EXHIBIT 4.1
THE PROVIDENT BANK,
as Seller and Master Servicer
and
(______________________________________),
as Trustee
_______________________
POOLING AND SERVICING AGREEMENT
Dated as of ____________, 199_
______________________
Home Equity Loan Asset-Backed Certificates
Series 199_-_
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . 26
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . 27
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . 31
Section 2.03. Representations and Warranties Regarding
the Seller and the Master Servicer . . . . . . . . . 32
Section 2.04. Representations and Warranties of the
Seller Regarding the Mortgage Loans . . . . . . . . 34
Section 2.05. (Reserved) . . . . . . . . . . . . . . . . . . . . . 45
Section 2.06. Substitution of Mortgage Loans . . . . . . . . . . . 45
Section 2.07. Execution and Authentication of
Certificates . . . . . . . . . . . . . . . . . . . . 47
Section 2.08. Designation of Interests in REMIC . . . . . . . . . . 47
Section 2.09. Designation of Start-up Day . . . . . . . . . . . . . 47
Section 2.10. REMIC Certificate Maturity Date . . . . . . . . . . . 47
Section 2.11. Tax Returns and Reports to
Certificateholders . . . . . . . . . . . . . . . . . 47
Section 2.12. Tax Matters Person . . . . . . . . . . . . . . . . . 48
Section 2.13. REMIC Related Covenants . . . . . . . . . . . . . . . 48
Section 2.14. Duties of Document Custodian; Authority . . . . . . . 51
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Master Servicer . . . . . . . . . . . . . . . . . 52
Section 3.02. Collection of Certain Mortgage Loan
Payments . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.03. Withdrawals from the Collection Account . . . . . . . 58
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses . . . . . . . . . . . . . . . . 59
Section 3.05. Maintenance of Mortgage Impairment
Insurance Policy . . . . . . . . . . . . . . . . . . 59
Section 3.06. Fidelity Bond . . . . . . . . . . . . . . . . . . . . 60
Section 3.07. Management and Realization Upon Defaulted
Mortgage Loans . . . . . . . . . . . . . . . . . . . 61
Section 3.08. Trustee to Cooperate . . . . . . . . . . . . . . . . 63
Section 3.09. Servicing Compensation; Payment of
Certain Expenses by Master Servicer . . . . . . . . 64
Section 3.10. Annual Statement as to Compliance . . . . . . . . . . 65
Section 3.11. Annual Servicing Report . . . . . . . . . . . . . . . 65
Section 3.12. Access to Certain Documentation and
Information Regarding the Mortgage
Loans . . . . . . . . . . . . . . . . . . . . . . . 66
Section 3.13. Maintenance of Certain Servicing
Insurance Policies . . . . . . . . . . . . . . . . . 66
Section 3.14. Reports to the Securities and Exchange
Commission . . . . . . . . . . . . . . . . . . . . . 66
Section 3.15. Reports of Foreclosures and Abandonments
of Mortgaged Properties, Returns Relating
to Mortgage Interest Received from
Individuals and Returns Relating to
Cancellation of Indebtedness . . . . . . . . . . . . 66
Section 3.16. Advances by the Master Servicer . . . . . . . . . . . 67
Section 3.17. Optional Purchase of Defaulted Mortgage
Loans
Section 3.18. Superior Liens . . . . . . . . . . . . . . . . . . . 68
Section 3.19. Assumption Agreements . . . . . . . . . . . . . . . . 69
Section 3.20. Payment of Taxes, Insurance and Other
Charges . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IV
Certificate Insurance Policy
Section 4.01. Certificate Insurance Policy . . . . . . . . . . . . 71
Section 4.03. Replacement Credit Enhancement
Instruments . . . . . . . . . . . . . . . . . . . . 71
Section 4.04. Claims Upon the Certificate Insurance
Policy . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE V
Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . 74
Section 5.02. Compensating Interest . . . . . . . . . . . . . . . . 77
Section 5.03. Statements . . . . . . . . . . . . . . . . . . . . . 77
Section 5.04. Distribution Account . . . . . . . . . . . . . . . . 81
Section 5.05. Investment of Accounts . . . . . . . . . . . . . . . 82
ARTICLE VI
The Certificates
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . 84
Section 6.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . 84
Section 6.03. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . 90
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . 90
Section 6.05. Appointment of Paying Agent . . . . . . . . . . . . . 90
ARTICLE VII
The Seller and the Master Servicer
Section 7.01. Liability of the Seller and the Master
Servicer . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Seller or the
Master Servicer . . . . . . . . . . . . . . . . . . 92
Section 7.03. Limitation on Liability of the Master
Servicer and Others . . . . . . . . . . . . . . . . 92
Section 7.04. Master Servicer Not to Resign . . . . . . . . . . . . 93
Section 7.05. Delegation of Duties . . . . . . . . . . . . . . . . 94
Section 7.06. Indemnification of the Trust by the
Master Servicer . . . . . . . . . . . . . . . . . . 94
Section 7.07. Inspection . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE VIII
Default
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . 96
Section 8.02. Trustee to Act; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . 99
Section 8.03. Waiver of Defaults . . . . . . . . . . . . . . . . . 100
Section 8.04. Notification to Certificateholders
Section 8.05. Rights of the Certificate Insurer to
Exercise Rights of Class A
Certificateholders . . . . . . . . . . . . . . . . . 100
Section 8.06. Trustee to Act Solely with Consent of
the Certificate Insurer . . . . . . . . . . . . . . 101
Section 8.07. Mortgage Loans, Trust and Accounts Held
for Benefit of the Certificate Insurer . . . . . . . 101
Section 8.08. Certificate Insurer Default . . . . . . . . . . . . . 102
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . 103
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . 105
Section 9.03. Trustee Not Liable for Certificates or
Mortgage Loans . . . . . . . . . . . . . . . . . . . 110
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . 111
Section 9.05. Seller to Pay Trustee Fees and Expenses . . . . . . . 111
Section 9.06. Eligibility Requirements for Trustee . . . . . . . . 111
Section 9.07. Resignation or Removal of Trustee . . . . . . . . . . 112
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . 113
Section 9.09. Merger or Consolidation of Trustee . . . . . . . . . 114
Section 9.10. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . 114
Section 9.11. Limitation of Liability . . . . . . . . . . . . . . . 115
Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates; Inspection . . . . . . . 115
Section 9.13. Suits for Enforcement . . . . . . . . . . . . . . . . 116
ARTICLE X
Termination
Section 10.01. Termination . . . . . . . . . . . . . . . . . . . . 117
Section 10.02. Additional Termination Requirements . . . . . . . . 118
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . 120
Section 11.02. Recordation of Agreement . . . . . . . . . . . . . . 121
Section 11.03. Limitation on Rights of Certificate-
holders . . . . . . . . . . . . . . . . . . . . . . 122
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . 123
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . 123
Section 11.06. Severability of Provisions . . . . . . . . . . . . . 124
Section 11.07. Assignment . . . . . . . . . . . . . . . . . . . . . 125
Section 11.08. Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . . . . . . . . . 125
Section 11.09. Third-Party Beneficiaries . . . . . . . . . . . . . 125
Section 11.10. Counterparts . . . . . . . . . . . . . . . . . . . . 125
Section 11.11. Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . . . . 125
Section 11.12. Insurance Agreement . . . . . . . . . . . . . . . . 125
Section 11.13. Subservicing Agreement . . . . . . . . . . . . . . . 125
EXHIBIT A - FORM OF CLASS A CERTIFICATE . . . . . . . . . . . . . . . A-1
EXHIBIT B - CERTIFICATE INSURANCE POLICY . . . . . . . . . . . . . . . B-1
EXHIBIT C - FORM OF CLASS R CERTIFICATE . . . . . . . . . . . . . . . C-1
EXHIBIT D - INITIAL MORTGAGE LOAN SCHEDULE . . . . . . . . . . . . . . D-1
EXHIBIT E - FORM OF INITIAL CERTIFICATE . . . . . . . . . . . . . . . E-1
EXHIBIT F - FORM OF MORTGAGE NOTE . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G - FORM OF MORTGAGES . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H - TRANSFER AFFIDAVIT . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I - LETTER OF REPRESENTATIONS . . . . . . . . . . . . . . . . I-1
EXHIBIT J - FORM OF REQUEST FOR RELEASE . . . . . . . . . . . . . . . J-1
EXHIBIT K - FORM OF INVESTMENT LETTER . . . . . . . . . . . . . . . . K-1
EXHIBIT L - SPECIMEN OF THE CERTIFICATE INSURANCE POLICY . . . . . . . L-1
EXHIBIT M - FORM OF OFFICER'S CERTIFICATE OF MASTER SERVICER . . . . . M-1
EXHIBIT N - (RESERVED)
EXHIBIT O - FORM OF LIQUIDATION REPORT . . . . . . . . . . . . . . . . O-1
EXHIBIT P - LIST OF SERVICING OFFICERS . . . . . . . . . . . . . . . . P-1
This Pooling and Servicing Agreement, dated as of ___________, 199_,
between The Provident Bank, as Seller (the "Seller"), as Document Custodian
(the "Document Custodian") and as Master Servicer (the "Master Servicer"),
and (________________________), as Trustee (the "Trustee").
W I T N E S S E T H T H A T:
----------------------------
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, shall
have the meanings specified in this Article.
Accounts: Collectively, the Collection Account and the Distribution
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Account.
Affiliate: With respect to any Person, any other Person controlling,
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controlled by or under common control with such Person. For purposes of
this definition, "control" means the power to direct the management and
policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
Aggregate Principal Balance: As of any date of determination, the sum
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of all the Principal Balances of the Mortgage Loans.
Agreement: This Pooling and Servicing Agreement and all amendments
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hereof and supplements hereto.
Amount Available: As to any Distribution Date, the sum of the Available
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Funds with respect to each of the Group 1 Certificates and the Group 2
Certificates.
Appraised Value: The appraised value of the Mortgaged Property based
---------------
upon the appraisal made by or for the originator at the time of the
origination of the related Mortgage Loan.
Assignment Event: The 30th day following either (i) the occurrence and
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continuance of an Event of Default, (ii) the reduction of the Seller's long-
term unsecured debt rating below "____" by Moody's or "___" by Standard &
Poor's or (iii) the suspension, termination or withdrawal of the Seller's
long-term unsecured debt rating by Moody's or Standard & Poor's.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
----------------------
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the Borough
--------------------
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
Available Funds: As to any Distribution Date and Certificate Group, the
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sum of (A) (x) the sum of all amounts described in clauses (i) through (vi)
inclusive, of Section 3.02(b) received by the Master Servicer in respect of
the related Loan Group (including any amounts paid by the Master Servicer and
the Seller and excluding (a) any amounts not required to be deposited in the
Collection Account pursuant to Section 3.02(b), (b) any amounts paid to the
Master Servicer or withdrawn by the Master Servicer pursuant to Sections
3.03(ii), (iii), (iv), (v), (vi) and (vii) in respect of the Mortgage Loans
in the related Loan Group as of the related Determination Date and (c) the
interest portion of Payaheads received during the related Due Period intended
by the Mortgagor to be applied in subsequent Due Periods) during the related
Due Period and deposited into the Collection Account as of the Determination
Date and (y) the interest portion of Payaheads deposited to the Collection
Account during a previous Due Period and intended to be applied by the
Mortgagor in the related Due Period, (B) Insured Payments, if any, with
respect to such Certificate Group and (C) any Termination Price with respect
to the Mortgage Loans in the related Loan Group deposited to the Distribution
Account pursuant to Section 10.01(a). No amount included in this definition
by virtue of being described by any component of the definition thereof shall
be included twice by virtue of also being described by any other component or
otherwise.
Balloon Loan: Any Mortgage Loan that provided on the date of
------------
origination for scheduled monthly payment in level amounts substantially
lower than the amount of the final scheduled payment.
BIF: The Bank Insurance Fund, as from time to time constituted, created
---
under the Financial Institutions Reform, Recovery and Enhancement Act of
1989, or, if at any time after the execution of this Agreement the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Book-Entry Certificate: Any Class A Certificate registered in the name
----------------------
of the Depository or its nominee, ownership of which is reflected on the
books of the Depository or on the books of a
Person maintaining an account with such Depository (directly or as an
indirect participant in accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
------------
day on which the Certificate Insurer or banking institutions in the States of
New York, Ohio or the State in which the Corporate Truste OFfice is located
are required or authorized by law to be closed.
Certificate: Any Class A or Class R Certificate.
-----------
Certificate Group: Either Group 1 Certificates or Group 2 Certificates,
-----------------
as the context requires.
Certificate Index: For any Distribution Date, the rate for one month
-----------------
United States dollar deposits quoted on Telerate Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to the first day of the
related Interest Period relating to the Class A-2 Certificates (or the second
LIBOR Business Day prior to the Closing Date, in the case of the first
Distribution Date). "Telerate Page 3750" means the display designated as
page 3750 on the Telerate Service (or such other page as may replace page
3750 on that service for the purpose of displaying London interbank offered
rates of major banks). If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates
as may be reasonably selected by the Trustee after consultation with the
Master Servicer), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, the
Certificate Rate will be the Certificate Rate applicable to the preceding
Distribution Date. On the second LIBOR Business Day immediately preceding
each Distribution Date, the Trustee shall determine the Certificate Rate for
the Interest Period commencing on such Distribution Date and inform the
Master Servicer of such rate.
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
----------------------------
(No. _____) with respect to the Class A Certificates and all endorsements
thereto dated the Closing Date, issued by the Certificate Insurer for the
benefit of the Holders of each Class of Class A Certificates, a copy of which
is attached hereto as Exhibit L.
Certificate Insurer: (________________________), a stock insurance
-------------------
company organized and created under the laws of the State of (_______) or any
successor thereto.
Certificate Insurer Default: (i) Any failure of the Certificate Insurer
---------------------------
to make a payment required under the Certificate Insurance Policy in
accordance with its terms; (ii) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or
other similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of or
in respect of the Certificate Insurer under any applicable United States
federal or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar official of
the Certificate Insurer or of any substantial part of its property, or ordering
the winding-up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
each case in effect for a period of 60 consecutive days; or (iii) the
commencement by the Certificate Insurer of a voluntary case or proceeding
under any applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated as bankrupt or insolvent, or the consent by the Certificate
Insurer to the entry of a decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Certificate Insurer, or the filing by the
Certificate Insurer of a petition or answer or consent seeking reorganization
or relief under any applicable United States federal or state law, or the
consent by the Certificate Insurer to the filing of such petition or to the
appointment of or the taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Certificate
Insurer or of any substantial part of its property, or the making by the
Certificate Insurer of an assignment for the benefit of its creditors, or the
failure by the Certificate Insurer to pay debts generally as they become due,
or the admission by the Certificate Insurer in writing of its inability to
pay its debts generally as they become due, or the taking of corporate action
by the Certificate Insurer in furtherance of any such action.
Certificate Owner: The Person who is the beneficial owner of a
-----------------
Book-Entry Certificate.
Certificate Rate: With respect to the Class A-1 Certificates, ____% per
----------------
annum. With respect to the Class A-2 Certificates, the lesser of (A) the
Class A-2 Formula Rate and (B) the Net Funds Cap for such Distribution Date.
Certificate Register and Certificate Registrar: The register maintained
----------------------------------------------
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
---------------------------
registered in the Certificate Register, except that, solely for the purpose
of giving any consent, direction, waiver or request pursuant to this Agreement,
(x) any Class A Certificate registered in the name of the Seller or any Person
actually known to a Responsible Officer to be an Affiliate of the Seller and
(y) any Class A Certificate for which the Seller or any Person actually know
to a Responsible Officer to be an Affiliate of the Seller is the Certificate
Owner or Holder shall be deemed not to be outstanding (unless to the
actual knowledge of a Responsible Officer (i) the Seller or such Affiliate
is acting as trustee or nominee for a Person who is not an Affiliate of the
Seller and who makes the voting decision with respect to such Class A
Certificates or (ii) the Seller or such Affiliate is the Certificate Owner or
Holder of all the Class A Certificates, but only with respect to the Class as
to which the Seller or such Affiliate owns all the Certificates) and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary
to effect any such consent, direction, waiver or request has been obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
----------------
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
-----------------------------------
Date and Loan Group, for any Mortgage Loan in such Loan Group to which there
has been a reduction in the amount of interest collectible thereon for the
most recently ended Due Period as a result of the application of the Civil
Relief Act, the amount by which (i) interest collectible on such Mortgage
Loan during such Due Period is less than (ii) one month's interest on the
Principal Balance of such Mortgage Loan at the Loan Rate for such Mortgage
Loan before giving effect to the application of the Civil Relief Act.
Class: With respect to each of Class A-1, Class A-2 and Class R
-----
Certificates, all of the Certificates of such Class.
Class A Certificate: Any certificate executed and authenticated by the
-------------------
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A-1 or Class A-2 Certificate pursuant to Section 6.01.
Class A Certificateholder: A Holder of a Class A Certificate.
-------------------------
Class A Monthly Principal Distributable Amount: With respect to any
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Distribution Date and Certificate Group, the amount equal to the sum of the
following amounts (without duplication) with respect to the immediately
preceding Due Period: (i) that portion of all Monthly Payments allocable to
principal on the Mortgage Loans in the related Loan Group, including all full
and partial principal prepayments received during the related Due Period,
(ii) the Principal Balance of all Mortgage Loans in the related Loan Group
that became Liquidated Mortgage Loans during the related Due Period and (iii)
the portion of the Purchase Price allocable to principal of all Defective
Mortgage Loans in the related Loan Group that were repurchased during the
related Due Period, and any Substitution Adjustments deposited to the
Distribution Account pursuant to Section 2.06(a) on or prior to the previous
Determination Date and not yet distributed.
Class A Principal Distribution: With respect to any Distribution Date
------------------------------
(other than the Final Scheduled Distribution Date) and Certificate Group, the
excess of (A) the sum of the related Class A Monthly Principal Distributable
Amount and Class A Principal Shortfall Amount for such Distribution Date over
(B) the related O/C Reduction Amount for such Distribution Date; provided,
--------
however, that the Class A Principal Distribution shall not exceed the related
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Class Principal Balance. The "Class A Principal Distribution" for a
Certificate Group on the Final Scheduled Distribution Date for such
Certificate Group will equal the related Class Principal Balance for such
Certificate Group as of such Distribution Date.
Class A Principal Shortfall Amount: With respect to any Distribution
----------------------------------
Date and Certificate Group, the amount, if any by which the related Class A
Principal Balance, after giving effect to all distributions of the related
Class A Monthly Principal Distributable Amount and any draws under the
Certificate Insurance Policy for such Distribution Date and Certificate
Group, exceeds the related Loan Group Principal Balance as of the end of the
related Due Period.
Class A-1 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-1 Certificate pursuant to Section 6.01.
Class A-2 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-2 Certificate pursuant to Section 6.01.
Class A-2 Formula Rate: As to any Distribution Date, the sum of the
----------------------
Certificate Index for such Distribution Date plus ____% (or ____0 for each
Distribution Date occurring after the date on which the Seller has the right
to terminate the Trust).
Class Interest Carryover Shortfall: With respect to any Class of Class
----------------------------------
A Certificates and any Distribution Date, the amount by which the Class
Interest Distribution for such Class for each prior Distribution Date
exceeded the amount of interest actually distributed on such prior
Distribution Dates.
Class Interest Distribution: With respect to any Distribution Date and
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each Class of Class A Certificates, the sum of (i) the applicable Class
Monthly Interest Distributable Amount for such Class on such Distribution
Date and (ii) the applicable Outstanding Class Interest Carryover Shortfall for
such Class on such Distribution Date.
Class Monthly Interest Distributable Amount: As to any Distribution
-------------------------------------------
Date and Class of Class A Certificates, interest accrued during the related
Interest Period at the applicable Certificate Rate on the related Class
Principal Balance immediately prior to such Distribution Date, reduced by an
amount equal to such Class' pro rata share (based on the amount of interest
to which such Class would have otherwise been entitled) of the related Civil
Relief Act Interest Shortfall, if any, for such Distribution Date.
Class Principal Balance: As of any date of determination and Class of
-----------------------
Certificates, the Original Class Certificate Principal Balance for such Class
reduced by the sum of all amounts previously distributed to the
Certificateholders of such Class in respect of principal on all previous
Distribution Dates.
Class R Certificate: Any Certificate executed and authenticated by the
-------------------
Trustee substantially in the form set forth in Exhibit C hereto.
Class R Certificateholder: The Holder of a Class R Certificate.
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Closing Date: ___________, 199_.
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Code: The Internal Revenue Code of 1986, as the same may be amended
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from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
------------------
maintained for the benefit of the Certificateholders and the Certificate
Insurer pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
---------------------------- ----
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the First Lien, if any, as of the date of
origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount
---------------------
calculated pursuant to Section 5.02.
Corporate Trust Office: The principal office of the Trustee at which
----------------------
at any particular time its corporate business shall be administered, which
office on the Closing Date is located at
(________________________________________), Attention: (_______).
Cumulative Net Losses: With respect to each Liquidated Mortgage Loan,
---------------------
the amount by which the aggregate Principal Balance of, and accrued interest
on, such Liquidated Mortgage Loan exceeds the Net Liquidation Proceeds for
such Mortgage Loan allocated to principal and accrued interest.
Curtailment: With respect to a Mortgage Loan, any payment of principal
-----------
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
Cut-Off Date: For any Mortgage Loan, the opening of business on
------------
__________, 199_.
Cut-Off Date Loan Group Principal Balance: With respect to a Loan
-----------------------------------------
Group, the aggregate of the Cut-Off Date Principal Balances of the Mortgage
Loans in such Loan Group; which equals $_____________, with respect to Loan
Group 1 and $_____________, with respect to Loan Group 2.
Cut-Off Date Loan Group Principal Balance: $_____________ with respect
-----------------------------------------
to Loan Group 1 and $_____________ with respect to Loan Group 2.
Cut-Off Date Pool Principal Balance: $______________.
-----------------------------------
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
------------------------------
unpaid principal balance thereof as of its Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute
Mortgage Loan pursuant to Section 2.02 or 2.04).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
-----------------------
substitution by the Seller pursuant to Section 2.02 or 2.04 or purchase by
the Master Servicer pursuant to Section 3.01(j).
Deficiency Amount: With respect to any Distribution Date, (A) the
-----------------
excess, if any, of (i) Class Monthly Interest Distributable Amount for each
Class of Class A Certificates (net of any Civil Relief Act Interest
Shortfalls with respect to the related Loan Group) plus any Class Interest
Carryover Shortfall for each Class of Class A Certificates over (ii) funds on
deposit in the Distribution Account available to be distributed therefor on
such Distribution Date and (B) the Guaranteed Principal Amount.
Definitive Certificates: As defined in Section 6.02(c).
-----------------------
Delinquency Loss Factor: As of any date of determination, the sum of:
-----------------------
(a) the Principal Balance of all Mortgage Loans 30-59 days Delinquent
as of such date multiplied by _____%;
(b) the Principal Balance of all Mortgage Loans 60-89 days Delinquent
as of such date multiplied by _____%; and
(c) the Principal Balance of all loans 90 or more days (including loans
in foreclosure and REO Property) as of such date Delinquent multiplied by
_____%.
Delinquent: A Mortgage Loan is "Delinquent" if any Monthly Payment due
----------
thereon is not made by the close of business on the day the related Monthly
Payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such Monthly Payment has not been received by the close of business on the
last day of the month immediately succeeding the month in which such Monthly
Payment was due. Similarly for "60 days Delinquent," "90 days Delinquent"
and so on.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is Cede & Co., as the registered Holder of
Class A-1 and Class A-2 Certificates evidencing $__________ and $__________,
respectively, in initial aggregate principal amount of such Certificates.
The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
(Designated Subservicer: (_________________________) or its successor
----------------------
in interest.)
Determination Date: With respect to any Distribution Date, the
------------------
(eighteenth) day of the month in which such Distribution Date occurs (or if
such day is not a Business Day, the Business Day immediately preceding such
(eighteenth) day).
Distributable Excess Spread: As to any Distribution Date and
---------------------------
Certificate Group, the excess, if any, of the related Specified O/C Amount
for such Distribution Date over the O/C Amount on such date.
Distribution Account: The account established by the Trustee pursuant
--------------------
to Section 5.04. The Distribution Account shall be an Eligible Account.
Distribution Date: The twenty-fifth day of each month or, if such day
-----------------
is not a Business Day, then the next Business Day, beginning in _______ 199_.
Document Custodian: The Provident Bank, as custodian and bailee for the
------------------
Trustee.
Due Date: As to any Mortgage Loan, the day of the month on which the
--------
Monthly Payment is due from the Mortgagor.
Due Period: With respect to each Distribution Date, the calendar month
----------
preceding the month in which such Distribution Date occurs.
Electronic Ledger: The electronic master record of home equity mortgage
-----------------
loans maintained by the Master Servicer.
Eligible Account: A segregated account that is (i) maintained with a
----------------
depository institution whose short-term debt obligations and long-term debt
obligations at the time of any deposit therein and throughout the time the
interest is maintained are rated at least "P-1" and "A2", respectively, by
Moody's and "A-1" and "A", respectively, by Standard & Poor's, and that the
deposits in such account or accounts are fully insured by either the BIF or
the SAIF and which is any of (a) a federal savings and loan association duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (b) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (c) a national
banking association duly organized, validly existing and in good standing
under the federal banking laws or (d) a principal subsidiary of a bank
holding company, and in each case of (a)-(d), approved in writing by the
Certificate Insurer, (ii) a segregated trust account maintained with the
corporate trust department of a federal or state chartered depository or
trust company, having capital and surplus of not less than $50,000,000,
acting in its fiduciary capacity, or (iii) an account otherwise acceptable to
each Rating Agency and the Certificate Insurer as evidenced by a letter from
each Rating Agency and the Certificate Insurer to the Trustee, without
reduction or withdrawal of the then current ratings of the Certificates.
Eligible Investments: One or more of the following (excluding any
--------------------
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
--------
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition
thereof, provided that the short-term unsecured debt obligations of the
--------
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating category (which is
"A-1+" for Standard & Poor's and "P-1" for Moody's);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days) of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the unsecured short-term debt obligations of such depository
--------
institution or trust company at the date of acquisition thereof have been
rated by each of Moody's and Standard & Poor's in its highest unsecured
short-term debt rating category;
(iv) commercial paper (having original maturities of not more than
90 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by Standard & Poor's and Moody's in their highest short-term
rating categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of
the United States or any state thereof which on the date of acquisition
has been rated by Standard & Poor's and Moody's in their respective
highest rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time as the
interest is held in such fund has a rating of "Aaa" by Moody's and
either "AAAm" or "AAAm-G" by Standard & Poor's; and
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Certificate Insurer as an Eligible Investment
hereunder and will not result in a reduction in the then current rating
of the Certificates, as evidenced by a letter to such effect from such
Rating Agency and the Certificate Insurer and with respect to which the
Master Servicer has received confirmation that, for tax purposes, the
investment complies with the last clause of this definition;
provided that no instrument described hereunder shall evidence either the
--------
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obli-
gations; and provided, further, that no instrument described hereunder may
-------- -------
be purchased at a price greater than par if such instrument may be prepaid or
called at a price less than its purchase price prior to its stated maturity.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
---------------------------------
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not more than 5% less than
the Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate
not less than the Loan Rate of the Defective Mortgage Loan and not more than
1% in excess of the Loan Rate of such Defective Mortgage Loan; (iii) if such
Defective Mortgage Loan is in Loan Group 2, have a Loan Rate based on the
same Index with the next Interest Rate Adjustment Date no later than the
Interest Rate Adjustment Date of the Defective Mortgage Loan and have a
Margin that is not less than the Margin of the Defective Mortgage Loan and
not more than 100 basis points higher than the Margin for the Defective
Mortgage Loan; or (iv) have a Mortgage of the same or higher level of
priority as the Mortgage relating to the Defective Mortgage Loan at the time
such Mortgage was transferred to the Trust; (v) have a remaining term to
maturity not more than six months earlier and not later than the remaining
term to maturity of the Defective Mortgage Loan; (vi) comply with each
representation and warranty set forth in Section 2.04 (deemed to be made as
of the date of substitution); (vii) have an original Combined Loan-to-Value
Ratio not greater than that of the Defective Mortgage Loan; (viii) if such
Defective Mortgage Loan is in Loan Group 2, have a Lifetime Rate Cap and a
Periodic Rate Cap no lower than the Lifetime Rate Cap and Periodic Rate Cap,
respectively, applicable to such Defective Mortgage Loan; and (ix) be of the
same type of Mortgaged Property as the Defective Mortgage Loan or a detached
single family residence. More than one Eligible Substitute Mortgage Loan may
be substituted for a Defective Mortgage Loan if such Eligible Substitute
Mortgage Loans meet the foregoing attributes in the aggregate and such
substitution is approved in writing in advance by the Certificate Insurer.
Event of Default: As defined in Section 8.01.
----------------
Excess O/C Amount: As to any Distribution Date and Certificate Group,
-----------------
the amount by which (i) the related O/C Amount for such Distribution Date
exceeds (ii) the related Specified O/C Amount for such Distribution Date.
Excess Spread: With respect to any Distribution Date and Loan Group,
-------------
the excess, if any, of (x) Available Funds for the related Certificate Group
for such Distribution Date over (y) the sum of (a) the amount required to be
distributed pursuant to Section 5.01(a)(i)(1)-(4), with respect to the Group
1 Certificates, and Section 5.01(a)(ii)(1)-(4), with respect to the Group 2
Certificates, on such Distribution Date and (b) the portion of Available
Funds for such Certificate Group distributed pursuant to Section 5.01(a)(iii)
on such Distribution Date.
FDIC: The Federal Deposit Insurance Corporation or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation.
-----
Final Scheduled Distribution Date: With respect to the Group 1
---------------------------------
Certificates, the Distribution Date in ____________ and with respect to the
Group 2 Certificates, the Distribution Date in ____________.
First Lien: With respect to any Mortgage Loan which is a second
----------
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Fiscal Agent: As defined in the Certificate Insurance Policy.
------------
FNMA: The Federal National Mortgage Association.
----
Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
-------------------
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid
through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Mortgage Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Group 1 Certificates: The Class A-1 Certificates.
--------------------
Group 2 Certificates: The Class A-2 Certificates.
--------------------
Guaranteed Principal Amount: means (a) for any Distribution Date (other
---------------------------
than a Distribution Date specified in (b)), the amount, if any, by which the
Class Principal Balance of each Certificate Group exceeds the related Loan
Group Principal Balance at the end of the previous month (after giving effect
to all distributions of principal on the related Class A Certificates on such
Distribution Date) and (b) on the Distribution Date in ____________ with
respect to the Group 1 Certificates, and ____________ with respect to the
Group 2 Certificates, (after giving effect to all other distributions of
principal on the Group 1 Certificates and the Group 2 Certificates, as
applicable), an amount equal to the applicable Class Principal Balance.
Index: With respect to each Interest Rate Adjustment Date for a
-----
Mortgage Loan in Loan Group 2, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as published
in The Wall Street Journal as of the first business day of the month
immediately preceding the month of the Interest Rate Adjustment Date.
Insurance Agreement: The Insurance Agreement dated as of __________,
-------------------
199_ among the DEPOSITOR, the Trustee, the Seller, the Master Servicer and
the Certificate Insurer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
------------------
Certificate Insurer) pursuant to any insurance policy covering a Mortgage
Loan or Mortgaged Property, or amounts required to be paid by the Master
Servicer pursuant to Section 3.05, net of any component thereof (i) covering
any expenses incurred by or on behalf of the Master Servicer in connection
with obtaining such proceeds, (ii) applied to the restoration or repair of
the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures or (iv) required to be
paid to any holder of a mortgage senior to such Mortgage Loan.
Insured Payment: (i) With respect to any Distribution Date, any
---------------
Deficiency Amount and (ii) any Preference Amount.
Interest Period: With respect to any Distribution Date and (i) the
---------------
Class A-1 Certificates, the period from the first day of the calendar month
preceding the month of such Distribution Date through the last day of such
calendar month and (ii) the Class A-2 Certificates, the period from the
Distribution Date in the month preceding the month of such Distribution Date
(or, in the case of the initial Distribution Date, from the Closing Date)
through the day before such Distribution Date.
Interest Rate Adjustment Date: With respect to each Mortgage Loan in
-----------------------------
Loan Group 2, the date or dates on which the Loan Rate is adjusted in
accordance with the related Mortgage Note.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
------------------
(ii) a day on which banking institutions in the State of New York or in the
city of London, England are required or authorized by law to be closed.
Lifetime Rate Cap: With respect to each Mortgage Loan in Loan Group 2,
-----------------
the maximum Loan Rate permitted over the life of such Mortgage Loan, as
provided by the terms of the related Mortgage Note.
Lifetime Rate Floor: With respect to each Mortgage Loan in Loan Group
-------------------
2, the minimum Loan Rate permitted over the life of such Mortgage Loan, as
provided by the terms of the related Mortgage Note.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
------------------------
Loan in respect of which the Master Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Due Period, that all Liquidation Proceeds which it expects to recover with
respect to the liquidation of the Mortgage Loan or disposition of the related
REO Property have been recovered.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
--------------------
including amounts drawn under the Certificate Insurance Policy) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise (including
rental income).
Liquidation Report: With respect to each Liquidated Mortgage Loan, the
------------------
report prepared by the Master Servicer in the form attached hereto as Exhibit
O.
Loan Group Principal Balance: Either the Loan Group 1 Principal Balance
----------------------------
or the Loan Group 2 Principal Balance, as applicable.
Loan Group: Either Loan Group 1 or Loan Group 2, as the context
----------
requires.
Loan Group 1: The pool of Mortgage Loans identified in the related
------------
Mortgage Loan Schedule as having been assigned to Loan Group 1.
Loan Group 1 Principal Balance: As of any date, the aggregate of the
------------------------------
Principal Balances of all Mortgage Loans in Loan Group 1 as of such date.
Loan Group 2: The pool of Mortgage Loans identified in the related
------------
Mortgage Loan Schedule as having been assigned to Loan Group 2.
Loan Group 2 Principal Balance: As of any date, the aggregate of the
------------------------------
Principal Balances of all Mortgage Loans in Loan Group 2 as of such date.
Loan Rate: With respect to any Mortgage Loan as of any day, the per
---------
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.
Majority Certificateholder: The Holder or Holders of each Class of
--------------------------
Class A Certificates evidencing Percentage Interests in excess of 51% in the
aggregate.
Margin: As to any Mortgage Loan in Loan Group 2, the percentage set
------
forth as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Master Servicer: The Provident Bank, an Ohio banking corporation, or
---------------
any successor thereto or any successor hereunder.
Master Servicing Fee: As to any Due Period and each Mortgage Loan, the
--------------------
annual fee payable to the Master Servicer which, subject to Section 3.02, is
calculated as an amount equal to the product of the Master Servicing Fee Rate
and the Principal Balance of such Mortgage Loan as of the first day of such
Due Period.
Master Servicing Fee Rate: ____% per annum.
-------------------------
Maximum Collateral Amount: With respect to each Certificate Group, the
-------------------------
Aggregate Principal Balance of the Mortgage Loans in the related Loan Group
as of the Cut-Off Date.
Monthly Advance: An advance made by the Master Servicer pursuant to
---------------
Section 3.16.
Monthly Payment: The scheduled monthly payment of principal and/or
---------------
interest required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
-------
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
-------------
to a particular Mortgage Loan and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of
----------------------
Mortgage Loans constituting assets of the Trust. The Mortgage Loan Schedule
is the schedule attached hereto as Exhibit D, which schedule sets forth as to
each Mortgage Loan (i) related Cut-Off Date Principal Balance, (ii) the name
of the Mortgagor, (iii) the account number, (iv) the original principal
amount, (v) the CLTV as of the date of the origination of the related
Mortgage Loan, (vi) the Due Date, (vii) the Loan Rate as of the related Cut-
Off Date, (viii) the first date on which a Monthly Payment is or was due
under the Mortgage Note, (ix) the original stated maturity date of the
Mortgage Note and if the Mortgage Loan is a Balloon Loan, the amortization
terms, (x) the remaining number of months to maturity as of the related Cut-
Off Date, (xi) the State and zip code in which the related Mortgaged Property
is situated, (xii) the type of property, (xiii) the lien status (xiv) the
applicable Loan Group and (xv) with respect to each Mortgage Loan in Loan
Group 2, (a) the Periodic Rate Cap, (b) the Margin, (c) the Lifetime Rate Cap
and (d) the next Interest Rate Adjustment Date after the Cut-Off Date. The
Mortgage Loan Schedule will be amended from time to time to reflect the
substitution of an Eligible Substitute Mortgage Loan for a Defective Mortgage
Loan from time to time hereunder.
Mortgage Loans: The mortgage loans that are transferred and assigned
--------------
to the Trustee pursuant to Sections 2.01 and 2.06 together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Master
Servicer or the Seller, as the case may be, from time to time pursuant to
Sections 2.02, 2.04, 3.01(j) and 2.06, as from time to time are held as a
part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to
-------------
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
------------------
and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
---------
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
------------------------
Liquidation Proceeds net of unreimbursed Master Servicing Fees, Servicing
Advances and Monthly Advances with respect thereto.
Net Funds Cap: As to any Distribution Date, the difference between (A)
-------------
the average of the Loan Rates of the Mortgage Loans in Loan Group 2 as of the
first day of the month preceding the month of such Distribution Date,
weighted on the basis of the related Principal Balances as of such date and
(B) the sum of (i) the Master Servicing Fee Rate, the rate at which the
Trustee Fee is calculated and the Premium Percentage and (ii) commencing with
the thirteenth Distribution Date, ____%.
Net Funds Cap Carryover Amount: As to any Distribution Date, the sum
------------------------------
of (A) if on such Distribution Date the Certificate Rate for the Class A-2
Certificates is based upon the Net Funds Cap, the excess of (i) the amount of
interest the Class A-2 Certificates would be entitled to receive on such
Distribution Date had such rate been calculated at the Class A-2 Formula Rate
for such Distribution Date over (ii) the amount of interest payable on the
Class A-2 Certificates at the Net Funds Cap for such Distribution Date, (B)
the Net Funds Cap Carryover Amount for all previous Distribution Dates not
previously reimbursed pursuant to Section 5.01(a)(vi)(6) and (C) one-month's
interest on the amount calculated in clause (B) at the Class A-2 Formula Rate
for such Distribution Date.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
-----------------------
Servicing Advance or Monthly Advance previously made and not reimbursed
pursuant to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance
proposed to be made in respect of a Mortgage Loan or REO Property which, in
the good faith business judgment of the Master Servicer, as evidenced by an
Officer's Certificate delivered to the Certificate Insurer, the Seller and
the Trustee promptly following such determination, would not be ultimately
recoverable pursuant to Sections 3.03(ii) or 3.03(vii).
O/C Amount: As to any Distribution Date and Certificate Group, the
----------
excess, if any, of (a) the related Loan Group Principal Balance as of the
close of business on the last day of the related Due Period over (b) the
related Class Principal Balance (after giving effect to amounts otherwise
available in respect of the Class A Monthly Principal Distributable Amount and
Class A Principal Shortfall Amount, if any, for such Distribution Date).
O/C Reduction Amount: As to any Distribution Date and Certificate
--------------------
Group, an amount equal to the lesser of (i) the related Excess O/C Amount for
such Distribution Date and (ii) with respect to the Group 1 Certificates,
Available Funds for such Certificates Group remaining after making the
distributions required to be made pursuant to Section 5.01(a)(i)(1) and (2)
on such Distribution Date and with respect to the Class A-2 Certificates,
Available Funds for the related Certificate Group remaining after making the
distributions required to be made pursuant to Section 5.01(a)(ii)(1) and (2)
on such Distribution Date.
Officer's Certificate: A certificate signed by the President, an
---------------------
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Master
Servicer and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
------------------
to the Trustee, who may be in-house counsel for the Master Servicer (except
that any opinion relating to the qualification of the Trust as a REMIC or
compliance with the REMIC Provisions must be an opinion of independent
outside counsel) and who, in the case of opinions delivered to each of the
Certificate Insurer and the Rating Agency, is reasonably acceptable to it.
Original Class Certificate Principal Balance: With respect to the Class
--------------------------------------------
A-1 Certificates, $__________ and with respect to the Class A-2 Certificates,
$__________.
Original Specified Subordinated Amount: As to the Group 1 Certificates,
--------------------------------------
$_______ and as to the Group 2 Certificates, $_________.
Original Specified Subordinated Amount Percentage: As to the Group 1
-------------------------------------------------
Certificates, ____% and as to the Group 2 Certificates, ____%.
Outstanding Class Interest Carryover Shortfall: As to any Class of
----------------------------------------------
Class A Certificates and any Distribution Date, the amount of Class Interest
Carryover Shortfall for such Distribution Date plus one month's interest
thereon, at the related Certificate Rate, to the extent permitted by law.
Ownership Interest: As to any Certificate or security interest in such
------------------
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
Payahead: With respect to any Due Date and Mortgage Loan, a Monthly
--------
Payment received by the Master Servicer with the scheduled Monthly Payment
for such Due Date, intended by the related Mortgagor to be applied on a
subsequent Due Date.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
------------
Percentage Interest: As to any Class A Certificate, the percentage
-------------------
obtained by dividing the principal denomination of such Certificate by the
aggregate of the principal denominations of all Class A Certificates of the
same Class. As to any Class R Certificate, the portion of the Class
evidenced thereby as stated on the face thereof, which shall be either
99.999999% or, but only with respect to the Tax Matters Person Residual
Interest held by the Tax Matters Person, 0.000001%.
Periodic Rate Cap: With respect to each Mortgage Loan in Loan Group 2
-----------------
with respect to which the related Mortgage Note provides for a periodic rate
cap, the maximum percentage increase or decrease in the Loan Rate permitted
for such Mortgage Loan over the Loan Rate in effect as of an Interest Rate
Adjustment Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States, any
--------------------
State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international
organization or any agency or instrumentality of either of the foregoing,
(iii) an organization which is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) (except certain farmers' cooperatives describe in
Code section 521) on any excess inclusions (as defined in Section 860E(c)(1))
with respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code section 1381(a)(2)(C), (v) a Person that is
not a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust whose income from
sources without the United States is includible in gross income for United
States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States and (vi) any other
Person so designated by the Trustee based on an Opinion of Counsel to the
effect that any transfer to such Person may cause the Trust to fail to
qualify as a REMIC at any time 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 will 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 FHLMC, a majority of its board
of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
------
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Pool Factor: With respect to any Distribution Date and the Mortgage
-----------
Loans, the percentage, carried to six places, obtained by dividing the Class
Principal Balance of a Class of Class A Certificates for such Distribution
Date by the Original Class Certificate Principal Balance of such Class.
Pool Principal Balance: With respect to any date, the aggregate of the
----------------------
Principal Balances of all Mortgage Loans as of such date.
Preference Amount: As defined in the Certificate Insurance Policy.
-----------------
Premium Amount: As to any Distribution Date and Certificate Group, the
--------------
product of the Premium Percentage for such Certificate Group and the related
Class Principal Balance before giving effect to distributions to be made on
such Distribution Date.
Premium Percentage: As defined in the Insurance Agreement for each
------------------
Certificate Group.
Prepayment Assumption: A conditional rate of prepayment equal to __%
---------------------
per annum in the first month of the life of the mortgage loans and an
additional ____% (precisely _____) (expressed as a percentage per annum) in
each month thereafter until the twelfth month; beginning in the twelfth month
and in each month thereafter during the life of the mortgage loans, a
conditional prepayment rate of __% per annum each month is assumed.
Prepayment Interest Shortfall: With respect to any Distribution Date,
-----------------------------
for each Mortgage Loan that was the subject during the related Due Period of
a Principal Prepayment in full an amount equal to the excess, if any, of (i)
30 days' interest on the Principal Balance of such Mortgage Loan at the Loan
Rate (less the Master Servicing Fee Rate) over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Master Servicing Fee for such Mortgage Loan in such
month.
Principal Balance: As to any Mortgage Loan and any day, other than a
-----------------
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus
all collections credited against the Principal Balance of any such Mortgage
Loan. For purposes of this definition, a Liquidated Mortgage Loan shall be
deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan immediately prior to the final recovery of related
Liquidation Proceeds and a Principal Balance of zero thereafter.
Principal Prepayment: Any payment or other recovery of principal on a
--------------------
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a
Mortgage Loan in full.
Projected Monthly Excess Cashflow: As of any date of calculation and
---------------------------------
with respect to a Loan Group, the Excess Spread existing on the Distribution
Date immediately preceding such date of calculation.
Prospectus: The base prospectus dated ____________, 199_.
----------
Prospectus Supplement: The prospectus supplement dated __________,
---------------------
199_, relating to the offering of the Class A Certificates.
Provident: The Provident Bank, or any successor thereto.
---------
Purchase Price: As to any Defective Mortgage Loan repurchased on any
--------------
date pursuant to Sections 2.02 or 2.04 or any Mortgage Loan required or
permitted to be purchased pursuant to Section 3.01(j) or Section 3.17, an
amount equal to the sum of (i) the unpaid Principal Balance thereof, (ii) all
unpaid accrued interest thereon (such accrued and unpaid interest may
constitute all or a portion of unpaid Master Servicing Fees and unreimbursed
Monthly Advances), computed at the applicable Loan Rate and (iii) any
unreimbursed Servicing Advances with respect to such Mortgage Loan.
Rating Agency: Any statistical credit rating agency, or its successor,
-------------
that rated the Class A Certificates at the request of Provident at the time
of the initial issuance of the Certificates. If such agency or a successor
is no longer in existence, "Rating Agency" shall be such statistical credit
rating agency, or other comparable Person, designated by Provident and
acceptable to the Certificate Insurer, notice of which designation shall be
given to the Trustee. References herein to the highest short term unsecured
rating category of a Rating Agency shall mean "A-1+" or better in the case of
Standard & Poor's and "P-1" or better in the case of Moody's, and in the case
of any other Rating Agency shall mean such equivalent ratings. References
herein to the highest long-term rating category of a Rating Agency shall mean
"AAA" in the case of Standard & Poor's and "Aaa" in the case of Moody's and
in the case of any other Rating Agency, such equivalent rating.
Record Date: With respect to (i) the initial Distribution Date and all
-----------
Class A Certificates, the Closing Date, (ii) each subsequent Distribution
Date and the Class A-1 Certificates, the last day of the month immediately
preceding the month in which the related Distribution Date occurs and (iii)
each subsequent Distribution Date and the Class A-2 Certificates, the day
immediately preceding such Distribution Date; provided, however, that if any
-------- -------
Class A-2 Certificate becomes a Definitive Certificate, the record date
for such Class A-2 Certificate will be the last day of the month immediately
preceding the month in which the related Distribution Date occurs.
Reference Bank Rate: As to any Interest Period relating to the Class
-------------------
A-2 Certificates as follows: the arithmetic mean (rounded upwards, if
necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 A.M., London time, on the second LIBOR Business
Day prior to the first day of such Interest Period to prime banks in the
London interbank market for a period of one month in amounts approximately
equal to the Class Principal Balance of the Class A-2 Certificates; provided
--------
that at least two such Reference Banks provide such rate. If fewer than two
offered rates appear, the Reference Bank Rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Master Servicer, as of 11:00 A.M., New
York time, on such date for loans in U.S. Dollars to leading European Banks
for a period of one month in amounts approximately equal to the Class
Principal Balance of the Class A-2 Certificates. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank Rate appli-
cable to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
---------------
interbank market, selected by Provident after consultation with the Trustee.
Regular Certificates: The Class A Certificates.
--------------------
Reimbursement Amount: As of any Distribution Date, the sum of (x) (i)
--------------------
Insured Payments previously received by the Trustee and not previously re-
paid to the Certificate Insurer pursuant to Sections 5.01(a)(i)(4) and
5.01(a)(ii)(4) plus (ii) interest accrued on such Insured Payment not
previously repaid calculated at the Late Payment Rate (as defined in the
Insurance Agreement) from the date the Trustee received such Insured Payment
and (y) (i) the amount of any Premium Amount for either Certificate Group not
paid on the date due plus (ii) interest on such amount at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and Provident of the
amount of any Reimbursement Amount.
Related Documents: As defined in Section 2.01.
-----------------
Related Group: With respect to the Group 1 Certificates, Loan Group 1.
-------------
With respect to the Group 2 Certificates, Loan Group 2.
REMIC: A "real estate mortgage investment conduit" within the meaning
-----
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date"
-------------------------------
of the Regular Certificates as that term is defined in Section 2.10.
REMIC Provisions: Provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be
in effect from time to time.
REO Property: A Mortgaged Property that is acquired by the Trustee in
------------
foreclosure or by deed in lieu of foreclosure.
Request for Release: A written request by either the Trustee or the
-------------------
Document Custodian for the release of a Mortgage File, in the form set forth
herein in Exhibit J.
Responsible Officer: When used with respect to the Trustee, any officer
-------------------
assigned to the corporate trust group (or any successor thereto), including
any vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration
of this Agreement. When used with respect to the Seller or Servicer, the
President or any Vice President, Assistant Vice President or any Secretary or
Assistant Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
----
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989 or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
Seller: The Provident Bank, an Ohio banking corporation, or any
------
successor thereto, as seller hereunder.
Servicing Advances: All reasonable and customary unanticipated "out of
------------------
pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to, the cost of (i)
the preservation, restoration and protection of the Mortgaged Property, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees
paid to any independent contractor in connection therewith, (iv) compliance
with the obligations under Sections 3.04, 3.07 or 3.20 and (v) in connection
with the liquidation of a Mortgage Loan, expenditures relating to the
purchase or maintenance of the First Lien pursuant to Section 3.18, all of
which reasonable and customary unanticipated out-of-pocket costs and expenses
are reimbursable to the Master Servicer to the extent provided in Sections
3.03(ii) and 3.03(vii) and 3.07.
Servicing Certificate: A certificate completed and executed by a
---------------------
Servicing Officer on behalf of the Master Servicer.
Servicing Officer: Any officer of each of the Master Servicer and
-----------------
Designated Subservicer involved in, or responsible for, the administration
and servicing of the Mortgage Loans whose name and specimen signature appear
on a list of servicing officers furnished to the Trustee (with a copy to the
Certificate Insurer) by the Master Servicer and the Designated Subservicer,
as such list may be amended from time to time, initially set forth in Exhibit
P hereto.
Specified O/C Amount: (a) for any Distribution Date and Certificate
--------------------
Group occurring during the period commencing on the Closing Date and ending
on the later of the date upon which principal in the amount of one-half the
related Maximum Collateral Amount has been received by the Class A
Certificateholders of such Certificate Group and the 30th Distribution Date
following the Closing Date, the greater of (i) the applicable Original
Specified Subordinated Amount and (ii) two times the difference of (A)
one-half of the aggregate Principal Balances of all Mortgage Loans in the
related Loan Group which are 91 or more days Delinquent (including REO
Property) and (B) with respect to the Group 1 Certificates, five times, and
with respect to the Group 2 Certificates, three times the related Projected
Monthly Excess Cash Flow as of such Distribution Date;
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, the greatest of (i) an amount equal to the lesser of (A)
the Original Specified Subordinated Amount and (B) two times the product of
the Original Specified Subordinated Amount Percentage and the related Class
Certificate Balance as of such Distribution Date, (ii) two times the
difference of (A) one-half of the aggregate Principal Balances of all
Mortgage Loans in the related Loan Group which are 91 or more days Delinquent
(including REO Property) over (B) with respect to the Group 1 Certificates,
five times, and with respect to the Group 2 Certificates, three times the
related Projected Monthly Excess Cashflow as of such date, (iii) an amount
equal to 0.50% of the Maximum Collateral Amount and (iv) the sum of the four
largest Principal Balances in the related Loan Group; and
(c) notwithstanding anything to the contrary set forth in clauses (a)
and (b) above, on the earlier of (i) any Distribution Date on which an Event
of Default has occurred and is continuing and (ii) any Distribution Date
after which there has been a draw on the Certificate Insurance Policy, the
Specified O/C Amount shall be the same as the Specified O/C Amount which
existed on the last Distribution Date on which an event specified in clause
(i) or (ii) as applicable had not occurred and was not continuing;
provided, however, that the Certificate Insurer may, in its sole discretion,
-------- -------
at the request of the Seller, modify clause (a) and/or clause (b) above for
the purpose of reducing or eliminating, in whole or in part, the application
of clause (a) and/or clause (b) above and the Trustee and the Rating Agencies
hall be notified in writing of such modification prior to the related
Distribution Date and such modification shall not result in a downgrading of
the then-current ratings of the Certificates.
Standard & Poor's: Standard & Poor's Rating Services, a division of The
-----------------
▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor in interest.
Start-up Day: The day designated as such pursuant to Section 2.09.
------------
Subservicer: Any Person with whom the Master Servicer has entered into
-----------
a Subservicing Agreement and who satisfies the requirements set forth in
Section 3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Master Servicer and
----------------------
any Subservicer relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 3.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
-----------------------
pursuant to Section 2.06, the excess of (i) the aggregate Principal Balances
of all Defective Mortgage Loans to be replaced by Eligible Substitute
Mortgage Loans (after application of principal payments received on or before
the date of substitution of any Eligible Substitute Mortgage Loans as of the
date of substitution), together with all accrued and unpaid interest (such
accrued and unpaid interest may constitute all or a portion of a unreimbursed
Monthly Advance) thereon at the Loan Rate, plus the amount of any
unreimbursed Servicing Advances made by the Master Servicer with respect to
such Defective Mortgage Loan over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loan as of the date of substitution.
Supplemental Mortgage Loan Schedule: As defined in Section 2.06(b).
-----------------------------------
Tax Matters Person: As defined in Section 2.12.
------------------
Tax Matters Person Residual Interest: A 0.000001% interest in the Class
------------------------------------
R Certificates, which shall be issued to and held by the Trustee.
Total Expected Losses: The sum of the (i) Cumulative Net Losses from
---------------------
the Closing Date through and including the date of determination and (ii) the
Delinquency Loss Factor.
Trust: The trust created by this Agreement, the corpus of which
-----
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account and the Distribution Account in
accordance with this Agreement, property that secured a Mortgage Loan and
that has become REO Property, the Certificate Insurance Policy, certain
hazard insurance policies maintained by the Mortgagors or the Master Servicer
in respect of the Mortgage Loans and all proceeds of each of the foregoing.
Trustee: (_______________________________________), or any successor
-------
Trustee appointed in accordance with this Agreement that has accepted such
appointment in accordance with this Agreement.
Trustee Fee: As to an Distribution Date and Loan Group, an amount equal
-----------
to ____% per annum of the sum of the related Loan Group Principal Balance as
of the first day of the preceding Due Period.
UCC: The Uniform Commercial Code, as amended from time to time, as in
---
effect in any specified jurisdiction.
Voting Rights: The portion of the aggregate voting rights of all the
-------------
Certificates evidenced by a Certificate. At all times during the term of
this Agreement, the Voting Rights shall be allocated among Holders of the
Class A Certificates in proportion to the Original Class Certificate
Principal Balances of their respective Classes. Voting Rights allocated to a
Class of Certificates shall be allocated among the Certificates of each such
Class in accordance with their respective Percentage Interests. The Holders
of the Class R Certificates shall have no Voting Rights.
Section 1.02. Interest Calculations. All calculations of interest
---------------------
hereunder that are made in respect of the Principal Balance of a Mortgage
Loan shall be made on the basis of a 360-day year consisting of twelve 30-day
months. The Certificate Rate for the Class A-1 Certificates shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Certificate Rate for the Class A-2 Certificates shall be calculated on
the basis of a 360-day year and the actual number of days elapsed. The
calculation of the Trustee Fee and the Master Servicing Fee shall be made on
the basis of a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-
half of one ▇▇▇▇▇ being rounded down.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans. (a) Provident, con
----------------------------
currently with the execution and delivery of this Agreement, does hereby
transfer, assign, sell, set over and otherwise convey to the Trust without
recourse (subject to Sections 2.02 and 2.04) (i) all of its right, title and
interest in and to each Mortgage Loan, including the related Cut-Off Date
Principal Balance, all interest accruing thereon on and after the applicable
Cut-Off Date and all collections in respect of interest and principal
received on and after the Cut-Off Date (exclusive of (i) payments in respect
of interest accrued on the Mortgage Loans during _________________ due on or
after the Cut-Off Date and permitted to be withdrawn from the Collection
Account pursuant to Section 3.03(v)(b) and (ii) payments in respect of
interest on the Mortgage Loans due prior to the Cut-Off Date and received
thereafter); (ii) property which secured such Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of the Mortgage Loans; and (iv)
all proceeds of any of the foregoing. In addition, on or prior to the
Closing Date, Provident shall cause the Certificate Insurer to deliver the
Certificate Insurance Policy to the Trustee. The foregoing sale, transfer,
assignment, set over and conveyance does not and is not intended to result in
a creation or an assumption by the Trustee of any obligation of the Seller or
any other Person in connection with the Mortgage Loans or any agreement or
instrument relating thereto except as specifically set forth herein.
In connection with such transfer, assignment, sale and conveyance by
Provident, the Seller shall deliver to, and deposit with, the Document
Custodian (in the case of paragraphs (ii), (iv), (v) and (vi) below) or the
Trustee (in the case of paragraphs (i) and (iii) below), on or before the
Closing Date (except that in the case of paragraph (iii) such documents need
not be delivered to the Trustee for up to 90 days from the Closing Date), the
following documents or instruments with respect to each Mortgage Loan (the
"Related Documents") and the related Mortgage Loan Schedule in computer
readable format:
(i) the original Mortgage Note, endorsed without recourse to the
order of the Trustee (which endorsement may be by an allonge), with all
intervening endorsements showing a complete chain of title from the
originator of such Mortgage Loan to the Seller;
(ii) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for recording to
the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller by
such recording office, the Seller shall deliver to the Document Custodian
a certified true copy of such original Mortgage so certified by the Seller,
together with a certificate of the Seller certifying that such original
Mortgage has been so delivered to such recording office; in all such instances,
the Seller shall deliver or cause to be delivered the original recorded
Mortgage to the Document Custodian promptly upon receipt of the original
recorded Mortgage;
(iii) the original Assignment of Mortgage, from the Seller to the
Trustee, which assignment shall be in form and substance acceptable for
recording;
(iv) the original attorney's opinion of title or the original
policy of title insurance, provided that if any such original policy of title
--------
insurance has not yet been received by the Seller, the Seller may have
delivered to the Document Custodian a copy of such policy or a title
insurance binder or commitment for the issuance of such policy;
(v) originals of all intervening assignments of Mortgage, with
evidence of recording thereon, showing a complete chain of title from the
originator to the Seller, provided that if any such original intervening
--------
assignment of Mortgage has been delivered for recording to the appropriate
public recording office of the jurisdiction in which the Mortgaged Property
is located but has not yet been returned to the Seller by such recording
office, the Seller may have delivered to the Document Custodian a certified
true copy of such original assignment of Mortgage so certified by the Seller,
together with a certificate of the Seller certifying that such original
assignment of Mortgage has been so delivered to such recording office; in all
such instances, the Seller shall deliver or cause to be delivered any such
original assignments to the Document Custodian promptly upon receipt thereof;
and
(vi) originals of all assumption and modification agreements, if
any.
For so long as an Assignment Event has not occurred, the Document
Custodian shall be entitled to maintain possession of each Mortgage File
(other than the related Mortgage Note and the Assignment of Mortgage) for
each Mortgage Loan. Within 30 days of an Assignment Event, the Seller, at
its expense, shall cause the portion of the Mortgage Files held by the
Document Custodian to be delivered to the Trustee or its designee.
The Seller hereby confirms to the Trustee that as of the Closing Date it
has caused the portions of the Electronic Ledger relating to the Mortgage
Loans to be clearly and unambiguously marked to indicate that the Mortgage
Loans have been transferred to the Trustee and constitute part of the Trust
in accordance with the terms of the trust created hereunder. The Electronic
Ledger shall indicate that the Mortgage Files (other than the Mortgage Notes
and the Assignments of Mortgage) are held by the Document Custodian as
custodian for the Trustee of the Provident Bank Home Equity Loan Trust 199_-_.
Within 30 days of an Assignment Event, the Seller, at its own expense,
shall either (i) record the Assignments of Mortgage in favor of the Trustee
in the appropriate real property or other records (which may be a blanket
assignment if permitted by applicable law) or (ii) deliver to the Trustee,
the Rating Agencies and the Certificate Insurer an Opinion of Counsel in form
and substance acceptable to the Certificate Insurer to the effect that
recording is not required to protect the Trustee's right, title and interest
in and to the related Mortgage Loan or, in the event a court should
recharacterize the conveyance of the Mortgage Loans as a loan or a pledge of
security for a loan, to perfect a first priority security interest in favor
of the Trustee in the related Mortgage Loan. With respect to any Assignment
of Mortgage as to which the related recording information is unavailable
within 30 days of an Assignment Event, such Assignment of Mortgage shall be
submitted by the Seller for recording within 30 days after receipt of such
information but in no event later than one year from the date such Assignment
of Mortgage is otherwise required to be recorded pursuant to this Section.
The Trustee shall be provided a copy of each Assignment of Mortgage submitted
for recording and such copy shall be retained by it. In the event that any
such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Seller, at its own expense, shall promptly prepare a
substitute Assignment of Mortgage or cure such defect, as the case may be,
and thereafter the Seller shall be required to submit each such Assignment of
Mortgage for recording. Any failure of the Seller to comply with this
Section shall result in the obligation of the Seller to purchase the related
Mortgage Loans pursuant to the provisions of Section 2.02 or substitute for
the related Mortgage Loans pursuant to the provisions of Section 2.06.
(b) The parties hereto intend that the transaction set forth herein be
a sale by Provident to the Trust of all Provident's right, title and interest
in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, Provident
hereby grants to the Trust a security interest in all of Provident's right,
title and interest in, to and under the Mortgage Loans and other property
described above; and this Agreement shall constitute a security agreement
under applicable law.
The Seller agrees to prepare, execute and file UCC-1 financing
statements with the Secretary of State in the State of Ohio and the ▇▇▇▇▇▇▇▇
County, Ohio Recorder's Office (which shall have been filed on or before the
Closing Date with respect to the Mortgage Loans) describing the applicable
Mortgage Loans and naming the Seller as debtor and the Trustee as secured
party and all necessary continuation statements and any amendments to the
UCC-1 financing statements required to reflect a change in the name or
corporate structure of the Seller or the filing of any additional UCC-1
financing statements due to the change in the principal officer of the
Seller, as are necessary to perfect and protect the Trustee's interest in each
Mortgage Loan and the proceeds thereof.
The Seller, the Master Servicer and the Trustee shall, to the extent
consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be main-
tained as such throughout the term of this Agreement.
(c) The Trustee shall, for the benefit of Certificateholders, within 60
days after execution and delivery of this Agreement certify to the Seller,
the Certificate Insurer and the Master Servicer that all Mortgage Notes have
been executed and received, and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule and that the Mortgage Notes
have been endorsed as set forth in Section 2.01(a) (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), and in so doing the
Trustee may rely on the purported due execution and genuineness of any
signature thereon. Within 180 days after execution and delivery of this
Agreement, the Trustee agrees, for the benefit of Certificateholders, to
certify to the Seller, the Certificate Insurer and the Master Servicer that
all Assignments of Mortgages have been executed and received, and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, and in so doing the Trustee may rely on the purported due execution
and genuineness of any signature thereon. If within such 60-day period or
180-day period, as applicable, the Trustee finds any such document constitut-
ing a part of a Mortgage File not to have been executed or received or to be
unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule or,
if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall,
promptly upon the conclusion of such review, notify the Seller, the Master
Servicer and the Certificate Insurer, and the Seller shall have a period of
90 days after such notice within which to correct or cure any such defect;
provided, however, that if such defect shall not have been corrected or cured
-------- -------
within such 90-day period due primarily to the failure of the related office
of real property or other records to return any document constituting a part
of a Mortgage File, the Seller shall so notify the Trustee in writing and the
period during which such defect may be corrected or cured shall be extended
until such time as any such documents are returned from such related office
(in no event, however, will such period extend beyond one (1) year from the
date of discovery of such defect); provided that prior to any such extension
--------
the Seller shall deliver to the Trustee a true copy of such document with a
certification by the Seller on the face of such copy substantially as follows:
"certified true and correct copy of original which has been transmitted for
recordation."
The Trustee agrees, for the benefit of Certificateholders, within 60
days following receipt of the Mortgage Files after an Assignment Event, to
certify to the Seller, the Certificate Insurer and the Master Servicer that
it has reviewed each Mortgage File and that, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in the certification in the
form annexed hereto as Exhibit E as not covered by such certification), (i)
all documents constituting part of such Mortgage File required to be
delivered to it pursuant to paragraphs (i) - (iv) of Section 2.01(a) are in
its possession, (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan, (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule which corresponds to items (i), (iii), (iv), (vi) and
(viii) of the definition of "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. If within such 60-day period,
the Trustee finds any document constituting a part of the Mortgage File not
to have been executed or received or to be unrelated to the Mortgage Loans
identified in said Mortgage Loan Schedule or, if in the course of its review,
the Trustee determines that such Mortgage File is otherwise defective in any
material respect, the Trustee shall notify the parties and follow the other
procedures set forth in the preceding paragraph.
(d) The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in subsection (c) of Section 2.01. Without
limiting the effect of the preceding sentence, in reviewing any Mortgage File
pursuant to such subsection, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form assigned and
endorsed in blank or whether any document has been recorded in accordance
with the requirements of any applicable jurisdiction, but shall only be
required to determine whether a document has been executed, that it appears
to be what it purports to be and, where applicable, that it purports to be
recorded, but shall not be required to determine whether any Person executing
any document is authorized to do so or whether any signature thereon is
genuine.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
---------------------
its receipt of the Certificate Insurance Policy, the Mortgage Notes, and the
sale and assignment of the Mortgage Loans, and, subject to the review and
period for delivery provided for in Section 2.01, and the Document
Custodian's receipt of the Mortgage Files (based on the Document Custodian's
representation that it has received the portion of the Mortgage Files being
held by it hereunder), and declares that the Trustee will hold such documents
and all amounts received by it thereunder and hereunder in trust, upon the
terms herein set forth, for the use and benefit of all present and future
Certificateholders and the Certificate Insurer. If the Seller is given notice
under Section 2.01(c) and if the Seller does not correct or cure such
omission or defect within the applicable 90-day period specified in Section
2.01(c), the Seller shall purchase such Mortgage Loan from the Trustee or
substitute an Eligible Substitute Mortgage Loan for such Mortgage Loan (i) on
the Determination Date in the month following the month in which such 90-day
period expired at the Purchase Price of such Mortgage Loan or in accordance
with Section 2.06, as applicable or (ii) upon the expiration of such 90-day
period if the omission or defect would result in the related Mortgage Loan
not being a "qualified mortgage loan" for purposes of Section 860G(a)(3) of
the Code. The Purchase Price for the purchased Mortgage Loan shall be
deposited in the Collection Account no later than the applicable
Determination Date or the Business Day preceding the expiration of such
90-day period, as the case may be and, upon receipt by the Trustee of written
notification of such deposit signed by an officer ofthe Seller, the Trstee
shall direct the Document Custodian to release to the Seller the related
Mortgage File and the Trustee and the Document Custodian shall execute and
deliver such instruments of transfer or assignment, prepared by and at the
expense of the Seller, in each case without recourse, as shall be necessary
to vest in the Seller or its designee any Mortgage Loan released pursuant
hereto. It is understood and agreed that the obligation of the Seller to
purchase any Mortgage Loan or substitute an Eligible Substitute Mortgage Loan
for such Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy against the
Seller respecting such defect or omission available to the Certificate
Insurer, the Certificateholders or the Trustee on behalf of Certificate-
holders. An Opinion of Counsel to the effect set forth in Section 2.06(d)
shall be delivered to the Trustee in connection with any such repurchase.
The Master Servicer, promptly following the transfer of (i) a Defective
Mortgage Loan from the Trust or (ii) an Eligible Substitute Mortgage Loan to
the Trust pursuant to this Section and Section 2.06, as the case may be,
shall amend the Mortgage Loan Schedule, appropriately ▇▇▇▇ the Electronic
Ledger and make appropriate entries in its general account records to reflect
such transfer and the addition of any Eligible Substitute Mortgage Loan, if
applicable.
Section 2.03. Representations and Warranties Regarding the Seller and
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the Master Servicer. (a) Provident represents and warrants that, as of the
-------------------
Closing Date:
(i) It is an Ohio banking corporation, validly existing and in
good standing under the laws of the State of Ohio and has the corporate power
to own its assets and to transact the business in which it is currently
engaged. It is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on its business, properties, assets or condition (financial or
other);
(ii) It has the corporate power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute its legal, valid and
binding obligation enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) It is not required to obtain the consent of any other party or
any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization, or
registration or declaration, as shall have been obtained or filed, as the
case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
it will not violate any provision of any existing law or regulation or any
order or decree of any court applicable to it or any of its properties or any
provision of its Articles of Incorporation or Code of Regulations, or
constitute a material breach of any mortgage, indenture, contract or other
agreement to which it is a party or by which it may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to its
knowledge threatened, against it or any of its properties or with respect to
this Agreement or the Certificates which in its opinion has a reasonable
likelihood of resulting in a material adverse effect on the transactions
contemplated by this Agreement;
(vi) No certificate of an officer, statement furnished in writing
or report delivered by it pursuant to the terms hereof contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading;
(vii) The transactions contemplated by this Agreement are in the
ordinary course of business of Provident; and
(viii) It is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is it aware of any pending insolvency;
and it did not sell the Mortgage Loans to the Trustee with any intent to
hinder, delay or defraud any of its creditors.
(b) The representations and warranties set forth in this Section shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially
and adversely affects the interests of the Certificateholders or the
Certificate Insurer, the Person discovering such breach shall give prompt
written notice to the other parties and to the Certificate Insurer. Within
60 days of its discovery or its receipt of notice of breach or, with the
prior written consent of a Responsible Officer of the Trustee, such longer
period specified in such consent, the Seller or the Master Servicer, as
appropriate, shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding
------------------------------------------------------
the Mortgage Loans. (a) The Seller represents and warrants to the Master
------------------
Servicer, the Trustee on behalf of the Certificateholders and the Certificate
Insurer as follows as of the Closing Date or such other specified date:
(i) The information with respect to each Mortgage Loan set forth
in the related Mortgage Loan Schedule is true and correct in all
material respects as of the Cut-Off Date;
(ii) As of the Closing Date, the Mortgage File relating to each
Mortgage Loan contains each of the documents and instruments specified
to be included therein;
(iii) Each Mortgaged Property is improved by a one- to four-family
single family residential dwelling, which may include condominiums,
townhouses and manufactured homes. No Mortgaged Property is a mobile
home. No Mortgage Property securing any Mortgage Loan is improved by a
manufactured home;
(iv) Each Mortgage Loan is being subserviced by the Designated
Subservicer;
(v) Each Mortgage Loan is a closed-end mortgage loan and all
amounts due under the related Mortgage Note have been advanced. Each
Mortgage Loan has an original term to maturity from the date on which
the first Monthly Payment is due of not more than 30 years with respect
to the Mortgage Loans in Loan Group 1 and 30 years with respect to the
Mortgage Loans in Loan Group 2. Not more than _____% of the Mortgage
Loans in Loan Group 1 (by Cut-Off Date Loan Group Initial Principal
Balance) are Balloon Loans;
(vi) Each Mortgage Note in respect of a Mortgage Loan in Loan Group
1 provides for level monthly payments sufficient to fully amortize the
principal balance of such Mortgage Note on its maturity date or is a
Balloon Loan;
(vii) Each Mortgage Note relating to a Mortgage Loan in Loan Group 2
accrues interest at an adjustable Loan Rate computed on an actuarial
basis. Each Loan Rate relating to a Mortgage Loan in Loan Group 2
adjusts semi-annually (after an initial fixed period of either six
months, thirty-six months or sixty months, as specified on the related
Mortgage Note) to equal the sum of the applicable Index and the Margin,
subject to a Periodic Rate Cap, Lifetime Rate Cap and Lifetime Rate
Floor. The Monthly Payment with respect to each Mortgage Loan in Loan
Group 2 adjusts with each adjustment to the Loan Rate and if timely paid
is sufficient to fully amortize the principal balance of such Mortgage
Note on its maturity date. With respect to each Interest Rate
Adjustment Date for a Mortgage Loan in Loan Group 2, the Periodic Rate
Cap is ____%. With respect to the Mortgage Loans in Loan Group 2, the
Lifetime Rate Caps range between _____% per annum and _____% per annum;
(viii) Each Mortgage is a valid and subsisting first or second lien
of record on the Mortgaged Property subject, in the case of any second
Mortgage Loan, only to a First Lien on such Mortgaged Property and
subject in all cases to the exceptions to title set forth in the title
insurance policy with respect to the related Mortgage Loan, which
exceptions are generally acceptable to second mortgage lending
companies, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security intended to
be provided by such Mortgage. Any security agreement, chattel mortgage
or equivalent document related to the Mortgage and delivered to the
Trustee establishes in the Seller a valid and subsisting lien on the
property described therein, and the Seller has full right to assign the
same to the Trustee;
(ix) Except with respect to liens released immediately prior to the
transfer herein contemplated, each Mortgage Note and related Mortgage
have not been assigned or pledged and immediately prior to the transfer
and assignment herein contemplated, the Seller held good, marketable and
indefeasible title to, and was the sole owner and holder of, each
Mortgage Loan subject to no liens, charges, mortgages, claims, partici-
pation interests, equities, pledges or security interests of any nature,
encumbrances or rights of others (collectively, a "Lien"); the Seller
has full right and authority under all governmental and regulatory
bodies having jurisdiction over the Seller, subject to no interest or
participation of, or agreement with, any party, to sell and assign the
same pursuant to this Agreement; and immediately upon the transfer and
assignment herein contemplated, the Seller shall have transferred all of
its right, title and interest in and to each Mortgage Loan to the
Purchaser (or its assignee) and the Purchaser (or its assignee) will
hold good, marketable and indefeasible title, to, and be the sole owner
of, each Mortgage Loan subject to no Liens;
(x) Except for no more than ____% of the Mortgage Loans (by Cut-
Off Date Pool Initial Principal Balance), no Mortgage Loan was 30 or
more days delinquent as of its Cut-Off Date. No more than ____% of the
Mortgage Loans (by Cut-Off Date Pool Initial Principal Balance) is
between 30 and 59 days delinquent as of its Cut-Off Date;
(xi) There is no delinquent tax, fee or assessment lien on any
Mortgaged Property, and each Mortgaged Property is free of material
damage and is in good repair;
(xii) No Mortgage Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or Mortgage,
or the exercise of any right thereunder, render either the Mortgage Note
or the Mortgage unenforceable in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto;
(xiii) None of the Mortgage Loans are retail installment contracts
for goods or services or are home improvement loans for goods or
services, which would be either "consumer credit contracts" or "purchase
money loans" as such terms are defined in 16 C.F.R. Section433.1;
(xiv) No Mortgagor has or will have a claim or defense against the
Seller or any assignor or assignee of the Seller under any express or
implied warranty with respect to goods or services provided in
connection with any Mortgage Loan;
(xv) The Mortgage, the Mortgage Note and the other Related
Documents contain the entire agreement of the parties and all
obligations of the Seller under the related Mortgage Loan, and no other
agreement defines, modifies or expands the obligations of the Seller
under the Mortgage Loan;
(xvi) There is no mechanics' lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien
prior to, or equal or coordinate with, the lien of the related Mortgage,
and no rights are outstanding that under law could give rise to such a
lien except those which are insured against by the title insurance
policy referred to in paragraph (xviii) below;
(xvii) Each Mortgage Loan at the time it was made complied with, and
each Mortgage Loan at all times was serviced in compliance with, in
each case, in all material respects, applicable state and federal
laws and regulations, including, without limitation, usury, equal credit
opportunity, consumer credit, truth-in-lending and disclosure laws;
(xviii) With respect to each Mortgage Loan, either (i) a lender's
title insurance policy, issued in standard American Land Title
Association or California Land Title Association form, or other form
acceptable in a particular jurisdiction, by a title insurance company
authorized to transact business in the state in which the related
Mortgaged Property is situated, together with a condominium endorsement,
if applicable, in an amount at least equal to the original principal
balance of such Mortgage Loan insuring the mortgagee's interest under
the related Mortgage Loan as the holder of a valid first or second
mortgage lien of record on the real property described in the Mortgage,
subject only to the exceptions of the character referred to in paragraph
(viii) above, was valid and in full force and effect on the date of the
origination of such Mortgage Loan and as of the Closing Date or (ii) an
attorney's opinion of title was prepared in connection with the
origination of such Mortgage Loan. The Seller is the sole named insured
of such mortgage title insurance policy, the assignment to the Trustee
as assignee of the Seller's interest in such mortgage title insurance
policy does not require the consent of or notification to the insurer or
the same has been obtained, and such mortgage title insurance policy is
in full force and effect and will be in full force and effect and inure
to the benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
that would impair the coverage of such mortgage title insurance policy;
(xix) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire and extended coverage representing
coverage described in Sections 3.04 and 3.05;
(xx) A flood insurance policy is in effect with respect to each
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in Sections 3.04 or 3.05, if and to the
extent required by Sections 3.04 or 3.05;
(xxi) Each Mortgage Note and the related Mortgage are genuine, and
each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the related Mortgagor and is enforceable in accordance
with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law), and all parties to each Mortgage Loan and the Mortgagee
had full legal capacity to execute all Mortgage Loan documents and to
convey the estate therein purported to be conveyed. The Mortgagor is
a natural person who is a party to the Mortgage Note and the Mortgage in
an individual capacity, and not in the capacity of a trustee or otherwise;
(xxii) The Seller has directed the Master Servicer to perform any and
all acts required to be performed to preserve the rights and remedies of
the Trustee in any insurance policies applicable to the Mortgage Loans
including, without limitation, any necessary notifications of insurers,
assign-ments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xxiii) No more than ____% of the Mortgage Loans (by Cut-Off Date Pool
Initial Principal Balance) are secured by Mortgaged Properties located
within any single zip code area;
(xxiv) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any material respect, except by a
written instrument which has been recorded or is in the process of being
recorded, if necessary, to protect the interests of the
Certificateholders and the Certificate Insurer and which has been or
will be delivered to the Trustee. The substance of any such alteration
or modification is reflected on the related Mortgage Loan Schedule and
was approved, if required, by the related primary mortgage guaranty
insurer, if any. Each original Mortgage was recorded, and all
subsequent assignments of the original Mortgage have been recorded in
the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of the Seller, or, subject
to Section 2.2 of the Purchase Agreement, are in the process of being
recorded;
(xxv) No instrument of release or waiver has been executed in
connection with the Mortgage Loan, and no Mortgagor has been released,
in whole or in part;
(xxvi) Except as provided in subclause (x) above, there are no
defaults in complying with the terms of the Mortgage, and any taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges or ground rents which previously became due and owing have been
paid. The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mort-
gagor, directly or indirectly, for the payment of any amount required by
the Mortgage Note, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds, whichever
is later, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(xxvii) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty, so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises were
intended;
(xxviii) All of the improvements which were included for the purpose of
determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property,
and no improvements on adjoining properties encroach upon the Mortgaged
Property;
(xxix) No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities and the
Mortgaged Property is lawfully occupied under applicable law;
(xxx) The proceeds of each Mortgage Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future
advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording the Mortgage Loans were paid;
(xxxi) Each Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and, in certain circumstances, additional real
estate collateral;
(xxxii) No Mortgage Loan is subject to the Home Ownership and Equity
Protection Act of 1994;
(xxxiii) There is no obligation on the part of the Seller or any other
party to make payments in respect of a Mortgage Loan in addition to
those made by the Mortgagor;
(xxxiv) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Certificate-
holders to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor;
(xxxv) No Mortgage Loan has a shared appreciation feature or other
contingent interest feature;
(xxxvi) The related First Lien, if any, requires equal monthly
payments, unless such First Lien is a balloon loan, or if it bears an
adjustable interest rate, the monthly payments for the related First
Lien may be adjusted no more frequently than monthly;
(xxxvii) Either (i) no consent for the Mortgage Loan is required by the
holder of the related First Lien or (ii) such consent has been obtained
and is contained in the Mortgage File;
(xxxviii) With respect to any First Lien that provides for negative
amortization or deferred interest, the balance of such First Lien used
to calculate the Combined Loan-to-Value Ratio for the Mortgage Loan is
based on the maximum amount of negative amortization possible under such
First Lien. With respect to any First Lien which is an open-ended loan,
the Combined Loan-to-Value Ratio was calculated based on the maximum
amount of principal which the borrower may incur thereunder;
(xxxix) The maturity date of the Mortgage Loan is prior to the
maturity date of the related First Lien, if any, if such First Lien
provides for a balloon payment. No Mortgage Loan provides for negative
amortization;
(xl) All parties which have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee, servicer or
otherwise, are (or, during the period in which they held and disposed of
such interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (2)(A) organized under the laws of such state,
or (B) qualified to do business in such state, or (C) federal savings
and loan associations or national banks having principal offices in such
state, or (D) not doing business in such state so as to require
qualification or licensing;
(xli) The Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related security for the Mortgage Loan is
sold without the prior consent of the mortgagee thereunder;
(xlii) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the related
Mortgage Loan Schedule. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan. The Mortgage
Note does not permit or obligate the Seller to make future advances to
the Mortgagor at the option of the Mortgagor;
(xliii) The Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise by judicial or
non-judicial foreclosure;
(xliv) Except as provided in paragraph (x) above, there is no
default, breach, violation or event of acceleration existing under any
Mortgage or the related Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xlv) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(xlvi) All amounts received after the Cut-Off Date with respect to
the Mortgage Loans to which the Seller is not entitled have been
deposited into the Collection Account and are, as of the Closing Date in
the Collection Account;
(xlvii) All of the Mortgage Loans were originated in accordance with
the underwriting criteria set forth in the Prospectus Supplement; at
least _____% and _____% of the Mortgage Loans in Loan Group 1 and Loan
Group 2, respectively (by Cut-Off Date Loan Group Initial Principal
Balance), were originated pursuant to one of the Seller's full
documentation origination programs; no more than _____% and _____% of
the Mortgage Loans in Loan Group 1 and Loan Group 2, respectively (by
Cut-Off Date Loan Group Initial Principal Balance), were originated
pursuant to one of the Seller's reduced documentation origination
programs; and no more than _____% and _____% of the Mortgage Loans in
Loan Group 1 and Loan Group 2, respectively (by Cut-Off Date Loan Group
Initial Principal Balance) were originated pursuant to one of the
Seller's no-documentation origination programs;
(xlviii) Each Mortgage Loan conforms, and all such Mortgage Loans in
the aggregate conform, to the description thereof set forth in the
Prospectus Supplement; each Mortgage Note and Mortgage is in
substantially one of the forms attached as Exhibit F and Exhibit G
hereto;
(xlix) The Mortgage Loans were not selected by the Seller for
inclusion in the Trust on any basis intended to adversely affect the
Trust or the Certificate Insurer;
(l) All appraisals were performed by qualified independent
appraisers after analysis of other sales of properties in the area in
which the related Mortgaged Property is located, and a full interior
inspection appraisal was performed on forms acceptable to either FNMA or
FHLMC in connection with each Mortgaged Property;
(li) Each hazard insurance policy required to be maintained under
Section 3.04 with respect to a Mortgage Loan is a valid, binding,
enforceable and subsisting insurance policy and is in full force and
effect;
(lii) Each Mortgage Loan was originated by the Seller or an
affiliate of the Seller or purchased by the Seller;
(liii) Each Mortgaged Property is located in the state identified on
the related Mortgage Loan Schedule and consists of a single parcel of
real property with a one-family residence erected thereon, or an
attached or detached or semi-detached two- to four-family dwelling, or
an individual condominium unit, or an individual unit in a planned unit
development. With respect to each Cut-Off Date Loan Group Principal
Balance (a) no more than ____% and ____% of the Mortgage Loans in Loan
Group 1 and Loan Group 2, respectively (by Cut-Off Date Loan Group
Initial Principal Balance), are secured by real property improved by
two- to four-family dwellings, (b) no more than ____% and ____% of the
Mortgage Loans in Loan Group 1 and Loan Group 2, respectively (by Cut-
Off Date Loan Group Initial Principal Balance), are secured by real
property improved by individual condominium units and units in a planned
unit development and (c) at least _____% and _____% of the Mortgage
Loans in Loan Group 1 and Loan Group 2, respectively (by Cut-Off Date
Loan Group Initial Principal Balance), are secured by real property with
a one-family residence erected thereon. No Mortgaged Property is held
under a ground lease;
(liv) No Mortgage Loan had a Combined Loan-to-Value Ratio at the
time of origination of more than _____%;
(lv) No more than _____% and _____% of the Mortgage Loans in Loan
Group 1 and Loan Group 2, respectively (by Cut-Off Date Loan Group
Initial Principal Balance), are secured by Mortgaged Properties that are
non-owner occupied properties. The Mortgaged Property is lawfully
occupied under applicable law;
(lvi) The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage;
(lvii) Each Mortgage Loan was originated on or after __________,
199_;
(lviii) As of the Closing Date, the Seller has not received a notice
of default of a First Lien which has not been cured;
(lix) The Seller has not transferred the Mortgage Loans to the
Trustee with any intent to hinder, delay or defraud any of its
creditors;
(lx) No improvement located on or being part of the related
Mortgaged Property is in violation of any applicable zoning law or
regulation. To the best knowledge of such Seller, all inspections,
licenses and certificates required to be made or issued with respect to
all occupied portions of the related Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited
to certifi-▇▇▇▇▇ of occupancy, have been made or obtained from the
appropriate authorities and such Mortgaged Property is lawfully occupied
under applicable law;
(lxi) Each Mortgage Loan is a "qualified mortgage loan" for purposes
of Section 860G(a)(3) of the Code;
(lxii) No Mortgagor has requested relief under the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended;
(lxiii) To the best of Seller's knowledge, there do not exist any
circumstances or conditions with respect to the Mortgage Loan, the
Mortgaged Property, the Mortgagor or the Mortgagor's credit standing
that can be reasonably expected to materially adversely affect the value
or marketability of the Mortgage Loan;
(lxiv) Each of the documents and instruments included in a Mortgage
File is duly executed and in due and proper form and each such document
or instrument is in a form generally acceptable to prudent institutional
mortgage lenders that regularly originate or purchase mortgage loans;
(lxv) No Mortgage Loan is a construction loan;
(lxvi) The Seller is in possession of a complete Mortgage File and
there are no custodial agreements in effect adversely affecting the right
or ability of the Seller to make the document deliveries required hereby;
(lxvii) To the best of the Seller's knowledge, no Mortgaged Property
was, as of the related Cut-Off Date, located within a one-mile radius of
any site listed in the National Priorities List as defined under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state list of hazardous waste sites
which are known to contain any hazardous substance or hazardous waste;
(lxviii) None of the Mortgage Loans is subject to a bankruptcy plan;
(lxix) The collection practices used by the Seller with respect to
the Mortgage Loans have been, in all material respects, legal, proper,
prudent and customary in the non-conforming mortgage servicing business;
(lxx) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
With respect to the representations and warranties set forth in this
Section that are made to the best of the Seller's knowledge (other than the
representation and warranty in subclause (lxiii)) or as to which the Seller
has no knowledge, if it is discovered by the Seller, the Master Servicer, the
Certificate Insurer or a Responsible Officer of the Trustee that the
substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, then, notwithstanding the Seller's lack of knowledge with respect to
the substance of such representation and warranty being inaccurate at the
time the representation or warranty was made, such inaccuracy shall be deemed
a breach of the applicable representation or warranty and with respect to any
breach of such representation or warranty or of any other representation or
warranty, the Seller shall cure, repurchase or substitute in accordance with
the Pooling and Servicing Agreement.
(b) It is understood and agreed that the representations and warranties
set forth in this Section shall survive delivery of the respective Mortgage
Files to the Document Custodian and the Trustee, as applicable, and the
termination of the rights and obligations of the Master Servicer pursuant to
Section 7.04 or 8.01. Upon discovery by the Seller, the Master Servicer, the
Certificate Insurer, the Trustee or the Document Custodian of a breach of any
of the foregoing representations and warranties, without regard to any
limitation set forth therein concerning the knowledge of the Seller as to the
facts stated therein, which materially and adversely affects the interests of
the Trust or the Certificateholders or the Certificate Insurer in the related
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties and the Certificate Insurer. Within 60 days of
its discovery or its receipt of notice of breach, the Seller shall use all
reasonable efforts to cure such breach in all material respects or shall
purchase such Mortgage Loan from the Trust or substitute an Eligible
Substitute Mortgage Loan as provided in Section 2.06 for such Mortgage Loan.
Any such purchase by the Seller shall be at the Purchase Price and in each
case shall be accomplished in the manner set forth in Section 2.02. It is
understood and agreed that the obligation of the Seller to cure, substitute
or purchase any Mortgage Loan as to which such a breach has occurred and
is continuing shall constitute the sole remedies against the Seller respecting
such breach available to Certificateholders or the Trustee on behalf of
Certificateholders pursuant to this Agreement. An Officer's Certificate and
Opinion of Counsel to the effect set forth in Section 2.06(d) shall be delivered
to the Trustee in connection with any such repurchase.
Section 2.05. (Reserved).
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Section 2.06. Substitution of Mortgage Loans. (a) On a Determination
------------------------------
Date within two years following the Closing Date and which is on or before
the date on which the Seller would otherwise be required to repurchase a
Mortgage Loan under Section 2.02 or 2.04, the Seller may deliver to the
Trustee one or more Eligible Substitute Mortgage Loans in substitution for
any one or more of the Defective Mortgage Loans which the Seller would other-
wise be required to repurchase pursuant to Sections 2.02 or 2.04. In
connection with any such substitution, the Seller shall calculate the
Substitution Adjustment, if any, and shall deposit such amount to the
Collection Account on or before the second Business Day prior to the
Distribution Date in the month succeeding the calendar month during which the
related Mortgage Loan became required to be purchased or replaced hereunder.
(b) The Seller shall notify the Master Servicer and the Trustee in
writing not less than five Business Days before the related Determination
Date which is on or before the date on which the Seller would otherwise be
required to repurchase such Mortgage Loan pursuant to Section 2.02 or 2.04 of
its intention to effect a substitution under this Section. On such
Determination Date (the "Substitution Date"), the Seller shall deliver to the
Trustee (1) the Eligible Substitute Mortgage Loans to be substituted for the
Defective Mortgage Loans, (2) a list of the Defective Mortgage Loans to be
substituted for by such Eligible Substitute Mortgage Loans, (3) an Officer's
Certificate (A) stating that no default by the Master Servicer described in
Section 8.01 shall have occurred and be continuing, (B) stating that the
aggregate principal balance of all Eligible Substitute Mortgage Loans (deter-
mined with respect to each Eligible Substitute Mortgage Loan as of the
Determination Date on which it was substituted) including the principal
balance of Eligible Substitute Mortgage Loans being substituted on such
Determination Date does not exceed an amount equal to 5% of the Pool
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Mortgage Loan Schedule (the
"Supplemental Mortgage Loan Schedule") setting forth the same type of
information as appears on the Mortgage Loan Schedule and representing as to
the accuracy thereof and (D) confirming that the representations and warranties
contained in Section 2.04 are true and correct in all material respects with
respect to the Substitute Mortgage Loans on and as of such Determination Date,
provided that remedies for the inaccuracy of such representations are limited
--------
as set forth in Sections 2.02, 2.04 and this Section, (4) an Opinion of
Counsel to the effect set forth below and (5) a certificate stating that cash
in the amount of the related Substitution Adjustment, if any, has been
deposited to the Collection Account. Upon receipt of the foregoing, the
Trustee shall release such Defective Mortgage Loans to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.06(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.06(a), Exhibit D to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect
to such Eligible Substitute Mortgage Loans, and all references in this Agree-
ment to Mortgage Loans shall include such Eligible Substitute Mortgage Loans
and be deemed to be made on or after the related Substitution Date, as the
case may be, as to such Eligible Substitute Mortgage Loans.
(d) In connection with the transfer of any Eligible Substitute Mortgage
Loan to the Trustee pursuant to this Section 2.06, the Seller shall deliver
to the Trustee and the Certificate Insurer an Opinion of Counsel to the
effect that such substitution will not cause (x) any federal tax to be
imposed on the Trust, including, without limitation, any Federal tax imposed
on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the start-up day" under Section 860G(d)(1) of the Code
or (y) any portion of the Trust to fail to qualify as a REMIC at any time
that any Certificate is outstanding. In the event that such opinion
indicates that a substitution will result in the imposition of a prohibited
transaction tax, give rise to net taxable income or be deemed a contribution
to the REMIC after the Start-up Day, the Seller shall not substitute for any
such Mortgage Loan until the Opinion of Counsel to the effect referred to in
the preceding sentence has been rendered.
Section 2.07. Execution and Authentication of Certificates. The
--------------------------------------------
Trustee on behalf of the Trust shall cause to be executed, authenticated and
delivered on the Closing Date to or upon the order of the DEPOSITOR, in
exchange for the Mortgage Loans, concurrently with the sale, assignment and
conveyance to the Trustee of the Mortgage Loans, each Class of Regular
Certificates in authorized denominations and the Class R Certificates,
together evidencing the ownership of the entire Trust.
Section 2.08. Designation of Interests in REMIC. The Class R
---------------------------------
Certificates are hereby designated as the single class of "residual
interests" in the REMIC for purposes of the REMIC Provisions. The Regular
Certificates are hereby designated as "regular interests" in the REMIC for
purposes of the REMIC Provisions.
Section 2.09. Designation of Start-up Day. The Closing Date is hereby
---------------------------
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.10. REMIC Certificate Maturity Date. Solely for purposes of
-------------------------------
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" of the REMIC is the Distribution Date in
____________.
Section 2.11. Tax Returns and Reports to Certificateholders. (a) For
---------------------------------------------
federal income tax purposes, the Trust shall have a calendar year and shall
maintain its books on the accrual method of accounting.
(b) The Trustee shall prepare, or cause to be prepared, execute and
deliver to the Master Servicer or Certificateholders, as applicable, any
income tax information returns for each taxable year with respect to the
Trust containing such information at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
shall furnish or cause to be furnished to the Trust and the
Certificateholders the schedules, statements or information at such times and
in such manner as may be required thereby. Within thirty (30) days of the
Closing Date, the Trustee shall furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Code,
the name, title, address and telephone number of the person that Holders of
the Certificates may contact for tax information relating thereto, together
with such additional information at the time or times and in the manner
required by the Code. Such federal, state or local income tax or information
returns shall be signed by the Trustee or such other Person as may be
required to sign such returns by the Code or state or local tax laws, regula-
tions or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending ___________, 199_, a REMIC election shall be made with
respect to all assets of the Trust for such taxable year and all succeeding
taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to the Trust, including, but not limited to, the income, expenses,
assets and liabilities of the Trust, and the fair market value and adjusted
basis of the Trust property and assets determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information.
(e) The Master Servicer, upon request, shall promptly furnish the
Trustee with all such information as to the Mortgage Loans as may be required
in connection with the Trustee's REMIC reporting obligations pursuant to this
Agreement.
Section 2.12. Tax Matters Person. The tax matters person with respect
------------------
to the REMIC (the "Tax Matters Person") shall be the Trustee. The Trustee
shall at all times hold the Tax Matters Person Residual Interest and shall
have the same duties with respect to the Trust as those of a "tax matters
partner" under Subchapter C of Chapter 63 of Subtitle F of the Code. Each
holder of a Class R Certificate shall be deemed to have agreed, by acceptance
thereof, to be bound by this Section.
Section 2.13. REMIC Related Covenants. For as long as the Trust shall
-----------------------
exist, the Trustee shall act in accordance herewith to assure continuing
treatment of the Trust as a REMIC and avoid the imposition of tax on the
Trust. In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" in the Trust within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates and the Class R
Certificates.
(b) Except as otherwise provided in the Code, the Seller shall not
grant and the Trustee shall not accept property unless (i) substantially all
of the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively and (ii) except as provided in Section 4.04, no property shall
be contributed to the Trust after the Start-up Day unless such grant would
not subject the Trust to the 100% tax on contributions to a REMIC after the
Start-up Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than
those permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion
of the Mortgage Loans (other than in accordance with Sections 2.02 or 2.04,
3.17 or 3.01(j)), unless such sale is pursuant to a "qualified liquidation"
as defined in Code Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee shall maintain books with respect to the REMIC on a
calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each
Form 1066Q for the REMIC and shall respond promptly to written requests made
not more frequently than quarterly by any Holder of Class R Certificates with
respect to the following matters:
(i) The original projected principal and interest cash flows on
the Closing Date on each class of regular and residual interests created
hereunder and on the Mortgage Loans, based on ___% of the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each class of regular
and residual interests created hereunder and the Mortgage Loans, based
on ___% of the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end
of such calendar quarter with respect to each class of regular or
residual interests created hereunder and with respect to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing
and amount of any cancellation of indebtedness income of the REMIC with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property"
or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in Section 860G(c) of the Code,
on any contribution to the Trust after the Start-up Day pursuant to Section
860G(d) of the Code, or any other tax is imposed, such tax shall be paid by
(i) the Trustee, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement, (ii) the
Master Servicer, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under this Agreement or (iii)
otherwise the Holders of the Class R Certificates in proportion to their
Percentage Interests. To the extent any tax is chargeable against the
Holders of the Class R Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain
from amounts otherwise distributable to the Holders of the Class R
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of
the Seller, the Trustee may engage in the activities otherwise prohibited by
the foregoing clauses (b), (c) and (d), provided that the Seller shall have
--------
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify the Trust from treatment
as a REMIC; and provided that the Seller shall have demonstrated to the
--------
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates, the Certificate Insurer and the
Trustee and that such action will not adversely impact the rating of the
Certificates.
(g) Except as provided below, the Trustee shall pay out of its own
funds, without any right of reimbursement, any and all tax related expenses
of the Trust (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits or
any administrative or judicial proceedings with respect to the Trust that
involve the Internal Revenue Service or state tax authorities), other than
the expense of obtaining any Opinion of Counsel required pursuant to Sections
2.06(d), 2.13(f), 3.01(j), 9.02(b) and 10.02 and other than taxes except as
specified herein. The Trustee shall be entitled to be reimbursed pursuant to
Section 9.05 for any professional fees or expenses related to audits or any
administrative or judicial proceedings that do not result from any breach of
the Trustee's duties hereunder.
Section 2.14. Duties of Document Custodian; Authority.
---------------------------------------
(a) The Document Custodian shall hold the portion of the Mortgage Files
permitted to be held by it hereunder for the benefit of the Trustee and
maintain such accurate and complete accounts, records and computer systems
pertaining to each Mortgage File as shall enable the Seller, the Master
Servicer and the Trustee to comply with this Agreement. The Document
Custodian shall act with reasonable care, using that degree of skill and
attention in the performance of its duties as it exercises with respect to
the mortgage files relating to all comparable home equity loans that it owns
or services for itself or others. The Document Custodian shall promptly
report to Trustee any failure on its part to hold such portion of the Mortgage
Files as herein provided and promptly take appropriate action to remedy any such
failure.
(b) The Document Custodian shall maintain each such portion of the
Mortgage File at one of its offices in Cincinnati, Ohio or at such other
office as shall be specified to the Trustee and the Certificate Insurer by
written notice not later than 30 days after any change in location.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Master Servicer. (a) It is intended that the Trust
-------------------
formed hereunder shall constitute, and that the affairs of the Trust shall be
conducted so as to qualify it as, a "real estate mortgage investment conduit"
("REMIC") as defined in, and in accordance with, the REMIC Provisions. In
furtherance of such intentions, the Master Servicer covenants and agrees that
it shall not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of the Trust.
(b) The Master Servicer, as independent contract servicer, shall
service and administer the Mortgage Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Master Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. The Master
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with any institution which (i) is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Subservicing Agreement, (ii) is acceptable to the
Certificate Insurer and (iii) (x) has been designated an approved Seller-
Servicer by FHLMC or FNMA for first and second mortgage loans or (y) is an
affiliate of the Master Servicer or (z) is otherwise approved by the
Certificate Insurer. The Master Servicer shall give notice to the
Certificate Insurer, the Rating Agencies and the Trustee prior to the
appointment of any Subservicer. The Master Servicer has appointed the
Designated Subservicer, as a subservicer, such Designated Subservicer being
acceptable to the Certificate Insurer. Any such Subservicing Agreement shall
be consistent with and not violate the provisions of this Agreement and shall
be in form and substance acceptable to the Certificate Insurer. The Master
Servicer shall be entitled to terminate any Subservicing Agreement in
accordance with the terms and conditions of such Subservicing Agreement and
either itself directly service the related Mortgage Loans or enter into a
Subservicing Agreement with a successor subservicer which qualifies
hereunder; provided, however, if an event of default is continuing and has
not been waived, under any Subservicing Agreement, if directed by the
Certificate Insurer, the Master Servicer shall terminate such Subservicing
Agreement.
(c) Notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable for the servicing and administering of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Subservicing Agreements or arrange-
ments or by virtue of indemnification from the Subservicer and to the same
extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. For purposes of
this Agreement, the Master Servicer shall be deemed to have received payments
on Mortgage Loans when the Subservicer has received such payments. The
Master Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Master Servicer by such Subservicer,
and nothing contained in this Agreement shall be deemed to limit or modify
such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Subservicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer and the Master Servicer alone, and the Trustee
and Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in Section 3.01(e). The Master Servicer
shall be solely liable for all fees owed by it to any Subservicer irrespec-
tive of whether the Master Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees. The Certificate Insurer shall be designated
as a third-party beneficiary under any Subservicing Agreement.
(e) Subject to subsection (g) below, in the event the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason of
an Event of Default), the Trustee or its designee approved by the Certificate
Insurer shall thereupon assume all of the rights and obligations of the
Master Servicer under each Subservicing Agreement that the Master Servicer
may have entered into, unless the Trustee or designee approved by the
Certificate Insurer elects to terminate any Subservicing Agreement in accor-
dance with the terms of such Subservicing Agreement. Any fee payable in
connection with such a termination will be payable by the outgoing Master
Servicer. If the Trustee does not terminate a Subservicing Agreement, the
Trustee, its designee or the successor servicer for the Trustee shall be
deemed to have assumed all of the Master Servicer's interest therein and to
have replaced the Master Servicer as a party to each Subservicing Agreement
to the same extent as if the Subservicing Agreements had been assigned to the
assuming party, except that the Master Servicer shall not thereby be relieved
of any liability or obligations under the Subservicing Agreements with regard
to events that occurred prior to the date the Master Servicer ceased to be
the Master Servicer hereunder. The Master Servicer, at its expense and
without right of reimbursement therefor, shall, upon the request of the
Trustee, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Master Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders and the Certificate Insurer,
provided, however, that the Master Servicer may not permit any modification
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with respect to any Mortgage Loan that would change the Loan Rate, defer or
forgive the payment of any principal or interest or extend the final maturity
date on the Mortgage Loan (unless (x) the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Master Servicer, imminent, and (y) such waiver, modification, postponement or
indulgence would not cause the REMIC to be disqualified or otherwise cause a
tax to be imposed on the REMIC). No costs incurred by the Master Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Master Servicer shall continue, and is hereby authorized and empowered to
execute and deliver on behalf of the Trustee and each Certificateholder, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required
by the Master Servicer, the Trustee shall furnish the Master Servicer and, if
directed by the Master Servicer, any Subservicer with any powers of attorney
and other documents necessary or appropriate to enable the Master Servicer
and any such Subservicer to carry out its servicing and administrative duties
under this Agreement.
Notwithstanding anything to the contrary contained herein, the Master
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage
loans for its own account, in accordance with accepted mortgage servicing
practices of prudent lending institutions servicing mortgage loans similar to
the Mortgage Loans and giving due consideration to the Certificate Insurer's
and the Certificateholders' reliance on the Master Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Master Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 7.04, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 7.04, the Designated
Subservicer, if it so elects, and with the consent of the Certificate Insurer
(or, if the Designated Subservicer does not assume the Master Servicer's
rights and obligations, then the Trustee or its designee approved by the
Certificate Insurer) shall assume all of the rights and obligations of the
Master Servicer, subject to Section 8.02. The Master Servicer shall, upon
request of the Designated Subservicer or the Trustee, as the case may be, but
at the expense of the Master Servicer, deliver to the Designated Subservicer
or the Trustee, as the case may be, all documents and records relating to the
Mortgage Loans and an accounting of amounts collected and held by the Master
Servicer and otherwise use its best efforts to effect the orderly and
efficient transfer of servicing rights and obligations to the assuming party.
(h) The Master Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer on or before the Closing Date and
shall revise such list from time to time, as appropriate, and shall deliver
all revisions promptly to the Trustee and the Certificate Insurer.
(i) The Master Servicer shall not consent to the placement of a lien on
the Mortgaged Property senior to that of the related Mortgage unless (i) such
action is consistent with reasonable commercial practice and (ii) such
consent is given in any one of the following situations:
(A) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately
following the placement of such senior lien, such Mortgage is in a
second lien position and both (i) the outstanding principal amount
of the mortgage loan secured by such senior lien is no greater than
the outstanding principal amount of the first mortgage loan secured
by the Mortgaged Property as of the date the related Mortgage Loan
was conveyed to the Trust and (ii) the updated Combined Loan-to-
Value Ratio of such Mortgage Loan is not greater than the Combined
Loan-to-Value Ratio of such Mortgage Loan as of the date such
Mortgage Loan was conveyed to the Trust; or
(B) such senior lien secures a mortgage loan that refinances an
existing first mortgage loan and either (i) the outstanding
principal amount of the replacement first mortgage loan immediately
following such refinancing is not greater than the outstanding
principal amount of such existing first mortgage loan at the date
of such refinancing or (ii) the updated Combined Loan-to-Value
Ratio of the applicable Mortgage Loan is not greater than the
Combined Loan-to-Value Ratio of such Mortgage Loan as of the date
such Mortgage Loan was conveyed to the Trust.
(j) Except as otherwise provided by Section 3.01(f), the Master
Servicer may agree to changes in the terms of a Mortgage Loan that would not
cause the Trust to fail to qualify as a REMIC, as evidenced by an Opinion of
Counsel delivered by the Master Servicer to the Trustee and the Certificate
Insurer prior to the effective date of any such change, provided, however,
-------- -------
that such changes (i) do not adversely affect the interests of Certificate-
holders or the Certificate Insurer, (ii) are consistent with prudent
business practice, as evidenced by an Officer's Certificate, substantially
in the form of Exhibit N hereto, delivered by the Master Servicer to the
Trustee and the Certificate Insurer prior to such effective date, (iii) do
not extend the maturity date of such Mortgage Loan in excess of one year and
(iv) do not result in any change of the Loan Rate of such Mortgage Loan. Any
changes to the terms of a Mortgage Loan that may cause the Trust to fail to
qualify as a REMIC may be agreed to by the Master Servicer, provided, however,
-------- -------
that (i) the Master Servicer has determined that such changes are necessary
to avoid prepayment of the Mortgage Loan as a result of a refinancing thereof
provided by another lender and that such changes are consistent with
prudent business practice, as evidenced by an Officer's Certificate to such
effect, substantially in the form of Exhibit N hereto, delivered by the Master
Servicer to the Trustee and the Certificate Insurer prior to the effective
date of any such change, (ii) the Master Servicer purchases such Mortgage
Loan on the Business Day immediately preceding the Distribution Date following
the related Due Period during which such determination was made at the
Purchase Price for such Mortgage Loan and (iii) after giving effect to
such purchase, the Trust continues, as evidenced by an Opinion of Counsel
delivered by the Master Servicer and the Certificate Insurer to the Trustee,
to qualify as a REMIC. In the event that such purchase does not occur, the
proposed changes to the terms of the related Mortgage Loan shall not be made.
The Master Servicer shall notify the Certificate Insurer of any changes in
the terms of a Mortgage Loan pursuant to this Section 3.01(j).
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
--------------------------------------------
Master Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans and shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to mortgage loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Master
Servicer may in its discretion (i) waive any prepayment penalty or late
payment charge or any assumption fees or other fees which may be collected in
the ordinary course of servicing such Mortgage Loan and (ii) arrange with
a Mortgagor a schedule for the payment of interest due and unpaid; provided
--------
that such arrangement is consistent with the Master Servicer's policies with
respect to the mortgage loans it owns or services; provided, further, that
-------- -------
notwithstanding such arrangement such Mortgage Loans will be included in the
monthly information delivered by the Master Servicer to the Trustee pursuant
to Section 5.03.
(b) The Master Servicer shall establish and maintain a separate trust
account, which shall be an Eligible Account (the "Collection Account") titled
"(Trustee), as Trustee, in trust for the registered holders of Home Equity Loan
Asset Backed Certificates, Series 199_-_ Collection Account." The Collection
Account shall be an Eligible Account. The Master Servicer shall on the
Closing Date deposit any amounts representing payments on and any collections
in respect of the Mortgage Loans received on and after the Cut-Off Date and
prior to the Closing Date, and thereafter deposit within two Business Days
following receipt thereof, the following payments and collections received
or made by it (without duplication):
(i) all payments received on and after the related Cut-Off Date
on account of principal on the Mortgage Loans and all Principal
Prepayments and Curtailments collected on and after the related Cut-Off
Date;
(ii) all payments received on and after the related Cut-Off Date
on account of interest on the Mortgage Loans;
(iii) all Net Liquidation Proceeds net of related Foreclosure
Profits;
(iv) all Insurance Proceeds;
(v) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.02, 2.04, 2.06, 3.01(j) and 3.17; and
(vi) any amount required to be deposited in the Collection
Account pursuant to Sections 3.01(j), 3.05, 3.07, 5.02 or 5.05(e);
provided, however, that with respect to each Due Period, the Master Servicer
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shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Master Servicing Fee for such Due Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account amounts
representing Foreclosure Profits, fees (including annual fees) or late charge
penalties payable by Mortgagors or amounts received by the Master Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.
(c) All funds in the Collection Account shall be held (i) uninvested or
(ii) invested at the direction of the Master Servicer in Eligible
Investments. Any investments of funds in the Collection Account shall mature
or be withdrawable at par on or prior to the second Business Day preceding
the immediately succeeding Distribution Date. Any investment earnings on
funds held in the Collection Account shall be for the account of the Master
Servicer and may be withdrawn from the Collection Account by the Master
Servicer at any time. Any investment losses on funds held in the Collection
Account shall be for the account of the Master Servicer and promptly
upon the realization of such loss shall be contributed by the Master Servicer
to the Collection Account. Any references herein to amounts on deposit in the
Collection Account shall refer to amounts net of such investment earnings.
Section 3.03. Withdrawals from the Collection Account. The Master
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Servicer shall withdraw or cause to be withdrawn funds from the Collection
Account for the following purposes:
(i) four Business Days prior to each Distribution Date, to
deposit the portion of the Available Funds in respect of each
Certificate Group then in the Collection Account to the Distribution
Account;
(ii) to reimburse the Master Servicer for any accrued unpaid
Master Servicing Fees and for unreimbursed Monthly Advances made with
its own funds and Servicing Advances. The Master Servicer's right to
reimbursement for such unpaid Master Servicing Fees and unreimbursed
Servicing Advances shall be limited to late collections on the related
Mortgage Loan, including Liquidation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Master Servicer from the
related Mortgagor or otherwise relating to the Mortgage Loan in respect
of which such reimbursed amounts are owed. The Master Servicer's right
to reimbursement for such unreimbursed Monthly Advances shall be limited
to late collections of interest on any Mortgage Loan and to Liquidation
Proceeds and Insurance Proceeds on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) subject to Section 5.05 hereof, to make investments in
Eligible Investments and to pay to the Master Servicer interest earned
in respect of Eligible Investments or on funds deposited in the
Collection Account;
(v) (a) to withdraw any funds deposited in the Collection
Account that were not required to be deposited therein or were deposited
therein in error and to pay such funds to the appropriate Person and (b)
to pay to the Seller any funds deposited in the Collection Account
representing _____________ interest accruals;
(vi) to pay the Master Servicer the servicing compensation it is
entitled to receive pursuant to Section 3.09 to the extent not retained
or paid pursuant to Section 3.02(b);
(vii) to reimburse the Master Servicer for Servicing Advances and
Monthly Advances which are determined in good faith to have become
Nonrecoverable Advances that are not, with respect to aggregate
Servicing Advances on any single Mortgage Loan or REO property, in
excess of the Principal Balance thereof (the foregoing limitation on
aggregate Servicing Advances on any single Mortgage Loan or REO Property
shall not be applicable so long as the Designated Subservicer is acting
as Subservicer); and
(viii) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein
to the Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
----------------------------------------------------
Expenses. The Master Servicer shall cause to be maintained for each Mortgage
--------
Loan fire and hazard insurance naming the Master Servicer or its designee as
loss payee thereunder providing extended coverage in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan from time to time and (ii) the
combined principal balance owing on such Mortgage Loan and any mortgage loan
senior to such Mortgage Loan. The Master Servicer shall also maintain on
property acquired upon foreclosure, or by deed in lieu of foreclosure, hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the improve-
ments which are a part of such property and (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan. Amounts collected by the Master Servicer under any such
policies shall be deposited in the Collection Account to the extent called
for by Section 3.02. In cases in which any Mortgaged Property is located in
a federally designated flood area as designated by the Seller to the Master
Servicer, the hazard insurance to be maintained for the related Mortgage Loan
shall include flood insurance to the extent such flood insurance is available
and the Master Servicer has determined such insurance to be necessary in
accordance with accepted first and second mortgage loan servicing standards,
as applicable. All such flood insurance shall be in amounts equal to the
lesser of (A) the amount in clause (ii) above and (B) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as
amended. The Master Servicer shall be under no obligation to require that
any Mortgagor maintain earthquake or other additional insurance and shall be
under no obligation itself to maintain any such additional insurance on
property acquired in respect of a Mortgage 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.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In
---------------------------------------------------
the event that the Master Servicer shall obtain and maintain a blanket policy
consistent with prudent industry standards with an insurer either (A) having
a General Policy rating of A.VIII or better in Best's Key Rating Guide, or
(B) approved by the Certificate Insurer, such approval not to be unreasonably
withheld; insuring against fire and hazards of extended coverage on all of
the Mortgage Loans, then, to the extent such policy names the Master Servicer
or its designee as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co-
insurance, and otherwise complies with the requirements of Section 3.04, the
Master Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
3.04, it being understood and agreed that such blanket policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a
policy complying with Section 3.04, and there shall have been a loss which
would have been covered by such policy, deposit in the Collection Account the
difference, if any, between the amount that would have been payable under a
policy complying with Section 3.04 and the amount paid under such blanket
policy. Upon the request of the Certificate Insurer or the Trustee, the
Master Servicer shall cause to be delivered to the Certificate Insurer or the
Trustee, as the case may be, a certified true copy of such policy. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Master Servicer agrees to prepare and present, on behalf of
itself, the Trustee, the Certificate Insurer and Certificateholders, claims
under any such policy in a timely fashion in accordance with the terms of
such policy.
Section 3.06. Fidelity Bond. The Master Servicer shall maintain with
-------------
responsible companies, at its own expense, a blanket fidelity bond ("Fidelity
Bond"), with coverage on all officers and employees acting in any capacity
requiring such persons to handle funds, money, documents or papers relating
to the Mortgage Loans ("Master Servicer Employees"). Any such Fidelity Bond
may be a Financial Institution Bond, Standard Form No. 24. Any such Fidelity
Bond shall protect and insure the Master Servicer against losses typically
covered by the Financial Institution Bond, Standard Form No. 24, including
fidelity, promises, in transit, forgery, or alteration and securities covered
losses. The Master Servicer shall maintain with responsible companies, at
its own expense, a Mortgage Protection Insurance Policy insuring against
mortgagee errors and omissions meeting the requirements of the FHLMC Sellers'
and Servicers' Guide, except with respect to the payment of real estate taxes
and any other mandatory assessments on the mortgaged premises. The minimum
coverage under any such Fidelity Bond and insurance policy shall be at least
equal to the corresponding amounts required by FNMA in the FNMA Mortgage-
Backed Securities Selling and Servicing Guide or by FHLMC in the FHLMC
Sellers' and Servicers' Guide or otherwise in an amount as is commercially
available at a cost that is not generally regarded as excessive by industry
standards. The Master Servicer shall be deemed to have complied with this
provision if one of its Affiliates has such a Fidelity Bond and insurance
policy and by the terms thereof the coverage afforded thereunder extends to
the Master Servicer. Any such Fidelity Bond and errors and omissions
insurance shall protect and insure the Master Servicer against losses,
including losses resulting from forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Master Servicer Employees. No
provision of this Section requiring such Fidelity Bond and errors and omis-
sions insurance shall diminish or relieve the Master Servicer from its duties
and obligations as set forth in this Agreement. Upon the reasonable request
of the Trustee, the Certificate Insurer or any Certificateholder, the Master
Servicer shall cause to be delivered to the Trustee, such Certificateholder
or the Certificate Insurer a certified true copy of such Fidelity Bond and
insurance policy.
Section 3.07. Management and Realization Upon Defaulted Mortgage Loans.
--------------------------------------------------------
The Master Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prudent and
prompt disposition and sale. The Master Servicer shall, either itself or
through an agent selected by the Master Servicer, manage, conserve, protect
and operate the REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in
the same manner that similar property in the same locality as the REO
Property is managed. The Master Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Master
Servicer deems to be in the best interest of the Certificate Insurer and the
Certificateholders.
The Master Servicer shall cause to be deposited, no later than two
Business Days after the receipt thereof, in the Collection Account, all
revenues received with respect to the related REO Property and shall retain,
or cause the Trustee to withdraw therefrom, funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Master Servicer.
The disposition of REO Property shall be carried out by the Master
Servicer for cash at such price, and upon such terms and conditions, as the
Master Servicer deems to be in the best interest of the Certificateholders
and, as soon as practicable thereafter, the expenses of such sale shall be
paid. The cash proceeds of sale of the REO Property shall be promptly
deposited in the Collection Account, net of Foreclosure Profits and of any
related unreimbursed Servicing Advances, accrued and unpaid Master Servicing
Fees and unreimbursed Monthly Advances payable to the Master Servicer in
accordance with Section 3.03, for distribution to the Certificateholders in
accordance with Section 5.01.
The Master Servicer shall foreclose upon or otherwise comparably convert
to ownership Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in default either when no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.01 subject
to the provisions contained in the last paragraph of this Section.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee or its nominee on behalf of Certificate-
holders and the Certificate Insurer.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage
Loan, the Master Servicer shall dispose of such Mortgaged Property (i) within
two years after its acquisition or (ii) (a) prior to the expiration of any
extension to such two-year grace period which is requested on behalf of the
Trust by the Master Servicer (at the expense of the Trust) more than 60 days
prior to the end of such two-year grace period and granted by the Internal
Revenue Service, (b) if the Internal Revenue Service rejects such extension
to such two-year grace period which is requested on behalf of the Trust by
the Master Servicer more than 60 days prior to the end of such two-year grace
period, within 30 days of such rejection or (c) if such extension has not
been granted or rejected by the Internal Revenue Service prior to the
expiration of such two-year grace period, within the number of days specified
in such extension unless the Master Servicer shall have received an Opinion
of Counsel to the effect that the holding of such Mortgaged Property
subsequent to two years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F
of the Code or cause the Trust to fail to qualify as a REMIC at any time that
any Class A Certificates are outstanding. Notwithstanding any other
provision of this Agreement, (i) no Mortgaged Property acquired by the Master
Servicer pursuant to this Section shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of
the Trust and (ii) no construction shall take place on such Mortgaged
Property in such a manner or pursuant to any terms, in either case, that
would cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in
the receipt by the Trust of any "net income from foreclosure property" which
is subject to taxation within the meaning of Sections 860G(c) and
857(b)(4)(B) of the Code. If a period greater than two years is permitted
under this Agreement and is necessary to sell any REO Property, the Master
Servicer shall give appropriate notice to the Trustee, the Certificate
Insurer and the Certificateholders and shall report monthly to the Trustee as
to the progress being made in selling such REO Property.
If the Master Servicer has actual knowledge that a Mortgaged Property
which the Master Servicer is contemplating acquiring in foreclosure or by
deed in lieu of foreclosure is located within a 1 mile radius of any site
with environmental or hazardous waste risks, the Master Servicer will notify
the Certificate Insurer prior to acquiring the Mortgaged Property and shall
not take any action without prior written approval of the Certificate
Insurer.
On each Distribution Date, the Master Servicer shall provide to the
Certificate Insurer the Liquidation Report with respect to each Mortgage Loan
that became a Liquidated Mortgage Loan during the preceding Due Period.
Section 3.08. Trustee to Cooperate. Upon any Principal Prepayment in
--------------------
full, the Master Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01(f), if the related Assignment of
Mortgage has been recorded as required hereunder, an instrument of
satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Master Servicer if required by applicable law and be
delivered to the Person entitled thereto. It is understood and agreed that
no expenses incurred in connection with such instrument of satisfaction or
transfer shall be reimbursed from amounts deposited in the Collection
Account. If the Trustee and/or the Document Custodian is holding all or a
portion of the Mortgage Files, from time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Trustee shall, upon
request of the Master Servicer or the Designated Subservicer and delivery to
the Trustee of a Request for Release, in the form attached hereto as Exhibit
J, signed by a Servicing Officer, release or direct the Document Custodian to
release the related Mortgage File to the Master Servicer or the Designated
Subservicer, as the case may be, and the Trustee shall execute such
documents, in the forms provided by the Master Servicer or the Designated
Subservicer, as the case may be, as shall be necessary for the prosecution of
any such proceedings or the taking of other servicing actions. Such Request
for Release shall obligate the Master Servicer or the Designated Subservicer,
as the case may be, to return the Mortgage File to the Trustee or the
Document Custodian, as appropriate, when the need therefor by the Master
Servicer or the Designated Subservicer, as the case may be, no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that hereinabove specified, a
copy of the Request for Release shall be released by the Trustee to the
Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions hereof, the Trustee
shall, if so requested in writing by the Master Servicer or the Designated
Subservicer, as the case may be, execute an appropriate assignment in the
form provided to the Trustee by the Master Servicer or the Designated
Subservicer, as the case may be, to assign such Mortgage Loan for the purpose
of collection to the Master Servicer (any such assignment shall unambiguously
indicate that the assignment is for the purpose of collection only) and, upon
such assignment, such assignee for collection will thereupon bring all
required actions in its own name and otherwise enforce the terms of the
Mortgage Loan and deposit or credit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection
Account. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the Mortgagor and any other defaults are cured then
the assignee for collection shall promptly reassign such Mortgage Loan to the
Trustee and return it to the place where the related Mortgage File was being
maintained.
Each Request for Release may be delivered to the Trustee or the Document
Custodian, as the case may be, (i) via mail or courier, (ii) via facsimile or
(iii) by such other means, including, without limitation, electronic or
computer readable format, as the Master Servicer or the Designated
Subservicer, as the case may be, and the Trustee shall mutually agree. The
Trustee or the Document Custodian shall promptly release the related Mortgage
File within five to seven business day of receipt of a properly completed
Request for Release pursuant to clauses (i), (ii) or (iii) above. Receipt of
a Request for Release pursuant to clauses (i), (ii) or (iii) above shall be
authorization to the Trustee or the Document Custodian to release such
Mortgage Files, provided the Trustee or the Document Custodian, as the case
may be, has determined that such Request for Release has been executed, with
respect to clauses (i) or (ii) above, or approved, with respect to clause
(iii) above, by a Servicing Officer of the Master Servicer or the Designated
Subservicer, as the case may be. If the Trustee or the Document Custodian is
unable to release the Mortgage Files within the time frames previously
specified after receipt of a fully completed and executed Request for
Release, the Trustee or the Document Custodian shall immediately notify the
Master Servicer or the Designated Subservicer, as the case may be, indicating
the reason for such delay, but in no event shall such notification be later
than five business days after receipt of such Request for Release. If the
Master Servicer is required to pay penalties or damages due solely to the
Trustee's or the Document Custodian's negligent failure to release the
related Mortgage File or the Trustee's or the Document Custodian's negligent
failure to execute and release documents in a timely manner, the Trustee or
the Document Custodian, as the case may be, shall be liable for such
penalties or damages.
On each day that the Master Servicer or the Designated Subservicer
remits to the Trustee or the Document Custodian Requests for Release pursuant
to clauses (ii) or (iii) above, the Master Servicer or the Designated
Subservicer shall also submit to the Trustee or the Document Custodian, as
the case may be, a summary of the total amount of such Requests for Release
requested on such day by the same method as described in such clauses (ii) or
(iii) above.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
------------------------------------------------------
Master Servicer. Subject to Section 5.02, the Master Servicer shall be
---------------
entitled to retain the Master Servicing Fee in accordance with Section 3.02
as compensation for its services in connection with servicing the Mortgage
Loans. Moreover, additional servicing compensation in the form of fees in
connection with assumption agreements or substitution agreements, tax service
fees, fees for statement of account or payoff of the Mortgage Loan,
prepayment penalties or late payment charges or other receipts not required
to be deposited in the Collection Account, including, without limitation,
Foreclosure Profits and, subject to Section 3.02(b), investment income on the
Collection Account or the Distribution Account shall be retained by the
Master Servicer. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment
of all other fees and expenses not expressly stated hereunder to be for the
account of the Trust or the Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.10. Annual Statement as to Compliance. (a) The Master
---------------------------------
Servicer will deliver to the Trustee, Provident, the Certificate Insurer and
the Rating Agencies, on or before the last day of the fifth month following
the end of the Master Servicer's fiscal year (December 31), beginning in
199_, an Officer's Certificate stating that (i) to the best knowledge of such
person, the Master Servicer has fully complied in all material respects with
the provisions of Articles III and V, if applicable, (ii) a review of the
activities of the Master Servicer during the preceding fiscal year (or such
shorter period as is applicable in the case of the first report) and of its
performance under this Agreement has been made under such officer's
supervision and (iii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its material obligations under
this Agreement throughout such fiscal year or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof. The Master Servicer shall
promptly notify the Certificate Insurer, Provident, the Trustee and the
Rating Agencies upon any change in the basis on which its fiscal year is
determined.
(b) The Master Servicer shall deliver to the Trustee, the Certificate
Insurer, Provident and each of the Rating Agencies, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which, with the giving of notice or the lapse of time or both, would become
an Event of Default.
Section 3.11. Annual Servicing Report. Not later than the last day of
-----------------------
the fifth month following the end of the Master Servicer's fiscal year
(December 31), beginning in 199_, the Master Servicer, at its expense, shall
cause a firm of independent public accountants reasonably acceptable to
Provident and the Certificate Insurer to furnish a letter or letters to the
Certificate Insurer, Provident, the Trustee and the Rating Agencies to the
effect that such firm has, with respect to the Master Servicer's overall
servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers,
and stating such firm's conclusions relating thereto.
Section 3.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Mortgage Loans. The Master Servicer shall provide to the Trustee, the
------------------
Certificate Insurer, Certificateholders which are federally insured savings
and loan associations, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of the Office of Thrift Supervision access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as
operator of the SAIF or the BIF), such access being afforded without charge
but only upon reasonable request and during normal business hours at the
offices of the Master Servicer. Nothing in this Section shall derogate from
the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the
failure of the Master Servicer to provide access as provided in this Section
as a result of such obligation shall not constitute a breach of this Section.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
---------------------------------------------------
Master Servicer shall during the term of its service as servicer maintain in
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder. Such policy or
policies shall, together, comply with the requirements from time to time of
FNMA for persons performing servicing for mortgage loans purchased by FNMA.
Section 3.14. Reports to the Securities and Exchange Commission. The
-------------------------------------------------
Trustee shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Trustee, each of the Seller and the Master Servicer shall
cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or
documentation within their control as the Trustee may reasonably request in
connection with the performance of its duties and obligations under this
Section. Any costs and expenses incurred by the Trustee hereunder shall not
be reimbursable to it pursuant to Section 9.05.
Section 3.15. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals
and Returns Relating to Cancellation of Indebtedness. The Master Servicer
---------------------------------------------------- shall make reports of
foreclosures and abandonments of any Mortgaged Property for each year
beginning in 199_. The Master Servicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Trustee acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or
partial satisfaction of a Mortgage Loan or (ii) knows or has reason to know
that any Mortgaged Property has been abandoned. The reports from the Master
Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Sections 6050J, 6050H and 6050P of the Code.
Section 3.16. Advances by the Master Servicer. (a) Not later than the
-------------------------------
close of business three Business Days prior to each Distribution Date (a
"Master Servicer Remittance Date"), the Master Servicer shall remit to the
Trustee for deposit in the Distribution Account an amount to be distributed
on such Distribution Date pursuant to Section 5.01, equal to the interest
accrued on each Mortgage Loan through the related Due Date, but not received
as of the close of business on the day preceding the related Determination
Date (net of the Master Servicing Fee); such amount being defined herein as
the "Monthly Advance". Such deposit of the Monthly Advance to the
Distribution Account may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being
held for future distribution to Certificateholders and so used shall be
replaced by the Master Servicer from its own funds by deposit in the
Distribution Account on or before the Business Day preceding the next
succeeding Master Servicer Remittance Date to the extent that such amounts
have not been remitted to the Collection Account since such Monthly Advances
were made. With respect to any Balloon Loan that is delinquent on its
maturity date, the Master Servicer will continue to make Monthly Advances
with respect to such Balloon Loan in an amount equal to one month's interest
on the unpaid principal balance at the applicable Loan Rate (net of the
Master Servicing Fee). The obligation to make Monthly Advances with respect
to each Mortgage Loan shall continue until such Mortgage Loan becomes a
Liquidated Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance (including, without limitation, Servicing Advances
and Monthly Advances with respect to Balloon Loans) shall be required to be
made hereunder if the Master Servicer determines, and provides the Trustee
with a Servicing Certificate to the effect, that such Servicing Advance or
Monthly Advance would, if made, constitute a Nonrecoverable Advance.
Section 3.17. Optional Purchase of Defaulted Mortgage Loans. The
---------------------------------------------
Seller, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee and the Certificate Insurer) to purchase for its
own account from the Trust any Mortgage Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.02. The
Purchase Price for any Mortgage Loan purchased hereunder shall be deposited
in the Collection Account and the Trustee, upon receipt of such deposit,
shall release or cause to be released to the Seller the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary
to vest in the Seller any Mortgage Loan released pursuant hereto and the
Seller shall succeed to all the Trustee's right, title and interest in and to
such Mortgage Loan and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Seller
shall thereupon own such Mortgage Loan, and all security and documents, free
of any further obligation to the Trustee, the Certificate Insurer or the
Certificateholders with respect thereto.
Notwithstanding the foregoing, unless the Certificate Insurer consents,
the Seller may only exercise its option pursuant to this Section 3.17 with
respect to the Mortgage Loan or Mortgage Loans that have been delinquent for
the longest period at the time of such repurchase. Any request by the Seller
to the Certificate Insurer for consent to repurchase Mortgage Loans that are
not the most delinquent shall be accompanied by a description of the Mortgage
Loans that have been delinquent longer than the Mortgage Loan or Mortgage
Loans that the Seller proposes to repurchase. If the Certificate Insurer
fails to respond to such request within 10 Business Days after receipt
thereof, the Seller may repurchase the Mortgage Loan or Mortgage Loans
proposed to be repurchased without the consent of, or any further action by,
the Certificate Insurer.
Section 3.18. Superior Liens. The Master Servicer shall file (or cause
--------------
to be filed) a request for notice of any action by a superior lienholder
under a First Lien for the protection of the Trustee's interest, where
permitted by local law and whenever applicable state law does not require
that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of
redemption.
If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First
Lien, or has declared or intends to declare a default under the mortgage or
the promissory note secured thereby, or has filed or intends to file an
election to have the Mortgaged Property sold or foreclosed, the Master
Servicer shall take, on behalf of the Trust, whatever actions are necessary
to protect the interests of the Certificateholders and the Certificate
Insurer, and/or to preserve the security of the related Mortgage Loan,
subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Master Servicer shall immediately notify the
Trustee and the Certificate Insurer of any such action or circumstances. The
Master Servicer shall advance the necessary funds to cure the default or
reinstate the superior lien, if such advance is in the best interests of the
Certificate Insurer and the Certificateholders. The Master Servicer shall
not make such an advance except to the extent that it determines in its
reasonable good faith judgment that the advance would be recoverable from
Liquidation Proceeds on the related Mortgage Loan and in no event in an
amount that is greater than the Principal Balance of the related Mortgage
Loan, except with the consent of the Certificate Insurer, which consent shall
not be unreasonably withheld. The Master Servicer shall thereafter take such
action as is necessary to recover the amount so advanced. Notwithstanding
the prior sentence, the Master Servicer shall not have an obligation to
obtain the Certificate Insurer's consent to make an advance in an amount
greater than the Principal Balance of the related Mortgage Loan so long as
the Designated Servicer is acting as Subservicer.
Notwithstanding the foregoing, the Master Servicer may change, modify or
amend any or all of the foregoing procedures if such change, modification or
amendment is applicable to the Mortgage Loans and all other mortgage loans
serviced by the Master Servicer and is otherwise in accordance with Section
3.01.
Section 3.19. Assumption Agreements. When a Mortgaged Property has
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been or is about to be conveyed by the Mortgagor, the Master Servicer shall,
to the extent it has knowledge of such conveyance or prospective conveyance,
exercise its right to accelerate the maturity of the related Mortgage Loan
under any "due-on-sale" clause contained in the related Mortgage or Mortgage
Note; provided, however, that the Master Servicer shall not exercise any such
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right if the "due-on-sale" clause, in the reasonable belief of the Master
Servicer, is not enforceable under applicable law. In such event, the Master
Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person shall become liable under the Mortgage Note and, unless
prohibited by applicable law, the Mortgagor shall remain liable thereon. The
Master Servicer, in accordance with accepted mortgage loan servicing
standards for mortgage loans similar to the Mortgage Loans, is also
authorized to enter into a substitution of liability whereby such person is
substituted as mortgagor and becomes liable under the Mortgage Note. The
Master Servicer shall notify the Trustee and the Certificate Insurer that any
such substitution or assumption agreement has been completed by forwarding to
the Trustee the original of such substitution or assumption agreement, which
original shall be added by the Trustee to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part
thereof. Except as otherwise provided in Section 3.01(j), in connection with
any assumption or substitution agreement entered into pursuant to this
Section, the Master Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such
Mortgage Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 3.20. Payment of Taxes, Insurance and Other Charges. With
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respect to each Mortgage Loan, the Master Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Master Servicer
maintains escrow accounts, the Master Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water
rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of primary mortgage guaranty insurance premiums, if
any, and fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums)
and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in any escrow
account which shall have been estimated and accumulated by the Master
Servicer in amounts sufficient for such purposes, as allowed under the terms
of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Master Servicer shall, if it has received notice of a default
or deficiency, monitor such payments to determine if they are made by the
Mortgagor.
ARTICLE IV
Certificate Insurance Policy
Section 4.01. Certificate Insurance Policy. As soon as possible, and
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in no event later than 3:00 p.m., New York time, on the third Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
amount of Available Funds for each Certificate Group (net of any Insured
Payments) for such Distribution Date minus the amount of any related Premium
Amount and Trustee Fee to be paid on such Distribution Date.
If for any Distribution Date a Deficiency Amount exists, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal
Agent no later than 12:00 noon, New York time, on the second Business Day
preceding such Distribution Date. The Notice shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy for an amount
equal to the Deficiency Amount. Upon receipt of the Insured Payment, at or
prior to the latest time payments of the Insured Payment are to be made by
the Certificate Insurer pursuant to the Certificate Insurance Policy, on
behalf of the Class A Certificateholders, the Trustee shall deposit such
Insured Payments in the Distribution Account and shall distribute such
Insured Payments only in accordance with, with respect to the Group 1
Certificates, Sections 5.01(a)(i)(2) and (3) and, with respect to the Group 2
Certificates, 5.01(a)(ii)(2) and (3).
The Trustee shall receive, as attorney-in-fact of each Holder of a Class
A Certificate, any Insured Payment from the Certificate Insurer and disburse
the same to each Holder of a Class A Certificate in accordance with the
provisions of Article V. Insured Payments disbursed by the Trustee from
proceeds of the Certificate Insurance Policy shall not be considered payment
by the Trust nor shall such payments discharge the obligation of the Trust
with respect to such Class A Certificate, and the Certificate Insurer shall
become the owner of such unpaid amounts due from the Trust in respect of such
Insured Payments as the deemed assignee of such Holder and shall be entitled
to be reimbursed therefore in accordance with Section 5.01. The Trustee
hereby agrees on behalf of each Holder of a Class A Certificate for the
benefit of the Certificate Insurer that it and they recognize that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be entitled to be reimbursed
therefore in accordance with Section 5.01.
Section 4.02. (Reserved).
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Section 4.03. Replacement Credit Enhancement Instruments. In the event
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of a Certificate Insurer Default (a "Replacement Event"), the Seller, in
-----------------
accordance with and upon satisfaction of the conditions set forth in the
Certificate Insurance Policy, including, without limitation payment in full
of all amounts owed to the Certificate Insurer, may, but shall not be
required to, substitute a new surety bond or surety bonds for the existing
Certificate Insurance Policy or may arrange for any other form of credit
enhancement; provided, however, that in each case the
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Class A Certificates shall be rated no lower than the rating assigned by each
Rating Agency to the Class A Certificates immediately prior to such
Replacement Event and the timing and mechanism for drawing on such new credit
enhancement shall be reasonably acceptable to the Trustee and the Master
Servicer. It shall be a condition to substitution of any new credit
enhancement that there be delivered to the Trustee (i) Opinion of Counsel,
acceptable in form to the Trustee, from counsel to the provider of such new
credit enhancement with respect to the enforceability thereof and such other
matters as the Trustee may require and (ii) an Opinion of Counsel to the
effect that such substitution would not (a) adversely affect in any material
respect the tax status of the Class A Certificates, (b) cause the Trust to be
subject to a tax at the entity level or to be classified as a taxable
mortgage pool within the meaning of Section 7701(i) of the Code or (c) result
in a material modification to this Agreement or of the Class A Certificates
as described in Section 1001 of the Code and the regulations thereunder.
Upon receipt of the items referred to above and the taking of physical
possession of the new credit enhancement, the Trustee shall, within five
Business Days following receipt of such items and such taking of physical
possession, deliver the replaced Certificate Insurance Policy to the
Certificate Insurer.
Section 4.04. Claims Upon the Certificate Insurance Policy. (a) The
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Trustee shall comply with the provisions of the Certificate Insurance Policy
with respect to claims upon the Certificate Insurance Policy.
(b) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon one Business Day's prior written notice to
the Trustee.
(c) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer
of the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under the Bankruptcy Code (a "Preference Claim") of any distribution
made with respect to the Class A Certificates. Each Certificateholder of
Class A Certificates, by its purchase of Class A Certificates, the Master
Servicer, the Seller and the Trustee hereby agree that the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal.
ARTICLE V
Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the
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Trustee shall withdraw from the Distribution Account the Amount Available and
make distributions thereof as described below:
(i) With respect to the Group 1 Certificates, the Available Funds
with respect to the Group 1 Certificates in the following order of
priority:
(1) to the Trustee, the Trustee Fee for Loan Group 1 for such
Distribution Date and, other than the _______ Distribution Date, to
the Certificate Insurer, so long as no Certificate Insurer Default
exists, the Premium Amount for the Group 1 Certificates for such
Distribution Date;
(2) to the Holders of the Class A-1 Certificates, an amount
equal to the Class Interest Distribution for the Class A-1
Certificates for such Distribution Date;
(3) to the Class A-1 Certificateholders, the related Class A
Principal Distribution, until the Class Principal Balance thereof
is reduced to zero; and
(4) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement
for draws made on the Policy in respect of the Group 1
Certificates.
(ii) With respect to the Group 2 Certificates, the Available Funds
with respect to the Group 2 Certificates in the following order of
priority:
(1) to the Trustee, the Trustee Fee for such Loan Group for
such Distribution Date and, other than the ____________
Distribution Date, to the Certificate Insurer, so long as no
Certificate Insurer Default exists, the Premium Amount for the
Group 2 Certificates for such Distribution Date;
(2) to the Holders of the Class A-2 Certificates, an amount
equal to the related Class Interest Distribution for such
Distribution Date;
(3) to the Class A-2 Certificateholders, the related Class A
Principal Distribution, until the Class Principal Balance thereof
is reduced to zero; and
(4) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement
for draws made on the Policy in respect of the Group 2
Certificates;
(iii) To the extent Available Funds for a Certificate Group are
insufficient to make the distributions specified above pursuant to (1)-
(4) of the applicable subclause, Available Funds for the other
Certificate Group remaining after making the distributions required to
be made pursuant to (1)-(4) of the applicable subclause for such other
Certificate Group shall be distributed to the extent of such
insufficiency in accordance with the priorities for distribution set
forth above for the Certificate Group experiencing such insufficiency.
(iv) To the Class A-1 Certificateholders, to the extent of the
related Available Funds remaining, the related Distributable Excess
Spread for such Distribution Date, until the Class Principal Balance
thereof is reduced to zero.
(v) To the Class A-2 Certificateholders, the related Distributable
Excess Spread for such Distribution Date, until the Class Principal
Balance thereof is reduced to zero.
(vi) After making the distributions referred to in clauses (i)
through (v) above, the Trustee shall make distributions in the following
order of priority, to the extent of the balance of the Amount Available:
(1) (a) to the Class A-1 Certificateholders, until the Class
Principal Balance thereof is reduced to zero, the excess of the
related Distributable Excess Spread for such Distribution Date over
the amount distributed to the Class A-1 Certificateholders pursuant
to subsection (iv) above and (b) to the Class A-2
Certificateholders, until the Class Principal Balance thereof is
reduced to zero, the excess of the related Distributable Excess
Spread for such Distribution Date over the amount distributed to
the Class A-2 Certificateholders pursuant to subsection (v) above;
(2) to the Master Servicer, the amount of any accrued and
unpaid Master Servicing Fees;
(3) to the Master Servicer, the amount of Nonrecoverable
Advances to the extent not previously reimbursed;
(4) to the Certificate Insurer, any Reimbursement Amount;
(5) solely from Available Funds with respect to the Group 2
Certificates, to the Class A-2 Certificateholders, the Net Funds
Cap Carryover Amount, if any; and
(6) to the Class R Certificateholders, the balance, if any.
Notwithstanding clause (6) above, any amounts due to the Master Servicer
pursuant to Section 7.03 shall be distributed to the Master Servicer prior to
distributions to the Class R Certificateholders.
(b) Distribution of Insured Payments. With respect to any Distribution
--------------------------------
Date, in the event of an Insured Payment, the Trustee shall make such
payments from the amount drawn under the Certificate Insurance Policy
pursuant to Section 4.01 for such Distribution Date in accordance with
Section 5.01(a). The Certificate Insurer shall be deemed to be the assignee
of the Holders of the Class A Certificates to the extent of any amount of
Insured Payments disbursed by the Trustee from proceeds of the Certificate
Insurance Policy and to such extent, shall be the subrogee of each such
Holder of the Class A Certificates; provided, however, that any such right
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of subrogation inuring to the Certificate Insurer hereunder or otherwise
shall be and is subordinated to the rights under this Agreement of the
Holders of the Class A Certificates and in accordance with Section 5.01(a).
(c) Method of Distribution. The Trustee shall make distributions in
----------------------
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Class A Certificateholders, by check or
money order mailed to such Certificateholder at the address appearing in the
Certificate Register, or, upon written request by a Class A Certificateholder
delivered to the Trustee at least five Business Days prior to such Record
Date, by wire transfer (but only if such Class A Certificateholder is the
Depository or such Class A Certificateholder owns of record one or more Class
A Certificates of a Class aggregating at least $1,000,000 Original Class
Certificate Principal Balance) and, in the case of Class R
Certificateholders, by wire transfer. Distributions among Certificateholders
shall be made in proportion to the Percentage Interests evidenced by the
Certificates held by such Certificateholders.
(d) Distributions on Book-Entry Certificates. Each distribution with
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respect to a Book-Entry Certificate shall be paid to the Depository, which
shall credit the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible
for disbursing funds to the Certificate Owners that it represents. All such
credits and disbursements with respect to a Book-Entry Certificate are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the Certificates. None of the Trustee, the Paying Agent, the
Certificate Registrar, the Certificate Insurer, the Master Servicer, any
Subservicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 5.02. Compensating Interest. Not later than the close of
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business on each Determination Date, the Master Servicer shall remit to the
Collection Account an amount equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls for the related Distribution Date resulting
from Principal Prepayments during the related Due Period and (B) its
aggregate Master Servicing Fee received in the related Due Period. The
Master Servicer shall not have the right to reimbursement for any amounts
deposited to the Collection Account pursuant to this Section. Such amounts
so deposited shall be included in the Available Funds relating to the Loan
Group experiencing the Principal Prepayments and distributed therewith on the
next Distribution Date. If on any Determination Date the amount deposited
into the Collection Account is the amount calculated in (B), such amount
shall be allocated between the Available Funds of each Loan Group pro rata
based on the aggregate Prepayment Interest Shortfall experienced by both Loan
Groups during the related Due Period. The Master Servicer shall not be
obligated to pay Compensating Interest with respect to Civil Relief Act
Interest Shortfalls.
Section 5.03. Statements. (a) Not later than 12:00 noon, New York
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time, on each Determination Date, the Master Servicer shall deliver to the
Trustee a computer tape (or such other report in a form and format mutually
agreeable to the Master Servicer and the Trustee) as to each Mortgage Loan as
of the end of the preceding Due Period and such other information as the
Trustee shall reasonably require. Not later than 12:00 noon, New York time,
on the Distribution Date, the Trustee shall deliver to the Master Servicer
and to the Certificate Insurer, by telecopy, with a hard copy thereof to be
delivered on such Distribution Date, a statement (the "Trustee's Remittance
Report") (based solely on the information contained on the computer tape)
containing the information set forth below with respect to such Distribution
Date:
(i) The Available Funds for each Certificate Group and each
Class' Certificate Rate for the related Distribution Date;
(ii) The Class Principal Balance of each Class, the Pool
Principal Balance and the Loan Group Principal Balance of the Mortgage
Loans in each Loan Group as reported in the prior Trustee's Remittance
Report or, in the case of the first Determination Date, the Original
Class Principal Balance of each Class, the Cut-Off Date Pool Principal
Balance and the Cut-Off Date Loan Group Principal Balance of the
Mortgage Loans in each Loan Group;
(iii) The aggregate amount of collections received on the Mortgage
Loans on or prior to such Determination Date in respect of the preceding
Due Period, separately stating the amounts received in respect of
principal and interest;
(iv) The number and Principal Balances of all Mortgage Loans that
were the subject of Principal Prepayments during the Due Period;
(v) The amount of all Curtailments that were received during the
Due Period;
(vi) The principal portion of all Monthly Payments received
during the Due Period;
(vii) The interest portion of all Monthly Payments received on the
Mortgage Loans during the Due Period;
(viii) The amount required to be paid by the Seller or Master
Servicer (reported separately) pursuant to Sections 2.03, 2.06 or
3.01(j);
(ix) The amount of the Monthly Advances and the amount of any
Compensating Interest payment to be made with respect to such Distri-
bution Date;
(x) The Class A Principal Distribution for each Certificate
Group for the related Distribution Date, the Class Interest Distribution
for the related Distribution Date to be distributed on each Class of
Class A Certificates and any Net Funds Cap Carryover Amount to be
distributed on the Class A-2 Certificates on the related Distribution
Date;
(xi) The amount, if any, of the Outstanding Class Interest
Carryover Shortfall and Class A Principal Shortfall Amount for each
Class after giving effect to the distributions on the related
Distribution Date;
(xii) The amount of the Insured Payments, if any, to be made on
the related Distribution Date;
(xiii) The amount to be distributed to the Class R Certif-
icateholders for the related Distribution Date;
(xiv) The Class Principal Balance for each Class after giving
effect to the distribution to be made on the related Distribution Date;
(xv) The weighted average remaining term to maturity of the
Mortgage Loans in each Loan Group and the weighted average Loan Rate in
each Loan Group;
(xvi) (a) The Master Servicing Fee to be paid to the Master
Servicer and (b) the amounts paid to the Certificate Insurer, separately
stated, pursuant to Sections 5.01(a)(i)(4) and 5.01(a)(ii)(4) and the
Reimbursement Amount to be paid to the Certificate Insurer pursuant to
Section 5.01(a)(vi)(4);
(xvii) The aggregate Premium Amount to be paid to the Certificate
Insurer pursuant to Section 5.01;
(xviii) The amount of all payments or reimbursements to the Master
Servicer pursuant to Section 3.03;
(xix) The Pool Factor for each Loan Group determined using the
balances in subclause (xxiv) above, computed to six (6) decimal places;
(xx) The O/C Amount, the O/C Reduction Amount, the Excess O/C
Amount and the Specified O/C Amount for the Distribution Date and each
Certificate Group and the Excess Spread for each related Loan Group for
such Distribution Date;
(xxi) The amount paid to Class R Certificateholders pursuant to
Section 5.01(a)(vi)(7);
(xxii) The amount of Distributable Excess Spread to be distributed
to the Class A Certificateholders of each Class on such Distribution
Date pursuant to Sections 5.01(a)(iv), 5.01(a)(v) and 5.01(a)(vi)(1), as
applicable, on such Distribution Date;
(xxiii) The number of Mortgage Loans outstanding at the beginning
and at the end of the related Due Period;
(xxiv) The Pool Principal Balance and the Loan Group Principal
Balance for each Loan Group, each as of the end of the Due Period
related to such Distribution Date;
(xxv) Separately stated for each Loan Group, the number and
aggregate Principal Balances of Mortgage Loans (w) as to which the
Monthly Payment is delinquent for 30-59 days, 60-89 days and 90 or more
days, respectively, (x) that have become REO Properties, in each case as
of the end of the preceding Due Period, (y) that are in foreclosure and
(z) the Mortgagor of which is the subject of any bankruptcy or
insolvency proceeding;
(xxvi) The unpaid principal amount of all Mortgage Loans that
became Liquidated Mortgage Loans during such Due Period;
(xxvii) The Net Liquidation Proceeds received during such Due
Period;
(xxviii) The book value (within the meaning of 12 C.F.R.
Section 571.13 or comparable provision) of any real estate acquired
through foreclosure or grant of a deed in lieu of foreclosure;
(xxix) For so long as the Master Servicer is the Seller, the Rating
Agencies' ratings of the long-term unsecured debt of the Seller (to the
extent such information is provided to the Trustee by the Certificate
Insurer or the Master Servicer); and
(xxx) Cumulative Net Losses, the Delinquency Loss Factor and Total
Expected Losses, as of such Distribution Date; and
(xxxi) Such other information as is required by the Code and
regulations thereunder to be made available to Holders of the Class A
Certificates.
The Trustee shall forward such report to the Master Servicer, the
Certificate Insurer, the Certificateholders and the Rating Agencies. The
Trustee may fully rely upon and shall have no liability with respect to
information provided by the Master Servicer.
To the extent that there are inconsistencies between the telecopy of the
Trustee's Remittance Report and the hard copy thereof, the Master Servicer
may rely upon the latter.
In the case of information furnished pursuant to subclauses (ii), (xii)
and (xvii) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar
amount as of the Cut-Off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Class A Certificateholder, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (ix)
and (xiv) above, aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished by the
Trustee to Certificateholders pursuant to any requirements of the Code as are
in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Class A
Certificateholders in respect of such Distribution Date and a statement
setting forth the amounts actually distributed to the Class R
Certificateholders on such Distribution Date together with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information provided pursuant to the
previous paragraph aggregated for such calendar year or applicable portion
thereof during which such Person was a Class R Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and
furnished to Certificateholders by the Trustee pursuant to any requirements
of the Code as from time to time in force.
(e) The Master Servicer and the Trustee shall furnish to each
Certificateholder and to the Certificate Insurer (if requested in writing),
during the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable or appropriate with respect to the Certificateholder or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions (if
requested in writing) as the Certificateholder or the Certificate Insurer, as
the case may be, may reasonably require; provided that the Master Servicer
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and the Trustee shall be entitled to be reimbursed by such Certificateholder
or the Certificate Insurer, as the case may be, for their respective fees and
actual expenses associated with providing such reports, if such reports are
not generally produced in the ordinary course of their respective businesses
or readily obtainable.
(f) Reports and computer tapes furnished by the Master Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent provided
in this Agreement and to the extent required by law or to the Rating
Agencies, the Depositor, the Certificate Insurer's reinsurers, parent, regu-
lators, liquidity providers and auditors and to the extent the Seller
instructs the Trustee in acting to furnish information regarding the Trust or
the Mortgage Loans to third-party information providers. No Person entitled
to receive copies of such reports or tapes or lists of Certificateholders
shall use the information therein for the purpose of soliciting the customers
of the Seller or for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
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(___________________________________________), a separate trust account (the
"Distribution Account") titled "(Trustee), as Trustee, in trust for the
registered holders of Home Equity Loan Asset-Backed Certificates, Series
199_-_ Distribution Account." The Distribution Account shall be an Eligible
Account. The Trustee shall deposit any amounts representing payments on and
any collections in respect of the Mortgage Loans received by it immediately
following receipt thereof, including, without limitation, all amounts
withdrawn by the Master Servicer from the Collection Account pursuant to
Section 3.03 for deposit to the Distribution Account. Amounts on deposit in
the Distribution Account may be invested in Eligible Investments pursuant to
Section 5.05.
Section 5.05. Investment of Accounts. (a) So long as no Event of
----------------------
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
shall be invested and reinvested by the Trustee, as directed in writing by
the Master Servicer, in one or more Eligible Investments bearing interest or
sold at a discount. If an Event of Default shall have occurred and be
continuing or if the Master Servicer does not provide investment directions,
the Trustee shall invest all Accounts in Eligible Investments described in
paragraph (vi) of the definition of Eligible Investments. No such investment
in any Account shall mature later than the Business Day immediately preceding
the next Distribution Date (except that (i) if such Eligible Investment is an
obligation of the Trustee, then such Eligible Investment shall mature not
later than such Distribution Date and (ii) any other date as may be approved
by the Rating Agencies and the Certificate Insurer).
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. The Trustee
shall not be liable for any investment loss or other charge resulting
therefrom unless the Trustee's failure to perform in accordance with this
Section 5.05 is the cause of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any investment loss or charge or any insufficiency in any
Account held by it resulting from any investment loss on any Eligible
Investment included therein unless the Trustee's failure to perform in
accordance with this Section is the cause of such loss or charge (except as
provided in subsection (b) of this Section).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the Master
Servicer shall from time to time direct as set forth in Section 5.05(a), but
only in one or more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account and the Distribution
Account shall be for the benefit of the Master Servicer as servicing
compensation (in addition to the Master Servicing Fee), and shall be subject
to withdrawal on or before the first Business Day of the month following the
month in which such income or gain is received. The Master Servicer shall
deposit in the Collection Account or the Distribution Account, as the case
may be, the amount of any loss incurred in respect of any Eligible Investment
held therein which is in excess of the income and gain thereon immediately
upon realization of such loss from its own funds, without any right to
reimbursement therefore.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Class A Certificates and
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Class R Certificates shall be substantially in the forms set forth in
Exhibits A and B hereto, respectively, and shall, on original issue, be
executed, authenticated and delivered by the Trustee to or upon the order of
the Seller concurrently with the sale and assignment to the Trustee of the
Trust. Each Class of Class A Certificates shall be initially evidenced by
one or more certificates representing a fraction of the Original Class A
Certificate Principal Balance and shall be held in minimum dollar denomina-
tions of $1,000 and dollar multiples in excess thereof, except that one of
each of the Class A Certificate may be in a different denomination so that
the sum of the denominations of all outstanding Class A Certificates shall
equal the Original Class A Certificate Principal Balance.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trust, 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 Trustee 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 6.02(c), the Class A Certificates shall
be Book-Entry Certificates. The Class R Certificates shall not be Book-Entry
Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
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(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges of Certifi-
▇▇▇▇▇ as herein provided. The Trustee shall initially serve as Certificate
Registrar for the purpose of registering Certificates and transfers and
exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R
Certificate, upon satisfaction of the conditions set forth below, the Trustee
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 Trustee shall execute and authenticate and deliver the Certifi-
▇▇▇▇▇ 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 Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry Certifi-
▇▇▇▇▇ 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 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 shall
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; and (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown
on the books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of Certi-
ficate 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.
(c) If (i)(x) the Depository or the Seller advises the Trustee in
writing that the Depository is no longer willing or able to discharge
properly its responsibilities as Depository and (y) the Trustee or the Seller
is unable to locate a qualified successor, (ii) the Depositor, at its sole
option, with the consent of the Trustee, elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of an Event of
Default, the Certificate Owners of each Class of Class A Certificates
representing Percentage Interests aggregating not less than 51% advises the
Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry
system through the Depository to the exclusion of definitive, fully regis-
tered certificates (the "Definitive Certificates") to Certificate Owners is
no longer in the best interests of the Certificate Owners. Upon surrender to
the Certificate Registrar of each Class of Class A Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall, at the Seller's expense, in the case of (i)
and (ii) above, or the Seller's expense, in the case of (iii) above, execute
and authenticate the Definitive Certificates. Neither the Seller nor the
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Trustee, the
Certificate Registrar, the Master Servicer, any Paying Agent and the Seller
shall recognize the Holders of the Definitive Certificates as Certificate-
holders hereunder.
(d) Except with respect to the initial transfer of the Class R
Certificates by the Seller, no transfer, sale, pledge or other disposition of
any Class R Certificate shall be made unless such disposition is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and any applicable state securities laws or is made in
accordance with the 1933 Act and laws. In the event of any such transfer,
other than the transfer of the Tax Matters Person Residual Interest to the
Trustee (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee, in substantially
the form attached hereto as Exhibit K) under the 1933 Act, the Trustee and
the Seller shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to
the Trustee and the Seller that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from
the 1933 Act or is being made pursuant to the 1933 Act, which Opinion of
Counsel shall not be an expense of the Trustee or the Seller or (ii) the
Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit H) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit K) acceptable to and in form and substance reasonably satisfactory to
the Seller and the Trustee certifying to the Seller and the Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee or the Seller. The Holder of a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Master Servicer and the Seller against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal
and state laws.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Seller, such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the
form of Exhibit M or Exhibit N hereto, as appropriate), to the effect that
such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement nor using the assets
of any such plan or arrangement to effect such transfer or (ii) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained
in an "insurance company general account" (as such term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that
the purchase and holding of such Certificates are covered under PTCE 95-60 or
(iii) in the case of any such Class R Certificate presented for registration
in the name of an employee benefit plan subject to ERISA or a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement or using such plan's or
arrangement's assets, an Opinion of Counsel satisfactory to the Trustee which
Opinion of Counsel shall not be an expense of the Master Servicer, the
Trustee or the Trust, addressed to the Trustee, to the effect that the
purchase or holding of such Class R Certificate will not result in the assets
of the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee
to any obligation in addition to those expressly undertaken in this Agreement
or to any liability. Notwithstanding anything else to the contrary herein,
any purported transfer of a Class R Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery to
the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Seller 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 Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee 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 Trustee 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 H 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
Trustee shall be under no liability to any Person for any registration
of transfer of a Class R Certificate that is in fact not permitted by
this Section 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 Trustee received the documents specified in clause (iii). The
Trustee 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 Trustee shall
be distributed and delivered by the Trustee 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 Trustee 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 Seller 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 Seller or its affiliates in connection with
such sale), expenses and taxes due, if any, will be remitted by the
Trustee to the previous Holder of such Class R Certificate that is a
Permitted Transferee, except that in the event that the Trustee
determines that the Holder of such Class R Certificate may be liable for
any amount due under this Section or any other provisions of this
Agreement, the Trustee 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 Trustee 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 Trustee 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 residual
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 Trustee, in form and substance satisfactory to the Trustee, (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 the Trust to fail to qualify as a
REMIC.
The Tax Matters Person Residual Interest shall at all times be
registered in the name of the Trustee.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar 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 Certifi-
▇▇▇▇▇.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to
its standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate is surrendered to the Certificate Registrar or-
------------------------------------------------ the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of
any Certificate and (ii) there is delivered to the Trustee, the Seller and
the Certificate Registrar such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee or the Certificate Registrar that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) in connection therewith. Any
duplicate Certificate issued pursuant to this Section, shall constitute
complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Master Servicer, the Seller,
the Trustee, the Certificate Registrar, the Certificate Insurer, any Paying
Agent and any agent of the Master Servicer, the Seller, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section
5.01 and for all other purposes whatsoever, and none of the Master Servicer,
the Trustee, the Certificate Insurer, the Trustee nor any agent of any of
them shall be affected by notice to the contrary.
Section 6.05. Appointment of Paying Agent. (a) The Paying Agent shall
---------------------------
make distributions to Certificateholders from the Distribution Account
pursuant to Section 5.01 and shall report the amounts of such distributions
to the Trustee. The duties of the Paying Agent may include the obligation
(i) to withdraw funds from the Collection Account pursuant to Section 3.03
and for the purpose of making the distributions referred to above and (ii) to
distribute statements and provide information to Certificateholders as
required hereunder. The Paying Agent hereunder shall at all times be a
corporation duly incorporated and validly existing under the laws of the
United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the
Trustee. The Trustee may appoint a successor to act as Paying Agent, which
appointment shall be reasonably satisfactory to the Seller and the
Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold
all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise
comply with the provisions of this Agreement applicable to it.
ARTICLE VII
The Seller and the Master Servicer
Section 7.01. Liability of the Seller and the Master Servicer. The
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Seller and the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Seller or Master Servicer, as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Seller or the Master Servicer. Any corporation into
-------------------------------------------------
which the Seller or the Master Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Seller or the Master Servicer shall be a party, or any corporation
succeeding to the business of the Seller or the Master Servicer, shall be the
successor of the Seller 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, that the successor Master Servicer shall
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satisfy all the requirements of Section 8.02 with respect to the
qualifications of a successor Master Servicer.
Section 7.03. Limitation on Liability of the Master Servicer and
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Others. Neither the Master Servicer nor any of the directors or officers or
------
employees or agents of the Master Servicer shall be under any liability to
the Trust or the Certificateholders for any action taken or for refraining
from the taking of any action by the Master Servicer in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
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provision shall not protect the Master Servicer or any such Person against
any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or negligence in the performance of duties of the
Master Servicer or by reason of its reckless disregard of its obligations and
duties of the Master Servicer hereunder. The preceding sentence shall not
limit the obligations of the Master Servicer pursuant to Section 9.05. The
Master Servicer and any director or officer or employee or agent of the
Master Servicer may rely in good faith on any document of any kind prima
-----
facie properly executed and submitted by any Person respecting any matters
-----
arising hereunder. The Master Servicer and any director or officer or
employee or agent of the Master Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certifi-
▇▇▇▇▇, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
its reckless disregard of obligations and duties hereunder; provided,
--------
however, that such indemnification shall be limited solely to amounts
------
otherwise available for distribution pursuant to Section 5.01(a)(vi)(6) and
such amounts shall be paid to the Master Servicer prior to distributions to
the Class R Certificateholders. The Master Servicer's right to indemnity or
reimbursement pursuant to this Section shall survive any resignation or
termination of the Master Servicer pursuant to Section 7.04 or 8.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to
such resignation or termination). This paragraph shall apply to the Master
Servicer solely in its capacity as Master Servicer hereunder and in no other
capacities.
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
-----------------------------
of Section 7.02, the Master Servicer shall not resign from the obligations
and duties hereby imposed on it except (i) upon determination that the
performance of its obligations or duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it or its subsidiaries or Affiliates,
the other activities of the Master Servicer so causing such a conflict being
of a type and nature carried on by the Master Servicer or its subsidiaries or
Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions: (a) the Master Servicer has proposed a successor master
servicer to the Trustee in writing, which shall be the Designated
Subservicer, unless the Designated Subservicer elects not to become the
successor master servicer, then another successor master servicer, and such
proposed successor master servicer is reasonably acceptable to the Trustee;
(b) each Rating Agency shall have delivered a letter to the Trustee prior to
the appointment of the successor servicer stating that the proposed
appointment of such successor master servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of
the Class A Certificates; and (c) such proposed successor servicer is
reasonably acceptable to the Certificate Insurer, as evidenced by a letter to
the Trustee; provided, however, that no such resignation by the Master
-------- -------
Servicer shall become effective until such successor master servicer shall
have assumed the Master Servicer's responsibilities and obligations hereunder
or the Trustee shall have designated a successor servicer in accordance with
Section 8.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02
as obligations that survive the resignation or termination of the Master
Servicer. Any such determination permitting the resignation of the Master
Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee and the Certificate Insurer.
The Master Servicer shall have no claim (whether by subrogation or otherwise)
or other action against any Certificateholder or the Certificate Insurer for
any amounts paid by the Master Servicer pursuant to any provision of this
Agreement. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee and the Certificate Insurer.
Section 7.05. Delegation of Duties. In the ordinary course of
--------------------
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to
conduct such duties in accordance with standards comparable to those set
forth in Section 3.01. Such delegation shall not relieve the Master Servicer
of its liabilities and responsibilities with respect to such duties and shall
not constitute a resignation within the meaning of Section 7.04. The Master
Servicer shall provide the Certificate Insurer and the Trustee with written
notice prior to the delegation of any of its duties to any Person other than
any of the Master Servicer's Affiliates or their respective successors and
assigns.
Section 7.06. Indemnification of the Trust by the Master Servicer. (a)
---------------------------------------------------
The Master Servicer shall indemnify and hold harmless the Trust and the
Trustee from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of the Master Servicer's willful misfeasance,
bad faith or negligence in the performance of its activities in servicing or
administering the Mortgage Loans pursuant to this Agreement, including, but
not limited to, any judgment, award, settlement, reasonable attorneys' fees
and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim related to the Master
Servicer's willful misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust and shall
survive the termination of the Agreement.
(b) Notwithstanding anything to the contrary contained herein, the
Seller (i) agrees to be liable directly to the injured party for the entire
amount and (ii) shall indemnify and hold harmless the Master Servicer, any
Designated Subservicer, the Trust and the Trustee from and against any loss,
liability, expense, damage, claim or injury (including, without limitation,
any prohibited transactions tax imposed on the Trust, but excluding any loss,
liability, expense, damage, claim or injury attributable to a holder of a
Regular Certificate in the capacity as an investor in such Certificates as a
result of defaults on the Mortgage Loans) arising out of or based on the
retention of the Mortgage Loans and Mortgage Files pursuant to this Agreement
by reason of any acts, omissions or alleged acts or omissions arising out of
activities of the Trust or the Trustee, or the actions of the Master Servicer
including, in either case, but not limited to, amounts payable to the Master
Servicer pursuant to Section 7.03, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided that the Seller shall not indemnify any such party (but shall
--------
indemnify any other injured party) if such loss, liability, expense, damage
or injury is due to such party's willful malfeasance, bad faith or negligence
or by reason of such party's reckless disregard of its obligations hereunder.
The provisions of this indemnity shall run directly to and be enforceable by
an injured party subject to the limitations hereof. The provisions of this
Section shall survive the termination of this Agreement.
Section 7.07. Inspection. The Master Servicer shall (and shall require
----------
any Subservicer in the related Subservicing Agreement to) afford the
Certificate Insurer, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer in respect of its
rights and obligations hereunder and access to officers of the Master
Servicer and each Subservicer responsible for such obligations. Upon
request, the Master Servicer shall furnish to the Certificate Insurer the
Master Servicer's most recent publicly available financial statements and
each Subservicer's most recent financial statements (annual or quarterly
statements, as the case may be) and such other information relating to their
capacity to perform their obligations under this Agreement as the Master
Servicer or such Subservicer possesses.
ARTICLE VIII
Default
Section 8.01. Events of Default. (a) If any one of the following
-----------------
events ("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Master Servicer to make any Monthly
Advance; or (B) any other failure by the Master Servicer to deposit in
the Collection Account or Distribution Account any deposit required to
be made under the terms of this Agreement which continues unremedied for
a period of two Business Days after the date upon which written notice
of such failure shall have been given to the Master Servicer by the
Trustee or to the Master Servicer and the Trustee by the Certificate
Insurer or by any holder of a Regular Certificate; or
(ii) The failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or, except as otherwise described in subclause (vi) below, the
failure by the Master Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Master Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days, after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Certificate Insurer or by any holder of
a Regular Certificate; or
(iii) The entry against the Master Servicer of a decree or order
by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to all or substantially all of its
property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged, unbonded or unstayed for a
period of 60 days; or the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or
(v) Any breach by the Master Servicer of a representation or
warranty made in Section 2.03, which breach materially and adversely
affects the interests of the Certificateholders or the Certificate
Insurer and continues unremedied for a period of 30 days after the
giving of written notice of such failure to the Master Servicer by the
Trustee, or to the Master Servicer and the Trustee by the Certificate
Insurer or Holders of Certificates evidencing Percentage Interests
aggregating not less than 25%; or
(vi) The failure of the Seller to deliver the Assignments of
Mortgage as required pursuant to Section 2.01(a)(iii); or
(vii) (A) On or prior to __________, ____, the Total Expected
Losses equal or exceed ____% of the Cut-Off Date Pool Principal Balance
or (B) after __________, ____, the Total Expected Losses equal or exceed
_____% of the Cut-Off Date Pool Principal Balance.
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied within the applicable grace period, (x)
subject to the succeeding paragraph, with respect solely to clause (i)(A)
above, if such Monthly Advance is not made by 4:00 P.M., New York time, on
the Business Day following written notice to the Master Servicer of such
event the Trustee shall terminate all of the rights and obligations of the
Master Servicer under this Agreement and the Designated Subservicer if it so
elects and with the consent of the Certificate Insurer shall immediately make
such Monthly Advance and assume, or if such Subservicer does not make such
election, then the Trustee, or any other successor servicer appointed in
accordance with Section 8.02, shall immediately make such Monthly Advance and
assume, pursuant to Section 8.02, the duties of a successor Master Servicer
and (y) in the case of (i)(B), (ii), (iii), (iv), (v) and (vi) above, the
Trustee shall, at the direction of the Certificate Insurer or the Holders of
each Class of Class A Certificates evidencing Percentage Interests
aggregating not less than 51%, (with the consent of the Certificate Insurer,
so long as no Certificate Insurer Default exists), by notice then given in
writing to the Master Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement. Upon the occurrence of clause
(vii) above, the Certificate Insurer may require that an audit of the Master
Servicer's servicing practices be performed, at the expense of the Seller, by
a Person selected by the Certificate Insurer. The Master Servicer shall
promptly provide the Certificate Insurer the written results of such audit.
If, upon being furnished with the results of such audit, the Certificate
Insurer reasonably concludes that the Master Servicer's servicing practices
have not been in compliance with the servicing standards set forth herein,
the Certificate Insurer may declare an Event of Default and may remove the
Master Servicer by giving written notice of such determination to the Seller,
the Master Servicer and the Trustee. Any such notice to the Master Servicer
shall also be given to each Rating Agency, the Seller and the Certificate
Insurer. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Designated Subservicer if it elects to
assume the obligations of successor Master Servicer hereunder and provided
that an event of default under such Subservicing Agreement does not exist (or
has been waived, with the consent of the Certificate Insurer) and the
Certificate Insurer consents to the succession of the Designated Master as
the successor master servicer, or the Trustee, as the case may be, pursuant
to and under this Section; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related docu-
ments or otherwise. The Master Servicer agrees to cooperate with the Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Desig-
nated Subservicer or the Trustee, as the case may be, for the administration
by it of all cash amounts that shall at the time be held by the Master
Servicer and to be deposited by it in the Collection Account, or that have
been deposited by the Master Servicer in the Collection Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including attorneys' fees) incurred in connec-
tion with transferring the Mortgage Files to the successor Master Servicer
and amending this Agreement to reflect such succession as Master Servicer
pursuant to this Section shall be paid by the predecessor Master Servicer (or
if the predecessor Master Servicer is the Trustee, the initial Master
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 8.01(i) for a period of ten Business Days or under Section
8.01(ii) for a period of 30 Business Days, shall not constitute an Event of
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Master Servicer and such delay or failure was
caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightn-
ing, fire, hurricanes, earthquakes, floods or similar causes. The preceding
sentence shall not relieve the Master Servicer from using its best efforts to
perform its respective obligations in a timely manner in accordance with the
terms of this Agreement and the Master Servicer shall provide the Trustee and
the Certificateholders with an Officers' Certificate giving prompt notice of
such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Master Servicer shall immediately notify the
Trustee in writing of any Events of Default.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and
----------------------------------------
after the time the Master Servicer receives a notice of termination pursuant
to Section 8.01 or 7.04, the Designated Subservicer or the Trustee, as the
case may be, shall be the successor in all respects to the Master Servicer in
its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof arising on and after its succession. As
compensation therefor, such successor Master Servicer shall be entitled to
such compensation as the Master Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding
the above, if the Designated Subservicer does not become the successor Master
Servicer and (i) if the Trustee is unwilling to act as successor Master
Servicer or (ii) if the Trustee is legally unable so to act, the Trustee
shall appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan
or home equity loan servicer having a net worth of not less than $50,000,000
as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided that any such successor Master Servicer shall
--------
be acceptable to the Certificate Insurer, as evidenced by the Certificate
Insurer's prior written consent which consent shall not be unreasonably
withheld and provided, further, that the appointment of any such successor
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Master Servicer will not result in the qualification, reduction or withdrawal
of the ratings assigned to the Certificates by the Rating Agencies.
Pending appointment of a successor to the Master Servicer hereunder, unless
the Trustee is prohibited by law from so acting, the Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment
and assumption, the successor shall be entitled to receive compensation out
of payments on Mortgage Loans in an amount equal to the compensation which the
Master Servicer would otherwise have received pursuant to Section 3.09 (or such
lesser compensation as the Trustee and such successor shall agree). The
appointment of a successor Master Servicer shall not affect any liability
of the predecessor Master Servicer which may have arisen under this Agreement
prior to its termination as Master Servicer to pay any deductible under an
insurance policy pursuant to Section 3.05 or to indemnify the Trustee
pursuant to Section 7.06), nor shall any successor Master Servicer be liable
for any acts or omissions of the predecessor Master Servicer or for any breach
by such Master Servicer of any of its representations or warranties contained
herein or in any related document or agreement. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Certificate-
holders and the Certificate Insurer, (ii) maintain in force a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder and a Fidelity Bond in respect of
its officers, employees and agents to the same extent as the Master Servicer
is so required pursuant to Section 3.06.
Section 8.03. Waiver of Defaults. The Certificate Insurer or the
------------------
Majority Certificateholders with the consent of the Certificate Insurer may,
on behalf of all Certificateholders, waive any events permitting removal of
the Master Servicer as servicer pursuant to this Article VIII, provided,
--------
however, that the Majority Certificateholders may not waive a default in
-------
making a required distribution on a Certificate without the consent of the
Holder of such Certificate. Upon any waiver of a past default, such default
shall cease to exist and any Event of Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to the Rating Agencies.
Section 8.04. Notification to Certificateholders. Upon any termination
----------------------------------
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
the Certificateholders at their respective addresses appearing in the Certi-
ficate Register, the Certificate Insurer and each Rating Agency.
Section 8.05. Rights of the Certificate Insurer to Exercise Rights of
-------------------------------------------------------
Class A Certificateholders. By accepting its Certificate, each Class A
--------------------------
Certificateholder agrees that unless a Certificate Insurer Default exists,
the Certificate Insurer shall be deemed to be the Certificateholders for all
purposes (other than with respect to payment on the Certificates) and shall
have the right to exercise all rights of the Class A Certificateholders under
this Agreement and under each Class of Class A Certificates without any
further consent of the Class A Certificateholders, including, without
limitation:
(a) the right to require the Seller to repurchase Mortgage Loans
pursuant to Section 2.02 or 2.04;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Master Servicer as servicer pursuant to Section 8.01 and
to consent to or direct waivers of Master Servicer defaults pursuant to
Section 8.03;
(c) the right to direct the actions of the Trustee during the
continuance of a Master Servicer default pursuant to Sections 8.01 and 8.02;
(d) the right to institute proceedings against the Master Servicer
pursuant to Section 8.01;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 9.02;
(f) the right to remove the Trustee pursuant to Section 9.07;
(g) the right to direct foreclosures upon the failure of the Master
Servicer to do so in accordance with this Agreement; and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of
the Certificate Insurer.
Section 8.06. Trustee to Act Solely with Consent of the Certificate
-----------------------------------------------------
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
-------
without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
(a) terminate the rights and obligations of the Master Servicer as
Master Servicer pursuant to Section 8.01;
(b) agree to any amendment pursuant to Article XI, provided, however,
-------- -------
that such consent shall not be unreasonably withheld; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.05, 8.06 or 8.07 or any
requirement for the Certificate Insurer's consent for any period of time.
Section 8.07. Mortgage Loans, Trust and Accounts Held for Benefit of
------------------------------------------------------
the Certificate Insurer. The Trustee shall hold the Trust and the Mortgage
-----------------------
Files for the benefit of the Certificateholders and the Certificate Insurer
and all references in this Agreement and in the Certificates to the benefit
of Holders of the Certificates shall be deemed to include the Certificate
Insurer. The Trustee shall cooperate in all reasonable respects with any
reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
and the Certificates unless, as stated in an Opinion of Counsel addressed to
the Trustee and the Certificate Insurer, such action is adverse to the
interests of the Certificateholders or diminishes the rights of the Certifi-
cateholders or imposes additional burdens or restrictions on the Certificate-
holders.
The Master Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Certificateholders and for the
benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
Section 8.08. Certificate Insurer Default. Notwithstanding anything
---------------------------
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions
of this Article VIII and all other provisions of this Agreement which (a)
permit the Certificate Insurer to exercise rights of the Certificateholders,
(b) restrict the ability of the Certificateholders, the Master Servicer or
the Trustee to act without the consent or approval of the Certificate
Insurer, (c) provide that a particular act or thing must be acceptable to the
Certificate Insurer, (d) permit the Certificate Insurer to direct (or
otherwise to require) the actions of the Trustee, the Master Servicer or the
Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to
take such action to any liability hereunder or (f) which have a similar
effect, shall be of no further force and effect and the Trustee shall
administer the Trust and perform its obligations hereunder solely for the
benefit of the Holders of the Certificates. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Certificate Insurer from any obligation
or liability it may have to any party or to the Certificateholders hereunder,
under any other agreement, instrument or document (including, without
limitation, the Certificate Insurance Policy) or under applicable law.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
-----------------
of an Event of Default and after the curing of all Events of Default which
may have occurred, undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
-------- -------
Trustee shall not be responsible for the accuracy or content of any such
resolution, certificate, statement, opinion, report, document, order or other
instrument. If any such instrument is found not to be in the form specified
in this Agreement, on its face, the Trustee shall take action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's reasonable satisfaction, the Trustee will provide
notice thereof to the Certificate Insurer and will, at the expense of the
Seller, which expense shall be reasonable given the scope and nature of the
required action, take such further action as directed by the Certificate
Insurer.
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:
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(i) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and
after the curing of all such Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of the Certificate Insurer or
in accordance with the direction of the Holders of Class A Certificates
evidencing Percentage Interests aggregating not less than 51% (with the
consent of the Certificate Insurer, so long as no Certificate Insurer
Default exists) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 8.01
unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Master Servicer, the Certificate
Insurer or the Holders of Class A Certificates evidencing Percentage
Interests aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer
in accordance with the terms of this Agreement.
Subject to the other provisions of this Agreement and without limiting
the generality of this Section, the Trustee shall have no duty (A) to see to
the payment or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust from funds available in the Collection
Account or (B) to confirm or verify the contents of any reports or
certificates of the Master Servicer delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.
Section 9.02. Certain Matters Affecting the Trustee. (a) Except as
-------------------------------------
otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any written 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) the Trustee shall be under no obligation to exercise any of
the rights 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 or the
Certificate Insurer, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby; the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act; nothing contained herein
shall, however, relieve the Trustee of the obligations, upon the
occurrence of an Event of Default (which has not been cured) of which a
Responsible Officer has actual knowledge, to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or documents, unless requested in writing to do so by the Certificate
Insurer or Holders of Certificates evidencing Percentage Interests
aggregating not less than 51% (with the consent of the Certificate
Insurer, so long as no Certificate Insurer Default exists); provided,
--------
however, that if the payment within a reasonable time to the Trustee of the
-------
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to such proceeding. The reasonable expense of every
such examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand. Nothing in
this clause (v) shall derogate from the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding
the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian;
(viii) the Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust created hereby or the powers
granted here; and
(ix) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
(b) It is intended that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify it as,
a REMIC as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) and as Tax
Matters Person on behalf of the REMIC, and that in such capacities, it shall:
(i) prepare, sign and file, or cause to be prepared and filed,
in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Return (Form 1066) and any other Tax Return required to be
filed by the Trust, using a calendar year as the taxable year for the
Trust;
(ii) make, or cause to be made, an election, on behalf of the
Trust, to be treated as a REMIC on the federal tax return of the Trust
for its first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded,
to the Master Servicer, the Certificateholders and the Internal Revenue
Service and any other relevant governmental taxing authority all
information returns or reports as and when required to be provided to
them in accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust are within its
control, conduct such affairs of the Trust at all times that any
Certificates are outstanding so as to maintain the status of the Trust
as a REMIC under the REMIC Provisions and any other applicable federal,
state and local laws, including, without limitation, information reports
relating to "original issue discount," as defined in the Code, based
upon ___% of the Prepayment Assumption and calculated by using the issue
price of the Certificates;
(v) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of
the Trust;
(vi) pay the amount of any and all federal, state and local
taxes, prohibited transaction taxes as defined in Section 860F of the
Code, other than any amount due as a result of a transfer or attempted
or purported transfer in violation of Section 6.02, imposed on the Trust
when and as the same shall be due and payable (but such obligation shall
not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Trustee shall be entitled
to reimbursement in accordance with Section 2.13;
(vii) ensure that any such returns or reports filed on behalf of
the Trust by the Trustee are properly executed by the appropriate
person;
(viii) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable
year of the Trust, enter into settlement agreements with any government
taxing agency, extend any statute of limitations relating to any item of
the Trust and otherwise act on behalf of the Trust in relation to any
tax matter involving the Trust;
(ix) as provided in Section 6.02(d)(vi), make available
information necessary for the computation of any tax imposed (1) on
transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will sign, as Trustee, any and all Tax
Returns required to be filed by the Trust. Notwithstanding the
foregoing, at such time as the Trustee becomes the successor Master
Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Master Servicer;
(x) make available to the Internal Revenue Service and those
Persons specified by the REMIC Provisions all information necessary to
compute any tax imposed (A) as a result of the Transfer of an Ownership
Interest in a Class R Certificate to any Person who is not a Permitted
Transferee, including the information described in Treasury regulations
sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
inclusions" of such Class R Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section
1381 of the Code that holds an Ownership Interest in a Class R
Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee. Reasonable compensation for
providing such information may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of
reimbursement, any and all tax-related expenses of the Trust (including,
but not limited to, tax return preparation and filing expenses and any
professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to the Trust that involve the Internal
Revenue Service or state tax authorities), other than (A) the expense of
obtaining any Opinion of Counsel required pursuant to Sections 2.06(d),
2.13(f), 3.01(j), 9.02(b) and 10.02, (B) any expenses for which the
Trustee is otherwise indemnified pursuant to Section 9.05, (C) taxes
except as specified herein, and (D) any professional fees or expenses
related to audits or any administrative or judicial proceedings that do
not result from any breach of the Trustee's duties hereunder,; and
(xii) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates the Form 1066
and each Form 1066Q for the REMIC and shall respond promptly to written
requests made not more frequently than quarterly by any Holder of Class
R Certificates with respect to the following matters:
(1) The original projected principal and interest cash flows
on the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on ___% of the
Prepayment Assumption;
(2) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage
Loans, based on ___% of the Prepayment Assumption;
(3) The Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and
interest cash flows described above;
(4) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each class
of regular or residual interests created hereunder and with respect
to the Mortgage Loans, together with each constant yield to
maturity used in computing the same;
(5) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of indebtedness
income of the REMIC with respect to such regular interests or bad
debt deductions claims with respect to the Mortgage Loans;
(6) The amount and timing of any non-interest expenses of the
REMIC; and
(7) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contribution" or "net income from foreclosure
property" or state or local income or franchise taxes.
The Trustee shall have no obligation to perform pursuant to this
Section 902(b)(xii) if the information required to perform hereunder is
not provided to it.
(xiii) Following the Closing Date, and except as otherwise provided
in this Agreement, the Trustee shall not knowingly accept any
contribution of assets to the Trust unless it shall have been provided
with an Opinion of Counsel at the expense of the party delivering such
assets acceptable to it and the Certificate Insurer to the effect that
the inclusion of such assets in the REMIC will not cause the REMIC to
fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject to the Trust to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local
law or ordinances.
(xiv) The Trustee agrees to indemnify the Trust, the Certificate
Insurer and the Master Servicer for any taxes and costs, including,
without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust, the Certificate Insurer or the Master Servicer,
as a result of a negligent or willful breach of the Trustee's covenants
set forth in this Section.
Unless otherwise specified, any costs and expenses incurred by the
Trustee pursuant to the Section 9.02 shall not be reimbursable to it pursuant
to Section 9.05.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
-----------------------------------------------------
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of
any Mortgage Loan or related document. The Trustee shall not be accountable
for the use or application by the Master Servicer or for the use or applica-
tion of any funds paid to the Master Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account by the Master
Servicer. The Trustee shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any
Mortgage or any Mortgage Loan, or the perfection and priority of any Mortgage
or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including, without limitation: the existence, condition and ownership of any
Mortgaged Property; the existence and enforceability of any hazard insurance
thereon (other than the Trustee as Master Servicer if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.02); the
validity of the assignment of any Mortgage Loan to the Trustee or of any
intervening assignment; the completeness of any Mortgage Loan; the perfor-
▇▇▇▇▇ or enforcement of any Mortgage Loan (other than the Trustee as Master
Servicer if the Trustee shall assume the duties of Master Servicer pursuant
to Section 8.02); the compliance by the Seller or the Master Servicer with
any warranty or representation made under this Agreement or in any related
document or the accuracy of any such warranty or representation prior to the
Trustee's receipt of notice or other discovery of any noncompliance therewith
or any breach thereof; any investment of monies by or at the direction of the
Master Servicer in Eligible Investments or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions
of any of the Master Servicer (other than the Trustee as Master Servicer if
the Trustee shall assume the duties of Master Servicer pursuant to Section
8.02), any Subservicer or any Mortgagor; any action of the Master Servicer
(other than if the Trustee shall assume the duties of the Master Servicer
pursuant to Section 8.02), or any Subservicer taken in the name of the
Trustee; the failure of the Master Servicer or any Subservicer to act or
perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant
to Section 8.02); provided, however, that the foregoing shall not relieve the
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Trustee of its obligation to perform its duties under this Agreement,
including, without limitation, the Trustee's duty to review the Mortgage
Files pursuant to Section 2.01. The Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Certifi-
▇▇▇▇▇ with the same rights as it would have if it were not Trustee and may
transact any banking and trust business with the Seller or the Master
Servicer.
Section 9.05. Seller to Pay Trustee Fees and Expenses. The Trustee
---------------------------------------
shall be entitled to receive the Trustee Fee for each Loan Group pursuant to
Section 5.01(a)(i)(1) and 5.01(a)(ii)(1), and the Seller shall pay or
reimburse, the Trustee upon its request for all reasonable expenses, dis-
bursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence, willful misfeasance or bad faith or
which is the responsibility of Certificateholders hereunder. In addition,
the Seller covenants and agrees to indemnify the Trustee and its officers,
directors, employees and agents from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (i) incurred in
connection with any legal action or relating to this Agreement, the Insurance
Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence of the
Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder or
(ii) resulting from any error in any tax or information return prepared by
the Master Servicer. This Section shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, have a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of "Baa3" by ▇▇▇▇▇'▇ and "BBB-" by S&P, and be subject to
supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The principal office of the Trustee (other than the initial Trustee) shall be
in a state with respect to which an Opinion of Counsel has been delivered to
such Trustee at the time such Trustee is appointed Trustee to the effect that
the Trust will not be a taxable entity under the laws of such state. In case
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at
---------------------------------
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Seller, the Master Servicer, the Certificate
Insurer and each Rating Agency. Upon receiving such notice of resignation,
the Seller shall promptly appoint a successor Trustee (approved in writing by
the Certificate Insurer, so long as such approval shall not be unreasonably
withheld) by written instrument, copies of which instrument shall be
delivered to the resigning Trustee, the successor Trustee; provided, however,
-------- -------
that any such successor Trustee shall be subject to the prior written
approval of the Master Servicer. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Seller, with the consent of the Certificate Insurer (so long
as no Certificate Insurer Default exists) or the Certificate Insurer, or if
at any time the Trustee shall be legally unable to act, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Seller, the Master Servicer or the
Certificate Insurer may remove the Trustee. If the Seller, the Master
Servicer or the Certificate Insurer removes the Trustee under the authority
of the immediately preceding sentence, the Seller shall promptly appoint a
successor Trustee (approved in writing by the Certificate Insurer, so long as
such approval is not unreasonably withheld) by written instrument, copies of
which instrument shall be delivered to the resigning Trustee and the
successor Trustee.
The Holders of Certificates evidencing Percentage Interests aggregating
at least 51% may, with the prior written consent of the Certificate Insurer,
so long as no Certificate Insurer Default exists, at any time remove the
Trustee by written instrument or instruments delivered to the Master
Servicer, the Seller and the Trustee; shall thereupon use its best efforts to
appoint a successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the Trustee may not be removed by the
Seller or the Certificateholders without the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
-----------------
provided in Section 9.07 shall execute, acknowledge and deliver to the
Seller, the Master Servicer and to its predecessor Trustee and the
Certificate Insurer an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Seller, the Master Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things
as may reasonably be required for fully and certainly vesting and confirming
in the successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior
written consent of the Certificate Insurer, which consent shall not be
unreasonably withheld.
Section 9.09. Merger or Consolidation of Trustee. Any corporation into
----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Seller and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Certificate Insurer to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Seller and the Certificate
Insurer, so long as no Certificate Insurer Default exists. If the
Certificate Insurer shall not have responded within 15 days after the receipt
by it of a request for approval pursuant to this Section 9.10, the Trustee
alone shall have the power to make such appointment. No co-trustee or sepa-
rate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 9.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 9.08. The Seller shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee, with the consent of the Certificate Insurer, so
long as no Certificate Insurer Default exists, may at any time accept
the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Seller, the Certificate
Insurer and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed
-----------------------
by the Trustee, not in its individual capacity but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred and vested in it
by this Agreement. Each of the undertakings and agreements made on the part
of the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the
purpose of binding only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates; Inspection. (a) All rights of action and claims under this
------------------------
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof
in any proceeding relating thereto, and such proceeding instituted by the
Trustee shall be brought in its own name or in its capacity as Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders and the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Master Servicer, the
Certificate Insurer and each Certificateholder upon reasonable notice during
normal business hours, access to all records maintained by the Trustee in
respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall
furnish the Seller, the Master Servicer, the Certificate Insurer and any
requesting Certificateholder with its most recent financial statements. The
Trustee shall cooperate fully with the Seller, the Master Servicer, the
Certificate Insurer and such Certificateholder and shall make available to
the Seller, the Master Servicer, the Certificate Insurer and such
Certificateholder for review and copying such books, documents or records as
may be requested with respect to the Trustee's duties hereunder. The Seller,
the Master Servicer, the Certificate Insurer and the Certificateholders shall
not have any responsibility or liability for any action or failure to act by
the Trustee and are not obligated to supervise the performance of the Trustee
under this Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case an Event of Default or
---------------------
other default by the Master Servicer or the Seller hereunder shall occur and
be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its rights and the rights of the Certificateholders or the
Certificate Insurer under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Trustee, the Certificateholders and the Certificate Insurer.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
-----------
responsibilities of the Seller, the Master Servicer and the Trustee created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of
the Master Servicer to send certain notices as hereinafter set forth) shall
terminate upon notice to the Trustee of the later of (A) payment in full of
all amounts owing to the Certificate Insurer unless the Certificate Insurer
shall otherwise consent and (B) the earliest of (i) the Distribution Date on
which the Class Principal Balance of both Certificate Groups has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage
Loan in the Trust, (iii) the optional purchase by the Seller of the Mortgage
Loans as described below and (iv) the Distribution Date in ____________.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last
surviving descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United
States to the Court of St. ▇▇▇▇▇, living on the date hereof.
The Seller may, at its option, terminate this Agreement on any date on
which the Pool Principal Balance is less than 5% of the Cut-Off Date Pool
Principal Balance, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to
the sum of the outstanding Pool Balance and accrued and unpaid interest
thereon at the weighted average of the Loan Rates through the end of the Due
Period preceding the final Distribution Date together with all amounts due
and owing to the Certificate Insurer (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Master Servicer shall deposit in the Distribution Account all
amounts then on deposit in the Collection Account (less amounts permitted to
be withdrawn by the Master Servicer pursuant to Section 3.03), which deposit
shall be deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by the Seller by depositing into
the Distribution Account on the Determination Date before such Distribution
Date of the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly
by the Trustee to the Certificate Insurer and by letter to Class A
Certificateholders mailed not earlier than the 15th day and not later than
the 25th day of the month next preceding the month of such final distribution
specifying (i) the Distribution Date upon which final distribution of the
Class A Certificates will be made upon presentation and surrender of Class A
Certificates at the office or agency of the Trustee therein designated, (ii)
the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the Class A
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Class A Certificates, the
Trustee shall cause to be distributed to the holders of Class A Certificates
on the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class A Certificates and to the
extent that funds are available for such purpose, an amount equal to the
amount required to be distributed to holders of Class A Certificates pursuant
to Section 5.01 for such Distribution Date. On the final Distribution Date,
the Trustee will withdraw from the Distribution Account and remit to the
Certificate Insurer the lesser of (x) the amount available for distribution
on such final Distribution Date, net of any portion thereof necessary to pay
holders of Class A Certifi-▇▇▇▇▇ pursuant to Section 5.01(a) and any amounts
owing to the Trustee in respect of the Trustee Fee and due and unpaid Monthly
Advances and Master Servicing Fees, (y) the unpaid amounts due and owing to
the Certificate Insurer pursuant to Section 5.01(a).
(d) In the event that all of the Class A Certificateholders shall not
surrender their Class A Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall promptly following
such date cause all funds in the Distribution Account not distributed in
final distribution to Class A Certificateholders to be withdrawn therefrom
and credited to the remaining Class A Certificateholders by depositing such
funds in a separate escrow account for the benefit of such Class A Certifi-
cateholders and the Master Servicer (if the Master Servicer has exercised its
right to purchase the Mortgage Loans) or the Trustee (in any other case)
shall give a second written notice to the remaining Class A Certificate-
holders to surrender their Class A Certificates for cancellation and receive
the final distribution with respect thereto. If within nine months after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholder shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Trustee
upon transfer of such funds shall be discharged of any responsibility for
such funds and the Certificateholders shall look to the Class R
Certificateholder for payment.
Section 10.02. Additional Termination Requirements. (a) In the event
-----------------------------------
that the Master Servicer exercises its purchase option as provided in Section
10.01, the Trust shall be terminated in accordance with the following
additional requirements, unless the Trustee have been furnished with an
Opinion of Counsel to the effect that the failure of the Trust to comply with
the requirements of this Section will not (i) result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or (ii) cause the Trust to fail to qualify as a REMIC at any time
that any Class A Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation of the REMIC meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any regu-
lations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Master Servicer for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to each Class of Class A Certificateholders
the related Class Principal Balance, plus one month's interest thereon
at the applicable Certificate Rate, (B) to the Certificate Insurer, all
amounts owing to the Certificate Insurer under this Agreement and the
Insurance Agreement and (C) to the Class R Certificateholders, all cash
on hand after such payment to the Class A Certificateholders (other than
cash retained to meet claims) and the Trust shall terminate at such
time.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a
plan of complete liquidation (and the Certificateholders hereby appoint the
Trustee as their attorney in fact to sign such plan) as appropriate or upon
the written request of the Certificate Insurer and (ii) to take such other
action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
---------
time by the Seller, the Master Servicer, and the Trustee, in each case
without the consent of any of the Certificateholders, but only with the
consent of the Certificate Insurer (which consent shall not be unreasonably
withheld), (i) to cure any ambiguity, (ii) to correct any defective
provisions or to correct or supplement any provisions herein that may be
inconsistent with any other provisions herein, (iii) to add to the duties of
the Master Servicer, (iv) to add any other provisions with respect to matters
or questions arising under this Agreement or the Certificate Insurance
Policy, as the case may be, which shall not be inconsistent with the
provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating agency in order to maintain or improve any rating of each
Class of Class A Certificates (it being understood that, after obtaining the
ratings in effect on the Closing Date, neither the Trustee, the Seller nor
the Master Servicer is obligated to obtain, maintain or improve any such
rating) or (vi) to add or amend any provisions of this Agreement to such
extent as shall be necessary to maintain the qualification of the Trust as a
REMIC; provided, however, that (x) as evidenced by an Opinion of Counsel
-------- -------
(at the expense of the requesting party) in each case such action shall not,
adversely affect in any material respect the interest of any
Certificateholder, (y) in each case, such action is necessary or desirable to
maintain the qualification of the Trust as a REMIC or shall not adversely
affect such qualification and (z) if the opinion called for in clause (x)
cannot be delivered with regard to an amendment pursuant to clause (vi)
above, such amendment is necessary to maintain the qualification of the Trust
as a REMIC; provided, further, that the amendment shall not be deemed to
-------- -------
adversely affect in any material respect the interests of the Certificate-
holders and no Opinion of Counsel to that effect shall be required if the
Person requesting the amendment obtains a letter from the Rating Agency
stating that the amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Class A Certificates; and
provided, further, that the Master Servicer shall not consent to any
-------- -------
amendment hereunder without the Designated Subservicer's consent.
This Agreement also may be amended from time to time by the Seller, the
Master Servicer and the Trustee, and the Master Servicer and the Certificate
Insurer may from time to time consent to the amendment of the Certificate
Insurance Policy with the consent of the Holders of each Class of Class A
Certificates which is affected by such amendment, evidencing Percentage
Interests aggregating not less than 51%, and in the case of an amendment to
this Agreement, with the consent of the Certificate Insurer, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment shall (i)
-------- -------
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Certificate Insurance
Policy which are required to be made on any Certificate without the consent
of the Holder of such Certificate or (ii) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders
of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in connection
with any such amendment, the party seeking such amendment shall furnish the
Trustee with an Opinion of Counsel stating whether such amendment would
adversely affect the qualification of the Trust as a REMIC and notice of the
conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section shall be
permitted or authorized by this Agreement notwithstanding that such Opinion
of Counsel may conclude that such amendment would adversely affect the
qualification of the Trust as a REMIC.
Prior to the execution of any such amendment, the Trustee shall furnish
written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
fully executed original counterparts of the instruments effecting such
amendment to the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an opinion of counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
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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 Trustee, but only upon direction of Certificateholders or the
Certificate Insurer accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of
Certificateholders or the Certificate Insurer. The Certificateholders or the
Certificate Insurer requesting such recordation shall bear all costs and
expenses of such recordation. The Trustee shall have no obligation to
ascertain whether such recordation so affects the interests of the
Certificateholders.
Section 11.03. Limitation on Rights of Certificateholders. The death
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or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 51% shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner what-
ever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificate-
holder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 11.05. Notices. (a) All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt
requested, to (a) in the case of the Master Servicer, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (b) in the case of the
Trustee, the Corporate Trust Office, (c) in the case of the Certificate
Insurer, ___________________________________, Attention: __________________,
Telecopy No.: (___) ________, Confirmation: (___) ________ (in each case in
which notice or other communication to the Certificate Insurer refers to an
Event of Default, a claim on the Certificate Insurance Policy or with respect
to which failure on the part of the Certificate Insurer to respond shall be
deemed to constitute consent or acceptance, then a copy of such notice or
other communication shall be marked to indicate "URGENT MATERIAL ENCLOSED"),
(e) in the case of ▇▇▇▇▇'▇, Home Mortgage Loan Monitoring Group, 4th Floor,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (f) in the case of Standard &
Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Mortgage Group, or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
Any notice required or permitted to be mailed to a Certificateholder shall
be given by first class mail, postage prepaid, at the address of such Holder
as shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice. Any notice
or other document required to be delivered or mailed by the Trustee to any
Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for
failure to delivery such notice or document to any Rating Agency.
(b) Notice to the Rating Agencies. The Trustee and the Master Servicer
-----------------------------
shall each be obligated to use its best efforts promptly to provide notice,
at the expense of the Master Servicer, to the Rating Agencies with respect to
each of the following of which a Responsible Officer of the Trustee or Master
Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured or waived;
(iii) The resignation or termination of the Master Servicer or the
Trustee;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Trustee
to make advances regarding Delinquent Mortgage Loans.
(c) In addition, (i) the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in
Section 5.03; and
(B) Each Statement to Certificateholders described in Section
5.03; and
(ii) The Master Servicer shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual statement as to compliance described in
Section 3.10;
(B) Each annual independent public accountants' servicing
report described in Section 3.11; and
(C) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Master Servicer has not made a
Delinquency Advance.
Any such notice pursuant to this Section shall be in writing and shall
be deemed to have been duly given if personally delivered or mailed by first
class mail, postage prepaid, or by express delivery service to the addresses
specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Certi-
ficates or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or
3.01), this Agreement may not be assigned by the Seller or the Master
Servicer without the prior written consent of the Certificate Insurer and
Holders of the Certificates evidencing Percentage Interests aggregating not
less than 662/3%.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
-----------------------------------------
agree that the Certificateholders shall not be personally liable for
obligations of the Trust, that the beneficial ownership interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02
are and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure
-------------------------
to the benefit of and be binding upon the parties hereto, the Certificate-
holders, the Certificate Owners, the Certificate Insurer and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other person will have any right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.11. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
Section 11.12. Insurance Agreement. The Trustee is authorized and
-------------------
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Trustee thereunder.
Section 11.13. Subservicing Agreement. The Trustee is authorized and
----------------------
directed to acknowledge the Subservicing Agreement relating to the Designated
Subservicer designated in Section 3.01(b) hereof; provided, however, that
notwithstanding the terms of such Subservicing Agreement, Section 3.01(c)
hereof shall control.
IN WITNESS WHEREOF, the Seller, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
all as of the day and year first above written.
THE PROVIDENT BANK,
as Seller, Document Custodian
and Master Servicer
By:
---------------------------------
Name:
Title:
(TRUSTEE),
as Trustee
By: _________________________________
Name:
Title:
State of ____________)
) ss.:
County of __________ )
On the ____ day of ________, 199_ before me, a notary public in and
for the State of ________, personally appeared _____________________, known
to me who, being by me duly sworn, did depose and say that he is the
______________ of The Provident Bank, an Ohio banking corporation, one of the
parties that executed the foregoing instrument; that he knows the seal of
said company; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
company; and that he signed his name thereto by like order.
----------------------
Notary Public
(Notarial Seal)
State of ____________)
) ss.:
County of __________ )
On the ____ day of ________, 199_ before me, a notary public in and
for the State of New York, personally appeared _____________________, known
to me who, being by me duly sworn, did depose and say that she is the
_________________ of (Trustee), a (national banking association), one of the
parties that executed the foregoing instrument; that she knows the seal of
said company; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
company; and that she signed her name thereto by like order.
----------------------
Notary Public
(Notarial Seal)