Depositor, the Master Servicer, the Securities Administrator and
the Trustee, without the consent of any of the Certificateholders, (a) to cure
any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Agreement, (b) to
modify, eliminate or add to any provisions to such extent as shall be necessary
to maintain the qualification of the Trust Fund as three REMICs at all times
that any Class A, Class M , Class CE or Class P Certificates are outstanding,
provided, that such action shall not, as evidenced by an Opinion of Counsel
addressed to the Trustee and delivered to the Trustee, adversely affect in any
material respect the interests of any Certificateholder. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Master Servicer, the Securities Administrator and the Trustee
with the consent of the Holders of Certificates entitled to at least 66-2/3% of
the Voting Rights for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; PROVIDED, HOWEVER, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66-2/3%
of the Voting Rights allocated to such Class, or (iii) modify the consents
required by the immediately preceding clauses (i) and (ii) without the consent
of the Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or the Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates. Without
limiting the generality of the foregoing, any amendment to this Agreement
required in connection with the compliance with or the clarification of any
reporting obligations described in Section 5.06 hereof shall not require the
consent of any Certificateholder and without the need for any Opinion of Counsel
or Rating Agency confirmation.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to it to the effect that such amendment
will not cause either REMIC I, REMIC II or REMIC III of the Trust Fund to fail
to qualify as a REMIC at any time that REMIC I Regular Interests, REMIC II
Regular Interests or Regular Interest Certificates are outstanding.
-111-
As soon as practicable after the execution of any such amendment, the
Trustee shall furnish written notification of the substance of such amendment to
each Certificateholder and Rating Agency.
It shall not be necessary for the consent of the Certificateholders
under this Section 11.1 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.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel addressed to it
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement.
Section 11.2 RECORDATION OF AGREEMENT; COUNTERPARTS. To the extent
permitted by applicable law, this Agreement (or an abstract hereof, if
acceptable by the applicable recording office) is subject to recordation in all
appropriate public offices for real property records in all the counties or
other comparable jurisdictions in which any or all of the properties subject to
the Mortgages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Depositor at the expense of
the Certificateholders, but only after the Depositor has delivered to the
Trustee an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.3 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 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.
Except as otherwise expressly provided herein no Certificateholder,
solely by virtue of its status as Certificateholder, shall have any right to
vote 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, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing 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
-112-
continuance thereof, as hereinbefore provided, and unless all of the Holders of
Certificates evidencing, in aggregate, not less than 25% of the Trust Fund shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more holders of Certificates shall have any right in any manner whatever
by virtue or by availing of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 11.3, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES OTHER THAN 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.5 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified or registered mail, return receipt requested
(a) in the case of the Depositor, to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Deutsche Mortgage Securities, Inc., Mortgage Loan Trust, Series
2004-2, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, or such other address or telecopy
number as may hereafter be furnished to the Master Servicer and the Trustee in
writing by the Depositor, (b) in the case of the Master Servicer and the
Securities Administrator, ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and for
overnight delivery to ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Deutsche Mortgage Securities, Inc., 2004-2 (telecopy number: (410)
715-2380), or such other address or telecopy number as may hereafter be
furnished to the Trustee and the Depositor in writing by the Master Servicer or
the Securities Administrator, and (c) in the case of the Trustee, at the
Corporate Trust Office or such other address or telecopy number as the Trustee
may hereafter be furnish to the Master Servicer and the Depositor in writing by
the Trustee. Any notice required or permitted to be given to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given when mailed, whether or not the Certificateholder receives such
notice. A copy of any notice required to be telecopied hereunder also shall be
mailed to the appropriate party in the manner set forth above.
Section 11.6 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
-113-
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.7 NOTICE TO RATING AGENCIES.
The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies with respect to each of the following of which it has actual
knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Master Servicer Event of
Default that has not been cured or waived;
3. The resignation or termination of the Master Servicer
or the Trustee;
4. The repurchase or substitution of Loans pursuant to
or as contemplated by Section 2.3;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Distribution
Account; and
7. Any event that would result in the inability of the
Trustee to make advances regarding delinquent Loans
pursuant to Section 7.2.
The Master Servicer shall make available to each Rating Agency
copies of the following:
1. Each annual statement as to compliance described in
Section 3.16; and
2. Each annual independent public accountants' servicing
report described in Section 3.17.
Any such notice pursuant to this Section 11.7 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and to ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other addresses as the Rating
Agencies may designate in writing to the parties hereto.
Section 11.8 ARTICLE AND SECTION REFERENCES.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 11.9 GRANT OF SECURITY INTEREST.
-114-
It is the express intent of the parties hereto that the conveyance of
the Loans by the Depositor to the Trustee, on behalf of the Trust Fund and for
the benefit of the Certificateholders, be, and be construed as, a sale of the
Loans by the Depositor and not a pledge of the Loans to secure a debt or other
obligation of the Depositor. However, in the event that, notwithstanding the
aforementioned intent of the parties, the Loans are held to be property of the
Depositor, then, (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Loans by the Depositor to the Trustee, on
behalf of the Trust Fund and for the benefit of the Certificateholders, to
secure a debt or other obligation of the Depositor and (b)(1) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the Uniform Commercial Code as in effect from time to time in the State
of New York; (2) the conveyance provided for in Section 2.1 hereof shall be
deemed to be a grant by the Depositor to the Trustee, on behalf of the Trust
Fund and for the benefit of the Certificateholders, of a security interest in
all of the Depositor's right, title and interest in and to the Loans and all
amounts payable to the holders of the Loans in accordance with the terms thereof
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, instruments, securities or other property, including without
limitation all amounts, other than investment earnings, from time to time held
or invested in the Distribution Account, whether in the form of cash,
instruments, securities or other property; (3) the obligations secured by such
security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Loans and the
Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee, on behalf of the Trust
Fund and for the benefit of the Certificateholders, a security interest in the
Loans and all other property described in clause (2) of the preceding sentence,
for the purpose of securing to the Trustee the performance by the Depositor of
the obligations described in clause (3) of the preceding sentence.
Notwithstanding the foregoing, the parties hereto intend the conveyance pursuant
to Section 2.1 to be a true, absolute and unconditional sale of the Loans and
assets constituting the Trust Fund by the Depositor to the Trustee, on behalf of
the Trust Fund and for the benefit of the Certificateholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-115-
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Securities
Administrator and the Trustee have caused their names to be signed hereto by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
DEUTSCHE MORTGAGE SECURITIES, INC.,
as Depositor
By___________________________________________
Name:
Its:
By___________________________________________
Name:
Its:
▇▇▇▇▇ FARGO BANK, N.A.,
as Master Servicer and Securities
Administrator
By___________________________________________
Name:
Its:
HSBC BANK USA, not in its individual capacity
but solely as Trustee
By___________________________________________
Name:
Its:
With Respect to Sections 6.7, 6.8 and 6.9:
THE MURRAYHILL COMPANY
By:____________________________________
Name:
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of February 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of Deutsche Mortgage Securities, Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of February 2004, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of Deutsche Mortgage Securities, Inc ., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the __ day of February 2004, before me, a notary public in
and for said State, personally appeared ___________________________ known to me
to be a ____________________ of ▇▇▇▇▇ Fargo Bank, N.A., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of February 2004, before me, a notary public in
and for said State, personally appeared _______________ known to me to be a
_______________ of HSBC Bank USA, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
EXHIBIT A-1
FORM OF CLASS A-[1][2][3][4][5][6] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND CERTAIN LOSSES ALLOCABLE HERETO,
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE
INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING
THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF
THE SECURITIES ADMINISTRATOR NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.1 Pass-Through Rate: %
Class A-[1][2][3][4][5][6] Senior Percentage Interest: _____
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-Off Date: of this Class as of the Cut-Off Date:
February 1, 2004 $
First Distribution Date: Initial Certificate Principal Balance of this
March 25, 2004 Certificate as of the Cut-Off Date:
$___________
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A. CUSIP: ___________
Final Distribution Date:
January 25, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions
allocable to the Class A-[1][2][3][4][5][6] Certificates with respect
to a Trust Fund consisting primarily of a pool of conventional one- to
four-family fixed interest rate mortgage loans sold by DEUTSCHE
MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund as described in the Agreement (as defined below), and does not
represent an obligation of or interest in Deutsche Mortgage Securities, Inc.,
the Master Servicer, the Trustee or the Securities Administrator referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans (as defined below) are guaranteed or insured
by any governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans were sold by
Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A. will act as
master servicer of the Mortgage Loans (the "Master
A-1-2
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-Off Date specified above (the
"Agreement"), among DMSI, as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank,
N.A., as Master Servicer and securities administrator (the "Securities
Administrator") and HSBC Bank USA, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, capitalized terms used herein shall have the meaning
ascribed to them in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.
[[Class A-1 Certificates:] Interest on this Certificate will
accrue during (a) as to the Distribution Date in March 2004, the period
commencing on the Closing Date and ending on the day preceding the Distribution
Date, and (b) as to any Distribution Date after the Distribution Date in March
2004, the period commencing on the Distribution Date in the month immediately
preceding the month in which that Distribution Date occurs and ending on the day
preceding that Distribution Date, on the Certificate Principal Balance hereof at
a per annum rate equal to the Pass-Through Rate set forth above. The Securities
Administrator will distribute on the 25th day of each month, or, if such 25th
day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the Business Day immediately preceding such Distribution Date (the
"Record Date"), an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The last scheduled Distribution Date is the Distribution Date
in January 2034.]
[Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. The Securities Administrator will distribute
on the 25th day of each month, or, if such 25th day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month immediately preceding the month of such Distribution Date
(the "Record Date"), an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The last scheduled Distribution Date is the Distribution Date
in January 2034.]
Distributions on this Certificate will be made by the
Securities Administrator by wire transfer in immediately available funds to the
account of the Person in whose name the Certificate is registered at the close
of business on the related Record Date or by any other means of payment
acceptable to such Certificateholder. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance
A-1-3
hereof will be reduced to the extent of distributions allocable to principal
hereon and any losses allocable hereto as described in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder, and
that neither the Depositor, the Trustee, the Master Servicer nor the Securities
Administrator is 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 hereby, and the rights,
duties and immunities of the Securities Administrator.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of Certificates affected thereby evidencing not less than 66-2/3% of the
Voting Rights. 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 lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Securities Administrator upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by the Securities
Administrator for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Securities Administrator duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates in authorized denominations
representing a like aggregate Percentage Interest will be issued to the
designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Securities Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. The Depositor, the Master Servicer, the
Securities Administrator, the Trustee and any agent of any of them may treat the
Person in whose
A-1-4
name this Certificate is registered as the owner hereof for all purposes, and
none of Depositor, the Master Servicer, the Securities Administrator, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the remittance of all funds due under the Agreement, coinciding
with or following the earlier to occur of (i) the maturity or other liquidation
(or Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan or (ii) the optional repurchase by the
party named in the Agreement of all the Mortgage Loans and other assets of the
Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-Off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Securities Administrator by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
A-1-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-[1][2][3][4][5][6] Certificates
referred to in the within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:________________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-2
FORM OF CLASS A-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.1 Pass-Through Rate: %
Class A-IO Percentage Interest: _____
Date of Pooling and Servicing Agreement and Aggregate Initial Notional Amount of this Class
Cut-Off Date: as of the Cut-Off Date:
February 1, 2004 $___________
First Distribution Date: Initial Notional Amount of this Certificate as of
March 25, 2004 the Cut-Off Date:
$___________
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A.
Final Distribution Date:
February 25, 2006 CUSIP: ___________
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions
allocable to the Class A-IO Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate mortgage loans sold by DEUTSCHE MORTGAGE
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund as described in the Agreement (as defined below), and does not
represent an obligation of or interest in Deutsche Mortgage Securities, Inc.,
the Master Servicer, the Trustee or the Securities Administrator referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans (as defined below) are guaranteed or insured
by any governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans were sold by
Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A. will act as
master servicer of the Mortgage Loans (the "Master
A-2-2
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-Off Date specified above (the
"Agreement"), among DMSI, as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank,
N.A., as Master Servicer and securities administrator (the "Securities
Administrator") and HSBC Bank USA, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, capitalized terms used herein shall have the meaning
ascribed to them in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Class A-IO Notional Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above. The Securities Administrator will distribute
on the 25th day of each month, or, if such 25th day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month preceding the month of such Distribution Date (the "Record
Date"), an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the amount of interest required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The last
scheduled Distribution Date is the Distribution Date in February 2006.
Distributions on this Certificate will be made by the
Securities Administrator by wire transfer in immediately available funds to the
account of the Person in whose name the Certificate is registered at the close
of business on the related Record Date or by any other means of payment
acceptable to such Certificateholder. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose and designated in such notice. The
Class A-IO Certificates have no Certificate Principal Balance. The initial
Notional Balance of this Certificate is set forth above.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder, and
that neither the Depositor, the Securities Administrator, the Master Servicer
nor the Trustee is 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 hereby, and the rights,
duties and immunities of the Securities Administrator.
A-2-3
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of Certificates affected thereby evidencing not less than 66-2/3% of the
Voting Rights. 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 lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Securities Administrator upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by the Securities
Administrator for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Securities Administrator duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates in authorized denominations
representing a like aggregate Percentage Interest will be issued to the
designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Securities Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. The Depositor, the Master Servicer, the
Securities Administrator, the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of Depositor, the Master Servicer, the Securities
Administrator, the Trustee or any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the remittance of all funds due under the Agreement, coinciding
with or following the earlier to occur of (i) the maturity or other liquidation
(or Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan or (ii) the optional repurchase by the
party named in the Agreement of all the Mortgage Loans and other assets of the
Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-Off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the
A-2-4
Agreement continue beyond the expiration of 21 years after the death of certain
persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Securities Administrator by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
A-2-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-3
FORM OF CLASS M-[1][2][3] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES [AND][,][ THE CLASS M-1 CERTIFICATES, [AND] THE CLASS M-2
CERTIFICATES], AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND CERTAIN LOSSES ALLOCABLE HERETO
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE
INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY
INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE
REPRESENTATIONS SET FORTH IN SECTION 5.3(D) OF THE AGREEMENT REFERRED TO HEREIN.
Certificate No.1 Pass-Through Rate: %
Class M-[1][2][3] Percentage Interest: _____
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-Off Date: of this Class as of the Cut-Off Date:
February 1, 2004 $___________
First Distribution Date: Initial Certificate Principal Balance of this
March 25, 2004 Certificate as of the Cut-Off Date:
$-----------
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A. CUSIP: ___________
Final Distribution Date:
January 25, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions
allocable to the Class [M]-[1][2][3] Certificates with respect to a
Trust Fund consisting primarily of a pool of conventional one- to
four-family fixed interest rate mortgage loans sold by DEUTSCHE
MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund as described in the Agreement (as defined below), and does not
represent an obligation of or interest in Deutsche Mortgage Securities, Inc.,
the Master Servicer, the Trustee or the Securities Administrator referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans (as defined below) are guaranteed or insured
by any governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans were sold by
Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A. will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
A-3-2
Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as
of the Cut-Off Date specified above (the "Agreement"), among DMSI, as depositor
(the "Depositor"), ▇▇▇▇▇ Fargo Bank, N.A., as Master Servicer and securities
administrator (the "Securities Administrator") and HSBC Bank USA, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. The Securities Administrator will distribute
on the 25th day of each month, or, if such 25th day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month preceding the month of such Distribution Date (the "Record
Date"), an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the amount (of interest and principal, if any) required to
be distributed to the Holders of Certificates of the same Class as this
Certificate. The last scheduled Distribution Date is the Distribution Date in
January 2034.
Distributions on this Certificate will be made by the
Securities Administrator by wire transfer in immediately available funds to the
account of the Person in whose name the Certificate is registered at the close
of business on the related Record Date or by any other means of payment
acceptable to such Certificateholder. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto as described in the Agreement.
Any transferee of this certificate shall be deemed to make the
representations set forth in section 5.3(d) of the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
neither the Depositor, the Trustee, the Master Servicer nor the Securities
Administrator is 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.
A-3-3
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 hereby, and the rights,
duties and immunities of the Securities Administrator.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of Certificates affected thereby evidencing not less than 66-2/3% of the
Voting Rights. 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 lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Securities Administrator upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by the Securities
Administrator for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Securities Administrator duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates in authorized denominations
representing a like aggregate Percentage Interest will be issued to the
designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Securities Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. The Depositor, the Master Servicer, the
Trustee, the Securities Administrator and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator or any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the remittance of all funds due under the Agreement, coinciding
with or following the earlier to occur of (i) the maturity or other liquidation
(or Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan or (ii) the optional repurchase by the
party named in the Agreement of all the Mortgage Loans and other assets of the
Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified
A-3-4
in the Agreement of the Mortgage Loans at the Cut-Off Date. The exercise of such
right will effect the early retirement of the Certificates. In no event,
however, will the Trust Fund created by the Agreement continue beyond the
expiration of 21 years after the death of certain persons identified in the
Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Securities Administrator by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
A-3-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-[1][2][3] Certificates referred to
in the within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-4
FORM OF CLASS CE CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AND THE CLASS M CERTIFICATES, AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
DISTRIBUTIONS ON THIS CERTIFICATE MAY BE MADE MONTHLY AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN AS THE DENOMINATION OF THIS
CERTIFICATE.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.3(C) OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON,
UNLESS THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.3(D)
OF THE AGREEMENT OR AN OPINION OF COUNSEL UNDER SECTION 5.3(D) OF THE AGREEMENT
THAT THE PURCHASE OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION
406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE DEPOSITOR, THE
MASTER SERVICER, THE TRUSTEE, THE SECURITIES ADMINISTRATOR, ANY SERVICER OR THE
TRUST FUND TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE
AGREEMENT.
Certificate No.1
Class CE Percentage Interest: _____
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-Off Date: of this Class as of the Cut-Off Date:
February 1, 2004 $_________
First Distribution Date: Initial Certificate Principal Balance of this
March 25, 2004 Certificate as of the Cut-Off Date:
$_________
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A. CUSIP:
Final Distribution Date:
January 25, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions
allocable to the Class CE Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate mortgage loans sold by DEUTSCHE MORTGAGE
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund as described in the Agreement (as defined below), and does not
represent an obligation of or interest in Deutsche Mortgage Securities, Inc.,
the Master Servicer, the Trustee or the Securities Administrator referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans (as defined below) are guaranteed or insured
by any governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Deutsche Bank Securities Inc. is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien, fixed
rate mortgage loans secured by one- to four- family residences, units in planned
unit developments and individual condominium units (collectively, the "Mortgage
Loans") sold by Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans
were sold by Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A.
will act as master servicer of the Mortgage Loans (the "Master Servicer," which
term includes any successors thereto under the Agreement referred to below). The
Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as
of the Cut-Off Date
A-4-2
specified above (the "Agreement"), among DMSI, as depositor (the "Depositor"),
▇▇▇▇▇ Fargo Bank, N.A., as Master Servicer and securities administrator (the
"Securities Administrator") and HSBC Bank USA as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement. This Certificate is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. The Securities Administrator will distribute
on the 25th day of each month, or, if such 25th day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month preceding the month of such Distribution Date (the "Record
Date"), an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the amount (of interest and principal, if any) required to
be distributed to the Holders of Certificates of the same Class as this
Certificate. The last scheduled Distribution Date is the Distribution Date in
January 2034.
Distributions on this Certificate will be made by the
Securities Administrator by wire transfer in immediately available funds to the
account of the Person in whose name the Certificate is registered at the close
of business on the related Record Date or by any other means of payment
acceptable to such Certificateholder. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and certain losses allocable hereto
as described in the Agreement.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit D
and either Exhibit E or Exhibit F, as applicable, and (ii) in all other cases,
an Opinion of Counsel reasonably satisfactory to the Trustee, the Depositor and
the Securities Administrator that such transfer may be made without such
registration or qualification (which Opinion of Counsel shall not be an expense
of the Trust Fund or of the Depositor, the Trustee, the Securities
Administrator, the Master Servicer, any Servicer or the Trust Fund in their
respective capacities as such), together with copies of the written
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Securities Administrator or the
Trustee is obligated to register or qualify the Class
A-4-3
of Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Securities Administrator, the
Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of this Class CE Certificate will be made unless
the Depositor, the Trustee and the Securities Administrator have received either
(i) an opinion of counsel under Section 5.3(d) of the Agreement stating, among
other things, that the transferee's acquisition of a Class CE Certificate is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal
Revenue Code (the "Code") and will not subject the Depositor, the Trustee, the
Securities Administrator, the Master Servicer, any Servicer or the Trust Fund to
any obligation or liability in addition to those undertaken in the Agreement or
(ii) a representation letter, in the form as described by the Agreement, stating
that the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee nor the Securities Administrator is 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 hereby, and the rights,
duties and immunities of the Securities Administrator.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of Certificates affected thereby evidencing not less than 66-2/3% of the
Voting Rights. 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 lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Securities Administrator upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by the Securities
Administrator for
A-4-4
such purposes, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Securities Administrator duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates in authorized denominations representing
a like aggregate Percentage Interest will be issued to the designated
transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Securities Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. The Depositor, the Master Servicer, the
Trustee, the Securities Administrator and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator or any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the remittance of all funds due under the Agreement, coinciding
with or following the earlier to occur of (i) the maturity or other liquidation
(or Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan or (ii) the optional repurchase by the
party named in the Agreement of all the Mortgage Loans and other assets of the
Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Scheduled Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-Off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Securities Administrator by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
A-4-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-5
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.3 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE
WITH THE PROCEDURES DESCRIBED HEREIN.
Certificate No.1
Class P Percentage Interest: _____
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-Off Date: of this Class as of the Cut-Off Date:
February 1, 2004 $100.00
First Distribution Date: Initial Certificate Principal Balance of this
March 25, 2004 Certificate as of the Cut-Off Date:
$100.00
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A. CUSIP:
Final Distribution Date:
January 25, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions allocable to the
Class P Certificates with respect to a Trust Fund consisting primarily of a pool
of conventional one- to four-family fixed interest rate mortgage loans sold by
DEUTSCHE MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund as described in the Agreement (as defined below), and does not
represent an obligation of or interest in Deutsche Mortgage Securities, Inc.,
the Master Servicer, the Trustee or the Securities Administrator referred to
below or any of their affiliates or any other person. Neither this Certificate
nor the underlying Mortgage Loans (as defined below) are guaranteed or insured
by any governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Deutsche Bank Securities Inc. is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien, fixed
rate mortgage loans secured by one- to four- family residences, units in planned
unit developments and individual condominium units (collectively, the "Mortgage
Loans") sold by Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans
were sold by Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A.
will act as master servicer of the Mortgage Loans (the "Master Servicer," which
term includes any successors thereto under the Agreement referred to below). The
A-5-2
Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as
of the Cut-Off Date specified above (the "Agreement"), among DMSI, as depositor
(the "Depositor"), ▇▇▇▇▇ Fargo Bank, N.A., as Master Servicer and securities
administrator (the "Securities Administrator") and HSBC Bank USA as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of the Class P Certificates on such Distribution Date
pursuant to the Agreement.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than the distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans.
Distributions on this Certificate will be made by the
Securities Administrator by wire transfer in immediately available funds to the
account of the Person in whose name the Certificate is registered at the close
of business on the related Record Date or by any other means of payment
acceptable to such Certificateholder. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit D
and either Exhibit E or Exhibit F, as applicable, and (ii) in all other cases,
an Opinion of Counsel reasonably satisfactory to the Trustee, the Depositor and
the Securities Administrator that such transfer may be made without such
registration or qualification (which Opinion of Counsel shall not be an expense
of the Trust Fund or of the Depositor, the Trustee, the Securities
Administrator, the Master Servicer, any Servicer or the Trust Fund in their
respective capacities as such), together
A-5-3
with copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee upon
which such Opinion of Counsel is based. None of the Depositor, the Securities
Administrator or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Securities Administrator, the
Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of this Class P Certificate will be made unless the
Depositor, the Trustee and the Securities Administrator have received either (i)
an opinion of counsel under Section 5.3(d) of the Agreement stating, among other
things, that the transferee's acquisition of a Class P Certificate is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal
Revenue Code (the "Code") and will not subject the Depositor, the Trustee, the
Securities Administrator, the Master Servicer, any Servicer or the Trust Fund to
any obligation or liability in addition to those undertaken in the Agreement or
(ii) a representation letter, in the form as described by the Agreement, stating
that the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee nor the Securities Administrator is 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 hereby, and the rights,
duties and immunities of the Securities Administrator.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of Certificates
affected thereby evidencing not less than 66-2/3% of the Voting Rights. 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 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.
A-5-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator for such
purposes, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Securities Administrator duly executed by the Holder
hereof or such Holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations representing a like
aggregate Percentage Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Securities Administrator, the
Trustee and any agent of any of them may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Securities Administrator, the Trustee or any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the remittance
of all funds due under the Agreement, coinciding with or following the earlier
to occur of (i) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan or (ii) the optional repurchase by the party named in the
Agreement of all the Mortgage Loans and other assets of the Trust Fund in
accordance with the terms of the Agreement. Such optional repurchase may be made
only on or after the Distribution Date on which the aggregate Scheduled
Principal Balance of the Mortgage Loans is less than the percentage of the
aggregate Scheduled Principal Balance specified in the Agreement of the Mortgage
Loans at the Cut-Off Date. The exercise of such right will effect the early
retirement of the Certificates. In no event, however, will the Trust Fund
created by the Agreement continue beyond the expiration of 21 years after the
death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an authorized
signatory of the Securities Administrator by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-5-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-6
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.3(C) AND 5.3(E) OF THE
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.3(D) OF THE
AGREEMENT OR AN OPINION OF COUNSEL UNDER SECTION 5.3(D) OF THE AGREEMENT THAT
THE PURCHASE OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE TRUSTEE,
THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, ANY SERVICER OR THE TRUST FUND TO
ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE SECURITIES
ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED
IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF
THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE
(ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF
A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL
BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE
PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.3(D) OF THE
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS
PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 5.3(C) AND 5.3(E) OF THE AGREEMENT.
A-6-2
Certificate No.1
Class R Percentage Interest: 100%
Date of Pooling and Servicing Agreement and
Cut-Off Date:
February 1, 2004
First Distribution Date:
March 25, 2004
Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A. CUSIP:
Final Distribution Date:
January 25, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-2
evidencing a fractional undivided interest in the distributions allocable to the
Class R Certificates with respect to a Trust Fund consisting primarily of a pool
of conventional one- to four-family fixed interest rate mortgage loans sold by
DEUTSCHE MORTGAGE SECURITIES, INC.
This Certificate is payable solely from the assets of the Trust Fund as
described in the Agreement (as defined below), and does not represent an
obligation of or interest in Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans (as defined below) are guaranteed or insured by any
governmental entity or by Deutsche Mortgage Securities, Inc., the Master
Servicer, the Trustee or the Securities Administrator or any of their affiliates
or any other person. None of Deutsche Mortgage Securities, Inc., the Master
Servicer or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.
This certifies that Deutsche Bank Securities Inc. is the registered
owner of the Percentage Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of conventional first lien, fixed rate
mortgage loans secured by one- to four- family residences, units in planned unit
developments and individual condominium units (collectively, the "Mortgage
Loans") sold by Deutsche Mortgage Securities, Inc. ("DMSI"). The Mortgage Loans
were sold by Deutsche Bank AG New York Branch to DMSI. ▇▇▇▇▇ Fargo Bank, N.A.
will act as master servicer of the Mortgage Loans (the "Master Servicer," which
term includes any successors thereto under the Agreement referred to below). The
Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as
of the Cut-Off Date
A-6-3
specified above (the "Agreement"), among DMSI, as depositor (the "Depositor"),
▇▇▇▇▇ Fargo Bank, N.A., as Master Servicer and securities administrator (the
"Securities Administrator") and HSBC Bank USA as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement. This Certificate is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Securities Administrator of, among other things, an affidavit to the effect
that it is a United States Person and Permitted Transferee, (iii) any attempted
or purported transfer of any Ownership Interest in this Certificate in violation
of such restrictions will be absolutely null and void and will vest no rights in
the purported transferee, and (iv) if any person other than a United States
Person and a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions, then the Depositor will have the
right, in its sole discretion and without notice to the Holder of this
Certificate, to sell this Certificate to a purchaser selected by the Depositor,
which purchaser may be the Depositor, or any affiliate of the Depositor, on such
terms and conditions as the Depositor may choose.
The Securities Administrator will distribute on the 25th day of each
month, or, if such 25th day is not a Business Day, the immediately following
Business Day (each, a "Distribution Date"), commencing on the First Distribution
Date specified above, to the Person in whose name this Certificate is registered
at the close of business on the last Business Day of the calendar month
immediately preceding the month in which such Distribution Date occurs (the
"Record Date"), an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amounts required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The last
scheduled Distribution Date is the Distribution Date in January 2034.
Distributions on this Certificate will be made by the Securities
Administrator by wire transfer in immediately available funds to the account of
the Person in whose name the Certificate is registered at the close of business
on the related Record Date or by any other means of payment acceptable to such
Certificateholder. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Securities Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Securities Administrator
for that purpose and designated in such notice.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as
A-6-4
Exhibit D and either Exhibit E or Exhibit F, as applicable, and (ii) in all
other cases, an Opinion of Counsel satisfactory to it that such transfer may be
made without such registration or qualification (which Opinion of Counsel shall
not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Securities Administrator or the Master Servicer in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Securities Administrator or the Trustee is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Securities Administrator, the
Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of this Class R Certificate will be made unless the
Depositor, the Trustee and the Securities Administrator have received either (i)
an opinion of counsel under Section 5.3(d) of the Agreement stating, among other
things, that the transferee's acquisition of a Class R Certificate is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal
Revenue Code (the "Code") and will not subject the Depositor, the Trustee, the
Securities Administrator, the Master Servicer, any Servicer or the Trust Fund to
any obligation or liability in addition to those undertaken in the Agreement or
(ii) a representation letter, in the form as described by the Agreement, stating
that the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Securities Administrator nor the Trustee is 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 hereby, and the rights,
duties and immunities of the Securities Administrator.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of Certificates
affected thereby evidencing not less than 66-2/3% of the Voting Rights. 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
A-6-5
or in lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator for such
purposes, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Securities Administrator duly executed by the Holder
hereof or such Holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations representing a like
aggregate Percentage Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Securities Administrator may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor, the Master Servicer, the Securities
Administrator, the Trustee and any agent of any of them may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of Depositor, the Master Servicer, the Securities Administrator, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the remittance
of all funds due under the Agreement, coinciding with or following the earlier
to occur of (i) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan or (ii) the optional repurchase by the party named in the
Agreement of all the Mortgage Loans and other assets of the Trust Fund in
accordance with the terms of the Agreement. Such optional repurchase may be made
only on or after the Distribution Date on which the aggregate Scheduled
Principal Balance of the Mortgage Loans is less than the percentage of the
aggregate Scheduled Principal Balance specified in the Agreement of the Mortgage
Loans at the Cut-Off Date. The exercise of such right will effect the early
retirement of the Certificates. In no event, however, will the Trust Fund
created by the Agreement continue beyond the expiration of 21 years after the
death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Securities Administrator 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 Securities Administrator has caused
this Certificate to be duly executed.
A-6-6
Dated: February 27, 2004
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a
new Certificate of a like denomination and Class, to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
____________________________________________________
Signature by or on behalf of assignor
_________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT B
[RESERVED]
EXHIBIT C
FORM OF TRANSFER AFFIDAVIT
Affidavit pursuant to Section
860E(e)(4) of the Internal Revenue
Code of 1986, as amended, and for
other purposes
STATE OF )
)ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he/she is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _____] [the United States], on behalf of which
he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Deutsche Mortgage Securities,
Inc. Mortgage Loan Trust, Series 2004-2 Mortgage Pass-Through Certificates,
Class R Certificates (the "Residual Certificates") for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by Deutsche Mortgage
Securities, Inc. (upon advice of counsel) to constitute a reasonable arrangement
to ensure that the Residual Certificates will not be owned directly or
indirectly by a disqualified organization; and (iv) it will not transfer such
Residual Certificates unless (a) it has received from the transferee an
affidavit in substantially the same form as this affidavit containing these same
four representations and (b) as of the time of the transfer, it does not have
actual knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or resident
of the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.
4. That the Investor's taxpayer identification number is
______________________.
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.
[NAME OF INVESTOR]
By: _______________________________________
[Name of Officer]
[Title of Officer]
[Address of Investor for receipt of
distributions]
Address of Investor
for receipt of tax
information:
C-2
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he/she
executed the same as his/her free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this ___ day of _________, 20___.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the ___ day of ___________________, 20___.
C-3
EXHIBIT D
FORM OF TRANSFEROR CERTIFICATE
______________,200___
HSBC Bank USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities Trust 2004-2
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc., ▇▇▇▇-▇
▇▇▇▇▇▇▇▇ Mortgage Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc.
Alternative Loan Trust, Series 2004-2
Re: Deutsche Mortgage Securities, Inc. Mortgage Loan
Trust, Series 2004-2, Class [CE][P][R]mortgage
Pass-Through Certificates
------------------------------------------------
Ladies and Gentlemen:
In connection with the sale by ___________ (the "Seller") to ________
(the "Purchaser") of $_________ Initial Certificate Principal Balance of Series
2004-2 Mortgage Pass-Through Certificates, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of February 1, 2004 among Deutsche Mortgage
Securities, Inc., as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank, N.A., as
master servicer and securities administrator, and HSBC Bank USA, as trustee (the
"Trustee"). The Seller hereby certifies, represents and warrants to, a covenants
with, the Depositor, the Trustee and the Securities Administrator that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act in any manner
set forth in the foregoing sentence with respect to any Certificate. The Seller
has not and will not sell or otherwise transfer any of the Certificates, except
in compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
D-2
EXHIBIT E
FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)
___________,200__
HSBC Bank USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities Trust 2004-2
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc., ▇▇▇▇-▇
▇▇▇▇▇▇▇▇ Mortgage Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc.
Alternative Loan Trust, Series 2004-2
Re: Deutsche Mortgage Securities, Inc. Mortgage Loan
Trust, Series 2004-2, Class [CE][P][R] Mortgage
Pass-Through Certificates
------------------------------------------------
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
______________ (the "Seller") $_________ Initial Certificate Principal Balance
of Series 2004-2 Mortgage Pass-Through Certificates, Class _____ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of February 1, 2004 among Deutsche
Mortgage Securities, Inc., as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank,
N.A., as master servicer and securities administrator, and HSBC Bank USA, as
trustee (the "Trustee"). All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The
Purchaser hereby certifies, represents and warrants to, and covenants with, the
Depositor, the Securities Administrator and the Trustee that:
1. The Purchaser understands that (a) the
Certificates have not been and will not be registered or
qualified under the Securities Act of 1933, as amended (the
"Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to
the foregoing effect.
2. The Purchaser is acquiring the Certificates for
its own account for investment only and not with a view to or
for sale in connection with any distribution
thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such
matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) able to bear the economic
risks of such an investment and (c) an "accredited investor"
within the meaning of Rule 501 (a) promulgated pursuant to the
Act.
4. The Purchaser has been furnished with, and has had
an opportunity to review (a) [a copy of the Private Placement
Memorandum, dated ______, 2004, relating to the Certificates
(b)] a copy of the Pooling and Servicing Agreement and [(b)]
[(c)] such other information concerning the Certificates, the
Mortgage Loans and the Depositor as has been requested by the
Purchaser from the Depositor or the Seller and is relevant to
the Purchaser's decision to purchase the Certificates. The
Purchaser has had any questions arising from such review
answered by the Depositor or the Seller to the satisfaction of
the Purchaser. [If the Purchaser did not purchase the
Certificates from the Seller in connection with the initial
distribution of the Certificates and was provided with a copy
of the Private Placement Memorandum (the "Memorandum")
relating to the original sale (the "Original Sale") of the
Certificates by the Depositor, the Purchaser acknowledges that
such Memorandum was provided to it by the Seller, that the
Memorandum was prepared by the Depositor solely for use in
connection with the Original Sale and the Depositor did not
participate in or facilitate in any way the purchase of the
Certificates by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and
not to the Depositor with respect to any damage, liability,
claim or expense arising out of, resulting from or in
connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the
Memorandum.]
5. The Purchaser has not and will not nor has it
authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate
or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any
general solicitation by means of general advertising or in any
other manner or (e) take any other action, that (as to any of
(a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition
of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser will not sell or
otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing
Agreement.
E-2
Very truly yours,
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
E-3
EXHIBIT F
FORM OF RULE 144A INVESTMENT LETTER
[Date]
HSBC Bank USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities Trust 2004-2
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc., ▇▇▇▇-▇
▇▇▇▇▇▇▇▇ Mortgage Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc.
Alternative Loan Trust, Series 2004-2
Re: Deutsche Mortgage Securities, Inc. Mortgage Loan Trust, Series
2004-2 Mortgage Pass-Through Certificates, (the
"Certificates"), including the Class CE, P and R Certificates
(the "Privately Offered Certificates")
-------------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates
are not being registered under the Securities Act of
1933, as amended (the "Act") or any applicable state
securities or "Blue Sky" laws, and are being sold to
us in a transaction that is exempt from the
registration requirements of such laws;
(ii) any information we desired concerning the
Certificates, including the Privately Offered
Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest
(the "Trust") or any other matter we deemed relevant
to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment
in Privately Offered Certificates; we are an
institutional "accredited investor" as defined in
Section 501(a) of Regulation D promulgated under the
Act and a sophisticated institutional investor;
(iv) we are acquiring Privately Offered Certificates for
our own account, not as nominee for any other person,
and not with a present view to any distribution or
other disposition of the Privately Offered
Certificates;
(v) we agree the Privately Offered Certificates must be
held indefinitely by us (and may not be sold,
pledged, hypothecated or in any way disposed of)
unless subsequently registered under the Act and any
applicable state securities or "Blue Sky" laws or an
exemption from the registration requirements of the
Act and any applicable state securities or "Blue Sky"
laws is available;
(vi) we agree that in the event that at some future time
we wish to dispose of or exchange any of the
Privately Offered Certificates (such disposition or
exchange not being currently foreseen or
contemplated), we will not transfer or exchange any
of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser
(as defined below), (2) if required by the Pooling
and Servicing Agreement (as defined below) a letter
to substantially the same effect as either this
letter or, if the Eligible Purchaser is a Qualified
Institutional Buyer as defined under Rule 144A of the
Act, the Rule 144A and Related Matters Certificate in
the form attached to the Pooling and Servicing
Agreement (as defined below) (or such other
documentation as may be acceptable to the Securities
Administrator) is executed promptly by the purchaser
and delivered to the addressees hereof and (3) all
offers or solicitations in connection with the sale,
whether directly or through any agent acting on our
behalf, are limited only to Eligible Purchasers and
are not made by means of any form of general
solicitation or general advertising whatsoever; and
(B) if the Privately Offered Certificate is
not registered under the Act (as to which we
acknowledge you have no obligation), the Privately
Offered Certificate is sold in a transaction that
does not require registration under the Act and any
applicable state securities or "blue sky" laws and,
if ▇▇▇▇▇ Fargo Bank, N.A. (the "Securities
Administrator") so requests, a satisfactory Opinion
of Counsel is furnished to such effect, which Opinion
of Counsel shall be an expense of the transferor or
the transferee;
(vii) we agree to be bound by all of the terms (including
those relating to restrictions on transfer) of the
Pooling and Servicing, pursuant to which the Trust
was formed; we have reviewed carefully and understand
the terms of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately
Offered Certificate directly or indirectly by, or on
behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of
the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and/or section 4975 of the
Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) are providing an opinion of counsel
to the effect that the proposed transfer and holding
of a Privately Offered Certificate: (I) is
permissible under applicable law, (II) will not
result in any non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code and
(III) will not subject
F-2
the Depositor, the Trustee, the Master Servicer, the
Securities Administrator, any Servicer or the Trust
Fund to any obligation or liability in addition to
those undertaken in the Agreement.
(ix) We understand that each of the Class CE, P and R
Certificates bears, and will continue to bear, a
legend to substantiate the following effect: "THIS
CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON OR A DISQUALIFIED
ORGANIZATION (AS DEFINED BELOW). SOLELY FOR U.S.
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE"). ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.3 OF THE AGREEMENT REFERRED
TO HEREIN. NO TRANSFER OF THIS CERTIFICATE MAY BE
MADE TO ANY PERSON, UNLESS THE TRANSFEREE PROVIDES
EITHER A CERTIFICATION PURSUANT TO SECTION 5.3(d) OF
THE AGREEMENT OR AN OPINION OF COUNSEL UNDER SECTION
5.3(d) OF THE AGREEMENT THAT THE PURCHASE OF THIS
CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT
SUBJECT THE MASTER SERVICER, THE TRUSTEE, THE
DEPOSITOR, THE SECURITIES ADMINISTRATOR, ANY SERVICER
OR THE TRUST FUND TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE MAY BE MADE ONLY IF THE PROPOSED
TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE TRUSTEE
THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES
OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN
SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN
SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS
TO
F-3
IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II)
SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE
DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED
TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH
AND THE PROVISIONS OF SECTION 5.3(d) OF THE AGREEMENT
REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
OWNERSHIP OF THIS CERTIFICATE. THIS CERTIFICATE HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH
ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.3 OF THE AGREEMENT."
"ELIGIBLE PURCHASER" means a corporation, partnership or other
entity which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of February 1,
2004, between Deutsche Mortgage Securities, Inc., as depositor, ▇▇▇▇▇ Fargo
Bank, N.A., as master servicer and securities administrator, and HSBC Bank USA,
as Trustee (the "Agreement").
If the Purchaser proposes that its Certificates be registered
in the name of a nominee on its behalf, the Purchaser has identified such
nominee below, and has caused such nominee to complete the Nominee
Acknowledgment at the end of this letter.
Name of Nominee (if any):________________________
F-4
IN WITNESS WHEREOF, this document has been executed by the
undersigned who is duly authorized to do so on behalf of the undersigned
Eligible Purchaser on the ___ day of ________, 20___.
Very truly yours,
[PURCHASER]
By:___________________________________
(Authorized Officer)
[By:__________________________________
Attorney-in-fact]
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:________________________________
(Authorized Officer)
[By:_______________________________
Attorney-in-fact]
EXHIBIT G
FORM OF BENEFIT PLAN AFFIDAVIT
[Date]
HSBC Bank USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities Trust 2004-2
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc., ▇▇▇▇-▇
▇▇▇▇▇▇▇▇ Mortgage Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deutsche Mortgage Securities, Inc.
Mortgage Loan Trust, Series 2004-2
Re: Deutsche Mortgage Securities, Inc. Mortgage Loan Trust, Series
2004-2 Mortgage Pass-through Certificates, (the "Trust") Class
CE, P, and R Certificates (The "Purchased Certificates")
-------------------------------------------------------------
Under penalties of perjury, I, ___________________, declare that, to the best of
my knowledge and belief, the following representations are true, correct and
complete; and
1. That I am the _________ of _________________ (the
"Purchaser"), whose taxpayer identification number is ___________, and on behalf
of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate
representing an interest in the Trust.
3. The Purchaser either (a) is not an employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or a "plan" described in Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") or any entity deemed to hold plan assets of any of
the foregoing by reason of a plan's investment in such entity (a "Plan") or (b)
has provided the opinion of counsel required by Section 5.3(d) of the
Agreement.]
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be duly executed
on its behalf, by its duly authorized officer this day of _____________, 20 .
[Purchaser]
By:_______________________________
Its:
G-2
SCHEDULE ONE
LOAN SCHEDULE
[TO BE PROVIDED BY THE DEPOSITOR UPON REQUEST]
SCHEDULE TWO
PREPAYMENT CHARGE SCHEDULE