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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
November 5, 1997
Access Financial Lending Corp.
(Exact name of registrant as specified in its charter)
Delaware 333-07837 41-1768416
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
400 Highway 169 South
Suite 400
St. Louis Park, Minnesota 55426
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (612) 542-6500
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
Access Financial Lending Corp. (the "Registrant") registered issuances of
up to $1,500,000,000 principal amount of Mortgage Loan Pass-Through Certificates
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Act"), by a Registration Statement on Form S-3
(Registration File No. 333-07837) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, Access Financial Mortgage Loan Trust
1997-3 (the "Trust") issued $199,870,000 in aggregate principal amount of its
Mortgage Loan Pass-Through Certificates, Series 1997-3 (the "Certificates"), on
October 31, 1997. This Current Report on Form 8-K is being filed to satisfy an
undertaking to file copies of certain agreements executed in connection with the
issuance of the Certificates, the forms of which were filed as Exhibits to the
Registration Statement.
The Certificates were issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") attached hereto as Exhibit 4.2, dated as
of October 1, 1997, among Access Financial Lending Corp., as seller (the
"Seller") and master servicer (the "Master Servicer"), Access Financial
Receivables Corp. (the "Depositor") and The Chase Manhattan Bank, as trustee
(the "Trustee"). The Certificates consist of five classes of fixed rate
certificates, the Class A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates, the Class A-IO Group I Certificates, and three classes of variable
rate certificates, the Class A-1 Group I Certificates, the Class A-6 Group II
Certificates, and the Class A-7 Group III Certificates (collectively, the "Class
A Certificates"). In addition to the Class A Certificates, the Trust will also
issue a subordinate Class of Certificates (the "Class B Certificates") and one
or more Classes of Residual Certificates. Only the Class A Certificates were
issued pursuant to the Registration Statement. The Certificates initially
evidence, in the aggregate, 100% of the undivided beneficial ownership interests
in the Trust.
The assets of the Trust consist primarily of a pool of fixed-rate,
amortizing mortgage loans and adjustable rate amortizing mortgage loans which
are secured by first or second liens on residential properties (the "Mortgage
Loans").
Interest distributions on the Class A Certificates are based on the
Certificate Principal Balance thereof and the then applicable Pass-Through Rate
thereof. The Class A-1 Group I Certificates will have a Variable Pass-Through
Rate, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates,
the Class A-4 Group I Certificates, the Class A-5 Group I Certificates, and the
Class A-IO Group I Certificates will have interest rates of 6.565% Pass-Through,
6.8000% Pass-Through,
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7.175% Pass-Through, 6.175% Pass-Through, and 5.000% Pass-Through, respectively.
The Class A-6 Group II and the Class A-7 Group III Certificates will both have a
Variable Pass-Through Rate. For more information on the Variable Pass-Through
Rates, please see the Pooling and Servicing Agreement, attached as Exhibit 4.2
hereto.
The aggregate principal amount of the Class A-1 Group I Certificates, the
Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class
A-4 Group I Certificates, the Class A-5 Group I Certificates, the Class A-6
Group II Certificates and the Class A-7 Group II Certificates was $40,096,000,
$15,400,000, $10,601,000, $8,000,000, $8,230,000, $49,997,000 and $67,546,000,
respectively. The notional amount for the Class A-IO Group I Certificates was
$8,230,000.
The Class B Certificates represent a beneficial ownership interest in a
portion of the interest payments on the Mortgage Loans. Distributions on the
Class B Certificates are calculated as described in the Pooling and Servicing
Agreement.
As of the Closing Date, the Mortgage Loans possessed the characteristics
described in the Prospectus dated November 7, 1996 and the Prospectus Supplement
dated October 23, 1997, filed pursuant to Rule 424(b)(2) of the Act on October
30, 1997.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated October 23, 1997, among Access Financial
Lending Corp., Prudential Securities Incorporated and Morgan Stanley & Co.
Incorporated.
4.1 Purchase and Sale Agreement, dated as of October 1, 1997 between Access
Financial Lending Corp. and Access Financial Receivables Corp.
4.2 Pooling and Servicing Agreement, dated as of October 1, 1997, among
Access Financial Lending Corp., as seller and master servicer, Access Financial
Receivables Corp., as transferor, and The Chase Manhattan Bank, as trustee.
10.1 Indemnification Agreement, dated as of October 23, 1997, among Access
Financial Lending Corp., Access Financial Receivables Corp., Financial Security
Assurance Inc., Prudential Securities Incorporated and Morgan Stanley & Co.
Incorporated.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ACCESS FINANCIAL LENDING CORP.,
as Registrant and on behalf of ACCESS
FINANCIAL MORTGAGE LOAN TRUST 1997-3
By: /s/ Leslie Zejdlik Foster
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Name: Leslie Zejdlik Foster
Title: President
Dated: November 5, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated October 23,
1997, among Access Financial Lending Corp.,
Prudential Securities Incorporated and Morgan
Stanley & Co. Incorporated.
4.1 Purchase and Sale Agreement, dated as of
October 1, 1997 between Access Financial
Lending Corp. and Access Financial
Receivables Corp.
4.2 Pooling and Servicing Agreement, dated as of
October 1, 1997, among Access Financial
Lending Corp., as seller and master servicer,
Access Financial Receivables Corp., as
transferor, and The Chase Manhattan Bank, as
trustee.
10.1 Indemnification Agreement, dated as of
October 23, 1997, among Access Financial
Lending Corp., Access Financial Receivables
Corp., Financial Security Assurance Inc.,
Prudential Securities Incorporated and Morgan
Stanley & Co. Incorporated.
EXECUTION COPY
ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-3
$40,096,000 Class A-1 Group I Certificates, Variable Pass-Through Rate
$15,400,000 Class A-2 Group I Certificates, 6.565% Pass-Through Rate
$10,601,000 Class A-3 Group I Certificates, 6.800% Pass-Through Rate
$8,000,000 Class A-4 Group I Certificates,7.175% Pass-Through Rate
$8,230,000 Class A-5 Group I Certificates, 6.745% Pass-Through Rate
$8,230,000* Class A-IO Group I Certificates, 5.000%Pass-Through Rate
$49,997,000 Class A-6 Group II Certificates, Variable Pass-Through Rate
$67,546,000 Class A-7 Group III Certificates, Variable Pass-Through Rate
*notional amount
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
October 23, 1997
Dear Sirs:
Access Financial Lending Corp., a corporation organized and existing under
the laws of Delaware (the "Company"), agrees with you (the "Underwriters") as
follows:
Section 1. Issuance and Sale of Certificates. The Company has authorized
the issuance and sale of Mortgage Loan Pass-Through Certificates, Series 1997-3,
Class A-1 Group I Certificates in an aggregate principal amount of $40,096,000,
Class A-2 Group I Certificates in an aggregate principal amount of $15,400,000,
Class A-3 Group I Certificates in an aggregate principal amount of $10,601,000,
Class A-4 Group I Certificates in an aggregate principal amount of $8,000,000,
Class A-5 Group I Certificates in an aggregate principal amount of $8,230,000,
Class A-IO Group I Certificates in an aggregate notional amount of $8,230,000,
Class A-6 Group II Certificates in an aggregate principal amount of $49,997,000
and Class A-7 Group III Certificates in an aggregate principal amount of
$67,546,000 (collectively, the "Offered Certificates"). The Offered
Certificates, the Class B Certificates and the Residual Certificates (the Class
B Certificates and the Residual Certificates, collectively, the "Non-Offered
Certificates") (the Non-Offered Certificates and the Offered Certificates,
collectively, the "Certificates"), are to be issued by Access Financial Mortgage
Loan Trust 1997-3 (the "Trust") pursuant to a Pooling and Servicing Agreement,
to be dated as of October 1, 1997 (the "Pooling and Servicing Agreement"), among
the Company, Access Financial Lending Corp., as master servicer (the "Master
Servicer"), Access Financial Receivables Corp., as the transferor (the
"Transferor") and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "Trustee"). The Non-Offered Certificates are not to be sold
hereunder. The Certificates evidence all of the
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beneficial ownership interests in the assets of the Trust consisting primarily
of a pool of amortizing mortgage loans which are secured by first or second
liens on residential properties (the "Mortgage Loans").
The Company will transfer all the Mortgage Loans to the Transferor pursuant
to a Purchase and Sale Agreement dated as of October 1, 1997 (the "Sale
Agreement") between the Company and the Transferor.
The Offered Certificates will have the benefit of a certificate insurance
policy (the "Certificate Insurance Policy") issued by Financial Security
Assurance, Inc., a monoline insurance company organized under the laws of New
York (the "Certificate Insurer").
In connection with the issuance of the Certificate Insurance Policy, (i)
the Company and the Certificate Insurer will execute and deliver an Insurance
and Indemnity Agreement dated as of October 1, 1997 (the "Insurance Agreement")
and (ii) the Company, the Transferor, the Underwriters and the Certificate
Insurer will execute and deliver an Indemnification Agreement dated as of
October 23, 1997 (the "Indemnification Agreement").
As used herein, the term "Company Agreements" means the Pooling and
Servicing Agreement, the Sale Agreement, the Insurance Agreement,the
Indemnification Agreement, any Sub-Servicing Agreements and this Agreement.
As used herein, the term "Transferor Agreements" means the Pooling and
Servicing Agreement, the Sale Agreement and the Indemnification Agreement.
An election will be made to treat certain of the assets and Accounts of the
Trust as "real estate mortgage investment conduits" ("REMICs") as such term is
defined in the Internal Revenue Code of 1986, as it may be amended from time to
time (the "Code"). The Offered Certificates and the Class B Certificates will be
designated as "regular interests" in a REMIC, and the Residual Certificates will
be designated as "residual interests" in a REMIC.
The offering of the Offered Certificates will be made by you, and the
Company understands that you propose to make a public offering of the Offered
Certificates for settlement on October 31, 1997, as you deem advisable.
Defined terms used herein shall have their respective meanings as set forth
in the Pooling and Servicing Agreement.
Section 2. Representations and Warranties. The Company represents and
warrants to, and agrees with each of the Underwriters, that:
(i) A Registration Statement on Form S-3 (No. 333-07837) has (a) been
prepared by the Company on such Form in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States Securities and
Exchange Commission
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(the "Commission") thereunder, (b) been filed with the Commission and (c) been
declared effective by the Commission, and no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceeding
for that purpose has been initiated or threatened, by the Commission. Copies of
such Registration Statement have been delivered by the Company to the
Underwriters. There are no contracts or documents of the Company which are
required to be filed as exhibits to the Registration Statement pursuant to the
Securities Act or the Rules and Regulations which have not been so filed or
incorporated by reference therein on or prior to the Effective Date of the
Registration Statement other than such documents or materials, if any, as the
Underwriters deliver to the Company pursuant to Section 9D hereof for filing on
Form 8-K. The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
As used herein, the term "Effective Date" means the date on and time at
which the Registration Statement became effective, or the date on and the time
at which the most recent post-effective amendment to such Registration
Statement, if any, was declared effective by the Commission. The term
"Registration Statement" means (i) the registration statement referred to in the
preceding paragraph, including the exhibits thereto, (ii) all documents
incorporated by reference therein pursuant to Item 12 of Form S-3 and (iii) any
post-effective amendment filed and declared effective prior to the date of
issuance of the Certificates. The term "Base Prospectus" means the prospectus
included in the Registration Statement. The term "Prospectus Supplement" means
the prospectus supplement dated the date hereof and specifically relating to the
Offered Certificates (the "Prospectus Supplement"), as first filed with the
Commission pursuant to Rule 424 of the Rules and Regulations. The term "Company
Offering Materials" means, collectively, the Registration Statement, the Base
Prospectus and the Prospectus Supplement except for the Underwriter Information.
The term "Underwriter Information" means the information set forth under the
caption "Underwriting" in the Prospectus Supplement and any information in the
Prospectus Supplement relating to any potential market-making, over-allotment or
price stabilization activities of the Underwriters. The term "Prospectus" means,
together, the Base Prospectus and the Prospectus Supplement.
(ii) The Registration Statement and the Prospectus conform, and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations. The Company Offering Materials do not and will not, as of the
Effective Date or filing date thereof and of any amendment thereto, as
appropriate, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(iii) The documents incorporated by reference in the Company Offering
Materials, when they were filed with the Commission conformed in all material
respects to the requirements of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable, and the Rules and
Regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a
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material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; any further
documents so filed and incorporated by reference in the Company Offering
Materials, when such documents are filed with the Commission will conform in all
material respects to the requirements of the Exchange Act and the Rules and
Regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that no representation is made as to documents deemed to be Derived
Information except to the extent such documents reflect Company - Provided
Information.
(iv) Since the respective dates as of which information is given in the
Company Offering Materials, or the Company Offering Materials as amended and
supplemented, (x) there has not been any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, business, management, financial condition, stockholders'
equity, results of operations, regulatory situation or business prospects of the
Company and (y) the Company has not entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the Company
that, in either case, would reasonably be expected to materially adversely
affect the interests of the holders of the Offered Certificates, otherwise than
as set forth or contemplated in the Company Offering Materials, as so amended or
supplemented.
(v) The Company is not aware of (x) any request by the Commission for any
further amendment of the Registration Statement or the Prospectus or for any
additional information, (y) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose or (z) any notification with
respect to the suspension of the qualification of the Offered Certificates for
the sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(vi) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the business or financial condition of the Company and has all power and
authority necessary to own or hold its properties, to conduct the business in
which it is engaged and to enter into and perform its obligations under each
Company Agreement and to cause the Certificates to be issued.
(vii) There are no actions, proceedings or investigations pending before or
threatened by any court, administrative agency or other tribunal to which the
Company is a party or of which any of its properties is the subject (i) which if
determined adversely to it is likely to have a material adverse effect
individually, or in the aggregate, on the business or financial condition of the
Company, (ii) asserting the invalidity of any Company Agreement, in whole or in
part or the Certificates, (iii) seeking to prevent the issuance of the
Certificates or the consummation by the Company of any of the
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transactions contemplated by any Company Agreement, in whole or in part, or (iv)
which if determined adversely it is likely to materially and adversely affect
the performance by the Company of its obligations under, or the validity or
enforceability of, any Company Agreement, in whole or in part or the
Certificates.
(viii) Each Company Agreement has been, or, when executed and delivered
will have been, duly authorized, validly executed and delivered by the Company
and each Company Agreement constitutes, a valid and binding agreement of the
Company, enforceable against the Company in accordance with their respective
terms, except to the extent that the enforceability hereof may be subject (x) to
insolvency, reorganization, moratorium, receivership, conservatorship, or other
similar laws, regulations or procedures of general applicability now or
hereafter in effect relating to or affecting creditors' rights generally, (y) to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (z) with respect to rights of indemnity
under this Agreement, to limitations of public policy under applicable
securities laws.
(ix) The issuance and delivery of the Certificates, and the execution,
delivery and performance of each Company Agreement and the consummation of the
transactions contemplated hereby and thereby, do not and will not conflict with
or result in a breach of or violate any term or provision of or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Company is a party, by which the Company
may be bound or to which any of the property or assets of the Company or any of
its subsidiaries may be subject, nor will such actions result in any violation
of the provisions of the articles of incorporation or by-laws of the Company or
any law, statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its respective
properties or assets.
(x) KPMG Peat Marwick is an independent public accountant with respect to
the Company as required by the Securities Act and the Rules and Regulations.
(xi) The direction by the Company to the Trustee to execute, authenticate,
countersign, issue and deliver the Certificates will be duly authorized by the
Company, and, assuming the Trustee has been duly authorized to do so, when
executed, authenticated, countersigned, issued and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the Certificates will be
validly issued and outstanding and will be entitled to the benefits of the
Pooling and Servicing Agreement.
(xii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance and sale of the Certificates, or the
consummation by the Company of the other transactions contemplated by this
Agreement, except the registration under the Securities Act of the Offered
Certificates and such consents, approvals, authorizations, registrations or
qualifications as may have been obtained or effected or as may be required under
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Certificates by you.
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(xiii) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Company Offering Materials (or is exempt therefrom)
and the Company has not received notice of any proceedings relating to the
revocation or modification of such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, is likely to materially and adversely affect the conduct of
its business, operations, financial condition or income.
(xiv) Neither the Company nor the Trust created by the Pooling and
Servicing Agreement will conduct its operations while any of the Certificates
are outstanding in a manner that would require the Company or the Trust to be
registered as an "investment company" under the Investment Company Act of 1940,
as amended (the "1940 Act"), as in effect on the date hereof.
(xv) Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of any Company Agreement, the Certificate
Insurance Policies and the Certificates that are required to be paid by the
Company at or prior to the Closing Date have been paid or will be paid at or
prior to the Closing Date.
(xvi) At the Closing Date, each of the representations and warranties of
the Company set forth in any Company Agreement will be true and correct in all
material respects.
(xvii) (a) Following the conveyance of the Mortgage Loans to the Trust
pursuant to the Pooling and Servicing Agreement, the Trust will own the Mortgage
Loans free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse
claim or other security interest (collectively, "Liens") other than Liens
created by the Pooling and Servicing Agreement, and (b) the Company will have
the power and authority to sell such Mortgage Loans to the Trust.
(xviii) As of the Cut-off Date, each of the Mortgage Loans will meet the
eligibility criteria described in the Prospectus.
(xix) Each of the Certificates, the Pooling and Servicing Agreement, any
Sub-Servicing Agreement, the Indemnification Agreement and the Certificate
Insurance Policies conforms in all material respects to the descriptions thereof
contained in the Prospectus.
Any certificate signed by an officer of the Company and delivered to you or
your counsel in connection with an offering of the Offered Certificates shall be
deemed, and shall state that it is, a representation and warranty as to the
matters covered thereby to each person to whom the representations and
warranties in this Section 2A are made.
Section 3. Purchase and Sale. The Underwriters' commitment to purchase the
Offered Certificates pursuant to this Agreement shall be deemed to have
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been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth. The Company agrees to instruct the Trust to issue the Offered
Certificates to each Underwriter as set forth in Schedule 1 hereto, and each
Underwriter agrees, severally and not jointly, to purchase the Offered
Certificates set forth by its name on Schedule 1 hereto on the date of issuance
thereof. The purchase prices for the Offered Certificates shall be as set forth
on Schedule 1 hereto.
Section 4. Delivery and Payment. Payment of the purchase price for, and
delivery of, any Offered Certificates to be purchased by you shall be made at
the office of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York, or at such other place as shall be agreed upon by you and the Company, at
10:00 a.m. New York City time on October 31, 1997 (the "Closing Date"), or at
such other time or date as shall be agreed upon in writing by you and the
Company. Payment shall be made by wire transfer of same day funds payable to the
account designated by the Company. Each of the Offered Certificates so to be
delivered shall be represented by one or more global certificates registered in
the name of Cede & Co., as nominee for The Depository Trust Company.
The Company agrees to have the Offered Certificates available for
inspection, checking and packaging by the Underwriters in New York, New York,
not later than 12:00 p.m. New York City time on the business day prior to the
Closing Date.
Section 5. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Offered Certificates for sale to the public as set forth in
the Prospectus.
Section 6. Covenants of the Company. The Company covenants with each of the
Underwriters as follows:
A. To cause to be prepared a Prospectus in a form approved by the
Underwriters, to file such Prospectus pursuant to Rule 424(b) under the
Securities Act within the time period prescribed by Rule 424(b) and to provide
the Underwriters with evidence satisfactory to the Underwriters of such timely
filing; to cause to be made no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the 91st day following the
Closing Date except as permitted herein; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the 91st day
following the Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the 91st day following the Closing Date and
to furnish the Underwriters with copies thereof; to file promptly all reports
and any global proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, until the 91st day
following the Closing Date; to promptly advise the Underwriters of its receipt
of notice of the issuance by the Commission of any stop order or of: (i) any
order preventing or suspending the use of the Prospectus; (ii) the suspension of
the qualification of the Offered Certificates for offering or sale in any
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jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; (iv) any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information. In
the event of the issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or suspending any such qualification, the
Company promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time in connection with the offering or sale of
the Offered Certificates and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Company shall notify the Underwriters
and, upon the Underwriters' request based upon the advice of counsel, shall file
such document and prepare and furnish without charge to the Underwriters and to
any dealer in securities as many copies as the Underwriters may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which corrects such statement or omission or effects such compliance.
D. To cause to be filed promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriters, be required by the
Securities Act or requested by the Commission.
E. To cause to be furnished to the Underwriters and counsel for the
Underwriters, prior to filing with the Commission, and to obtain the consent of
the Underwriters, which consent will not unreasonably be withheld, for the
filing of the following documents relating to the Certificates: (i) any
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To cause to be made generally available to holders of the Offered
Certificates as soon as practicable, but in any event not later than 90 days
after the close
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of the period covered thereby, a statement of earnings of the Trust (which need
not be audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including Rule 158) and covering a period of at least twelve
consecutive months beginning not later than the first day of the first fiscal
quarter following the Closing Date.
G. To use its best efforts, in cooperating with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Underwriters may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the distribution of
the Offered Certificates. The Company will cause the filing of such statements
and reports as may be required by the laws of each jurisdiction in which the
Offered Certificates have been so qualified.
H. The Company will not, without the prior written consent of the
Underwriters, contract to sell any mortgage pass-through certificates, mortgage
pass-through notes or collateralized mortgage obligations or other similar
securities either directly or indirectly for a period of five (5) business days
prior to the later of termination of the syndicate or the Closing Date.
I. So long as the Offered Certificates shall be outstanding, the Company
shall cause the Trustee, pursuant to the Pooling and Servicing Agreement, to
deliver to the Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance of the Master Servicer under
the Pooling and Servicing Agreement delivered to the Trustee pursuant to Section
10.16 thereof; (ii) the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Section 10.17 of the Pooling
and Servicing Agreement; and (iii) the monthly reports furnished to the Owners
pursuant to Section 7.6 of the Pooling and Servicing Agreement.
J. So long as any of the Offered Certificates are outstanding, the Company
will furnish to the Underwriters (i) as soon as practicable after the end of the
fiscal year of the Trust all documents required to be distributed to
Certificateholders and other filings with the Commission pursuant to the
Exchange Act, or any order of the Commission thereunder with respect to any
securities issued by the Company that are (A) non-structured equity or debt
offering of the Company or (B) the Offered Certificates and (ii) from time to
time, any other information concerning the Company filed with any government or
regulatory authority which is otherwise publicly available, as the Underwriters
shall reasonably request in writing.
K. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
L. If, between the date hereof or, if earlier, the dates as of which
information is given in the Prospectus and the Closing Date, to the knowledge of
the Company, there shall have been any material change, or any development
involving a prospective material change in or affecting the general affairs,
management, financial
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position, shareholders' equity or results of operations of the Company, the
Company will give prompt written notice thereof to the Underwriters.
M. The Trustee will prepare, or cause to be prepared, and file, or cause to
be filed, a timely election to treat the Trust Fund as a REMIC for Federal
income tax purposes and will file, or cause to be filed, such tax returns and
take such actions, all on a timely basis, as are required to elect and maintain
such status.
N. To the extent, if any, that the ratings provided with respect to the
Offered Certificates by the rating agency or agencies that initially rate the
Offered Certificates are conditional upon the furnishing of documents or the
taking of any other actions by the Company, the Company shall use its best
efforts to furnish or cause to be furnished such documents and take any such
other actions.
Section 7. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Certificates pursuant to
this Agreement are subject to (i) the accuracy on and as of the Closing Date of
the representations and warranties on the part of the Company herein contained,
(ii) the accuracy of the statements of officers of the Company made pursuant
hereto, (iii) the performance by the Company of all of its obligations
hereunder, and the performance by the Company of all of its obligations under
the Company Agreements and (iv) the following conditions as of the Closing Date:
A. No stop order suspending the effectiveness of the Registration Statement
shall have been issued, and no proceeding for that purpose shall have been
initiated or threatened by the Commission. Any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus shall have been complied with.
B. You shall have received the Transfer Agreement, the Pooling and
Servicing Agreement, any Sub-Servicing Agreements, the Insurance Agreement, the
Indemnification Agreement and the Offered Certificates in form and substance
satisfactory to you and duly executed by the signatories required pursuant to
the respective terms thereof.
C. You shall have received from Dewey Ballantine LLP, counsel for the
Company and the Transferor, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters to the effect that:
(i) The issuance and sale of the Offered Certificates have been duly
authorized and, when executed, authenticated, countersigned and delivered
by the Trustee in accordance with the Pooling and Servicing Agreement and
delivered and paid for pursuant to this Agreement, will be validly issued
and outstanding and will be entitled to the benefits of the Pooling and
Servicing Agreement.
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(ii) No authorization, approval, consent or order of, or filing with,
any court or governmental agency or authority is necessary under the
federal law of the United States or the laws of the State of New York in
connection with the execution, delivery and performance by the Company of
the Company Agreements, except such as may be required under the Act or the
Rules and Regulations and Blue Sky or other state securities laws, filings
with respect to the transfer of the Mortgage Loans to the Trust pursuant to
the Pooling and Servicing Agreement and such other approvals or consents as
have been obtained.
(iii) Each Company Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with their respective terms, except that as to enforceability such
enforcement may (A) be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, (B) be limited by general principles of equity
(whether considered in a proceeding at law or in equity) and (C) the
enforceability as to rights to indemnification may be subject to
limitations of public policy under applicable laws.
(iv) Each Transferor Agreement constitutes the legal, valid and
binding obligation of the Transferor, enforceable against the Transferor in
accordance with their respective terms, except that as to enforceability
such enforcement may (A) be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, (B) be limited by general principles of equity
(whether considered in a proceeding at law or in equity) and (C) the
enforceability as to rights to indemnification may be subject to
limitations of public policy under applicable laws.
(v) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
(vi) Neither the Company nor the Trust is required to be registered as
an "investment company" under the Investment Company Act of 1940, as
amended.
(vii) The direction by the Company to the Trustee to execute, issue,
countersign and deliver the Offered Certificates has been duly authorized
and, when the Offered Certificates are executed and authenticated by the
Trustee in accordance with the Pooling and Servicing Agreement and
delivered and paid for pursuant to this Agreement, they will be validly
issued and outstanding and entitled to the benefits provided by the Pooling
and Servicing Agreement.
(viii) Immediately prior to the transfer of the Mortgage Loans by the
Company to the Transferor pursuant to the Sale Agreement, the Company was
the sole owner of all right, title and interest in the Mortgage Loans and
other property to be transferred to the Transferor.
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(ix) The Company has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Transferor and
has duly authorized such sale and assignment to the Transferor by all
necessary corporate action.
(x) The Company has directed the Trustee in its capacity as Trustee of
the Access Financial Loan Purchase Trust to transfer, assign, set over and
otherwise convey without recourse, to the Transferor, all right, title and
interest of the Company in and to each Mortgage Loan listed on the Mortgage
Loan Schedule delivered by the Company on the Startup Day, and all of its
right, title and interest in and to (A) scheduled payments of interest due
on each Mortgage Loan after the Cut-Off Date, (B) scheduled payments of
principal due, and unscheduled collections of principal received, on each
Mortgage Loan on and after the Cut-off Date and (C) the Certificate
Insurance Policy; such transfer of the Mortgage Loans set forth on the
Mortgage Loan Schedule to the Transferor will be absolute and is intended
by the Company and all parties hereto to be treated as a sale to the Trust.
(xi) The Offered Certificates, the Pooling and Servicing Agreement,
any Sub-Servicing Agreement and this Agreement each conform in all material
respects with the respective descriptions thereof contained in the
Registration Statement and the Prospectus.
(xii) The statements in the Prospectus under the captions "Summary of
Prospectus - Certain Federal Income Tax Considerations", "Summary of
Prospectus - ERISA Considerations", "ERISA Considerations" and "Certain
Federal Income Tax Considerations", "Summary - ERISA Considerations",
"Summary - Federal Tax Aspects", "ERISA Considerations", "Certain Federal
Tax Aspects" and "REMICS", to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been reviewed by such
counsel and represent a fair and accurate summary of the matters addressed
therein, under existing law and the assumptions stated therein.
(xiii) The statements in the Prospectus under the caption "Certain
Legal Aspects of Mortgage Loans and Related Matters", "Legal Investment
Matters" and "Legal Investment Considerations" to the extent they
constitute matters of law or legal conclusions, are correct in all material
respects.
(xiv) The Offered Certificates will, when issued, be properly
characterized for Federal income tax purposes as indebtedness of the
Company and the Trust created by the Pooling and Servicing Agreement and
will not constitute a "taxable mortgage pool" within the meaning of Section
7701(i) of the Code.
(xv) Assuming compliance with all of the provisions of the Pooling and
Servicing Agreement, the arrangement pursuant to which the Mortgage Loans
will be administered by the Trustee and pursuant to which the Offered
Certificates
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will be sold will be treated as a REMIC as defined by Section 860D of the
Code and the Offered Certificates and the Class B Certificates will be
treated as "regular interests" in a REMIC (or a combination of "regular
interests" in a REMIC), and the Residual Certificates will be treated as
"residual interests" in a REMIC on the date of issuance thereof and will
continue to qualify as a REMIC for so long as such arrangement continues to
comply with any applicable changes in the provisions of the Code and
regulations issued thereunder.
(xvi) The Registration Statement is effective under the Act and no
stop order suspending the effectiveness of the Registration Statement has
been issued, and to the best of such counsel's knowledge no proceeding for
that purpose has been instituted or threatened by the Commission under the
Act.
(xvii) The conditions to the use by the Company of a registration
statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. There are no contracts or
documents which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or the Rules and Regulations thereunder which
have not been so filed.
(xviii) The Registration Statement at the time it became effective,
and any amendments thereto at the time such amendment becomes effective
(other than the information set forth in the financial statements and other
financial and statistical information contained therein, as to which such
counsel need express no opinion), complied as to form in all material
respects with the applicable requirements of the Act and the Rules and
Regulations thereunder.
(xix) The execution, delivery and performance of each Company
Agreement by the Company will not conflict with or violate any federal
statute, rule, regulation or order of any federal governmental agency or
body, or any federal court having jurisdiction over the Company or its
properties or assets.
(xx) The execution, delivery and performance of each Transferor
Agreement by the Transferor will not conflict with or violate any federal
statute, rule, regulation or order of any federal governmental agency or
body, or any federal court having jurisdiction over the Transferor or its
properties or assets.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of each of the Company, the
Transferor, any Sub-Servicer, the Certificate Insurer, the Trustee and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and on the basis of the foregoing,
no facts have come to such counsel's attention that have led such counsel to
believe the Registration Statement, at the time it became effective and as of
the date of such counsel's opinion contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, as of its date and as of the date of such counsel's
opinion, contained or
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contains an untrue statement of material fact or omitted or omits to state a
material fact necessary to make the statements therein not misleading; it being
understood that such counsel need express no belief with respect to the
financial statements, schedules and other financial and statistical data
included in the Registration Statement or the Prospectus.
D. The Company shall have delivered to the Underwriters a certificate,
dated the Closing Date, of an authorized officer of the Company to the effect
that the signer of such certificate has carefully examined this Agreement and
the Prospectus and that: (i) the representations and warranties of the Company
in each Company Agreement are true and correct in all material respects at and
as of the Closing Date with the same effect as if made on the Closing Date, (ii)
the Company has complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date, (iii) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or, to such officer's
knowledge, threatened, (iv) there has been no material adverse change in the
condition (financial or other), earnings, business, properties or prospects of
the Company, whether or not arising from transactions in the ordinary course of
business, except as set forth or contemplated in the Prospectus and (v) nothing
has come to such officer's attention that would lead such officer to believe
that the Company Offering Materials contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company shall attach to such certificate a true and correct copy of its
certificate of incorporation, as appropriate, and bylaws which are in full force
and effect on the date of such certificate and a certified true copy of the
resolutions of its Board of Directors with respect to the transactions
contemplated herein.
E. The Transferor shall have delivered to the Underwriters a certificate,
dated the Closing Date, of an authorized officer of the Transferor to the effect
that the signer of such certificate has carefully examined this Agreement and
the Prospectus and that: (i) the representations and warranties of the
Transferor in each Transferor Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on the
Closing Date and (ii) the Transferor has complied in all material respects with
all the agreements and satisfied in all material respects all the conditions on
its part to be performed or satisfied at or prior to the Closing Date.
The Transferor shall attach to such certificate a true and correct copy of
its certificate of incorporation, as appropriate, and bylaws which are in full
force and effect on the date of such certificate and a certified true copy of
the resolutions of its Board of Directors with respect to the transactions
contemplated herein.
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F. The Underwriters shall have received from in-house counsel of the
Company, a favorable opinion, dated the Closing Date and satisfactory in form
and substance to the Underwriters and counsel for the Underwriters to the effect
that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
full corporate power to own its property or assets and to conduct its
business as presently conducted by it and as described in the Prospectus,
and is in good standing in each jurisdiction in which the conduct of its
business or the ownership of its property or assets requires such
qualification or where the failure to be so qualified would have a material
adverse effect on its condition (financial or otherwise).
(ii) Each Company Agreement has been duly authorized, executed and
delivered by authorized officers or signers of the Company.
(iii) The direction by the Company to the Trustee to execute, issue,
countersign and deliver the Offered Certificates has been duly authorized
by the Company.
(iv) The execution, delivery and performance of each Company Agreement
by the Company will not conflict with or result in a material breach of any
of the terms or provisions of, or constitute a material default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any of the property or assets of the Company pursuant to the terms of
the certificate of incorporation or the by-laws of the Company or any
statute, rule, regulation or order of any governmental agency or body of
the State of Minnesota, or any Minnesota state court having jurisdiction
over the Company or its property or assets or any material agreement or
instrument known to such counsel, to which the Company is a party or by
which the Company or any of its property or assets is bound.
(v) No authorization, approval, consent or order of, or filing with,
any court or governmental agency or authority of the State of Minnesota is
necessary in connection with the execution, delivery and performance by the
Company of any Company Agreement, except such as may be required under the
Act or the Rules and Regulations and Blue Sky or other state securities
laws, filings with respect to the transfer of the Mortgage Loans to the
Transferor pursuant to the Sale Agreement and such other approvals or
consents as have been obtained.
(vi) To such counsel's knowledge, there are no legal or governmental
proceedings pending to which the Company is a party or of which any
property or assets of the Company is the subject, and no such proceedings
are to the best of such counsel's knowledge threatened or contemplated by
governmental authorities against the Company or the Trust, that, (A) are
required to be disclosed in the Registration Statement or (B) (i) assert
the invalidity against the Company of all or any part of any Company
Agreement, (ii) seek to prevent the issuance of the
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Offered Certificates, (iii) could materially adversely affect the Company's
obligations under any Company Agreement, or (iv) seek to affect adversely
the federal or state income tax attributes of the Offered Certificates.
G. The Underwriters shall have received from in-house counsel of the
Transferor, a favorable opinion, dated the Closing Date and satisfactory in form
and substance to the Underwriters and counsel for the Underwriters to the effect
that:
(i) The Transferor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware
with full corporate power to own its property or assets and to conduct its
business as presently conducted by it, and is in good standing in each
jurisdiction in which the conduct of its business or the ownership of its
property or assets requires such qualification or where the failure to be
so qualified would have a material adverse effect on its condition
(financial or otherwise).
(ii) Each Transferor Agreement has been duly authorized, executed and
delivered by authorized officers or signers of the Transferor.
(iii) The execution, delivery and performance of each Transferor
Agreement by the Transferor will not conflict with or result in a material
breach of any of the terms or provisions of, or constitute a material
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the property or assets of the Transferor
pursuant to the terms of the certificate of incorporation or the by-laws of
the Transferor or any statute, rule, regulation or order of any
governmental agency or body of the State of Minnesota, or any Minnesota
state court having jurisdiction over the Transferor or its property or
assets or any material agreement or instrument known to such counsel, to
which the Transferor is a party or by which the Transferor or any of its
property or assets is bound.
(iv) No authorization, approval, consent or order of, or filing with,
any court or governmental agency or authority of the State of Minnesota is
necessary in connection with the execution, delivery and performance by the
Transferor of any Transferor Agreement, except such as may be required
under the Act or the Rules and Regulations and Blue Sky or other state
securities laws, filings with respect to the transfer of the Mortgage Loans
to the Trust pursuant to the Pooling and Servicing Agreement and such other
approvals or consents as have been obtained.
(v) To such counsel's knowledge, there are no legal or governmental
proceedings pending to which the Transferor is a party or of which any
property or assets of the Transferor is the subject, and no such
proceedings are to the best of such counsel's knowledge threatened or
contemplated by governmental authorities against the Transferor or the
Trust, that, (A) are required to be disclosed in the Registration Statement
or (B) (i) assert the invalidity against the Transferor of all or any part
of any Transferor Agreement, (ii) seek to prevent the
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issuance of the Offered Certificates, (iii) could materially adversely
affect the Transferor's obligations under any Transferor Agreement, or (iv)
seek to affect adversely the federal or state income tax attributes of the
Offered Certificates.
H. The Underwriters shall have received from special counsel to the
Certificate Insurer, reasonably acceptable to the Underwriters, a favorable
opinion dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, to the effect that:
(i) The Certificate Insurer is a monoline insurance company licensed
and authorized to transact insurance business and to issue, deliver and
perform its obligations under its surety bonds under the laws of the State
of New York. The Certificate Insurer (a) is a monoline insurance company
validly existing and in good standing under the laws of the State of New
York, (b) has the corporate power and authority to own its assets and to
carry on the business in which it is currently engaged, and (c) is duly
qualified and in good standing as a foreign corporation under the laws of
each jurisdiction where failure so to qualify or to be in good standing
would have a material and adverse effect on its business or operations.
(ii) No litigation or administrative proceedings of or before any
court, tribunal or governmental body are currently pending or, to the best
of such counsel's knowledge, threatened against the Certificate Insurer,
which, if adversely determined, would have a material and adverse effect on
the ability of the Certificate Insurer to perform its obligations under the
Certificate Insurance Policy.
(iii) The Certificate Insurance Policy and the Indemnification
Agreement constitute the irrevocable, valid, legal and binding obligations
of the Certificate Insurer in accordance with their respective terms to the
extent provided therein, enforceable against the Certificate Insurer in
accordance with their respective terms, except as the enforceability
thereof and the availability of particular remedies to enforce the
respective terms thereof against the Certificate Insurer may be limited by
applicable laws affecting the rights of creditors of the Certificate
Insurer and by the application of general principles of equity.
(iv) The Certificate Insurer, as an insurance company, is not eligible
for relief under the United States Bankruptcy Code. Any proceedings for the
liquidation, conservation or rehabilitation of the Certificate Insurer
would be governed by the provisions of the Insurance Law of the State of
New York.
(v) The statements set forth in the Prospectus under the caption "The
Certificate Insurance Policy and the Certificate Insurer" are true and
correct, except that no opinion is expressed as to financial statements or
other financial information included in the Prospectus relating to the
Certificate Insurer and, insofar as such statements constitute a summary of
the Certificate Insurance
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Policy, accurately and fairly summarize the terms of the Certificate
Insurance Policy.
(vi) The Certificate Insurance Policy constitutes an insurance policy
within the meaning of Section 3(a)(8) of the Act.
(vii) Neither the execution or delivery by the Certificate Insurer of
the Certificate Insurance Policy, the Insurance Agreement, the
Indemnification Agreement, nor the performance by the Certificate Insurer
of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the amended by-laws of the Certificate
Insurer nor, to the best of such counsel's knowledge, result in a breach
of, or constitute a default under, any agreement or other instrument to
which the Certificate Insurer is a party or by which any of its property is
bound nor, to the best of such counsel's knowledge, violate any judgment,
order or decree applicable to the Certificate Insurer of any governmental
regulatory body, administrative agency, court or arbitrator located in any
jurisdiction in which the Certificate Insurer is licensed or authorized to
do business.
I. The Underwriters shall have received from counsel to LSI Financial Group
("LSI"), reasonably acceptable to the Underwriters, a favorable opinion dated
the Closing Date and satisfactory in form and substance to the Underwriters and
counsel for the Underwriters, to the effect that:
(i) LSI has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its state of incorporation.
(ii) LSI has full corporate power and authority to enter into and
perform its obligations under the Sub-Servicing Agreement, including, but
not limited to, its obligation to serve in the capacity of sub-servicer
pursuant to the Sub-Servicing Agreement.
(iii) The Sub-Servicing Agreement has been duly authorized, executed
and delivered by LSI and constitutes a legal, valid and binding obligation
of LSI enforceable against LSI in accordance with its terms, except that as
to enforceability such enforcement may (A) be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and (B) be limited by general
principles of equity (whether considered in a proceeding at law or in
equity).
(iv) The execution, delivery and performance of the Sub-Servicing
Agreement by LSI will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of LSI pursuant to the terms of the certificate of
incorporation or the by-laws of LSI or any statute, rule, regulation or
order of any governmental agency or body, or any court having jurisdiction
over LSI or its property or assets or any
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agreement or instrument known to such counsel, to which LSI is a party or
by which LSI or any of its property or assets is bound.
(v) No authorization, approval, consent or order of, or filing with,
any state or federal court or governmental agency or authority is necessary
in connection with the execution, delivery and performance by LSI of the
Sub-Servicing Agreement.
J. The Underwriters shall have received a certificate of LSI signed by an
authorized officer of LSI, dated the Closing Date to the effect that such
officer has examined the information contained under the heading "The
Sub-Servicer" with respect to LSI and the Sub-Servicing Agreement in the
Prospectus and that such information does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
K. The Underwriters shall have received from Dewey Ballantine LLP, counsel
for the Underwriters, such opinion or opinions, dated the Closing Date, with
respect to the validity of the Offered Certificates and such other related
matters as the Underwriters may require.
L. The Underwriters shall have received from counsel to the Trustee a
favorable opinion dated the Closing Date and satisfactory in form and substance
to the Underwriters and counsel for the Underwriters, to the effect that:
(i) The Trustee has been duly incorporated and is validly existing as
a banking association in good standing under the laws of the state of New
York.
(ii) The Trustee has full corporate trust power and authority to enter
into and perform its obligations under the Pooling and Servicing Agreement,
including, but not limited to, its obligation to serve in the capacity of
Trustee and to execute, issue, countersign and deliver the Offered
Certificates.
(iii) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee, and constitutes a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee, in
accordance with its terms, except that as to enforceability such
enforcement may (A) be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and (B) be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(iv) The Certificates have been duly authorized, executed and
authenticated by the Trustee on the date hereof on behalf of the Trust in
accordance with the Pooling and Servicing Agreement.
(v) The execution, delivery and performance of the Pooling and
Servicing Agreement and the Certificates by the Trustee will not conflict
with or
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result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the property or assets of the Trustee pursuant
to the terms of the articles of association or the by-laws of the Trustee
or any statute, rule, regulation or order of any governmental agency or
body, or any court having jurisdiction over the Trustee or its property or
assets or any agreement or instrument known to such counsel, to which the
Trustee is a party or by which the Trustee or any of its respective
property or assets is bound.
(vi) No authorization, approval, consent or order of, or filing with,
any state or federal court or governmental agency or authority is necessary
in connection with the execution, delivery and performance by the Trustee
of the Pooling and Servicing Agreement and the Offered Certificates, as
applicable.
(vii) If the Trustee were acting as Master Servicer under the Pooling
and Servicing Agreements on the date hereof, the Trustee would have the
power and authority to perform the obligations of the Master Servicer as
provided in the Pooling and Servicing Agreement.
M. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution and delivery of the
Certificates by the Trustee thereunder and such other matters as the
Underwriters shall reasonably request.
N. The Indemnification Agreement shall have been executed and delivered, in
which the Certificate Insurer shall represent, among other representations, that
(i) the information under the captions "Certificate Insurer" and "Certificate
Insurance Policy" in the section entitled "Summary" and "The Certificate
Insurance Policy and the Certificate Insurer" in the Prospectus Supplement was
approved by the Certificate Insurer and does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (ii) there has been no change in the financial
condition of the Certificate Insurer since June 30, 1997, which would have a
material adverse effect on the Certificate Insurer's ability to meet its
obligations under the Certificate Insurance Policy.
O. The Certificate Insurance Policy shall have been issued by the
Certificate Insurer and shall have been duly countersigned by an authorized
agent of the Certificate Insurer, if so required under applicable state law or
regulation.
P. The Offered Certificates (other than the Class A-IO Group I
Certificates) shall have been rated "AAA" by Standard & Poor's Corporation
("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's") and the Class
A-IO Group I Certificates shall have been rated "AAAr" by S&P and "Aaa" by
Moody's.
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Q. The Underwriters shall have received copies of letters dated as of the
Closing Date, from S&P and Moody's stating the current ratings of the Offered
Certificates as set forth in Section P. above.
R. The Underwriters shall have received from Dewey Ballantine LLP LLP,
counsel to the Company, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, as to true sale matters relating to the transaction, and the
Underwriters shall be addressees of any opinions of counsel supplied to the
rating organizations relating to the Certificates.
S. All proceedings in connection with the transactions contemplated by this
Agreement, and all documents incident hereto, shall be reasonably satisfactory
in form and substance to the Underwriters and counsel for the Underwriters, and
the Underwriters and counsel for the Underwriters shall have received such other
information, opinions, certificates and documents as they may reasonably request
in writing.
T. The Prospectus and any supplements thereto shall have been filed (if
required) with the Commission in accordance with the rules and regulations under
the Act and Section 2 hereof, and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be contemplated by the Commission or by any authority administering any state
securities or Blue Sky law
If any condition specified in this Section 7 shall not have been fulfilled
when and as required to be fulfilled, (i) this Agreement may be terminated by
you by notice to the Company at any time at or prior to the Closing Date, and
such termination shall be without liability of any party to any other party
except as provided in Section 8 and (ii) the provisions of Section 8, the
indemnity set forth in Section 9, the contribution provisions set forth in
Section 10 and the provisions of Sections 12 and 15 shall remain in effect.
Section 8. Payment of Expenses. The Company agrees to pay the following
expenses incident to the performance of the Company's obligations under this
Agreement, (i) the filing of the Registration Statement and all amendments
thereto, (ii) the duplication and delivery to you, in such quantities as you may
reasonably request, of copies of this Agreement, (iii) the preparation, issuance
and delivery of the Certificates, (iv) the fees and disbursements of Dewey
Ballantine LLP, counsel for the Underwriters and special counsel to the Company
and the Transferor, (v) the fees and disbursements of KPMG Peat Marwick,
accountants of the Company (excluding fee and disbursements of KPMG Peat Marwick
related to providing comfort in connection with the Derived Information), (vi)
the qualification of the Offered Certificates under securities and Blue Sky laws
and the determination of the eligibility of the Offered Certificates for
investment in accordance with the provisions hereof, including filing fees and
the fees and disbursements of Dewey Ballantine LLP, counsel to the Underwriters,
in connection therewith and in connection with the preparation of any Blue Sky
survey, (vii) the printing and delivery to you, in such quantities as you may
reasonably request, of copies
21
<PAGE>
of the Registration Statement and Prospectus and all amendments and supplements
thereto, and of any Blue Sky survey, (viii) the duplication and delivery to you,
in such quantities as you may reasonably request, of copies of the Pooling and
Servicing Agreement and the other transaction documents, (ix) the fees charged
by nationally recognized statistical rating agencies for rating the Offered
Certificates, (x) the fees and expenses of the Trustee and its counsel and (xi)
the fees and expenses of the Certificate Insurer and its counsel.
If this Agreement is terminated by you in accordance with the provisions of
Section 7, the Company shall reimburse you for all reasonable third-party
out-of-pocket expenses, including the reasonable fees and disbursements of Dewey
Ballantine LLP, your counsel.
Section 9. Indemnification. A. The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls each Underwriter
within the meaning of the Securities Act or the Exchange Act, from and against
any and all loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of the Offered
Certificates), to which each Underwriter or any such controlling person may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Company Offering Materials or (ii) the omission or alleged
omission to state therein a material fact required to be stated or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and shall reimburse each Underwriter and each such
controlling person promptly upon demand for any documented legal or documented
other expenses reasonably incurred by each Underwriter or such controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the foregoing indemnity with respect to any
untrue statement contained in or omission from a prospectus shall not inure to
the benefit of each Underwriter if the Company shall sustain the burden of
proving that the person asserting against such Underwriter the loss, liability,
claim, damage or expense purchased any of the Offered Certificates which are the
subject thereof and was not sent or given a copy of the appropriate Prospectus
(or the appropriate Prospectus as amended or supplemented), if required by law,
at or prior to the written confirmation of the sale of such Offered Certificates
to such person and the untrue statement contained in or omission from such
preliminary prospectus was corrected in the appropriate Prospectus (or the
appropriate Prospectus as amended or supplemented).
The foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to the Underwriters or any controlling person of any
of the Underwriters.
B. Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, the directors and the officers of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company
22
<PAGE>
within the meaning of the Securities Act or the Exchange Act against any and all
loss, claim, damage or liability, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Underwriter Information or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse the Company promptly on demand, and
any such director, officer or controlling person for any documented legal or
other documented expenses reasonably incurred by the Company, or any director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which
each Underwriter may otherwise have to the Company or any such director, officer
or controlling person.
C. Promptly after receipt by any indemnified party under this Section 9 of
notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 9, promptly notify the indemnifying party in writing of
the claim or the commencement of that action; provided, however, that the
failure to notify an indemnifying party shall not relieve it from any liability
which it may have under this Section 9 except to the extent it has been
materially prejudiced by such failure; and provided, further, that the failure
to notify any indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party, unless
such indemnified party reasonably objects to such assumption on the ground that
there may be legal defenses available to it which are different from or in
addition to those available to such indemnifying party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, except to the extent provided in the next
following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 9 for any fees and expenses of counsel
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there
23
<PAGE>
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel; or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to local counsel) at any time for all
such indemnified parties, which firm shall be designated in writing by the
Underwriters, if the indemnified parties under this Section 9 consist of the
Underwriters or any of its controlling persons, or by the Company, if the
indemnified parties under this Section 9 consist of the Company or any of the
Company's directors, officers or controlling persons, but in either case
reasonably satisfactory to the indemnified party.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9A and B, shall use its best efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which such indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
Notwithstanding the foregoing, if (x) the indemnified party has made a
proper request to the indemnifying party for the payment of the indemnified
party's legal fees and expenses, as permitted hereby, and (y) such request for
payment has not been honored within thirty days, then, for so long as such
request thereafter remains unhonored, the indemnifying party shall be liable for
any settlement entered into by the indemnified party whether or not the
indemnifying party consents thereto.
D. The Underwriters agree to provide the Company no later than the date on
which the Prospectus Supplement is required to be filed pursuant to Rule 424
with a copy of any Derived Information (defined below) for filing with the
Commission on Form 8-K.
E. Each Underwriter, severally and not jointly, agrees, assuming all
Company-Provided Information (defined below) is accurate and complete in all
material
24
<PAGE>
respects, to indemnify and hold harmless the Company, its officers and directors
and each person who controls the Company within the meaning of the Securities
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Derived
Information provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are incurred. The obligations of each Underwriter under this Section
9(E) shall be in addition to any liability which each Underwriter may otherwise
have.
The procedures set forth in Section 9C shall be equally applicable to this
Section 9E.
F. For purposes of this Agreement, the term "Derived Information" means
such portion, if any, of the information delivered to the Company pursuant to
Section 9D for filing with the Commission on Form 8-K as: (i) is not contained
in the Prospectus without taking into account information incorporated therein
by reference; and (ii) does not constitute Company-Provided Information.
"Company-Provided Information" means any computer tape furnished to the
Underwriters by the Company concerning the assets comprising the Trust.
Section 10. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and the
Underwriters (each, a "Contributing Party") shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by such Contributing Party (i) in such
proportion as is appropriate to reflect the relative benefits received by such
Contributing Party from the offering of the Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of such Contributing
Party in connection with the statements or omissions which resulted in the
losses, liabilities, claims, damages and expenses as well as any other relevant
equitable considerations; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the
25
<PAGE>
Contributing Party and the Contributing Parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission and other equitable considerations.
Notwithstanding the provisions of Section 9 or of this Section 10, neither
Underwriter shall be required to be responsible for any amount in excess of the
amount by which the total re-offering price at which the Offered Certificates
underwritten by it and distributed and offered to the public exceeds the amount
paid hereunder by such Underwriter for the Offered Certificates. For purposes of
this Section 10, each person, if any, who controls you within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution as
each of the Underwriters and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Section 11. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Underwriters, by notice given to the Company
prior to delivery of and payment for the Offered Certificates if prior to such
time (i) any change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Trust or the Company
which, in the reasonable judgment of the Underwriters, materially impairs the
investment quality of the Certificates or makes it impractical or inadvisable to
market the Offered Certificates; (ii) the Offered Certificates have been placed
on credit watch by S&P or Moody's with negative implications; (iii) trading in
securities generally on the New York Stock Exchange or the National Association
of Securities Dealers National Market System shall have been suspended or
limited, or minimum prices shall have been established on such exchange or
market system; (iv) a banking moratorium shall have been declared by either
Federal or New York State authorities; or (v) there shall have occurred any
outbreak or material escalation of hostilities or other calamity or crisis, the
effect of which makes it, in the reasonable judgment of the Underwriters,
impractical or inadvisable to proceed with the completion of the sale and
payment for the Offered Certificates. Upon such notice being given, the parties
to this Agreement shall (except for any liability arising before or in relation
to such termination) be released and discharged from their respective
obligations under this Agreement.
Section 12. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall
26
<PAGE>
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of you or controlling person of you, or by or on behalf of
the Company or any officers, directors or controlling persons and shall survive
delivery of any Offered Certificates to you or any controlling person.
Section 13. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication to:
The Underwriters: Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292-2015
Fax: (212) 778-7401
Morgan Stanley & Co. Incorporated
1585 Broadway, 3rd Floor
New York, NY 10036
Fax: (212) 761-0782
The Company: Access Financial Lending Corp.
400 Highway 169 South, Suite 400
Post Office Box 26365
St. Louis Park, MN 55426-0365
Attention: General Counsel
Fax: (612) 542-6639
Section 14. Parties. This Agreement shall inure to the benefit of and be
binding upon you and the Company, and their respective successors or assigns.
Nothing expressed or mentioned in this Agreement is intended nor shall it be
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 9 and 10 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Offered Certificates from you shall be deemed to be
a successor by reason merely of such purchase.
Section 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH SUCH
LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
27
<PAGE>
Section 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but together they shall
constitute but one instrument.
Section 17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of or affect the meaning or
interpretation of, this Agreement.
Section 18. Default of Underwriters. If either Underwriter defaults in its
obligations to purchase the Offered Certificates offered to it hereunder (such
Underwriter, the "Defaulting Underwriter"), then the remaining Underwriter (the
"Performing Underwriter") shall have the option, but not the obligation, to
purchase all, but not less than all, of the Offered Certificates offered to the
Defaulting Underwriter. If the Performing Underwriter elects not to exercise
such option, then this Agreement will terminate without liability on the part of
the Performing Underwriter. Nothing contained herein shall relieve the
Defaulting Underwriter from any and all liabilities to the Company and the
Performing Underwriter resulting from the default of the Defaulting Underwriter.
[remainder of page deliberately left blank]
28
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
ACCESS FINANCIAL LENDING CORP.
By: _______________________________
Name: Leslie Zejdlik Foster
Title: President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: ______________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By: _____________________________
Name:
Title:
29
<PAGE>
Schedule 1
Underwriting
Class A-1
---------
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- --------- ------------------
Prudential Securities 99.75% $20,048,000.00 $19,997,880.00
Incorporated
Morgan Stanley & Co. 99.75% 40,0096,000.00 39,995,760.00
Incorporated
-------------- --------------
TOTAL $40,100,000 $39,999,750
=========== ===========
Class A-2
---------
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.75% $ 7,700,000.00 $ 7,680,750.00
Incorporated
Morgan Stanley & Co. 99.75% 7,700,000.00 7,680,750.00
Incorporated
-------------- --------------
TOTAL $15,400,000.00 $15,361,500.00
============== ==============
Class A-3
---------
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.75% $ 5,300,500.00 $ 5,287,248.75
Incorporated
Morgan Stanley & Co. 99.75% 5,300,500.00 5,287,248.75
Incorporated
-------------- --------------
TOTAL $10,601,000.00 $10,574,497.50
============== ==============
<PAGE>
Class A-4
---------
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.75% $4,000,000.00 $3,990,000.00
Incorporated
Morgan Stanley & Co. 99.75% 4,000,000.00 3,990,000.00
Incorporated
------------- -------------
TOTAL $8,000,000.00 $7,980,000.00
============= =============
Class A-5
---------
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.734375% $4,115,000.00 $4,104,069.53
Incorporated
Morgan Stanley & Co. 99.734375% 4,115,000.00 4,104,069.53
Incorporated
------------- -------------
TOTAL $8,230,000.00 $8,208,139.06
============= =============
Class A-IO
----------
Purchase Price
Percentage Proceeds
(excluding Notional (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 13.0629812950% $8,230,000 $1,075,083.36
Incorporated
0
Morgan Stanley & Co. 0 0
Incorporated
---------- -------------
TOTAL $8,230,000 $1,075,083.36
========== =============
<PAGE>
Class A-6
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.75% $24,998,500.00 $24,936,003.75
Incorporated
Morgan Stanley & Co. 99.75% 24,998,500.00 $24,936,003.75
Incorporated
-------------- --------------
TOTAL $49,997,000.00 $49,872,007.50
============== ==============
Class A-7
Purchase Price
Percentage Proceeds
(excluding Principal (excluding
Underwriter accrued interest) Amount accrued interest)
----------- ----------------- ------ -----------------
Prudential Securities 99.75% $33,775,000.00 $33,688,567.50
Incorporated
Morgan Stanley & Co. 99.75% 33,775,000.00 $33,690,562.50
Incorporated
-------------- --------------
TOTAL $67,546,000.00 $67,377,135.00
============== ==============
EXHIBIT 4.1
<PAGE>
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
Between
ACCESS FINANCIAL LENDING CORP.,
as the Seller
and
ACCESS FINANCIAL RECEIVABLES CORP.,
as the Purchaser
Dated as of October 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS....................................................................1
SECTION 1.01. Definitions................................................. 1
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS................................1
SECTION 2.01. Agreement to Purchase........................................1
SECTION 2.02. Purchase Price.............................................. 1
SECTION 2.03. Conveyance of Mortgage Loans; Possession
of Mortgage Loan Files...................................... 1
SECTION 2.04. Transfer of Mortgage Loans; Assignment of Agreement......... 2
SECTION 2.05. Examination of Mortgage Loan Files.......................... 2
SECTION 2.06. Books and Records........................................... 2
SECTION 2.07. Cost of Delivery and Recordation of Documents............... 2
ARTICLE THREE REPRESENTATIONS AND WARRANTIES...................................2
SECTION 3.01. Representations and Warranties as to the Seller..............2
SECTION 3.02. Representations and Warranties of the Purchaser..............3
THE SELLERUR...................................................................4
SECTION 4.01. Covenants of the Seller......................................4
MISCELLANEOUS.................................................................4
SECTION 5.01. Notices......................................................4
SECTION 5.02. Severability of Provisions...................................4
SECTION 5.03. Agreement of Seller..........................................4
SECTION 5.04. Survival.....................................................4
SECTION 5.05. Effect of Headings and Table of Contents.....................5
SECTION 5.06. Successors and Assigns.......................................5
SECTION 5.07. Confirmation of Intent; Grant of Security Interest...........5
SECTION 5.08. Miscellaneous................................................5
SECTION 5.09. Amendments...................................................5
SECTION 5.10. Third-Party Beneficiaries....................................6
SECTION 5.11. Governing Law; Consent To Jurisdiction;
Waiver Of Jury Trial.........................................6
SECTION 5.12. Execution in Counterparts....................................6
EXHIBIT A - MORTGAGE LOAN SCHEDULE
<PAGE>
This Purchase and Sale Agreement, dated as of October 1, 1997, between
ACCESS FINANCIAL LENDING CORP., a Delaware corporation, its successors and
assigns (the "Seller"), and ACCESS FINANCIAL RECEIVABLES CORP., a Delaware
corporation and its successors and assigns (the "Purchaser").
WITNESSETH:
WHEREAS, Exhibit A attached hereto (the "Mortgage Loan Schedule") and made
a part hereof lists certain mortgage loans (the "Mortgage Loans") owned by the
Seller that the Seller desires to sell to the Purchaser and that the Purchaser
desires to purchase;
WHEREAS, it is the intention of the Seller and the Purchaser that,
immediately following the Seller's conveyance of the Mortgage Loans to Purchaser
on the Startup Day, (a) the Purchaser shall convey the Mortgage Loans to a trust
(the "Trust") pursuant to a Pooling and Servicing Agreement, dated as of October
1, 1997 (the "Pooling and Servicing Agreement"), among the Seller, Access
Financial Lending Corp., as master servicer (the "Master Servicer"), the
Purchaser, as transferor and The Chase Manhattan Bank, as trustee (the
"Trustee") and (b) the Trustee shall issue certificates evidencing beneficial
ownership interests in the property of the Trust formed by the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used herein that are not
otherwise defined shall have the respective meanings ascribed thereto in the
Pooling and Servicing Agreement.
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase.
(a) Subject to the terms and conditions of this Agreement, the Seller
agrees to sell, and the Purchaser agrees to purchase on the Startup Day, the
Mortgage Loans. The Mortgage Loan Schedule shall conform to the requirements of
the Purchaser and to the definition of "Mortgage Loan Schedule" under the
Pooling and Servicing Agreement.
(b) The closing for the purchase and sale of the Mortgage Loans shall take
place at the offices of Dewey Ballantine, New York, New York, at 11:00 a.m., New
York time, on October 31, 1997 or such other place and time as the parties shall
agree (such time being herein referred to as the "Startup Day").
Section 2.01. Purchase Price. On the Startup Day, as full consideration for
the Seller's sale of the Mortgage Loans to the Purchaser, the Purchaser will
deliver to the Seller an amount in cash equal to the Seller's book value of the
Mortgage Loans, as certified to the Purchaser by the Seller.
<PAGE>
Section 2.02. Conveyance of Mortgage Loans; Possession of Mortgage Loan
Files.
(a) On the Startup Day, the Seller will direct the Trustee in its capacity
as trustee of Access Financial Lending Loan Purchase Trust to transfer, assign,
set over and otherwise convey without representation, warranty or recourse, to
the Purchaser, all right, title and interest of the Seller in and to each
Mortgage Loan listed on the Mortgage Loan Schedule delivered by the Seller on
the Startup Day, and all its right, title and interest in and to (i) scheduled
payments of interest due on each Mortgage Loan after the Cut-Off Date, (ii)
scheduled payments of principal due, and unscheduled collections of principal
received, on each Mortgage Loan on and after the Cut-Off Date, and (iii) its
Insurance Policies (the "Conveyed Property"); such transfer of the Mortgage
Loans set forth on the Mortgage Loan Schedule to the Purchaser is absolute and
is intended by the parties hereto to be treated as a sale to the Purchaser.
(b) Pursuant to the Pooling and Servicing Agreement, the Purchaser shall,
on the Startup Day, assign all of its right, title and interest in and to the
Conveyed Property together with its rights hereunder to the Trust.
Section 2.03. Transfer of Mortgage Loans; Assignment of Agreement. The
Seller hereby acknowledges and agrees that the Purchaser may assign its interest
under this Agreement to the Trust as may be required to effect the purposes of
the Pooling and Servicing Agreement, without further notice to, or consent of,
the Seller, and the Trust shall succeed to such of the rights and obligations of
the Purchaser hereunder as shall be so assigned. The Purchaser shall, pursuant
to the Pooling and Servicing Agreement, assign all of its right, title and
interest in and to the Conveyed Property to the Trustee for the benefit of the
Certificateholders.
Section 2.04. Examination of Mortgage Loan Files. Prior to the Startup Day,
the Seller shall make the Mortgage Loan Files available to the Purchaser or its
designee for examination at the Trustee's offices or at such other place as the
Seller shall reasonably specify. Such examination may be made by the Purchaser
or its designee at any time on or before the Startup Day. If the Purchaser or
its designee makes such examination prior to the Startup Day and identifies any
Mortgage Loans that do not conform to the requirements of the Purchaser as
described in this Agreement, such Mortgage Loans shall be deleted from the
Schedule of Mortgage Loans and may be replaced, prior to the Startup Day, by
Qualified Replacement Mortgage acceptable to the Purchaser. The Purchaser may,
at its option and without notice to the Seller, purchase the Mortgage Loans
without conducting any partial or complete examination. The fact that the
Purchaser or the Trustee has conducted or has failed to conduct any partial or
complete examination of the Files shall not affect the rights of the Purchaser
or the Trustee to demand repurchase or other relief as provided in this
Agreement.
Section 2.05. Books and Records. The sale of each Mortgage Loan shall be
reflected on the Seller's accounting and other records, balance sheet and other
financial statements as a sale of assets by the Seller to the Purchaser. The
Seller shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders.
Section 2.06. Cost of Delivery and Recordation of Documents. The costs
relating to the delivery and recordation of the documents specified in this
Article Two in connection with the Mortgage Loans shall be borne by the Seller.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Seller. The Seller
hereby represents and warrants to the Purchaser, as of the Startup Day, that:
(a) Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Seller is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Seller.
(b) Authorization; Binding Obligations. The Seller has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and to cause the Trust to
be created. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Seller 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.
(c) No Consent Required. The Seller 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.
(d) No Violations. The execution, delivery and performance of this
Agreement by the Seller will not violate any provision of any existing law or
regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Seller is a party
or by which the Seller may be bound.
(e) Litigation. No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Seller threatened, against the Seller or any of its properties or, with
respect to this Agreement, the Certificates which, if adversely determined,
would in the opinion of the Seller have a material adverse effect on the
transactions contemplated by this Agreement.
Section 3.02. Representations and Warranties of the Purchaser. The
Purchaser hereby represents, warrants and covenants to the Seller, as of the
date of execution of this Agreement and the Startup Day, that:
(a) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(b) The Purchaser has the corporate power and authority to purchase each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all the transactions contemplated by this Agreement;
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(c) This Agreement has been duly and validly authorized, executed and
delivered by the Purchaser, and, assuming the due authorization, execution and
delivery hereof by the Seller, constitutes the legal, valid and binding
agreement of the Purchaser, enforceable against the Purchaser in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Purchaser with
this Agreement or the consummation by the Purchaser of any of the transactions
contemplated hereby, except such as have been made on or prior to the Startup
Day; and
(e) None of the execution and delivery of this Agreement, the purchase of
the Mortgage Loans from the Seller, the consummation of the other transactions
contemplated hereby, or the fulfillment of or compliance with the terms and
conditions of this Agreement, (i) conflicts or will conflict with the charter or
bylaws of the Purchaser or conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default or results or
will result in an acceleration under, any term, condition or provision of any
indenture, deed of trust, contract or other agreement or other instrument to
which the Purchaser is a party or by which it is bound and which is material to
the Purchaser, or (ii) results or will result in a violation of any law, rule,
regulation, order, judgment or decree of any court or governmental authority
having jurisdiction over the Purchaser.
ARTICLE IV
THE SELLER
Section 4.01. Covenants of the Seller. The Seller hereby agrees to do all
acts, transactions, and things and to execute and deliver all agreements,
documents, instruments, and papers by and on behalf of the Seller as the
Purchaser or its counsel may reasonably request in order to consummate the sale
and transfer of the Mortgage Loans to the Purchaser and the subsequent sale and
transfer thereof to the Trustee, and the rating, issuance and sale of the
Certificates.
ARTICLE V
MISCELLANEOUS
Section 5.01. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, addressed to the
Seller at Access Financial Lending Corp., 400 Highway 169 South, Suite 400, St.
Louis Park, MN 55426-1106, Attention: President, or to such other address as the
Seller may designate in writing to the Purchaser and if to the Purchaser,
addressed to the Purchaser at Access Financial Receivables Corp., 400 Highway
169 South, Suite 410, St. Louis Park, MN 55426-1106, Attention: President, or to
such other address as the Purchaser may designate in writing to the Seller.
Section 5.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any
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Mortgage Loan shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
Section 5.03. Agreement of Seller. The Seller agrees to execute and deliver
such instruments and take such actions as the Purchaser may, from time to time,
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement.
Section 5.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 5.05. 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 5.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third Person without the written consent of the other party to this
Agreement; provided, however, that the Purchaser may assign its rights hereunder
without the consent of the Seller.
Section 5.07. Confirmation of Intent; Grant of Security Interest. It is the
express intent of the parties hereto that the conveyance of the Mortgage Loans
by the Seller to the Purchaser as contemplated by this Agreement be, and be
treated for all purposes as, a sale by the Seller to the Purchaser of the
Mortgage Loans. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans are
held to continue to be property of the Seller then (a) this Agreement shall also
be deemed to be a security agreement within the meaning of Articles 8 and 9 of
the Uniform Commercial Code; (b) the transfer of the Mortgage Loans provided for
herein shall be deemed to be a grant by the Seller to the Purchaser of a
security interest in all of the Seller's right, title and interest in and to the
Mortgage Loans and all amounts payable on the Mortgage Loans in accordance with
the terms thereof and all proceeds of the conversion, voluntary or involuntary,
of the foregoing into cash, instruments, securities or other property; (c) the
possession by the Purchaser of Mortgage Loans and such other items of property
as constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9A305 of the Uniform Commercial Code; and
(d) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Purchaser for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Purchaser pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser 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 maintained as such throughout the term
of this Agreement.
Section 5.08. Miscellaneous. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof.
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Section 5.09. Amendments. (a) This Agreement may be amended from time to
time by the Seller and the Purchaser by written agreement without notice to or
consent of the Certificateholders to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder; provided, further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, or change the rights or obligations
of any other party hereto without the consent of such party.
(b) It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
Section 5.10. Third-Party Beneficiaries. The parties agree that the Trustee
is an intended third-party beneficiary of this Agreement to the extent necessary
to enforce the rights and to obtain the benefit of the remedies of the Purchaser
under this Agreement which are assigned to the Trustee for the benefit of the
Certificateholders pursuant to the Pooling and Servicing Agreement and to the
extent necessary to obtain the benefit of the enforcement of the obligations and
covenants of the Seller under Sections 3.05 and 4.01 of this Agreement.
Section 5.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
NEW YORK.
(b) THE PURCHASER AND THE SELLER HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 5.01 OF THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE PURCHASER AND THE SELLER EACH HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE PURCHASER AND THE SELLER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE PURCHASER AND THE SELLER HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE
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RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 5.14. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
by their respective officers thereunto duly authorized as of the date first
above written.
ACCESS FINANCIAL LENDING CORP.
By:_________________________________
Name: Leslie Zejdlik Foster
Title: President
ACCESS FINANCIAL RECEIVABLES CORP.
By:_________________________________.
Name: Leslie Zejdlik Foster
Title: President
8
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EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT 4.2
<PAGE>
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-3
Among
ACCESS FINANCIAL LENDING CORP.,
as Seller and Master Servicer,
ACCESS FINANCIAL RECEIVABLES CORP.,
as the Transferor,
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of October 1, 1997
<PAGE>
TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties.................................................................... 1
Recitals................................................................... 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................... 1
Section 1.1. Definitions ............................................. 1
Section 1.2. Use of Words and Phrases ................................ 36
Section 1.3. Captions; Table of Contents ............................. 36
Section 1.4. Opinions ................................................ 36
Section 1.5. Calculations ............................................ 36
ARTICLE II THE TRUST....................................................... 36
Section 2.1. Establishment of the Trust .............................. 36
Section 2.2. Office .................................................. 36
Section 2.3. Purpose and Powers ...................................... 37
Section 2.4. Appointment of the Trustee; Declaration of Trust ........ 37
Section 2.5. Expenses of the Trust ................................... 37
Section 2.6. Ownership of the Trust .................................. 37
Section 2.7. Receipt of Trust Estate ................................. 37
Section 2.8. Miscellaneous REMIC Provisions .......................... 37
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER,
THE MASTER SERVICER AND THE TRANSFEROR; CONVEYANCE OF MORTGAGE LOANS ...... 40
Section 3.1. Representations and Warranties of the Seller, the Master
Servicer and the Transferor ............................. 40
Section 3.2. Covenants of the Seller to Take Certain Actions with
Respect to the Mortgage Loans in Certain Situations ..... 47
Section 3.3. Conveyance of the Mortgage Loans and Qualified
Replacement Mortgages ................................... 56
Section 3.4. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee ................ 58
Section 3.5. Cooperation Procedures .................................. 61
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES............................... 61
Section 4.1. Issuance of Certificates ................................ 61
Section 4.2. Sale of Certificates .................................... 61
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS........................... 61
Section 5.1. Terms ................................................... 61
Section 5.2. Forms ................................................... 62
Section 5.3. Execution, Authentication and Delivery .................. 62
Section 5.4. Registration and Transfer of Certificates ............... 62
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates ....... 64
Section 5.6. Persons Deemed Owners ................................... 65
Section 5.7. Cancellation ............................................ 65
Section 5.8. Limitation on Transfer of Ownership Rights .............. 65
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Section 5.9. Assignment of Rights .................................... 66
ARTICLE VI COVENANTS....................................................... 66
Section 6.1. Distributions ........................................... 66
Section 6.2. Money for Distributions to be Held
in Trust; Withholding ................................... 66
Section 6.3. Protection of Trust Estate .............................. 67
Section 6.4. Performance of Obligations .............................. 67
Section 6.5. Negative Covenants ...................................... 67
Section 6.6. No Other Powers ......................................... 68
Section 6.7. Limitation of Suits ..................................... 68
Section 6.8. Unconditional Rights of Owners to Receive Distributions . 69
Section 6.9. Rights and Remedies Cumulative .......................... 69
Section 6.10. Delay or Omission Not Waiver ............................ 69
Section 6.11. Control by Owners ....................................... 69
ARTICLE VII ACCOUNTS, FLOW OF FUNDS, DISTRIBUTIONS AND REPORTS............. 70
Section 7.1. Collection of Money ..................................... 70
Section 7.2. Establishment of Accounts ............................... 70
Section 7.3. Flow of Funds ........................................... 70
Section 7.4. Investment of Accounts .................................. 74
Section 7.5. Eligible Investments .................................... 74
Section 7.6. Reports by Trustee ...................................... 75
Section 7.7. Drawings under the Certificate Insurance Policy
and Reports by Trustee .................................. 79
Section 7.8. Allocation of Realized Losses ........................... 80
Section 7.9. Supplemental Interest Payments .......................... 81
ARTICLE VIII TERMINATION OF TRUST.......................................... 81
Section 8.1. Termination of Trust .................................... 81
Section 8.2. Termination Upon Option of the Seller ................... 82
Section 8.3. Auction Sale ............................................ 82
Section 8.4. Disposition of Proceeds ................................. 83
ARTICLE IX THE TRUSTEE..................................................... 83
Section 9.1. Certain Duties and Responsibilities. .................... 83
Section 9.2. Removal of Trustee for Cause ............................ 86
Section 9.3. Certain Rights of the Trustee ........................... 87
Section 9.4. Not Responsible for Recitals or Issuance
of Certificates ......................................... 88
Section 9.5. May Hold Certificates ................................... 88
Section 9.6. Money Held in Trust ..................................... 88
Section 9.7. Compensation and Reimbursement .......................... 88
Section 9.8. Corporate Trustee Required; Eligibility ................. 88
Section 9.9. Resignation and Removal; Appointment of Successor ....... 88
Section 9.10. Acceptance of Appointment by Successor Trustee .......... 89
Section 9.11. Merger, Conversion, Consolidation or Succession to
Business of the Trustee ................................. 90
Section 9.12. Reporting; Withholding .................................. 90
Section 9.13. Liability of the Trustee ................................ 91
Section 9.14. Appointment of Co-Trustee or Separate Trustee ........... 91
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ARTICLE X SERVICING AND ADMINISTRATION OF MORTGAGE LOANS................... 92
Section 10.1. General Servicing Procedures ............................ 92
Section 10.2. Collection of Certain Mortgage Loan Payments ............ 94
Section 10.3. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers ....................................... 95
Section 10.4. Successor Sub-Servicers ................................. 95
Section 10.5. Liability of Master Servicer ............................ 95
Section 10.6. No Contractual Relationship Between Sub-Servicer and
Trustee or the Owners ................................... 95
Section 10.7. Assumption or Termination of Sub-Servicing Agreement
by Trustee .............................................. 96
Section 10.8. Principal and Interest Account .......................... 96
Section 10.9. Delinquency Advances and Servicing Advances ............. 99
Section 10.10. Compensating Interest; Relief Act Shortfalls ............ 99
Section 10.11..Maintenance of Insurance ................................ 100
Section 10.12..Due-on-Sale Clauses; Assumption and
Substitution Agreements ................................. 101
Section 10.13..Realization Upon Defaulted Mortgage Loans ............... 101
Section 10.14..Trustee to Cooperate; Release of Files .................. 103
Section 10.15..Master Servicing Compensation ........................... 104
Section 10.16..Annual Statement as to Compliance ....................... 104
Section 10.17..Annual Independent Certified Public
Accountants' Reports .................................... 104
Section 10.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans; Confidentiality ........... 104
Section 10.19. Assignment of Agreement ................................. 105
Section 10.20. Inspections by Certificate Insurer and Account Parties;
Errors and Omissions Insurance .......................... 105
Section 10.21. Financial Statements .................................... 105
Section 10.22. REMIC ................................................... 106
Section 10.23. The Designated Depository Institution ................... 106
Section 10.24. Appointment of Custodian ................................ 106
ARTICLE XI EVENTS OF DEFAULT; REMOVAL OF MASTER SERVICER; MERGER .......... 106
Section 11.1. Removal of Master Servicer; Resignation
of Master Servicer ...................................... 106
Section 11.2. Trigger Events; Removal of Master Servicer .............. 110
Section 11.3. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer ............................. 111
ARTICLE XII MISCELLANEOUS.................................................. 111
Section 12.1. Compliance Certificates and Opinions .................... 111
Section 12.2. Form of Documents Delivered to the Trustee .............. 112
Section 12.3. Acts of Owners .......................................... 112
Section 12.4. Notices, etc. to Trustee ................................ 113
Section 12.5. Notices and Reports to Owners; Waiver of Notices ........ 113
Section 12.6. Rules by Trustee and Seller ............................. 114
Section 12.7. Successors and Assigns .................................. 114
Section 12.8. Severability ............................................ 114
Section 12.9. Benefits of Agreement ................................... 114
Section 12.10. Legal Holidays .......................................... 114
Section 12.11. Governing Law ........................................... 114
Section 12.12. Counterparts ............................................ 114
Section 12.13. Usury ................................................... 114
Section 12.14. Amendment ............................................... 115
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Section 12.15. REMIC Status; Taxes ..................................... 116
Section 12.16. Additional Limitation on Action and Imposition of Tax ... 117
Section 12.17. Appointment of Tax Matters Person ....................... 117
Section 12.18. Reports to the Securities and Exchange Commission ....... 117
Section 12.19. Notices ................................................. 118
Section 12.20. Grant of Security Interest .............................. 119
Section 12.21. Indemnification ......................................... 119
ARTICLE XIII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER............. 122
Section 13.1. Rights of the Certificate Insurer to Exercise Rights
of the Owners of the Class A Certificates ............... 122
Section 13.2. Trustee to Act Solely with Consent of the
Certificate Insurer ..................................... 122
Section 13.3. Trust Fund and Accounts Held for Benefit of
the Certificate Insurer ................................. 122
Section 13.4. Claims Upon the Policy; Policy Payments Account ......... 123
Section 13.5. Effects of Payments by the Certificate Insurer .......... 124
Section 13.6. Notices to the Certificate Insurer ...................... 124
Section 13.7. Third-Party Beneficiary ................................. 124
EXHIBIT A-1 Form of Class A-1 Group I Certificate
EXHIBIT A-2 Form of Class A-2 Group I Certificate
EXHIBIT A-3 Form of Class A-3 Group I Certificate
EXHIBIT A-4 Form of Class A-4 Group I Certificate
EXHIBIT A-5 Form of Class A-5 Group I Certificate
EXHIBIT A-6 Form of Class A-IO Group I Certificate
EXHIBIT A-7 Form of Class A-6 Group II Certificate
EXHIBIT A-8 Form of Class A-7 Group III Certificate
EXHIBIT B-1 Form of Class B Certificate
EXHIBIT B-2 Form of Class B-S Certificate
EXHIBIT C-1 Form of Class RL Certificate
EXHIBIT C-2 Form of Class RU Certificate
EXHIBIT D Form of Transfer Certificate
EXHIBIT E Form of Residual Certificate Tax Matters Transfer Certificate
EXHIBIT F Form of Master Servicer's Trust Receipt
EXHIBIT G Form of Liquidation Report
EXHIBIT H Form of Delivery Order
EXHIBIT I Officer's Certificate
EXHIBIT J Form of Certificate Regarding Prepaid Loans
EXHIBIT K Form of Initial Trustee Certification
EXHIBIT L Form of Interim Trustee Certification
EXHIBIT M Form of Final Trustee Certification
EXHIBIT N Auction Procedures
EXHIBIT O Form of Trustee Request for Formula Interest Shortfall
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POOLING AND SERVICING AGREEMENT, relating to ACCESS FINANCIAL MORTGAGE LOAN
TRUST 1997-3, dated as of October 1, 1997, among ACCESS FINANCIAL LENDING CORP.,
a Delaware corporation, as the seller (in such capacity, the "Seller") and as
the master servicer (in such capacity, the "Master Servicer"), ACCESS FINANCIAL
RECEIVABLES CORP., a Delaware corporation, as the transferor (the "Transferor")
and THE CHASE MANHATTAN BANK, a New York banking corporation, in its capacity as
trustee (the " Trustee").
WHEREAS, the Seller wishes to establish a trust and three sub-trusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Seller has conveyed the Mortgage Loans to the Transferor
pursuant to the Sale Agreement;
WHEREAS, the Transferor wishes to convey the Mortgage Loans to the Trust;
WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee, valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done; and
WHEREAS, The Chase Manhattan Bank, a New York banking corporation, is
willing to serve in the capacity of Trustee hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Seller, the Master Servicer, the Transferor and the
Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions . For all purposes of this Agreement, the
following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Account": The Certificate Account, each Principal and Interest Account and
each Distribution Account including any sub-Accounts created pursuant to Section
7.2.
"Accrual Period": With respect to the Class A-2 Group I, A-3 Group I, A-4
Group I, A-5 Group I and A-IO Certificates and any Payment Date, the period from
and including the second day of the calendar month immediately preceding such
Payment Date to and including the first day of the calendar month in which such
Payment Date occurs; with respect to the Class A-1 Group I, A-6 Group II and A-7
Group III Certificates and any Payment Date, the period from and including the
prior Payment Date (or, in the case of the first Payment Date, from and
including the Startup Day) to and including the day immediately preceding such
Payment Date.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this
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definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, and including the Exhibits hereto.
"Allocable Losses": As defined in Section 7.8 hereof.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Mortgage Loan, or,
in the case of a Mortgage Loan which is a purchase money mortgage, the sales
price of the Property at such time of origination, if such sales price is less
than such appraised value.
"Auction Sale": The Trustee's solicitation of bids for the purchase of all
Mortgage Loans in the Trust pursuant to Section 8.3 hereof.
"Authorized Officer": With respect to any Person, any person who is
authorized to act for such Person in matters relating to this Agreement, and
whose action is binding upon such Person and, with respect to the Seller, the
Master Servicer, the Transferor and the Trustee, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Startup Day.
"Available Funds": With respect to Group I, the Group I Available Funds,
with respect to Group II, the Group II Available Funds and with respect to Group
III, the Group III Available Funds.
"Base Group I Principal Distribution Amount": As to any Payment Date, an
amount equal to (x) the sum, without duplication, of (i) the principal portion
of all scheduled and unscheduled payments received by the Master Servicer on the
Group I Mortgage Loans during the related Remittance Period, including any
Prepayments and any Net Proceeds, (ii) the principal portion of all Substitution
Amounts and the principal portion of all Loan Purchase Prices deposited into the
Principal and Interest Accounts with respect to the Group I Mortgage Loans on
the related Remittance Date, and (iii) the proceeds received by the Trustee with
respect to the Group I Mortgage Loans in connection with any termination of the
Trust pursuant to Article VIII hereof, to the extent such proceeds relate to
principal, minus (y) the amount of any Group I Subordination Reduction Amount
for such Payment Date.
"Base Group II Principal Distribution Amount": As to any Payment Date, an
amount equal to (x) the sum, without duplication, of (i) the principal portion
of all scheduled and unscheduled payments received by the Master Servicer on the
Group II Mortgage Loans during the related Remittance Period, including any
Prepayments and any Net Proceeds, (ii) the principal portion of all Substitution
Amounts and the principal portion of all Loan Purchase Prices deposited into the
Principal and Interest Accounts with respect to the Group II Mortgage Loans on
the related Remittance Date, and (iii) the proceeds received by the Trustee with
respect to the Group II Mortgage Loans in connection with any termination of the
Trust pursuant to Article VIII hereof, to the extent such proceeds relate to
principal, minus (y) the amount of any Group II Subordination Reduction Amount
for such Payment Date.
"Base Group III Principal Distribution Amount": As to any Payment Date, an
amount equal to (x) the sum, without duplication, of (i) the principal portion
of all scheduled and
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unscheduled payments received by the Master Servicer on the Group III Mortgage
Loans during the related Remittance Period, including any Prepayments and any
Net Proceeds, (ii) the principal portion of all Substitution Amounts and the
principal portion of all Loan Purchase Prices deposited into the Principal and
Interest Accounts with respect to the Group III Mortgage Loans on the related
Remittance Date, and (iii) the proceeds received by the Trustee with respect to
the Group III Mortgage Loans in connection with any termination of the Trust
pursuant to Article VIII hereof, to the extent such proceeds relate to
principal, minus (y) the amount of any Group III Subordination Reduction Amount
for such Payment Date.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the State of New York, the state in
which the principal corporate office or bank of the Master Servicer is located
or in the state in which the principal corporate trust office of the Trustee is
located, which initially is New York, New York, are authorized or obligated by
law or executive order to be closed.
"Certificate": Any one of the Class A-1 Group I Certificates, Class A-2
Group I Certificates, Class A-3 Group I Certificates, Class A-4 Group I
Certificates, Class A-5 Group I Certificates, Class A-IO Group I Certificates,
Class A-6 Group II Certificates, Class A-7 Group III Certificates, Class B
Certificates, Class B-S Certificates or the Residual Certificates.
"Certificate Account": The account designated as the Certificate Account
pursuant to Section 7.2 hereof.
"Certificate Insurance Policy": The financial guaranty insurance policy
number 50590-N issued by the Certificate Insurer to the Trustee for the benefit
of the Owners of the Class A Certificates.
"Certificate Insurer": Financial Security Assurance Inc., a New York
monoline insurance company.
"Certificate Insurer Default": The existence and continuance of any of the
following:
(a) the Certificate Insurer shall have failed to make a required payment
when due under the Certificate Insurance Policy;
(b) the Certificate Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York State Insurance Law or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization, (ii) made a general assignment for the benefit of its creditors
or (iii) had an order for relief entered against it under the United States
Bankruptcy Code, the New York State Insurance Law or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of Insurance
or any other competent regulatory authority shall have entered a final and
nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent, or receiver for the Certificate Insurer or for all or any material
portion of its property or (ii) authorizing the taking of possession by a
custodian, trustee, agent, or receiver of the Security Insurer or of all or any
material portion of its property.
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"Certificate Insurer Premium Rate": 0.21% per annum.
"Certificate Principal Balance": The Class A-1 Principal Balance, the Class
A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance, the Class A-5 Principal Balance, the Class A-6 Principal Balance, the
Class A-7 Principal Balance or the Class B Principal Balance, as the case may
be.
"Certificateholder": As of any date and with respect to any Certificate,
the Person in whose name such Certificate is registered on the Register on such
date.
"Class": All of the Class A-1 Group I Certificates, the Class A-2 Group I
Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the Class A-IO Group I
Certificates, the Class A-6 Group II Certificates, the Class A-7 Group III
Certificates, the Class B Certificates, or all of the Residual Certificates, as
applicable.
"Class A Certificate Principal Balance": The sum of the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the
Class A-4 Principal Balance, the Class A-5 Principal Balance, the Class A-6
Principal Balance and the Class A-7 Principal Balance.
"Class A Certificates": Collectively, the Class A-1 Group I Certificates,
the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the
Class A-4 Group I Certificates, the Class A-5 Group I Certificates, the Class
A-IO Group I Certificates, the Class A-6 Group II Certificates, and the Class
A-7 Group III Certificates.
"Class A Distribution Account": The Class A Group I Distribution Account,
the Class A Group II Distribution Account or the Class A Group III Distribution
Account, as the case may be.
"Class A Group I Certificates": All of the Class A-1 Group I Certificates,
the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the
Class A-4 Group I Certificates, the Class A-5 Group I Certificates and the Class
A-IO Group I Certificates.
"Class A Group I Distribution Account": The Class A Group I Distribution
Account created pursuant to Section 7.2 hereof.
"Class A Group II Distribution Account": The Class A Group II Distribution
Account created pursuant to Section 7.2 hereof.
"Class A Group III Distribution Account": The Class A Group III
Distribution Account created pursuant to Section 7.2 hereof.
"Class A-1 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-1 Principal Distribution Amount for such Payment Date and (ii) the Class
A-1 Interest Distribution Amount for such Payment Date.
"Class A-1 Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-1 hereto.
"Class A-1 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1
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Principal Balance immediately prior to such Payment Date. The Class A-1 Interest
Distribution Amount does not include interest shortfalls, if any, on the
Mortgage Loans in Group I arising from Prepayments of principal or Relief Act
Shortfalls to the extent such shortfalls are not covered by Compensating
Interest or Group I Available Funds.
"Class A-1 Pass-Through Rate": The lesser of (i) LIBOR as of the second to
last Business Day prior to the immediately preceding Payment Date (or prior to
the Startup Day, in the case of the initial Payment Date) plus 0.11% per annum
or (ii) the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for
such Payment Date.
"Class A-1 Principal Balance": The original Class A-1 Principal Balance of
$40,096,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-1 Group I Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-1 Principal Distribution Amount": With respect to any Payment Date
on or prior to the Class A-1 Termination Date, an amount equal to the lesser of
(x) the Remaining Group I Principal Distribution Amount for such Payment Date
and (y) the amount necessary to reduce the Class A-1 Principal Balance (as it
was immediately prior to such Payment Date) to zero. On the Class A-1
Termination Date any portion of the Remaining Group I Principal Distribution
Amount for such Payment Date remaining on such Payment Date following the
reduction to zero of the Class A-1 Principal Balance shall be distributed as the
initial principal distribution on the Class A-2 Group I Certificates.
"Class A-1 Termination Date": The Payment Date on which the Class A-1
Principal Balance is reduced to zero.
"Class A-2 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-2 Principal Distribution Amount for such Payment Date and (ii) the Class
A-2 Interest Distribution Amount for such Payment Date.
"Class A-2 Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-2 hereto.
"Class A-2 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Principal Balance immediately prior to such Payment Date. The
Class A-2 Interest Distribution Amount does not include interest shortfalls, if
any, on the Mortgage Loans in Group I arising from Prepayments of principal or
Relief Act Shortfalls to the extent such shortfalls are not covered by
Compensating Interest or Group I Available Funds.
"Class A-2 Pass-Through Rate": The lesser of (i) 6.565% per annum or (ii)
the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for such
Payment Date.
"Class A-2 Principal Balance": The original Class A-2 Principal Balance of
$15,400,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-2 Group I Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-2 Principal Distribution Amount": With respect to any Payment Date
following the Class A-1 Termination Date, an amount equal to the lesser of (x)
the Remaining Group I Principal Distribution Amount for such Payment Date and
(y) the amount necessary to
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reduce the Class A-2 Principal Balance (as it was immediately prior to such
Payment Date) to zero. On the Class A-1 Termination Date any portion of the
Remaining Group I Principal Distribution Amount for such Payment Date remaining
on such Payment Date following the reduction to zero of the Class A-1 Principal
Balance shall be distributed as the initial principal distribution on the Class
A-2 Group I Certificates. On the Class A-2 Termination Date any portion of the
Remaining Group I Principal Distribution Amount remaining on such Payment Date
following the reduction to zero of the Class A-2 Principal Balance shall be
distributed as the initial principal distribution on the Class A-3 Group I
Certificates.
"Class A-2 Termination Date": The Payment Date on which the Class A-2
Principal Balance is reduced to zero.
"Class A-3 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-3 Principal Distribution Amount for such Payment Date and (ii) the Class
A-3 Interest Distribution Amount for such Payment Date.
"Class A-3 Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-3 hereto.
"Class A-3 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-3 Pass-Through Rate on
the Class A-3 Principal Balance immediately prior to such Payment Date. The
Class A-3 Interest Distribution Amount does not include interest shortfalls, if
any, on the Mortgage Loans in Group I arising from Prepayments of principal or
Relief Act Shortfalls to the extent such shortfalls are not covered by
Compensating Interest or Group I Available Funds.
"Class A-3 Pass-Through Rate": The lesser of (i) 6.800% per annum or (ii)
the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for such
Payment Date.
"Class A-3 Principal Balance": The original Class A-3 Principal Balance of
$10,601,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-3 Group I Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-3 Principal Distribution Amount": With respect to any Payment Date
following the Class A-2 Termination Date, an amount equal to the lesser of (x)
the Remaining Group I Principal Distribution Amount for such Payment Date and
(y) the amount necessary to reduce the Class A-3 Principal Balance (as it was
immediately prior to such Payment Date) to zero. On the Class A-2 Termination
Date any portion of the Remaining Group I Principal Distribution Amount for such
Payment Date remaining on such Payment Date following the reduction to zero of
the Class A-2 Principal Balance shall be distributed as the initial principal
distribution on the Class A-3 Group I Certificates. On the Class A-3 Termination
Date any portion of the Remaining Group I Principal Distribution Amount
remaining on such Payment Date following the reduction to zero of the Class A-3
Principal Balance shall be distributed as the initial principal distribution on
the Class A-4 Group I Certificates.
"Class A-3 Termination Date": The Payment Date on which the Class A-3
Principal Balance is reduced to zero.
"Class A-4 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-4 Principal Distribution Amount for such Payment Date and (ii) the Class
A-4 Interest Distribution Amount for such Payment Date.
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"Class A-4 Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-4 hereto.
"Class A-4 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-4 Pass-Through Rate on
the Class A-4 Principal Balance immediately prior to such Payment Date. The
Class A-4 Interest Distribution Amount does not include interest shortfalls, if
any, on the Mortgage Loans in Group I arising from Prepayments of principal or
Relief Act Shortfalls to the extent such shortfalls are not covered by
Compensating Interest or Group I Available Funds.
"Class A-4 Pass-Through Rate": The lesser of (i) 7.175% per annum or (ii)
the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for such
Payment Date.
"Class A-4 Principal Balance": The original Class A-4 Principal Balance of
$8,000,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-4 Group I Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-4 Principal Distribution Amount": With respect to any Payment Date
following the Class A-3 Termination Date, an amount equal to the lesser of (x)
the Remaining Group I Principal Distribution Amount for such Payment Date and
(y) the amount necessary to reduce the Class A-4 Principal Balance (as it was
immediately prior to such Payment Date) to zero. On the Class A-3 Termination
Date any portion of the Remaining Group I Principal Distribution Amount for such
Payment Date remaining on such Payment Date following the reduction to zero of
the Class A-3 Principal Balance shall be distributed as the initial principal
distribution on the Class A-4 Group I Certificates.
"Class A-5 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-5 Principal Distribution Amount for such Payment Date and (ii) the Class
A-5 Interest Distribution Amount for such Payment Date.
"Class A-5 Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-5 hereto.
"Class A-5 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-5 Pass-Through Rate on
the Class A-5 Principal Balance immediately prior to such Payment Date. The
Class A-5 Interest Distribution Amount does not include interest shortfalls, if
any, on the Mortgage Loans in Group I arising from Prepayments of principal or
Relief Act Shortfalls to the extent such shortfalls are not covered by
Compensating Interest or Group I Available Funds.
"Class A-5 Lockout Distribution Amount": With respect to any Payment Date,
the product of (i) the applicable Class A-5 Lockout Percentage for such Payment
Date and (ii) the Class A-5 Lockout Pro Rata Distribution Amount for such
Payment Date.
"Class A-5 Lockout Percentage": For each Payment Date shall be as follows:
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Payment Dates Lockout Percentage
------------- ------------------
November 1997 - October 2000 0%
November 2000 - October 2002 45%
November 2002 - October 2003 80%
November 2003 - October 2004 100%
November 2004 and thereafter 300%
"Class A-5 Lockout Pro Rata Distribution Amount": For any Payment Date will
be an amount equal to the product of (x) a fraction, the numerator of which is
the Certificate Principal Balance of the Class A-5 Certificates immediately
prior to such Payment Date and the denominator of which is the aggregate
Certificate Principal Balance of the Group I Certificates (not including the
Class A-IO Group I Certificates) immediately prior to such Payment Date and (y)
the Group I Principal Distribution Amount for such Payment Date.
"Class A-5 Pass-Through Rate": The lesser of (i) 6.745% per annum or (ii)
the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for such
Payment Date.
"Class A-5 Principal Balance": The original Class A-5 Principal Balance of
$8,230,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-5 Group I Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-5 Principal Distribution Amount": With respect to any Payment Date
prior to the Class A-4 Termination Date, the Class A-5 Lockout Distribution
Amount. With respect to the Payment Date occurring on the Class A-4 Termination
Date, the sum of (i) the Class A-5 Lockout Distribution Amount and (ii) any
portion of the Remaining Group I Principal Distribution Amount remaining on such
Payment Date following the reduction to zero of the Class A-4 Principal Balance.
With respect to any Payment Date after the Class A-4 Termination Date, the
lesser of (x) the Group I Principal Distribution Amount and (y) the amount
necessary to reduce the Class A-5 Principal Balance to zero.
"Class A-6 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-6 Principal Distribution Amount for such Payment Date, (ii) the Class
A-6 Interest Distribution Amount for such Payment Date and (iii) the Class A-6
Interest Carry-Forward Amount for such Payment Date.
"Class A-6 Formula Interest Shortfall": As defined in Section 7.9(a)
hereof.
"Class A-6 Formula Pass-Through Rate": As of any Payment Date, the rate
described in clause (i) of the definition of "Class A-6 Pass-Through Rate".
"Class A-6 Full Interest Distribution Amount": With respect to any Payment
Date, the Class A-6 Interest Distribution Amount for such Payment Date
calculated using the Class A-6 Formula Pass-Through Rate for such Payment Date
rather than the Class A-6 Pass-Through Rate for such Payment Date plus, if the
full amount of the Class A-6 Formula Interest Shortfall, if any, was not funded
on any prior Payment Date and remains unpaid on such Payment Date, such amount,
together with interest thereon (from the Payment Date on which such Class A-6
Formula Interest Shortfall was calculated) at the Class A-6 Formula Pass-Through
Rate for such Payment Date.
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"Class A-6 Interest Carry-Forward Amount": As of any Payment Date, the sum
of (i) the amount, if any, by which (x) the Class A-6 Interest Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution, made to the Owners of the Class A-6 Group II
Certificates pursuant to Section 7.3(c)(ii) hereof on such immediately preceding
Payment Date and allocable to the Class A-6 Interest Distribution Amount on such
immediately preceding Payment Date and (ii) interest on the amount, if any,
described in clause (i) at one-twelfth of the Class A-6 Pass-Through Rate from
such immediately preceding Payment Date. The Class A-6 Interest Distribution
Amount does not include interest shortfalls, if any, on the Mortgage Loans in
Group II arising from Prepayments of principal or Relief Act Shortfalls to the
extent such shortfalls are not covered by Compensating Interest or Group II
Available Funds.
"Class A-6 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-6 Pass-Through Rate on
the Class A-6 Principal Balance immediately prior to such Payment Date.
"Class A-6 Pass-Through Rate": With respect to any Payment Date and Accrual
Period, the lesser of (i) LIBOR as of the second to last Business Day prior to
the immediately preceding Payment Date (or prior to the Startup Day, in the case
of the initial Payment Date) plus 0.185% per annum, or (ii) the Net Weighted
Average Coupon Rate for the Group II Mortgage Loans for such Payment Date.
"Class A-6 Principal Balance": The original Class A-6 Principal Balance of
$49,997,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-6 Group II Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-6 Principal Distribution Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Group II Principal Distribution
Amount for such Payment Date and (y) the amount necessary to reduce the Class
A-6 Principal Balance (as it was immediately prior to such Payment Date) to
zero.
"Class A-6 Group II Certificates": Those certificates in substantially the
form set forth in Exhibit A-7 hereto.
"Class A-7 Distribution Amount": As of any Payment Date, the sum of (i) the
Class A-7 Principal Distribution Amount for such Payment Date, (ii) the Class
A-7 Interest Distribution Amount for such Payment Date and (iii) the Class A-7
Interest Carry-Forward Amount for such Payment Date.
"Class A-7 Formula Interest Shortfall": As defined in Section 7.9(a)
hereof.
"Class A-7 Formula Pass-Through Rate": As of any Payment Date, the rate
described in clause (i) of the definition of "Class A-7 Pass-Through Rate".
"Class A-7 Full Interest Distribution Amount": With respect to any Payment
Date, the Class A-7 Interest Distribution Amount for such Payment Date
calculated using the Class A-7 Formula Pass-Through Rate for such Payment Date
rather than the Class -A-7 Pass-Through Rate for such Payment Date plus, if the
full amount of the Class A-7 Formula Interest Shortfall, if any, was not funded
on any prior Payment Date and remains unpaid on such Payment Date, such amount,
together with interest thereon (from the Payment Date on which such Class
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A-7 Formula Interest Shortfall was calculated) at the Class A-7 Formula
Pass-Through Rate for such Payment Date.
"Class A-7 Interest Carry-Forward Amount": As of any Payment Date, the sum
of (i) the amount, if any, by which (x) the Class A-7 Interest Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution, made to the Owners of the Class A-7 Group III
Certificates pursuant to Section 7.3(c)(iii) hereof on such immediately
preceding Payment Date and allocable to the Class A-7 Interest Distribution
Amount on such immediately preceding Payment Date and (ii) interest on the
amount, if any, described in clause (i) at one-twelfth of the Class A-7
Pass-Through Rate from such immediately preceding Payment Date.
"Class A-7 Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-7 Pass-Through Rate on
the Class A-7 Principal Balance immediately prior to such Payment Date. The
Class A-7 Interest Distribution Amount does not include interest shortfalls, if
any, on the Mortgage Loans in Group III arising from Prepayments of principal or
Relief Act Shortfalls to the extent such shortfalls are not covered by
Compensating Interest or Group III Available Funds.
"Class A-7 Pass-Through Rate": With respect to any Payment Date and Accrual
Period, the lesser of (i) LIBOR as of the second to last Business Day prior to
the immediately preceding Payment Date (or prior to the Startup Day, in the case
of the initial Payment Date) plus 0.205% per annum, or (ii) the Net Weighted
Average Coupon Rate for the Group III Mortgage Loans for such Payment Date.
"Class A-7 Principal Balance": The original Class A-7 Principal Balance of
$67,546,000 reduced by the sum of all amounts previously distributed to the
Owners of the Class A-7 Group III Certificates in respect of principal on all
previous Payment Dates, but shall not be reduced below zero.
"Class A-7 Principal Distribution Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Group III Principal Distribution
Amount for such Payment Date and (y) the amount necessary to reduce the Class
A-7 Principal Balance (as it was immediately prior to such Payment Date) to
zero.
"Class A-7 Group III Certificates": Those certificates in substantially the
form set forth in Exhibit A-8 hereto.
"Class A-IO Distribution Amount": As of any Payment Date, the Class A-IO
Interest Distribution Amount for such Payment Date.
"Class A-IO Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-IO Pass-Through Rate on
the Class A-IO Notional Amount immediately prior to such Payment Date. The Class
A-IO Interest Distribution Amount does not include interest shortfalls, if any,
on the Mortgage Loans in Group I arising from Prepayments of principal or Relief
Act Shortfalls to the extent such shortfalls are not covered by Compensating
Interest or Group I Available Funds.
"Class A-IO Pass-Through Rate": 5.000% per annum.
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"Class A-IO Notional Amount": An amount equal to (a) on any Payment Date
prior 37th Payment Date, the Class A-5 Principal Balance and (b) on or after the
37th Payment Date, zero.
"Class A-IO Group I Certificates": Those certificates in substantially the
form set forth in Exhibit A-6 hereto.
"Class B Certificates": Those certificates in substantially the form set
forth in Exhibit B-1 hereto.
"Class B Carry-Forward Amount": As of any Payment Date, the amount, if any,
by which (x) the Class B Distribution Amount as of the immediately preceding
Payment Date exceeded (y) the amount of the actual distribution to the Owners of
the Class B Certificates made pursuant to Section 7.3(c)(v) hereof on such
immediately preceding Payment Date.
"Class B Distribution Account": The Class B Distribution Account created
pursuant to Section 7.2 hereof.
"Class B Distribution Amount": As of any Payment Date, the sum of (i) the
Class B Interest Distribution Amount for such Payment Date, (ii) the Group I
Subordination Reduction Amount for such Payment Date, the Group II Subordination
Reduction Amount and the Group III Subordination Reduction Amount, if any,
described in Section 7.3(b)(iii)(E) hereof and (iv) the Class B Carry-Forward
Amount, if any, as of such Payment Date.
"Class B Interest": As of any Payment Date, the product of (x) the Class B
Pass-Through Rate, times the actual number of days in the related Remittance
Period divided by 365 (or 366, as appropriate), and (y) the Net Pool Balance as
of the opening of business on the first day of such Remittance Period.
"Class B Interest Distribution Amount": As of any Payment Date, the Class B
Interest for such Payment Date minus the sum of
(i) the amount of any Class B Interest actually paid to the Owners of the
Class A Group I Certificates on such Payment Date as all or a portion
of (x) the Group I Insured Distribution Amount on such Payment Date,
pursuant to Section 7.3(b)(iii)(B) hereof or (y) the portion of any
Group I Subordination Increase Amount allocated to the Class A Group
I Distribution Account with respect to a Group I Subordination
Deficiency on such Payment Date pursuant to Section 7.3(b)(iii)(E)
hereof;
(ii) the amount of any Class B Interest actually paid to the Owners of the
Class A-6 Group II Certificates as all or a portion of (x) the Group
II Insured Distribution Amount on such Payment Date, pursuant to
Section 7.3(b)(iii)(B) hereof or (y) the portion of any Group II
Subordination Increase Amount allocated to the Class A Group II
Distribution Account with respect to a Group II Subordination
Deficiency on such Payment Date, pursuant to Section 7.3(b)(iii)(E)
hereof; and
(iii) the amount of any Class B Interest actually paid to the Owners of the
Class A-7 Group III Certificates as all or a portion of (x) the Group
II Insured Distribution Amount on such Payment Date, pursuant to
Section 7.3(b)(iii)(B) hereof or (y) the portion of any Group III
Subordination Increase Amount allocated to the Class A Group III
Distribution Account with respect to a Group III Subordination
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Deficiency on such Payment Date, pursuant to Section 7.3(b)(iii)(E)
hereof.
"Class B Pass-Through Rate": With respect to any Payment Date, the weighted
average of the interest rates borne by the LT-1, LT-2, LT-3, LT-4, LT-5, LT-7,
LT-9 and LT-11 Lower Tier Interests for the immediately preceding Remittance
Period minus two times the weighted average of the interest rates borne by the
LT-6, LT-8, and LT-10 and LT-12 Lower Tier Interests for such Remittance Period,
with the rate on the LT-12 Lower Tier Interest deemed to be zero for purposes of
this calculation.
"Class B Principal Balance": As of the Startup Day, zero. The Class B
Principal Balance shall be:
(x) increased on each Payment Date by the amounts, if any, of the Class B
Interest (i) actually paid to the Owners of the Class A Group I
Certificates on such Payment Date as all or a portion of the Group I
Principal Distribution Amount or as all or a portion of the Group I
Subordination Increase Amount on such Payment Date pursuant to
Sections 7.3(b)(iii)(A) and 7.3(b)(iii)(E) hereof, (ii) actually paid
to the Owners of the Class A-6 Group II Certificates on such Payment
Date as all or a portion of the Group II Principal Distribution
Amount or as all or a portion of the Group II Subordination
Deficiency Amount on such Payment Date, pursuant to Sections
7.3(b)(iii)(A) and 7.3(b)(iii)(E) hereof and (iii) actually paid to
the Owners of the Class A-7 Group III Certificates on such Payment
Date as all or a portion of the Group III Principal Distribution
Amount or as all or a portion of the Group III Subordination
Deficiency Amount on such Payment Date, pursuant to Sections
7.3(b)(iii)(A) and 7.3(b)(iii)(E) hereof; and
(y) decreased on each Payment Date by the amounts of (i) any Group I
Subordination Reduction Amount, any Group II Subordination Reduction
Amount or any Group III Subordination Reduction Amount paid to the
Owners of the Class B Certificates on such Payment Date pursuant to
Section 7.3(b)(iii)(G) hereof and (ii) the amount of any Allocable
Losses allocated as a reduction of the Class B Principal Balance on
such Payment Date pursuant to Section 7.8(a) hereof. The Class B
Principal Balance shall in no event be less than zero.
"Class B-S Certificate": Any of those Certificates representing the right
to receive excess amounts in the Supplemental Interest Payment Account, and
designated as a "Class B-S Certificate" on the face thereof, in the form of
Exhibit B-2 hereto.
"Class LT-1 Certificates" or "LT-1": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-2 Certificates" or "LT-2": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-3 Certificates" or "LT-3": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-4 Certificates" or "LT-4": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
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"Class LT-5 Certificates" or "LT-5": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-6 Certificates" or "LT-6": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-7 Certificates" or "LT-7": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-8 Certificates" or "LT-8": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-9 Certificates" or "LT-9": The uncertificated class of interests
in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT-10 Certificates" or "LT-10": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT-11 Certificates" or "LT-11": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT-12 Certificates" or "LT-12": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class RI Certificates": Those certificates representing certain residual
rights to distributions from REMIC I in substantially the form set forth as
Exhibit C-3 hereto.
"Class RL Certificates": Those certificates representing certain residual
rights to distributions from the Lower-Tier REMIC in substantially the form set
forth as Exhibit C-1 hereto.
"Class RU Certificates": Those certificates representing certain residual
rights to distributions from the Upper-Tier REMIC in substantially the form set
forth as Exhibit C-2 hereto.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 10.10 of this Agreement.
"Coupon Rate": With respect to any Note and Remittance Period, the rate of
interest borne by such Note at the opening of business on the first day of such
Remittance Period.
"Cumulative Loss Percentage": As to any Payment Date and the Mortgage
Loans, the percentage equivalent of the fraction obtained by dividing (i) the
Cumulative Net Realized Losses by (ii) the Original Pool Principal Balance.
"Cumulative Net Realized Losses": As of any Payment Date, the sum of all
Net Realized Losses with respect to the Mortgage Loans experienced on all prior
Payment Dates.
"Cut-Off Date": The close of business on October 1, 1997.
"Delinquency Advance": As defined in Section 10.9(a) of this Agreement.
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"Delinquency Percentage": As of the last day of any Remittance Period and
with respect to the Mortgage Loans, the percentage equivalent of a fraction, the
numerator of which is equal to the aggregate Principal Balances of all Mortgage
Loans that are 90 or more days delinquent, in foreclosure or converted to REO
Properties as of such last day of such Remittance Period, and the denominator of
which is the Pool Principal Balance as of the last day of such Remittance
Period.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon is
not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The Delivery Order from the Seller to the Trustee
directing the Trustee to issue the Certificates on the Startup Day, in
substantially the form of Exhibit H hereto.
"Depository": The Depository Trust Company, 55 Water Street, New York, New
York 10041, and any successor depository hereafter named.
"Designated Depository Institution": With respect to any Account, an
institution whose deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, the long-term deposits of which shall be
rated A or better by S&P and A1 or better by Moody's and in one of the two
highest short-term rating categories by S&P and the highest short-term rating
category by Moody's, unless otherwise approved in writing by the Certificate
Insurer and each Rating Agency, and which is any of the following: (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) approved in writing by
the Certificate Insurer and the Rating Agencies and, in each case acting or
designated by the Master Servicer or the Trustee as the depository institution
for such Account; provided, however, that any such institution, association or
subsidiary shall have combined capital, surplus and individual profits of at
least $100,000,000. Notwithstanding the foregoing, an Account may be held by an
institution otherwise meeting the preceding requirements except that the only
applicable rating requirement shall be that the unsecured and uncollateralized
debt obligations thereof shall be rated Baa2 or better by Moody's and BBB or
better by S&P if such institution has capital and surplus of not less than
$50,000,000 and has trust powers and the Account is held by such institution in
its trust capacity and not in its commercial capacity.
"Designated Residual Holder": Access Financial Receivables Corp.
"Determination Date": The second Business Day preceding each Payment Date.
"Disqualified Organization": Has the meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
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"Distribution Accounts": The Class A Group I Distribution Account, the
Class A Group II Distribution Account and the Class A Group III Distribution
Account and the Class B Distribution Account.
"Eligible Investments": Those investments so designated pursuant to Section
7.5 hereof.
"ERISA": As defined in Section 5.8(a) hereof.
"Event of Default": As defined in Section 11.1 of this Agreement.
"Excess Spread Trigger": As such term is defined in the Insurance and
Indemnity Agreement.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents pertaining to a particular Mortgage Loan pursuant to
Section 3.3(b) hereof and any additional documents required to be added to the
File pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a first priority
mortgage lien with respect to any Property as indicated on the Mortgage Loan
Schedules.
"Fiscal Agent": As defined in the Insurance Agreement.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"Full Interest Distribution Amount": The Class A-6 Full Interest
Distribution Amount or the Class A-7 Full Interest Distribution Amount, as the
case may be.
"Group": Group I, Group II or Group III, as the case may be.
"Group I": The group of Mortgage Loans that are the Group I Mortgage Loans.
"Group I Available Funds": As of any Payment Date, the amount on deposit in
the Certificate Account with respect to the Group I Mortgage Loans on such
Payment Date after making the deposits to the Certificate Account pursuant to
Sections 7.3(a)(i) hereof on such Payment Date. The term "Group I Available
Funds" does not include Insured Payments and does not include any amounts that
cannot be distributed to the Owners of the Certificates by the Trustee as a
result of proceedings under the United States Bankruptcy Code.
"Group I Certificates": Any of the Class A-1 Group I Certificates, the
Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class
A-4 Group I Certificates, the Class A-5 Group I Certificates and the Class A-IO
Group I Certificates.
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"Group I Cumulative Net Realized Losses": As of any Payment Date, the sum
of all Net Realized Losses with respect to the Group I Mortgage Loans
experienced on all prior Payment Dates.
"Group I Excess Subordinated Amount": With respect to any Payment Date, the
excess, if any, of (x) the Group I Subordinated Amount that would apply on such
Payment Date after taking into account the payment of the Group I Principal
Distribution Amount on such Payment Date (except for any distributions of
related Group I Subordination Reduction Amounts on such Payment Date) over (y)
the Group I Specified Subordinated Amount for such Payment Date.
"Group I Insured Distribution Amount": With respect to any Payment Date,
the sum of (i) Group I Insured Interest Distribution Amount for such Payment
Date and (ii) the Group I Insured Principal Distribution Amount for such Payment
Date.
"Group I Insured Interest Distribution Amount": With respect to any Payment
Date, the sum of (i) the Class A-1 Interest Distribution Amount, (ii) the Class
A-2 Interest Distribution Amount, (iii) the Class A-3 Interest Distribution
Amount, (iv) the Class A-4 Interest Distribution Amount, (v) the Class A-5
Interest Distribution Amount and (vi) the Class A-IO Interest Distribution
Amount.
"Group I Insured Payment": As of any Payment Date, the sum of (x) the Group
I Shortfall Amount for such Payment Date and (y) any Preference Amounts with
respect to the Group I Certificates with respect to which the affected Owners
have complied with the provisions of Section 7.3(g) hereof during the related
Remittance Period.
"Group I Insured Principal Distribution Amount": With respect to any
Payment Date, the Group I Subordination Deficit for such Payment Date plus any
amounts paid to the Trustee at the option of the Certificate Insurer in respect
of any losses on Liquidated Loans.
"Group I Interest Distribution Amount": As of any Payment Date, the sum of
the Class A-1 Interest Distribution Amount, the Class A-2 Interest Distribution
Amount, the Class A-3 Interest Distribution Amount, the Class A-4 Interest
Distribution Amount. the Class A-5 Interest Distribution Amount and the Class
A-IO Interest Distribution Amount..
"Group I Interest Remittance Amount": For any Remittance Date, the amount
equal to (x) the sum, without duplication, of (i) the aggregate interest
portions of the payments (whether or not collected) becoming due on the Group I
Mortgage Loans during the immediately preceding Remittance Period and (ii)
Compensating Interest with respect to the Group I Mortgage Loans minus (y) the
aggregate Master Servicing Fee due to the Master Servicer with respect to Group
I Mortgage Loans for such Remittance Period to the extent not previously paid
to, or withheld by, the Master Servicer.
"Group I Monthly Remittance": The sum of (i) the Group I Interest
Remittance Amount and the Group I Principal Remittance Amount required to be
remitted to the Trustee on each Remittance Date and (ii) the amount of any
Substitution Amounts and Loan Purchase Prices on deposit in the Principal and
Interest Account with respect to the Group I Mortgage Loans on such Remittance
Date.
"Group I Mortgage Loans": The Mortgage Loans held by the Trust and assigned
to Group I, as indicated on the related Mortgage Loan Schedule, as supplemented
and amended from time to time.
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"Group I Pool Principal Balance": As of any date of determination, the
aggregate Principal Balances of all of the Group I Mortgage Loans as of the
close of business on such date.
"Group I Preference Amount": The Preference Amount with respect to Group I.
"Group I Premium Amount": With respect to each Payment Date, an amount
equal to the product of (x) one twelfth of the Certificate Insurer Premium Rate
and (y) the sum of the Certificate Principal Balances of the Class A Group I
Certificates (except the Class A-IO Notional Amount) as of the close of business
on the last day of the preceding Remittance Period.
"Group I Principal Distribution Amount": As of any Payment Date, the lesser
of (A) the Group I Available Funds less the Group I Interest Distribution
Amount, the Group I Trustee's Fee and the Group I Premium Amount and (B) the sum
of (i) the Base Group I Principal Distribution Amount, (ii) the Group I
Subordination Deficit, and (iii) the Group I Subordination Increase Amount.
"Group I Principal Remittance Amount": For any Remittance Date, without
duplication, the amount equal to the sum of (i) the aggregate principal portions
of the payments received by the Master Servicer with respect to the Group I
Mortgage Loans during the immediately preceding Remittance Period and (ii) any
Prepayments, Net Proceeds (but only to the extent that such Net Proceeds do not
exceed the Principal Balance of the related Mortgage Loan), in each case
described in clauses (i) and (ii) only to the extent collected on the Group I
Mortgage Loans during the preceding Remittance Period.
"Group I Shortfall Amount": As of any Payment Date, the excess, if any, of
(x) the Group I Insured Distribution Amount, as of such Payment Date over (y)
the Group I Total Available Funds on deposit in the Class A Group I Distribution
Account at 12 noon on the related Determination Date.
"Group I Specified Subordinated Amount": As such term is defined in the
Insurance and Indemnity Agreement.
"Group I Stepped Down Required Subordinated Percentage": As such term is
defined in the Insurance and Indemnity Agreement.
"Group I Subordinated Amount": With respect to any Payment Date, the
excess, if any, of (x) the Group I Pool Principal Balance as of the close of
business on the last day of the preceding Remittance Period over (y) the sum of
the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance, the Class A-4 Principal Balance and the Class A-5 Principal
Balance as of such Payment Date (after taking into account the payment on such
Payment Date of the amount set forth in clause (x) of the definition of "Base
Group I Principal Distribution Amount", and the Group I Subordination Deficit
except for any portions thereof related to payment of Group I Insured Payments
applied as payments of the Group I Principal Distribution Amount on such Payment
Date or on any prior Payment Date and not previously reimbursed to the
Certificate Insurer pursuant to Section 7.3 hereof).
"Group I Subordination Deficiency Amount": As of any Payment Date, the
excess, if any, of (i) the Group I Specified Subordinated Amount applicable to
such Payment Date over (ii) the Group I Subordinated Amount applicable to such
Payment Date prior to taking into account the payment of any related Group I
Subordination Increase Amounts on such Payment Date.
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"Group I Subordination Deficit": As of any Payment Date, the excess, if
any, of (x) the sum of the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance and
the Class A-5 Principal Balance after taking into account the amount otherwise
payable as the Group I Principal Distribution Amount on such Payment Date (i.e.,
the sum of (i) the Base Group I Principal Distribution Amount and (ii) the Group
I Subordination Increase Amount), over (y) the Group I Pool Principal Balance as
of the close of business on the last day of the preceding Remittance Period.
"Group I Subordination Increase Amount": With respect to any Payment Date,
the lesser of (x) the Group I Subordination Deficiency Amount as of such Payment
Date and (y) the portion of the Class B Interest allocable to Group I pursuant
to Section 7.3(b)(iii)(E) as of such Payment Date.
"Group I Subordination Reduction Amount": With respect to any Payment Date,
an amount equal to the lesser of (x) the Group I Excess Subordinated Amount and
(y) the amount described in clause (x) of the definition of Base Group I
Principal Distribution Amount, in each case as of such Payment Date.
"Group I Total Available Funds": As of any Payment Date, the amount on
deposit in the Class A Group I Distribution Account on such Payment Date after
making the allocations, transfers and disbursements from the Certificate Account
pursuant to Section 7.3(b) hereof on such Payment Date. The term "Group I Total
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to the Owners of the Certificates by the
Trustee as a result of proceedings under the United States Bankruptcy Code.
"Group I Trustee's Fee": With respect to any Payment Date, the product of
(i) one-twelfth of 0.0075% and (ii) the Group I Pool Principal Balance as of the
last day of the preceding Remittance Period.
"Group II": The group of Mortgage Loans that are the Group II Mortgage
Loans.
"Group II Available Funds": As of any Payment Date, the amount on deposit
in the Certificate Account with respect to the Group II Mortgage Loans on such
Payment Date after making the deposit to the Certificate Account pursuant to
Section 7.3(a)(ii) hereof on such Payment Date. The term "Group II Available
Funds" does not include Insured Payments and does not include any amounts that
cannot be distributed to the Owners of the Certificates by the Trustee as a
result of proceedings under the United States Bankruptcy Code.
"Group II Certificates": Any of the Class A-6 Group II Certificates.
"Group II Cumulative Net Realized Losses": As of any Payment Date, the sum
of all Net Realized Losses with respect to the Group II Mortgage Loans
experienced on all prior Payment Dates.
"Group II Excess Subordinated Amount": With respect to any Payment Date,
the excess, if any, of (x) the Group II Subordinated Amount that would apply on
such Payment Date after taking into account the payment of the Group II
Principal Distribution Amount on such Payment Date (except for any distributions
of related Group II Subordination Reduction Amounts on such Payment Date) over
(y) the Group II Specified Subordinated Amount for such Payment Date.
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"Group II Insured Distribution Amount": With respect to any Payment Date,
the sum of (i) Group II Insured Interest Distribution Amount for such Payment
Date and (ii) the Group II Insured Principal Distribution Amount for such
Payment Date.
"Group II Insured Interest Distribution Amount": With respect to any
Payment Date, the sum of (i) the Class A-6 Interest Distribution Amount and (ii)
the Class A-6 Interest Carry-Forward Amount.
"Group II Insured Payment": As of any Payment Date, the sum of (x) the
Group II Shortfall Amount for such Payment Date and (y) any Preference Amounts
with respect to the Class A-6 Group II Certificates with respect to which the
affected Owners have complied with the provisions of Section 7.3(g) hereof
during the related Remittance Period.
"Group II Insured Principal Distribution Amount": With respect to any
Payment Date, the Group II Subordination Deficit for such Payment Date plus any
amounts paid to the Trustee at the option of the Certificate Insurer in respect
of any losses on Liquidated Loans.
"Group II Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-6 Pass-Through Rate on
the Class A-6 Principal Balance immediately prior to such Payment Date.
"Group II Interest Remittance Amount": For any Remittance Date, the amount
equal to (x) the sum, without duplication, of (i) the aggregate interest
portions of the payments (whether or not collected) becoming due on the Group II
Mortgage Loans during the immediately preceding Remittance Period and (ii)
Compensating Interest with respect to the Group II Mortgage Loans minus (y) the
aggregate Master Servicing Fee due to the Master Servicer with respect to the
Group II Mortgage Loans for such Remittance Period to the extent not previously
paid to, or withheld by, the Master Servicer.
"Group II Monthly Remittance": The sum of (i) the Group II Interest
Remittance Amount and the Group II Principal Remittance Amount required to be
remitted to the Trustee on each Remittance Date and (ii) the amount of any
Substitution Amounts and Loan Purchase Prices on deposit in the Principal and
Interest Account with respect to the Group II Mortgage Loans on such Remittance
Date.
"Group II Mortgage Loans": The Mortgage Loans held by the Trust and
assigned to Group II, as indicated on the related Mortgage Loan Schedule, as
supplemented and amended from time to time.
"Group II Pool Principal Balance": As of any date of determination, the
aggregate Principal Balances of all of the Group II Mortgage Loans as of the
close of business on such date.
"Group II Preference Amount": The Preference Amount with respect to Group
II.
"Group II Premium Amount": With respect to each Payment Date, an amount
equal to the product of (x) one twelfth of the Certificate Insurer Premium Rate
and (y) the Certificate Principal Balance of the Class A-6 Group II Certificates
as of the close of business on the last day of the preceding Remittance Period.
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"Group II Principal Distribution Amount": As of any Payment Date, the
lesser of (A) the Group II Available Funds less the Group II Interest
Distribution Amount, the Group II Trustee's Fee and the Group II Premium Amount
and (B) the sum of (i) the Base Group II Principal Distribution Amount, (ii) the
Group II Subordination Deficit, and (iii) the Group II Subordination Increase
Amount in each case for such Payment Date.
"Group II Principal Remittance Amount": For any Remittance Date, without
duplication, the amount equal to the sum of (i) the aggregate principal portions
of the payments received by the Master Servicer with respect to the Group II
Mortgage Loans during the immediately preceding Remittance Period and (ii) any
Prepayments, Net Proceeds (but only to the extent that such Net Proceeds do not
exceed the Principal Balance of the related Mortgage Loan), in each case
described in clauses (i) and (ii) only to the extent collected on the Group II
Mortgage Loans during the preceding Remittance Period.
"Group II Shortfall Amount": As of any Payment Date, the excess, if any, of
(x) the Group II Insured Distribution Amount, as of such Payment Date, over (y)
the Group II Total Available Funds on deposit in the Class A-6 Group II
Distribution Account at 12 noon on the related Determination Date.
"Group II Specified Subordinated Amount": As such term is defined in the
Insurance and Indemnity Agreement.
"Group II Stepped Down Required Subordinated Percentage": As such term is
defined in the Insurance and Indemnity Agreement.
"Group II Subordinated Amount": With respect to any Payment Date, the
excess, if any, of (x) the Group II Pool Principal Balance as of the close of
business on the last day of the preceding Remittance Period over (y) the Class
A-6 Group II Principal Balance as of such Payment Date (after taking into
account the payment on such Payment Date of the amount set forth in clause (x)
of the definition of "Base Group II Principal Distribution Amount", and the
Group II Subordination Deficit except for any portion thereof related to payment
of Group II Insured Payments applied as payments of the Group II Principal
Distribution Amount on such Payment Date or on any prior Payment Date and not
previously reimbursed to the Certificate Insurer pursuant to Section 7.3
hereof).
"Group II Subordination Deficiency Amount": As of any Payment Date, the
excess, if any, of (i) the Group II Specified Subordinated Amount applicable to
such Payment Date over (ii) the Group II Subordinated Amount applicable to such
Payment Date prior to taking into account the payment of any related Group II
Subordination Increase Amounts on such Payment Date.
"Group II Subordination Deficit": As of any Payment Date, the excess, if
any, of (x) the Class A-6 Group II Principal Balance after taking into account
the amount otherwise payable as the Group II Principal Distribution Amount on
such Payment Date (i.e., the sum of (i) the Base Group II Principal Distribution
Amount and (ii) the Group II Subordination Increase Amount), over (y) the Group
II Pool Principal Balance as of the close of business on the last day of the
preceding Remittance Period.
"Group II Subordination Increase Amount": With respect to any Payment Date,
the lesser of (x) the Group II Subordination Deficiency Amount as of such
Payment Date and (y) the portion of the Class B Interest allocable to Group II
pursuant to Section 7.3(b)(iii)(E) as of such Payment Date.
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"Group II Subordination Reduction Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Group II Excess Subordinated
Amount for such Payment Date and (y) the amount described in clause (x) of the
definition of Base Group II Principal Distribution Amount for such Payment Date.
"Group II Total Available Funds": As of any Payment Date, the amount on
deposit in the Class A Group II Distribution Account on such Payment Date after
making the allocations, transfers and disbursements from the Certificate Account
pursuant to Section 7.3(b) hereof on such Payment Date. The term "Group II Total
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to the Owners of the Certificates by the
Trustee as a result of proceedings under the United States Bankruptcy Code.
"Group II Trustee's Fee": With respect to any Payment Date, the product of
(i) one-twelfth of 0.0075% and (ii) the Group II Pool Principal Balance as of
the last day of the preceding Remittance Period.
"Group III": The group of Mortgage Loans that are the Group III Mortgage
Loans.
"Group III Available Funds": As of any Payment Date, the amount on deposit
in the Certificate Account with respect to the Group III Mortgage Loans on such
Payment Date after making the deposit to the Certificate Account pursuant to
Section 7.3(a)(iii) hereof on such Payment Date. The term "Group III Available
Funds" does not include Insured Payments and does not include any amounts that
cannot be distributed to the Owners of the Certificates by the Trustee as a
result of proceedings under the United States Bankruptcy Code.
"Group III Certificates": Any of the Class A-7 Group III Certificates.
"Group III Cumulative Net Realized Losses": As of any Payment Date, the sum
of all Net Realized Losses with respect to the Group III Mortgage Loans
experienced on all prior Payment Dates.
"Group III Excess Subordinated Amount": With respect to any Payment Date,
the excess, if any, of (x) the Group III Subordinated Amount that would apply on
such Payment Date after taking into account the payment of the Group III
Principal Distribution Amount on such Payment Date (except for any distributions
of related Group III Subordination Reduction Amounts on such Payment Date) over
(y) the Group III Specified Subordinated Amount for such Payment Date.
"Group III Insured Distribution Amount": With respect to any Payment Date,
the sum of (i) Group III Insured Interest Distribution Amount for such Payment
Date and (ii) the Group III Insured Principal Distribution Amount for such
Payment Date.
"Group III Insured Interest Distribution Amount": With respect to any
Payment Date, the sum of (i) the Class A-7 Interest Distribution Amount and (ii)
the Class A-7 Interest Carry-Forward Amount.
"Group III Insured Payment": As of any Payment Date, the sum of (x) the
Group III Shortfall Amount for such Payment Date and (y) any Preference Amounts
with respect to the Class A-7 Group III Certificates with respect to which the
affected Owners have complied with the provisions of Section 7.3(g) hereof
during the related Remittance Period.
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"Group III Insured Principal Distribution Amount": With respect to any
Payment Date, the Group III Subordination Deficit for such Payment Date plus any
amounts paid to the Trustee at the option of the Certificate Insurer in respect
of any losses on Liquidated Loans.
"Group III Interest Distribution Amount": As of any Payment Date, interest
accrued during the related Accrual Period at the Class A-7 Pass-Through Rate on
the Class A-7 Principal Balance immediately prior to such Payment Date.
"Group III Interest Remittance Amount": For any Remittance Date, the amount
equal to (x) the sum, without duplication, of (i) the aggregate interest
portions of the payments (whether or not collected) becoming due on the Group
III Mortgage Loans during the immediately preceding Remittance Period and (ii)
Compensating Interest with respect to the Group III Mortgage Loans minus (y) the
aggregate Master Servicing Fee due to the Master Servicer with respect to the
Group III Mortgage Loans for such Remittance Period to the extent not previously
paid to, or withheld by, the Master Servicer.
"Group III Monthly Remittance": The sum of (i) the Group III Interest
Remittance Amount and the Group III Principal Remittance Amount required to be
remitted to the Trustee on each Remittance Date and (ii) the amount of any
Substitution Amounts and Loan Purchase Prices on deposit in the Principal and
Interest Account with respect to the Group III Mortgage Loans on such Remittance
Date.
"Group III Mortgage Loans": The Mortgage Loans held by the Trust and
assigned to Group III, as indicated on the related Mortgage Loan Schedule, as
supplemented and amended from time to time.
"Group III Pool Principal Balance": As of any date of determination, the
aggregate Principal Balances of all of the Group III Mortgage Loans as of the
close of business on such date.
"Group III Preference Amount": The Preference Amount with respect to Group
III.
"Group III Premium Amount": With respect to each Payment Date, an amount
equal to the product of (x) one twelfth of the Certificate Insurer Premium Rate
and (y) the Certificate Principal Balance of the Class A-7 Group III
Certificates as of the close of business on the last day of the preceding
Remittance Period.
"Group III Principal Distribution Amount": As of any Payment Date, the
lesser of (A) the Group III Available Funds less the Group III Interest
Distribution Amount, the Group III Trustee's Fee and the Group III Premium
Amount and (B) the sum of (i) the Base Group III Principal Distribution Amount,
(ii) the Group III Subordination Deficit, and (iii) the Group III Subordination
Increase Amount in each case for such Payment Date.
"Group III Principal Remittance Amount": For any Remittance Date, without
duplication, the amount equal to the sum of (i) the aggregate principal portions
of the payments received by the Master Servicer with respect to the Group III
Mortgage Loans during the immediately preceding Remittance Period and (ii) any
Prepayments, Net Proceeds (but only to the extent that such Net Proceeds do not
exceed the Principal Balance of the related Mortgage Loan), in each case
described in clauses (i) and (ii) only to the extent collected on the Group III
Mortgage Loans during the preceding Remittance Period.
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"Group III Shortfall Amount": As of any Payment Date, the excess, if any,
of (x) the Group III Insured Distribution Amount, as of such Payment Date, over
(y) the Group III Total Available Funds on deposit in the Class A-7 Group III
Distribution Account at 12 noon on the related Determination Date.
"Group III Specified Subordinated Amount": As such term is defined in the
Insurance and Indemnity Agreement.
"Group III Stepped Down Required Subordinated Percentage": As such term is
defined in the Insurance and Indemnity Agreement.
"Group III Subordinated Amount": With respect to any Payment Date, the
excess, if any, of (x) the Group III Pool Principal Balance as of the close of
business on the last day of the preceding Remittance Period over (y) the Class
A-7 Group III Principal Balance as of such Payment Date (after taking into
account the payment on such Payment Date of the amount set forth in clause (x)
of the definition of "Base Group III Principal Distribution Amount", and the
Group III Subordination Deficit except for any portion thereof related to
payment of Group III Insured Payments applied as payments of the Group III
Principal Distribution Amount on such Payment Date or on any prior Payment Date
and not previously reimbursed to the Certificate Insurer pursuant to Section 7.3
hereof).
"Group III Subordination Deficiency Amount": As of any Payment Date, the
excess, if any, of (i) the Group III Specified Subordinated Amount applicable to
such Payment Date over (ii) the Group III Subordinated Amount applicable to such
Payment Date prior to taking into account the payment of any related Group III
Subordination Increase Amounts on such Payment Date.
"Group III Subordination Deficit": As of any Payment Date, the excess, if
any, of (x) the Class A-7 Group III Principal Balance after taking into account
the amount otherwise payable as the Group III Principal Distribution Amount on
such Payment Date (i.e., the sum of (i) the Base Group III Principal
Distribution Amount and (ii) the Group III Subordination Increase Amount), over
(y) the Group III Pool Principal Balance as of the close of business on the last
day of the preceding Remittance Period.
"Group III Subordination Increase Amount": With respect to any Payment
Date, the lesser of (x) the Group III Subordination Deficiency Amount as of such
Payment Date and (y) the portion of the Class B Interest allocable to Group III
pursuant to Section 7.3(b)(iii)(E) as of such Payment Date.
"Group III Subordination Reduction Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Group III Excess Subordinated
Amount for such Payment Date and (y) the amount described in clause (x) of the
definition of Base Group III Principal Distribution Amount for such Payment
Date.
"Group III Total Available Funds": As of any Payment Date, the amount on
deposit in the Class A Group III Distribution Account on such Payment Date after
making the allocations, transfers and disbursements from the Certificate Account
pursuant to Section 7.3(b) hereof on such Payment Date. The term "Group III
Total Available Funds" does not include Insured Payments and does not include
any amounts that cannot be distributed to the Owners of the Certificates by the
Trustee as a result of proceedings under the United States Bankruptcy Code.
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"Group III Trustee's Fee": With respect to any Payment Date, the product of
(i) one-twelfth of 0.0075% and (ii) the Group III Pool Principal Balance as of
the last day of the preceding Remittance Period.
"Highest Lawful Rate": As defined in Section 12.13.
"Insurance and Indemnity Agreement": The Insurance and Indemnity Agreement
dated as of October 1, 1997 among the Certificate Insurer, the Seller and the
Transferor.
"Indemnification Agreement": The Indemnification Agreement dated as of
October 23, 1997 among the Seller, the Master Servicer, the Transferor, the
Underwriters and the Certificate Insurer.
"Insurance Policy": Any hazard or title insurance policy relating to a
Mortgage Loan.
"Insurance Proceeds": The proceeds of any Insurance Policy relating to a
Mortgage Loan, a Property or an REO Property, net of proceeds to be applied to
the repair of the Property or released to the Mortgagor and net of expenses
reimbursable therefrom, but excluding any Insured Payment.
"Insured Distribution Amount": The Group I Insured Distribution Amount, the
Group II Insured Distribution Amount or the Group III Insured Distribution
Amount, as the case may be.
"Insured Payment": The Group I Insured Payment, the Group II Insured
Payment or the Group III Insured Payment, as the case may be.
"Interest Advance": As defined in Section 7.9(a) hereof.
"Interest Advance Reimbursement Amount": As defined in Section 7.9(b)
hereof.
"Interest Determination Date": With respect to any Accrual Period for the
Class A-1 Group I Certificates, the Class A-6 Group II Certificates and the
Class A-7 Group III Certificates, the second London Business Day preceding the
first day of such Accrual Period.
"Late Payment Rate": As defined in the Insurance and Indemnity Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-1 Group I
Certificates, the Class A-6 Group II Certificates or the Class A-7 Group III
Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on the Reuters Screen LIBO
Page, as of 11:00 a.m. (London time) on such Interest Determination Date. On
each Interest Determination Date, LIBOR for the related Accrual Period will be
established by the Trustee as follows:
(i) If, on such Interest Determination Date, two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period
shall be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16%).
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(ii) If, on such Interest Determination Date, fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate.
"Liquidated Loan": As to any Payment Date, (i) any Mortgage Loan as to
which the Master Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Remittance Period that all
Liquidation Proceeds which it expects to recover from or on account of such
Mortgage Loan have been recovered or (ii) any Mortgage Loan as to which the
related REO Property has been held by the Trust for 270 days. Any such
determination shall be evidenced by an Officer's Certificate in the form of
Exhibit I to this Agreement.
"Liquidation Expenses": Expenses which are incurred by the Master Servicer
in connection with the liquidation of any defaulted Mortgage Loan, such
expenses, including, without limitation, legal fees and expenses, and any
unreimbursed Servicing Advances expended by the Master Servicer pursuant to
Sections 10.9(b) and 10.13 of this Agreement with respect to the related
Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by the Master
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise, and including, without limitation, sale
proceeds received upon the sale of REO Property.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from the
Trust on a Remittance Date pursuant to Sections 3.2, 3.3, 3.4, or 10.13(f)
hereof, an amount equal to the Principal Balance of such Mortgage Loan as of the
date of purchase (after giving effect to the related Monthly Remittance remitted
by the Master Servicer on such Remittance Date), plus interest on the
outstanding Principal Balance thereof as of the beginning of the preceding
Remittance Period computed at the related Coupon Rate less the rate at which the
Master Servicing Fee is calculated, plus the aggregate amounts of (i) all
unreimbursed Reimbursable Advances and (ii) all Delinquency Advances which the
Master Servicer has theretofore failed to remit with respect to such Mortgage
Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to any
First Mortgage Loan, the ratio of (A) the original principal balance of the Note
relating to such First Mortgage Loan to (B) the Appraised Value and (ii) with
respect to any Second Mortgage Loan, the ratio of (A) an amount equal to the sum
of (a) the remaining principal balance of the Senior Lien note relating to such
First Mortgage Loan and (b) the original principal balance of the Note relating
to such Second Mortgage Loan to (B) the Appraised Value as of the date of
origination of such Second Mortgage Loan.
"London Business Day": A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.
"Lower Tier Distribution Amount": As of any Payment Date, the sum of (i)
the Group I Available Funds, (ii) the Group II Available Funds and (iii) the
Group III Available Funds.
"Lower-Tier Interests": As defined in Section 2.8(c) hereof.
"Lower-Tier REMIC": The segregated pool of assets held by the Trust
consisting of the REMIC I Regular Interests.
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"Lower Tier Required Subordinate Amount": With respect to any Distribution
Date, an amount equal to the product of (a) the product of (i) 0.50 and (ii) the
sum of the principal balances of LT-6, LT-8, LT-10 and LT-12 divided by the Pool
Principal Balance then outstanding and (b) the sum of the Group I, Group II and
Group III Specified Subordinated Amounts.
"Lower Tier Subordinated Amount": As of any date of determination, (i) 0.50
times the sum of the principal balances of LT-6, LT-8, LT-10 and LT-12 minus
(ii) the sum of the principal balances of LT-6, LT-8 and LT-10, in each case as
of such date of determination.
"Master Servicer": Access Financial Lending Corp., a Delaware corporation.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt in
the form set forth in Exhibit F hereto.
"Master Servicing Fee": With respect to any Mortgage Loan, an amount
retained by the Master Servicer from collections of interest on the Mortgage
Loans as compensation for its servicing duties relating to such Mortgage Loan
pursuant to Section 10.15 hereof and equal to 0.45% per annum of the then
outstanding principal amount of such Mortgage Loan as of the first day of each
Remittance Period payable on a monthly basis; provided, that if the Seller is no
longer the Master Servicer, such rate may be increased to a rate not in excess
of 0.50% and if the Trustee is acting as Master Servicer such rate shall be
equal to 0.50%.
"Maximum LT-12 Interest Deferral Amount": With respect to any Distribution
Date, the excess of (i) accrued interest at the stated interest rate applicable
to LT-12 for such Distribution Date on a balance equal to the principal balance
of LT-12 minus the Lower Tier Subordinated Amount, in each case for such
Distribution Date over (ii) interest on LT-6, LT-8 and LT-10 for such
Distribution Date.
"Monthly Remittance": The Group I Monthly Remittance, the Group II Monthly
Remittance or the Group III Monthly Remittance, as the case may be.
"Moody's": Moody's Investors Service, Inc.
"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 Note.
"Mortgage Loan": Each of the mortgage loans sold by the Seller to the Trust
on the Startup Day, together with any Qualified Replacement Mortgages
substituted therefor by the Seller in accordance with Section 3.2, 3.3 or 3.4
hereof as from time to time are held as a part of the Trust Estate, the Mortgage
Loans originally so held being identified in the related Mortgage Loan Schedule.
The term "Mortgage Loan" includes the terms "First Mortgage Loan" and "Second
Mortgage Loan". The term Mortgage Loan" includes any Mortgage Loan which is
Delinquent, which relates to a foreclosure or which relates to a Property which
is REO Property prior to such Property's disposition by the Trust. Any mortgage
loan which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Seller, in fact
was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 3.3(b)(i) hereof with respect to such mortgage loan, shall nevertheless
be considered a "Mortgage Loan" for all purposes of this Agreement.
"Mortgage Loan Group": Each of Group I, Group II and Group III.
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"Mortgage Loan Schedules": The schedules of Mortgage Loans, separated by
Mortgage Loan Group and by Sub-Servicer, listing each Mortgage Loan conveyed on
the Startup Day and setting forth as to each Mortgage Loan the following
information: (i) the name of the Mortgagor, (ii) the street address of the
Property, (iii) the town or city in which the Property is located, (iv) the
Principal Balance as of the Cut-Off Date, (v) the account number, (vi) the
original principal amount, (vii) the current Coupon Rate, (viii) the first date
on which a scheduled monthly payment is due under the Note, (ix) the original
stated maturity date of the Note, (x) the State in which the Property is
located, (xi) the zip code of the Property, (xii) the Loan-to-Value Ratio,
(xiii) the Loan-to-Value Ratio of any Second Mortgage Loan calculated by
disregarding the amount described in clause (ii)(a) of the definition of
"Loan-to-Value Ratio", (xiv) whether the Property is owner-occupied or non-owner
occupied, (xv) whether the Property is a single family residence, two-to-four
family residence, a condominium, a townhouse or a rowhouse and (xvi) if such
Mortgage Loan is a "balloon loan", the amortization terms (e.g., 30 year
amortization due in 15 years).
"Mortgagor": The obligor on a Note.
"Net Insurance Proceeds": As to any Mortgage Loan, Insurance Proceeds net
of unreimbursed Reimbursable Advances relating thereto. In no event shall Net
Insurance Proceeds with respect to any Mortgage Loan be less than zero.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of unreimbursed Reimbursable Advances relating to such Mortgage Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"Net Pool Balance": As of any Payment Date, the sum of the Pool Principal
Balance less the sum of the principal balances of the Class LT-6, LT-8, LT-10,
and LT-12 Certificates.
"Net Proceeds": The sum of, without duplication, Net Liquidation Proceeds,
Net Insurance Proceeds and Net Released Mortgage Property Proceeds.
"Net Realized Loss": With respect to any Liquidated Loan the excess, if
any, of (x) the Principal Balance thereof at the time the Mortgage Loan became a
Liquidated Loan over (y) the related Net Liquidation Proceeds.
"Net Released Mortgage Property Proceeds": As to any Mortgage Loan,
Released Mortgage Property Proceeds net of unreimbursed Reimbursable Advances
relating thereto. In no event shall Net Released Mortgage Property Proceeds with
respect to any Mortgage Loan be less than zero.
"Net Weighted Average Coupon Rate": With respect to any Mortgage Loan Group
and Remittance Period, the weighted average Coupon Rates (weighted by Principal
Balances) of the related Mortgage Loans, calculated at the opening of business
on the first day of such Remittance Period, less the rate at which the Master
Servicing Fee is then calculated and less the Trustee Fee and Certificate
Insurer Premium Rate (in each case, such rates adjusted to match the Accrual
Period of the Certificates in the related Group); and less interest shortfalls
with respect to Mortgage Loans in the related Group as of the end of the prior
Remittance Period arising from Prepayments of principal and from application of
the Relief Act, which shortfalls are not otherwise covered by Compensating
Interest with respect to such Payment Date; and in the case of Group I only for
the first 36 Payment Dates, less the interest due on the Class A-IO Group I
Certificates on such Payment Date, expressed as a per annum rate on the
aggregate
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principal balance of the Mortgage Loans in the related Group as of the opening
of business of the first day of the related Remittance Period; and in the case
of Group II and Group III only, less (x) 0% on the first through 12th Payment
Dates or (y) 0.50% on the 13th Payment Date and thereafter.
"Nonrecoverable Advances": With respect to any Mortgage Loan, any Servicing
Advance or Delinquency Advance proposed to be made by the Master Servicer in
respect of a Mortgage Loan or REO Property which, in the good faith business
judgment of the Master Servicer, would not be ultimately recoverable from late
collections, Insurance Proceeds, Liquidation Proceeds or Released Mortgage
Property Proceeds on such Mortgage Loan or REO Property or otherwise.
Notwithstanding anything to the contrary contained in this Agreement, no
Delinquency Advance or Servicing Advance shall be required to be made by the
Master Servicer if such Delinquency Advance or Servicing Advance would, if made,
constitute a Nonrecoverable Advance.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"Operative Documents": This Agreement, the Sale Agreement, the Insurance
and Indemnity Agreement, the Underwriting Agreement, and the Indemnification
Agreement.
"Original Group I Pool Principal Balance": The aggregate Principal Balances
of all Group I Mortgage Loans as of the Cut-Off Date, i.e., $82,331,718.36.
"Original Group II Pool Principal Balance": The aggregate Principal
Balances of all Group II Mortgage Loans as of the Cut-Off Date, i.e.,
$50,001,533.97.
"Original Group III Pool Principal Balance": The aggregate Principal
Balances of all Group III Mortgage Loans as of the Cut-Off Date, i.e.,
$67,550,309.04.
"Original Pool Principal Balance": The aggregate Principal Balances of all
Mortgage Loans as of the Cut-Off Date, i.e., $199,883,561.37.
"Original Principal Balance": With respect to each Note, the outstanding
principal amount of such Note as of the Cut-Off Date.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Certificates or portions thereof for which full and final payment
of money in the necessary amount has been theretofore deposited with the
Trustee in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
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(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.5 hereof; and
(v) With respect to voting rights, any Class A Certificates held by
the Seller, the Master Servicer, the Transferor or any affiliate of any
thereof, unless all other Class A Certificates have been paid in full.
Any Certificates in which the Certificate Insurer has an interest pursuant
to its right of subrogation shall be "Outstanding Certificates".
"Owner": The Person in whose name a Certificate is registered in the
Register.
"Payment Date": The 18th day of each month (or, if such day is not a
Business Day, the next following Business Day), commencing in the month
following the Startup Day.
"Percentage Interest": As to any Class A Certificate or Class B
Certificate, that percentage, expressed as a fraction, the numerator of which is
the original principal balance of such Certificate as of the Cut-Off Date and
the denominator of which is the original principal balance of all Certificates
of the same Class as of the Cut-Off Date; as to any Residual Certificate, that
Percentage Interest set forth on such Residual Certificate.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Principal
Balances of all Mortgage Loans 90 or more days Delinquent as of the close of
business on the last day of such Remittance Period over (y) the Pool Principal
Balance as of the close of business on the last day of such Remittance Period.
"Pool Principal Balance": As to any Payment Date, the aggregate Principal
Balance of the Mortgage Loans as of the close of business on the last day of the
related Remittance Period.
"Pool Rolling Three Month Delinquency Rate": As of any Payment Date the
fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Payment Dates), immediately preceding Remittance Periods.
"Preference Amount": As to any Payment Date, with respect to a Class of
Certificates, any amounts included in previous distributions to the related
Certificateholders of Distribution Amounts for such Class (exclusive of Insured
Payments) which are recovered from such Certificateholders 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 and which have not theretofore been repaid to such
Certificateholders provided such Certificateholders have complied with the
provisions of Section 7.3(f).
"Premium Amount": The Group I Premium Amount, the Group II Premium Amount
or the Group III Premium Amount, as the case may be.
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"Prepayment": Any payment of principal of a Mortgage Loan by a Mortgagor
which is received by the Master Servicer in advance of the scheduled due date
for the payment of such principal.
"Prepayment Interest Shortfalls": With respect to each Group, the sum of
the difference (caused by any Prepayments during a calendar month), if any, for
each Mortgage Loan in the related Group, between (i) the interest collected by
the Master Servicer from the Mortgagor during a calendar month, and (ii) the
full month's interest at the related Coupon Rate.
"Preservation Expenses": Expenditures made by the Master Servicer in
connection with a foreclosed Mortgage Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation. Preservation
Expenses shall constitute "Servicing Advances" for all purposes of this
Agreement.
"Principal and Interest Account": The principal and interest account
created by the Master Servicer pursuant to Section 10.8 hereof.
"Principal Balance": As of any date of calculation and with respect to each
Mortgage Loan, the Original Principal Balance thereof less any related Principal
Remittance Amounts relating to such Mortgage Loan included in previous related
Monthly Remittances and, if applicable, the related Monthly Remittance as of
such date; provided that the Principal Balance for any Mortgage Loan which has
become a Liquidated Loan shall be zero following the date on which such Mortgage
Loan becomes a Liquidated Loan, and at all times thereafter.
"Principal Distribution Amount": The Class A-1 Principal Distribution
Amount, the Class A-2 Principal Distribution Amount, the Class A-3 Principal
Distribution Amount, the Class A-4 Principal Distribution Amount, the Class A-5
Principal Distribution Amount, the Class A-6 Principal Distribution Amount or
the Class A-7 Principal Distribution Amount as the case may be.
"Principal Remittance Amounts": The Group I Principal Remittance Amount,
the Group II Principal Remittance Amount or the Group III Principal Remittance
Amount, as the case may be.
"Prohibited Transaction": Has the meaning as defined in Section 860F of the
Code.
"Property": The underlying real property, including the improvements
thereon, securing a Mortgage Loan.
"Prospectus": The Prospectus dated November 7, 1996 relating to Mortgage
Loan Asset Backed Securities, issuable in Series.
"Prospectus Supplement": The Prospectus Supplement dated October 23, 1997
relating to the Class A Certificates.
"Qualified Liquidation": "Qualified Liquidation" shall have the meaning set
forth from time to time in the definition thereof at Section 860F(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust.
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"Qualified Mortgage": "Qualified mortgage" shall have the meaning set forth
from time to time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
by the Seller pursuant to Section 3.2, 3.3 or 3.4 hereof, which (i) has a fixed
rate of interest if the Mortgage Loan being replaced is a Group I Mortgage Loan
and has a variable rate of interest if the Mortgage Loan being replaced is a
Group II or Group III Mortgage Loan, (ii) has a Coupon Rate at least equal to
the Coupon Rate of the Mortgage Loan being replaced (which, in the case of a
Group II or Group III Mortgage Loan, shall be deemed to mean the same index and
a margin equal to or greater than the margin applicable to the Mortgage Loan
being replaced), (iii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iv) shall mature no
later than the latest maturity date of any Mortgage Loan then held in the
related Mortgage Loan Group (v) has a Loan-to-Value Ratio as of the Replacement
Cut-Off Date no higher than the Loan-to-Value Ratio of the replaced Mortgage
Loan at such time, (vi) shall be a First Mortgage Loan if the Mortgage Loan
being replaced was a First Mortgage Loan, and shall have the same or higher lien
priority if the Mortgage Loan being replaced was a junior Mortgage Loan, (vii)
has a Principal Balance as of the related Replacement Cut-Off Date equal to or
less than the Principal Balance of the replaced Mortgage Loan as of such
Replacement Cut-Off Date, (viii) shall be of the same or higher credit quality
classification (determined in accordance with the Seller's underwriting
guidelines) as the Mortgage Loan which such Qualified Replacement Mortgage
replaces, (ix) satisfies the criteria set forth from time to time in the
definition of "qualified replacement mortgage" at Section 860G(a)(4) of the Code
(or any successor statute thereto) and applicable to the Trust, and (x) complies
as of the date of substitution with each representation and warranty set forth
in Section 3.2(b) hereof, all as evidenced by any Officer's Certificate of the
Seller delivered to the Trustee prior to any such substitution. In the event
that one or more mortgage loans are proposed to be substituted for one or more
Mortgage Loans, the Certificate Insurer may allow the foregoing tests to be met
on a weighted average basis or other aggregate basis acceptable to the
Certificate Insurer, as evidenced by a written approval delivered to the Trustee
by the Certificate Insurer, except that the requirement of clause (ix) hereof
must be satisfied as to each Qualified Replacement Mortgage.
"Rating Agency": Any nationally recognized statistical credit rating
agency, or its successor, that rates any Certificates at the request of the
Seller at the time of the initial issuance of the Certificates. If such agency
or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Seller, notice of which designation shall be given to the Trustee, the
Certificate Insurer and the Master Servicer. References herein to the highest
rating category of a rating agency shall mean AAA (with respect to long-term
ratings) or A-1+ (with respect to short-term ratings), in the case of S&P, and
Aaa (with respect to long-term ratings) or P-1 (with respect to short-term
ratings), in the case of Moody's, and in the case of any other Rating Agency
shall mean such equivalent ratings.
"Record Date": With respect to the Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-IO Group I Certificates and any Payment Date, the close of
business on the first Business Day of the calendar month in which such Payment
Date occurs. With respect to the Class A-1, Class A-6 and Class A-7 Certificates
and any Payment Date, the close of business on the Business Day immediately
preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC; provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by the Seller which are
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engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) not
controlling, under the control of or under common control with the Seller or any
affiliate thereof, (iii) whose quotations appear on the Reuters Screen LIBO Page
on the relevant Interest Determination Date and (iv) which have been designated
as such by the Trustee.
"Register": The register maintained by the Trustee in accordance with
Section 5.4 hereof, in which the names of the Owners are set forth.
"Registration Statement": The Seller's Registration Statement number
333-07837, filed on Form S-3.
"Reimbursable Advances": As to any Mortgage Loan, all Delinquency Advances
and Servicing Advances made by the Master Servicer with respect thereto, to the
extent not previously paid to or withheld by the Master Servicer.
"Reimbursement Amount": With respect to any Class of Class A Certificates
and for any Payment Date, the sum of (x)(i) all related Insured Payments
previously received by the Trustee not previously repaid to the Certificate
Insurer pursuant to Section 7.3(b)(iii)(C), together with interest accrued on
each such related Insured Payment not previously repaid calculated from the date
the Trustee received the related Insured Payment at the Late Payment Rate and
(y) any other amounts then due and owing to the Certificate Insurer relating to
such Class A Certificates under the Insurance and Indemnity Agreement.
"Released Mortgaged Property Proceeds": Proceeds received in connection
with a taking of a Property by condemnation or the exercise of eminent domain or
in connection with a release of part of the Property.
"Relief Act Shortfalls": With respect to each Group, the aggregate
difference (caused by application of the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended) between (i) the interest collected by the Master Servicer
from the related Mortgagor during a calendar month and (ii) the full month's
interest at the related Coupon Rate.
"Remaining Group I Principal Distribution Amount": As of any Payment Date,
the Group I Principal Distribution Amount less the Class A-5 Lockout
Distribution Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC I": The segregated pool of assets held by the Trust consisting of
the Mortgage Loans.
"REMIC I Regular Interests": As defined in Section 2.8(d) hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of the Code, and related provisions, and regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.
"REMIC Trust": The segregated pool of assets consisting of the Trust Estate
except for the Supplemental Interest Payment Account.
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"Remittance Date": Any date on which the Master Servicer is required to
remit moneys on deposit in a Principal and Interest Account to the Trustee,
which shall be the 13th day of each month, commencing in the month following the
Startup Day or if such day is not a Business Day the following Business Day.
"Remittance Period": The period (inclusive) beginning at the opening of
business on the second day of the calendar month immediately preceding the
calendar month in which a Remittance Date occurs and ending at the close of
business on the first day of the calendar month in which such Remittance Date
occurs.
"REO Property": A Property acquired by the Master Servicer in the name of
and on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in
connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the second day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Representative": Prudential Securities Incorporated.
"Reserve Interest Rate": With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of 1/16%) of
the one-month U.S. dollar lending rates which three New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (ii)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month U.S. dollar lending rate which three New York City banks selected by
the Trustee are quoting on such Interest Determination Date to leading European
banks.
"Residual Certificate": Any Class RL Certificate or any Class RU
Certificate.
"Rolling Delinquency Percentage": For any Distribution Date, the average of
the Delinquency Percentages for the Mortgage Loans as of the last day of each of
the six (or 1, 2, 3, 4, and 5 in the case of the first five Payment Dates, as
applicable) most recently ended Remittance Periods.
"Rolling Loss Percentage": As of any Distribution Date commencing on the
thirteenth Payment Date, the percentage equivalent of a fraction, the numerator
of which is the aggregate amount of Net Realized Losses incurred during the
preceding twelve calendar months, and the denominator of which is the aggregate
Pool Principal Balance as of the first day of the twelfth preceding calendar
month.
"S&P": Standard & Poor's, a division of The McGraw Hill Companies.
"Sale Agreement": The Purchase and Sale Agreement dated as of October 1,
1997 between the Seller and the Transferor.
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"Second Mortgage Loan": A Mortgage Loan which constitutes a second priority
mortgage lien with respect to the related Property, as identified in the
Mortgage Loan Schedules.
"Seller": Access Financial Lending Corp., a Delaware corporation.
"Seller Optional Termination Date": The first Remittance Date on which the
then-outstanding aggregate Principal Balances of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage loan
relating to the corresponding Property having a first priority lien.
"Servicing Advance": As defined in Sections 10.9(b) and 10.13 hereof.
"Servicing Standards": As defined in Section 10.2 hereof.
"Startup Day": October 31, 1997.
"Step-Down Cumulative Loss Test": As such term is defined in the Insurance
and Indemnity Agreement.
"Step-Down Rolling Delinquency Test": As such term is defined in the
Insurance and Indemnity Agreement.
"Step-Down Rolling Loss Test": As such term is defined in the Insurance and
Indemnity Agreement.
"Step-Down Trigger": For any Payment Date after the 30th Payment Date, the
Step-Down Trigger will have occurred if each of the Step-Down Cumulative Loss
Test, the Step-Down Rolling Delinquency Test and the Step-Down Rolling Loss Test
is met. In no event will the Step-Down Trigger be deemed to have occurred for
the 30th Payment Date or any preceding Payment Date.
"Step-Up Cumulative Loss Test": As such term is defined in the Insurance
and Indemnity Agreement.
"Step-Up Rolling Delinquency Test": As such term is defined in the
Insurance and Indemnity Agreement.
"Step-Up Rolling Loss Test": As such term is defined in the Insurance and
Indemnity Agreement.
"Step-Up Trigger": For any Payment Date, the Step-Up Trigger will have
occurred if any one of the Step-Up Cumulative Loss Test, the Step-Up Rolling
Delinquency Test or the Step-Up Rolling Loss Test is met.
"Sub-Servicer": Any Person with whom the Master Servicer has entered into a
Sub-Servicing Agreement and who satisfies the requirements set forth in Section
10.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Master Servicer
and any Sub-Servicer relating to servicing and/or administration of certain
Mortgage Loans as permitted by Section 10.3 hereof.
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"Subordination Deficiency Amount": The Group I Subordination Deficiency
Amount, the Group II Subordination Deficiency Amount or the Group III
Subordination Deficiency Amount, as the case may be.
"Substitution Amount": As defined in Section 3.2(a) hereof.
"Supplemental Certificates": The Class B-S Certificates.
"Supplemental Interest Payment Account": The Supplemental Interest Payment
Account established in accordance with Section 7.9(a) hereof and maintained by
the Trustee.
"Supplemental Interest Payment Amount": As defined in Section 7.9(a)
hereof.
"Supplemental Interest Trust": The Access Financial Supplemental Interest
Trust 1997-3 created pursuant to Section 7.9(a) hereof.
"Tax Matters Person": The tax matters person, as defined in Section
1.860F-4(d) of the Treasury Regulations, appointed with respect to the Trust
pursuant to Section 12.17 hereof.
"Transferor": Access Financial Receivables Corp., a Delaware corporation.
"Trigger Event": An Event of Default described in clauses (viii), (ix) or
(x) of Section 11.1.
"Trust": Access Financial Mortgage Loan Trust 1997-3, the trust created
under Article II of this Agreement.
"Trust Estate": Collectively, all money, instruments, and other property to
the extent such money, instruments and other property, are subject hereto or
intended to be held in trust for the benefit of the Owners, including all
proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii)
such amounts, including Eligible Investments, as from time to time may be held
by the Trustee in any Account, and by the Master Servicer in the Principal and
Interest Account or otherwise held by the Master Servicer in trust for the
Owners (except as otherwise provided herein), (iii) any Property, the ownership
of which has been effected in the name of the Trust as a result of foreclosure
or acceptance by the Master Servicer of a deed in lieu of foreclosure and that
has not been withdrawn from the Trust, (iv) the rights, if any, of the Trust in
any Insurance Policies relating to the Mortgage Loans, (v) Net Liquidation
Proceeds (but only to the extent that such Net Liquidation Proceeds do not
exceed the Principal Balance of the related Mortgage Loan plus accrued and
unpaid interest on such Mortgage Loan) with respect to any Liquidated Loan, (vi)
Released Mortgaged Property Proceeds and (vii) the Certificate Insurance Policy.
"Trustee": The Chase Manhattan Bank, a New York banking corporation,
located on the date of execution of this Agreement at 450 West 33rd Street, 15th
Floor, New York, NY 10001, not in its individual capacity but solely as Trustee
under this Agreement, and any successor hereunder.
"Trustee's Fee": The total of the Group I Trustee's Fee, the Group II
Trustee's Fee and the Group III Trustee's Fee.
"Underwriters": Prudential Securities Incorporated and Morgan Stanley & Co.
Incorporated.
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"Underwriting Agreement": The Underwriting Agreement dated October 23, 1997
among the Seller and the Underwriters.
"Unregistered Certificates": Certificates which are not registered as
evidenced by inclusion in the Register.
"Upper-Tier REMIC": The segregated pool of assets held by the Trust
consisting of the Lower Tier Interests (except for the RL Lower-Tier Interest,
as set forth in the chart in Section 2.8(c) hereof), the Distribution Accounts
and the Certificate Insurance Policy.
Section 1.2. Use of Words and Phrases . "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. The definitions set forth in Section 1.1 hereof
include both the singular and the plural. Whenever used in this Agreement, any
pronoun shall be deemed to include both singular and plural and to cover all
genders.
Section 1.3. Captions; Table of Contents . The captions or headings in this
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
Section 1.4. Opinions . Each opinion with respect to the validity, binding
nature and enforceability of documents or Certificates may be qualified to the
extent that the same may be limited by applicable 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 may state that no
opinion is expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion may
state that it is given in reasonable reliance upon an opinion of another, a copy
of which must be attached, concerning the laws of a foreign jurisdiction.
Opinions regarding REMIC matters must be furnished by special counsel to the
Seller.
Section 1.5. Calculations All calculations of accrued interest made
pursuant to the Agreement shall be made assuming a 360-day year consisting of
twelve 30-day months, except for interest on the Class A-1 Group I Certificates,
the Class A-6 Group II Certificates and Class A-7 Group III Certificates, which
calculations shall be made based on the actual number of days over a 360-day
year, or as otherwise specifically provided herein.
ARTICLE II
THE TRUST
Section 2.1. Establishment of the Trust . The Seller does hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "Access Financial Mortgage Loan
Trust 1997-3". The Trust shall be deemed to consist of three sub-trusts, one
with respect to each Mortgage Loan Group.
Section 2.2. Office . The office of the Trust shall be in care of the
Trustee, 450 West 33rd Street, 15th Floor, New York, New York 10001, attn:
Global Trust Services or at
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such other address as the Trustee may designate by notice to the Seller, the
Master Servicer, the Transferor, the Certificate Insurer and the Owners.
Section 2.3. Purpose and Powers . The purpose of the Trust is to engage in
the following activities, and only such activities: (i) the purchase of the
Mortgage Loans; (ii) the holding of the Mortgage Loans and the Trust Estate
related thereto; (iii) the issuance of the Certificates; (iv) activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith, including the investment of moneys in
accordance with this Agreement; and (v) such other activities as may be required
in connection with conservation of the Trust Estate and distributions to the
Owners; provided, however, that nothing contained herein shall be construed to
permit the Trustee to take any action which would adversely affect the status of
any interest held by the Trust which is intended to be treated as a REMIC.
Section 2.4. Appointment of the Trustee; Declaration of Trust . The Seller
hereby appoints the Trustee as trustee of the Trust effective as of the Startup
Day, to have all the rights, powers and duties set forth herein. The Trustee
hereby acknowledges and accepts such appointment, represents and warrants its
eligibility as of the Startup Day to serve as Trustee pursuant to Section 9.8
hereof and declares that it will hold the Trust Estate in trust upon and subject
to the conditions set forth herein for the benefit of the Owners.
Section 2.5. Expenses of the Trust . The Master Servicer shall retain its
monthly aggregate Master Servicing Fees as provided in Section 10.15 herein; the
Trustee's Fee shall be paid monthly as provided in Section 7.3(b)(i) hereof; and
the premiums due to the Certificate Insurer shall be paid monthly as provided in
Section 7.3(b)(iii)(C) hereof; all other expenses of the Trust including any
fees and expenses incurred by the Trustee in connection with a termination of
the Trust pursuant to Article VIII shall be submitted to the Seller for its
approval, and, if so approved, shall be paid by the Seller. The reasonable fees
and expenses of the Trustee's counsel in connection with the review and delivery
of this Agreement and related documentation shall be due as of the Startup Day
and shall be paid by the Seller.
Section 2.6. Ownership of the Trust . On the Startup Day, the ownership
interests in the Trust shall be transferred as set forth in Section 4.2 hereof,
such transfer to be evidenced by issuance of the Certificates as described
therein. Thereafter, transfer of any ownership interest shall be governed by
Section 5.4 hereof.
Section 2.7. Receipt of Trust Estate . The Seller hereby directs the
Trustee to accept the property conveyed to it pursuant to Section 3.3 hereof in
connection with the establishment of the Trust, and the Trustee hereby
acknowledges receipt of such property. The Seller further directs the Trustee to
issue the Certificates, to hold the Class A Certificates as transfer agent for
the Depository as provided in Section 5.4, and to deliver the Class B
Certificates and the Residual Certificates to the Seller.
Section 2.8. Miscellaneous REMIC Provisions . (a)__ The Trust shall elect
that each of the Upper-Tier REMIC, the Lower-Tier REMIC and REMIC I shall be
treated as REMICs under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such REMIC elections.
(b) The Class A-1 Group I Certificates, the Class A-2 Group I Certificates,
the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the
Class A-5 Group I Certificates, the Class A-IO Group I Certificates, the Class
A-6 Group II Certificates, the Class
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A-7 Group III Certificates, the uncertificated right of the Supplemental
Interest Account to receive the distributions described in Section 7.3(c) (the
"Uncertificated Interest") are hereby designated as " regular interests" with
respect to the Upper-Tier REMIC and the Class RU Certificates are hereby
designated as the single class of "residual interest" with respect to the
Upper-Tier REMIC.
(c) The Class LT-1, LT-2, LT-3, LT-4, LT-5, LT-6, LT-7, LT-8, LT-9, LT-10,
LT-11 and LT-12 Certificates are hereby designated as "regular interests" with
respect to the Lower-Tier REMIC and the Class RL Certificates are hereby
designated as the single class of "residual interest" with respect to the
Lower-Tier REMIC. The beneficial ownership interest of the Lower-Tier REMIC
shall be evidenced by the interests (the "Lower-Tier Interests") having the
characteristics and terms as follows:
Original Final
Class Companion Principal Interest Payment
Designation Classes Balance Rate Date
----------- ------- ------- ---- ----
LT-1 A-1 $40,096,000 (1) June 18, 2012
LT-2 A-2 $15,400,000 (1) February 18, 2017
LT-3 A-3 $10,601,000 (1) May 18, 2024
LT-4 A-4 $8,000,000 (1) October 18, 2027
LT-5 A-5 $8,230,000 (1) October 18, 2027
LT-6 $2,000 (2) October 18, 2027
LT-7 A-6 $49,997,000 (3) October 18, 2027
LT-8 $2,000 (4) October 18, 2027
LT-9 A-7 $67,546,000 (5) October 18, 2027
LT-10 $2,000 (6) October 18, 2027
LT-11 A-IO (7) October 18, 2000
LT-12 $6,000 (8) October 18, 2027
RL (9) (9) October 18, 2027
(1) The Weighted average of the Class IB Pass-Through Rate and the excess of
the Class IA Pass-Through Rate over (a) 5.00% for the first 36 Payment
Dates and (b) 0.0% thereafter.
(2) The Weighted Average of the Class A-1, A-2, A-3, A-4 and A-5 Pass-Through
Rates.
(3) The Net Weighted Average Coupon Rate of the Group II Mortgage Loans, plus
the Certificate Insurer Premium Rate.
(4) The Class A-6 Pass-Through Rate.
(5) The Net Weighted Average Coupon Rate of the Group III Mortgage Loans, plus
the Certificate Insurer Premium Rate.
(6) The Class A-7 Pass-Through Rate.
(7) 5.00% per annum on the principal balance of the Class IA Certificate for
the first 36 Payment dates and 0.0% thereafter.
(8) The Net Weighted Average Coupon Rate of the Mortgage Loans, plus the
Certificate Insurer Premium Rate.
(9) The RL Certificate has no principal balance and does not bear interest.
The Lower-Tier Interests LT-1, LT-2, LT-3, LT-4, LT-5, LT-6, LT-7, LT-8, LT-9,
LT-10, LT-11 and LT-12 shall be issued as non-certificated interests and
recorded on the records of the Lower-Tier REMIC as being issued to and held by
the Trustee on behalf of the Upper-Tier REMIC.
On each Payment Date, the Lower Tier Distribution Amount shall be applied
as principal and interest of particular Lower Tier Interests, other than the RL
Certificate, in amounts
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corresponding to the aggregate respective amounts required to be applied as
principal and interest of their related Companion Classes (as set forth above)
and the Class B Certificates pursuant to the priorities set forth in section 7.3
hereof and with respect to the Lower Tier Interests LT-6, LT-8, and LT-10 and
LT-12,
(i) the Lower Tier Distribution Amount shall be applied as interest to
LT-6, LT-8, and LT-10 and LT-12 in an amount corresponding to the interest
accrued on the class principal balances of such classes at the interest rate for
such class as stated above; provided, however, that amounts payable as interest
in respect of LT-12 shall be reduced (the "LT-12 Distribution Reduction Amount")
when the Lower Tier Subordinated Amount is less than the Lower Tier Required
Subordinated Amount by the lesser of (x) the amount of such difference and (y)
the Maximum LT-12 Interest Deferral Amount. The LT-12 Distribution Reduction
Amount will be applied to proportionately reduce the principal balances of LT-6,
LT-8 and LT-10; in the case of LT-6, in proportion to the amount on such Payment
Date of any Group I Subordination Increase Amount, in the case of LT-8, in
proportion to the amount on such Payment Date of any Group II Subordination
Increase Amount and in the case of LT-10, in proportion to the amount on such
Payment Date of any Group III Subordination Increase Amount; and
(ii) the remainder of the Lower Tier Distribution Amount shall be applied
as principal to LT-6, LT-8, LT-10 and LT-12 in the following percentages:
(a) 50.00% to LT-12; and
(b) 50.00% to LT-6, LT-8 and LT-10 in proportion to the Group I Principal
Distribution Amount, the Group II Principal Distribution Amount and
the Group III Principal Distribution Amount, respectively, in each
case as of such Payment Date provided that the Lower Tier
Subordinated Amount is less than or equal to the Lower Tier Required
Subordinated Amount. If not, 50.00% divided among LT-6, LT-8, LT-10
and LT-12 such that the Lower Tier Subordinated Amount is equal to
the Lower Tier Required Subordinated Amount.
No distributions will be made on the Class RL Certificate, except that any
distribution of the proceeds of the final remaining assets of the Lower Tier
REMIC shall be distributed to the holder thereof upon presentation and surrender
of the Class RL Certificate.
(d) REMIC I will be evidenced by the Class IA, Class IB, Class IC and Class
ID Certificates (the "REMIC I Regular Interests"), which will be uncertificated
and non-transferable and are hereby designated as the "regular interests" in
REMIC I and (y) the Class RI Certificates, which are hereby designated as the
single "residual interest" in REMIC I (the REMIC I Regular Certificates,
together with the Class RI certificates, the "REMIC I Certificates"). The REMIC
I Regular Interests shall be recorded on the records of the REMIC I as being
issued to and held by the Trustee on behalf of the Lower-Tier REMIC.
The Class IA Certificates shall have an initial principal balance equal to
the initial principal balance of the Class A-5 Certificates (that is,
$8,230,000). The Class IB Certificates shall have an initial principal balance
equal to the excess of the Original Group I Pool Principal Balance over the
initial principal balance of the Class IA Certificates (that is,
$74,101,718.36). The Class IC Certificates shall have an initial principal
balance equal to the Original Group II Pool Principal Balance. The Class ID
Certificates shall have an initial principal balance equal to the Original Group
III Pool Principal Balance.
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On each Payment Date, principal collections on the Mortgage Loans shall be
allocated as follows: an amount equal to the principal payable on the Class A-5
Certificates shall be payable on the Class IA Certificates; the remaining Group
I Principal Distribution Amount shall be payable to the Class IB Certificates;
the Group II Principal Distribution Amount shall be payable on the Class IC
certificates; and the Group III Principal Distribution Amount shall be payable
on the Class ID Certificates.
The Class IA and Class IB Certificates shall each have Pass-Through Rates
equal to the Net Weighted Average Coupon Rate of the Group I Loans. The Class IC
Certificates shall have a Pass-Through Rate equal to the Net Weighted Average
Coupon Rate of the Group II Loans. The Class ID Certificates shall have a
Pass-Through Rate equal to the Net Weighted Average Coupon Rate of the Group III
Loans. The Class RI Certificates shall have no principal balance and no
Pass-Through Rate and shall be entitled to only those distributable assets, if
any remaining in REMIC I on each Payment Date after all amounts required to be
distributed to the Class IA , Class IB , Class IC and Class ID Certificates
after applicable Trust expenses have been paid.
(e) The Startup Day is hereby designated as the "startup day" of each REMIC
within the meaning of Section 860G(a)(9) of the Code.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER, THE MASTER SERVICER AND THE TRANSFEROR;
CONVEYANCE OF MORTGAGE LOANS
Section 3.1. Representations and Warranties of the Seller, the Master
Servicer and the Transferor . (a)__ The Seller hereby represents, warrants and
covenants to the Master Servicer, the Transferor, the Trustee, the Certificate
Insurer and to the Owners as of the Startup Day that:
(i) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such
qualification necessary. The Seller has all requisite corporate power and
authority to own and operate its properties, to enable it to carry out its
business as presently conducted in a material manner and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party in a
material manner.
(ii) The execution and delivery of this Agreement and the other
Operative Documents to which the Seller is a party, by the Seller, and its
performance and compliance with the terms of this Agreement and of the
other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Seller and will not
violate the Seller's Certificate of Incorporation or Bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Seller is a party or
by which the Seller is bound, or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Seller or any of its properties.
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(iii) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Seller, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement hereof and thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
by general principles of equity (whether considered in a proceeding or
action in equity or at law).
(iv) The Seller is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Seller or its properties or might have consequences that
would materially and adversely affect its performance hereunder and under
the other Operative Documents to which it is a party.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller which litigation might have
consequences that would prohibit its entering into this Agreement or any
other Operative Document to which it is a party or that would materially
and adversely affect the condition (financial or otherwise) or operations
of the Seller or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the
other Operative Documents to which it is a party.
(vi) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the certificate, statement or report not misleading.
(vii) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is
responsible in accordance with the Operative Documents or which are
attributed to the Seller therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Seller or omit to state a
material fact required to be stated therein or necessary in order to
prevent the statements contained therein with respect to the Seller from
being misleading. To the best of the Seller's knowledge and belief, the
Registration Statement does not contain any untrue statement of a material
fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
(viii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any
such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Certificates and the execution and
delivery by the Seller of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has
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expired or no review thereof may be obtained or appeal therefrom taken, and
are adequate to authorize the consummation of the transactions contemplated
by this Agreement and the other Operative Documents on the part of the
Seller and the performance by the Seller of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
(ix) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller.
(x) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Mortgage Loans to
the Transferor.
(xi) The Seller did not sell any interest in any Mortgage Loan with
any intent to hinder, delay or defraud any of its creditors.
(xii) The Seller is solvent and the Seller will not be rendered
insolvent as a result of the sale of the Mortgage Loans to the Transferor.
(b) The Master Servicer hereby represents and warrants to the Seller, the
Transferor, the Trustee, the Certificate Insurer, and to the Owners as of the
Startup Day that:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and is, or a
Sub-Servicer is, in compliance with the laws of each state in which any
Property is located to the extent necessary to enable the Master Servicer
to perform its obligations hereunder. The Master Servicer and each
Sub-Servicer is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary to enable the Master
Servicer to perform its obligations hereunder. The Master Servicer has all
requisite corporate power and authority to own and operate its properties,
to carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge, either directly or through
Sub-Servicers, its obligations under this Agreement. The Master Servicer
and any Sub-Servicer (except LSI Financial Group) has equity of at least
$15,000,000 as determined in accordance with generally accepted accounting
principles. Each Sub-Servicer appointed by the Master Servicer will have
all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted.
(ii) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement and any Sub-Servicing Agreement have been duly authorized by all
necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the Master
Servicer is a party or by which the Master Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over the Master Servicer or
any of its properties.
(iii) This Agreement and any Sub-Servicing Agreement, assuming due
authorization, execution and delivery by the other parties hereto and
thereto, each constitutes a valid, legal and binding obligation of the
Master Servicer, enforceable
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against it in accordance with the terms hereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
by general principles of equity (whether considered in a proceeding or
action in equity or at law).
(iv) The Master Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under any Sub-Servicing Agreement.
(v) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which litigation might
have consequences that would prohibit its entering into this Agreement or
any Sub-Servicing Agreement or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Master Servicer
or its properties or might have consequences that would materially and
adversely affect its performance hereunder.
(vi) Each certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Master Servicer is
true and correct in all material respects.
(vii) The statements contained in the Prospectus Supplement which
describe the Master Servicer under the caption "The Master Servicer" are
true and correct in all material respects.
(viii) The Master Servicing Fee is a "current (normal) servicing fee
rate" as that term is used in Statement of Financial Accounting Standards
No. 65 issued by the Financial Accounting Standards Board. Neither the
Master Servicer nor any affiliate thereof will report on any financial
statements any part of the Master Servicing Fee as an adjustment to the
sales price of the Mortgage Loans.
(ix) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Master Servicer makes
no such representation or warranty), that are necessary or advisable in
connection with the execution and delivery by, and the performance of the
obligations of, the Master Servicer, either directly or through a
Sub-Servicer, of this Agreement and each Sub-Servicing Agreement, have been
duly taken, given or obtained, as the case may be, are in full force and
effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained
has expired or no review thereof may be obtained or appeal therefrom taken,
and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and each Sub-Servicing Agreement on the part
of the Master Servicer and the performance by the Master Servicer, either
directly or through a Sub-Servicer, of its obligations under this Agreement
and each Sub-Servicing Agreement.
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(x) The collection practices used by the Master Servicer with respect
to the Mortgage Loans have been, in all material respects, legal, proper,
prudent and customary in the non-conforming credit residential loan
servicing business.
(xi) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(c) The Transferor hereby represents and warrants to the Seller, the Master
Servicer, the Trustee, the Certificate Insurer, and to the Owners as of the
Startup Day that:
(i) The Transferor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such
qualification necessary. The Transferor has all requisite corporate power
and authority to own and operate its properties, to enable it to carry out
its business as presently conducted in a material manner and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party in a
material manner.
(ii) The execution and delivery of this Agreement and the other
Operative Documents to which the Transferor is a party, by the Transferor,
and its performance and compliance with the terms of this Agreement and of
the other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the Transferor
and will not violate the Transferor's Certificate of Incorporation or
Bylaws or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the breach
of, any material contract, agreement or other instrument to which the
Transferor is a party or by which the Transferor is bound, or violate any
statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over the Transferor.
(iii) This Agreement and the other Operative Documents to which the
Transferor is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid, legal
and binding obligation of the Transferor, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement
hereof and thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered in
a proceeding or action in equity or at law).
(iv) The Transferor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences that
would materially and adversely affect its performance hereunder and under
the other Operative Documents to which it is a party.
(v) No litigation is pending or, to the best of the Transferor's
knowledge, threatened against the Transferor which litigation might have
consequences that would prohibit its entering into this Agreement or any
other Operative Document to which it is a party or that would materially
and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.
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(vi) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Transferor contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the certificate, statement or report not misleading.
(vii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any
such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Transferor makes no
such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution
and delivery by the Transferor of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative
Documents on the part of the Transferor and the performance by the
Transferor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(viii) The transactions contemplated by this Agreement are in the
ordinary course of business of the Transferor.
(ix) The Transferor received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the Mortgage
Loans to the Trust.
(x) The Transferor did not sell any interest in any Mortgage Loan with
any intent to hinder, delay or defraud any of its creditors.
(xi) The Transferor is solvent and the Transferor will not be rendered
insolvent as a result of the sale of the Mortgage Loans to the Trust.
(d) The Transferor additionally covenants that it shall be operated in such
a manner that it would not be substantively consolidated in the trust estate of
any other Person in the event of a bankruptcy or insolvency of such Person and
in such regard, the Transferor shall:
(A) not become involved in the day-to-day management of any other
Person;
(B) not permit the Seller to become involved in the day-to-day
management of the Transferor except to the extent provided in the
Operative Documents;
(C) not engage in transactions with any other Person other than those
activities permitted by its certificate of incorporation and
matters necessarily incident thereto;
(D) maintain separate corporate records and books of account and a
separate business office from any other Person;
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(E) maintain its assets separately from the assets of any other
Person (including through the maintenance of a separate bank
account);
(F) maintain separate financial statements, books and records from
any other Person;
(G) not guarantee any other Person's obligations or advance funds to
any other Person for the payment of expenses or otherwise;
(H) conduct all business correspondence of the Transferor and other
communications in the Transferor's own name;
(I) not act as an agent of any other Person in any capacity except
pursuant to contractual documents indicating such capacity and
only in respect of transactions permitted by its certificate of
incorporation and matters necessarily incident thereto;
(J) not fail to hold appropriate meetings of the Board of Directors
at least annually and otherwise as necessary to authorize all
corporate action;
(K) not fail to hold meetings of the stockholders at least annually;
(L) not form, or cause to be formed, any subsidiaries;
(M) not act as an agent of the Seller nor permit the Seller to act as
its agent except to the limited extent permitted under the
Operative Documents;
(N) maintain two independent directors at all times;
(O) maintain a separate office from the Seller; and
(P) not engage in intercorporate transactions except to the extent
permitted by its certificate of incorporation and bylaws;
(e) It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the
Trustee.
Upon discovery by any of the Seller, the Master Servicer, the Transferor,
the Certificate Insurer or the Trustee of a breach of any of the representations
and warranties set forth in this Section 3.1(c) which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties
and the Certificate Insurer; provided that, the Trustee shall have no duty or
responsibility to inquire, investigate, determine or obtain actual knowledge of
facts or events constituting a breach of any such representations or warranties.
Within 30 days of its discovery or its receipt of notice of breach, the Master
Servicer shall cure such breach in all material respects and, upon the Master
Servicer's continued failure to cure such breach, may thereafter be removed
pursuant to Section 11.1 hereof.
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Section 3.2. Covenants of the Seller to Take Certain Actions with Respect
to the Mortgage Loans in Certain Situations . (a)__ Upon the actual knowledge of
the Seller, the Master Servicer, the Transferor, the Certificate Insurer or the
Trustee that the statements set forth in (ii), (x), (xiii), (xix), (xxxii),
(xxxiii) or (xxxix) of subsection (b) below were untrue in any material respect
as of the Startup Day or that any of the other statements set forth in
subsection (b) below were untrue as of the Startup Day with the result that the
interests of the Owners or the interests of the Certificate Insurer are
materially and adversely affected, the party discovering such breach shall give
prompt written notice to the other parties and the Certificate Insurer.
Upon the earliest to occur of the Seller's discovery, its receipt of notice
of breach from any one of the other parties or the Certificate Insurer or such
time as a situation resulting from an existing statement which is untrue
materially and adversely affects the interests of the Owners or of the
Certificate Insurer as set forth above, the Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or it shall,
subject to the further requirements of this paragraph, on the second Remittance
Date next succeeding such discovery, receipt of notice or such time (i)
substitute in lieu of each Mortgage Loan which has given rise to the requirement
for action by the Seller a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Principal Balance of such
Mortgage Loan as of such Replacement Cut-Off Date, deliver an amount equal to
such difference together with accrued and unpaid interest on such amount
calculated at the related Coupon Rate less the rate at which the Master
Servicing Fee is calculated, if any, of the Mortgage Loan being replaced (such
aggregate amount, the "Substitution Amount"), together with the aggregate amount
of all unreimbursed Delinquency Advances and Servicing Advances theretofore made
with respect to such Mortgage Loan to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Trust at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account. In connection with any such proposed purchase or
substitution, the Seller at its expense, shall cause to be delivered to the
Trustee and to the Certificate Insurer an opinion of counsel experienced in
federal income tax matters stating whether or not such a proposed purchase or
substitution would constitute a Prohibited Transaction for the Trust or would
jeopardize the status of any of the REMICs as a REMIC and the Seller shall only
be required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust or would not jeopardize the
status of any of the Upper-Tier REMIC, the Lower-Tier REMIC or REMIC I as a
REMIC. Notwithstanding the foregoing, the fact that a remedy would constitute a
Prohibited Transaction with respect to a Mortgage Loan shall not reduce the
obligation hereunder of the Seller to effect another remedy with respect to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller so
to cure the defect, substitute or purchase any Mortgage Loan as to which such a
statement set forth below is untrue in any material respect and has not been
remedied, along with the indemnification remedy available under Section 12.21(b)
shall constitute the sole remedies available to the Owners, the Trustee or the
Certificate Insurer respecting any such statement.
(b) (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) Each Mortgage Loan File has been or will be delivered to the
Trustee on the Startup Day;
(iii) Each Mortgage Loan being transferred to the Trustee is a
Qualified Mortgage and is a Mortgage;
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(iv) 89.10% of the Original Group I Pool Principal Balance, 91.62% of
the Original Group II Pool Principal Balance and 90.21% of the Original
Group III Pool Principal Balance have corresponding Properties that are
improved by a one-to-four family residential dwelling and the remaining
Mortgage Loans have corresponding Properties that are improved by modular
housing, manufactured housing, PUD, SF row houses, townhouses or duplexes;
(v) As of the Cut-Off Date, no Mortgage Loan in Group I had a
Loan-to-Value Ratio in excess of 90.0% and the weighted average Combined
Loan-to-Value Ratio for Group I was approximately 74.60%, no Mortgage Loan
in Group II had a Loan-to-Value Ratio in excess of 90.0% and the weighted
average Loan-to-Value Ratio for Group II was approximately 78.45%, no
Mortgage Loan in Group III had a Loan-to-Value Ratio in excess of 90.0% and
the weighted average Loan-to-Value Ratio for Group III was approximately
77.49%;
(vi) Each Mortgage Loan is being serviced by or on behalf of the
Master Servicer;
(vii) The Note related to each Group I Mortgage Loan bears a fixed
Coupon Rate of at least 8.25% per annum; the Note related to each Group II
Mortgage Loan bears interest based on an index of six-month LIBOR, adjusts
either every sixth month or every twenty-fourth month or every thirty-sixth
month, has a margin of at least 3.00%, an adjustment cap of at least 1.00%,
a lifetime cap of at least 13.78% and a Coupon Rate as of the Cut-Off Date
of at least 7.60%; the Note related to each Group III Mortgage Loan bears
interest based on an index of six-month LIBOR, adjusts either every sixth
month or every twenty-fourth month or every thirty-sixth month, has a
margin of at least 3.75%, an adjustment cap of at least 1.00%, a lifetime
cap of at least 13.85% and a Coupon Rate as of the Cut-Off Date of at least
7.68%;
(viii) Notes representing not more than 42.78% of the Original Group I
Pool Principal Balance of the Mortgage Loans provide for a "balloon"
payment at the end of the 15th year (such Mortgage Loans having 30-year
amortization schedules), none of the Group II Mortgage Loans provide for a
"balloon" payment and none of the Group III Mortgage Loans provide for a
"balloon" payment;
(ix) As of the Cut-Off Date, each Mortgage is a valid and subsisting
first or second lien (as identified in the Mortgage Loan Schedule) of
record on the Property subject in the case of any Second Mortgage Loan only
to a Senior Lien on such 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
banking institutions in connection with their regular mortgage lending
activities, 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;
(x) Immediately prior to the transfer and assignment contemplated by
the Sale Agreement, the Seller held good and indefeasible title to, and was
the sole owner of, each Mortgage Loan conveyed by the Seller subject to no
liens, charges, mortgages, encumbrances or rights of others except as set
forth in paragraph (ix) or other liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment contemplated the Trust will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan subject
to no liens, charges, mortgages,
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encumbrances or rights of others except as set forth in paragraph (ix) or
other liens which will be released simultaneously with such transfer and
assignment;
(xi) As of the Cut-Off Date, no Mortgage Loan is more than 59 days
delinquent, and Mortgage Loans (in the aggregate) representing no more than
4.92% of the Original Group I Pool Principal Balance of the Mortgage Loans
are 30-59 days delinquent, no more than 10.57% of the Original Group II
Pool Principal Balance of the Mortgage Loans are 30-59 days delinquent and
none of the Group III Mortgage Loans are 30-59 days delinquent;
(xii) As of the Startup Day, each Property is free of substantial
damage and is in good repair;
(xiii) As of the Startup Day, there is no valid and enforceable
offset, defense or counterclaim to any Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Note;
(xiv) As of the Startup Day, there is no delinquent tax or assessment
lien on any Property, nor is there any claim for work, labor or material
affecting any Property which is or may be a lien prior to, or equal with,
the lien of the related Mortgage except, in each case, those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Mortgage Loan complies and at the time it was made complied
in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act, Real Estate Settlement Procedure Act and other consumer protection
laws, usury, equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard California Land Title Association form or
American Land Title Association form in the state in which the related
Property is situated, 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 mortgage lien of
record in the case of each First Mortgage Loan or second mortgage lien of
record in the case of each Second Mortgage Loan on the real property
described in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph (ix) above, was
effective on the date of the origination of such Mortgage Loan, and, as of
the Startup Day, such policy will be valid and thereafter such policy shall
continue in full force and effect. The assignment to the Trust of the
benefits of the mortgage title insurance does not require the consent of or
notification to the insurer. No claims have been made under such mortgage
title insurance policies and no prior holder of the related mortgage has
done, by act or omission, anything that would impair the coverage of such
mortgage title insurance policy;
(xvii) At the Startup Day, the improvements upon each Property are
covered by a valid and existing hazard insurance policy (which may be a
blanket policy of the type described in Section 10.11(c) hereof) with a
generally acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan (together, in the case of a
Second Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss on
a replacement
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cost basis or (C) the full insurable value of the Property and in any event
which is not less than the amount necessary to avoid the operation of any
coinsurance provisions with respect to the Property in the event of any
loss less than the amount of the insurance coverage and consistent with the
amount that would have been required as of the date of origination by the
related originator in its normal residential mortgage lending activities
with respect to similar properties in the same locality. All hazard
insurance policies are the valid and binding obligation of the insurer and
contain a standard mortgagee clause naming the originator, its successors
and assigns, as mortgagee. All premiums thereon have been paid. Such
insurance policy requires prior notice to the insured of termination or
cancellation, and no such notice has been received. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy (which may be a blanket policy of the
type described in Sections 10.11(b) and 10.11(c) hereof) in a form meeting
the requirements of the current guidelines of the Federal Insurance
Administration is in effect with respect to such Property with a generally
acceptable carrier in an amount representing coverage not less than the
least of (A) the outstanding principal balance of the related Mortgage Loan
(together, in the case of a Second Mortgage Loan, with the outstanding
principal balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended. All flood insurance policies are the
valid and binding obligation of the insurer and contain a standard
mortgagee clause naming the originator, its successors and assigns, as
mortgagee. All premiums thereon have been paid. Such flood insurance policy
requires prior notice to the insured of termination or cancellation, and no
such notice has been received. The Mortgage obligates the Mortgagor
thereunder to maintain all such flood insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such flood insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(xix) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof 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 had full legal capacity to execute
all documents relating to such Mortgage Loan and convey the estate therein
purported to be conveyed; there is only one original Note with respect to
each Mortgage Loan;
(xx) The Seller has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
Trust in any Insurance Policies applicable to any Mortgage Loans delivered
by the Seller including, to the extent such Mortgage Loan is not covered by
a blanket policy described in Section 10.11(c) hereof, any necessary
notifications of insurers, assignments of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights in
favor of the Trustee;
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(xxi) Each original Mortgage was recorded or is in the process of
being 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 for the benefit of the
Trustee (or, subject to Section 3.3 hereof, are in the process of being
recorded);
(xxii) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interests
of the Owners and which has been delivered to the Trustee. The substance of
any such alteration or modification is reflected on the related Mortgage
Loan Schedule;
(xxiii) 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 such Mortgage Loans were paid;
(xxiv) No Mortgage Loan was originated under a buydown plan;
(xxv) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxvi) Each Property is located in the state identified in the related
Mortgage Loan Schedule and consists of one parcel of real property (or
several parcels secured by a blanket mortgage) with a residential dwelling
erected thereon;
(xxvii) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Property is sold without the prior consent of the
mortgagee thereunder;
(xxviii) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal amount
of the related Mortgage Loan. No Note permits or obligates the Master
Servicer to make future advances to the related Mortgagor at the option of
the Mortgagor;
(xxix) There is no proceeding pending or threatened for the total or
partial condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, earthquake or
earth movement;
(xxx) All of the improvements which were included for the purposes of
determining the Appraised Value of any Property lie wholly within the
boundaries and building restriction lines of such Property, and no
improvements on adjoining properties encroach upon such Property, except in
each case exceptions which are stated in the title insurance policy and
affirmatively insured;
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(xxxi) 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 Owners or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor;
(xxxii) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Property of the benefits of the security,
including (A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption available that would materially interfere with
the right to sell the related Property at a trustee's sale or the right to
foreclose on the related Mortgage;
(xxxiii) Except as provided by clause (xi) of this subsection 3.2(b),
there is no default, breach, violation or event of acceleration existing
under any Mortgage or the related 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;
(xxxiv) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part;
(xxxv) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform, in all material respects to the description thereof set
forth in the Registration Statement;
(xxxvi) An appraisal was performed with respect to each Mortgage Loan;
such appraisal was performed in material compliance with the appraisal
description set forth in the Prospectus;
(xxxvii) No more than 4.93% of the Original Pool Principal Balance of
the Mortgage Loans in Group I is secured by condominiums, townhouses or
rowhouses, no more than 5.72% of the Original Pool Principal Balance of the
Mortgage Loans in Group II is secured by condominiums, townhouses or
rowhouses and no more than 5.00% of the Original Pool Principal Balance of
the Mortgage Loans in Group III is secured by condominiums, townhouses or
rowhouses;
(xxxviii) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the description thereof
set forth in the Prospectus and the Prospectus Supplement and each Mortgage
Loan was underwritten in accordance therewith;
(xxxix) As of the Startup Day, the Seller had no actual knowledge that
there exists on any Property any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation;
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(xl) No more than 0.74% of the Original Pool Principal Balance of the
Mortgage Loans in Group I is secured by Properties located within any
single zip code area, no more than 2.54% of the Original Pool Principal
Balance of the Mortgage Loans in Group II is secured by Properties located
within any single zip code area and no more than 1.61% of the Original Pool
Principal Balance of the Mortgage Loans in Group III is secured by
Properties located within any single zip code area; no more than 11.49% of
the Original Pool Principal Balance of the Mortgage Loans in Group I is
located within any single state, no more than 23.96% of the Original Pool
Principal Balance of the Mortgage Loans in Group II is located within any
single state and no more than 22.57% of the Original Pool Principal Balance
of the Mortgage Loans in Group III is located within any single state;
(xli) At least 92.33% of the Original Group I Pool Principal Balance,
at least 93.99% of the Original Group II Pool Principal Balance and at
least 96.05% of the Original Group III Pool Principal Balance is secured by
Properties that are owner occupied;
(xlii) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid;
(xliii) Except for payments in the nature of escrow payments,
including, without limitation, taxes and insurance payments, the Seller has
not advanced funds, or induced, solicited or knowingly received any advance
of funds by a party other than the Mortgagor, directly or indirectly, for
the payment of any amount required by the Mortgage, except for interest
accruing from the date of the Mortgage Note or date of disbursement of the
Mortgage proceeds, whichever is greater, to the day which precedes by one
month the due date of the first installment of principal and interest;
(xliv) 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;
(xlv) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xlvi) There is no obligation on the part of the Seller, the
originator, the Master Servicer, the Transferor, the Trustee or any other
Person to make payments in addition to those made by the Mortgagor;
(xlvii) With respect to each Second Mortgage Loan, the related Senior
Lien requires equal monthly payments, or if it bears an adjustable interest
rate, the monthly payments for the related Senior Lien may be adjusted no
more frequently than monthly;
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(xlviii) With respect to each Second Mortgage Loan, either (i) no
consent for the Mortgage Loan is required by the holder of the related
Senior Lien or (ii) such consent has been obtained and is contained in the
File;
(xlix) With respect to any Senior Lien that provided for negative
amortization or deferred interest, the balance of such Senior Lien used to
calculate the Loan-to-Value Ratio for the Second Mortgage Loan is based on
the maximum amount of negative amortization or deferred interest possible
under such Senior Lien;
(l) The maturity date of each Second Mortgage Loan is prior to the
maturity date of the related Senior Lien if such Senior Lien provides for a
balloon payment;
(li) All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee 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 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 loans 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;
(lii) All amounts received on and after the Cut-Off Date with respect
to the Mortgage Loans to which the Master Servicer is not entitled have
been deposited into the Principal and Interest Account and are, as of the
Startup Day, in the Principal and Interest Account;
(liii) The Mortgage Loans were not selected for inclusion in the Trust
on any basis intended to adversely affect the Trust;
(liv) With respect to each Property subject to a land trust (a "Land
Trust Mortgage") (a) a trustee, duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is
named as such in the land trust agreement and such trustee is named in the
Land Trust Mortgage as Mortgagor; (b) all fees and expenses of the land
trustee which have previously become due and owing have been paid and no
fees or expenses are or will become payable by the Owners or the Trust to
the land trustee under the land trust agreement; (c) the beneficiary is
solely obligated to pay any fees and expenses of the land trustee and the
priority of the lien of the Land Trust Mortgage is not and will not be
primed by the land trustee; (d) the Mortgaged Property is occupied by the
beneficiary under the land trust agreement and, if such land trust
agreement terminates, the beneficiary will become the owner of the
Mortgaged Property; (e) the beneficiary is obligated to make payments under
the Note and will have personal liability for deficiency judgments; (f) the
Land Trust Mortgage and assignment of beneficial interest relating to such
land trust held by the Trust was made in compliance with the related land
trust agreement, was validly entered into by the related land trust trustee
or beneficiary and, does not currently, and will not in the future, violate
any provision of the related land trust agreement, nor any agreement
between or amongst the beneficiaries of such land trust; (g) a UCC
financing statement has been filed, continued, and will be continued,
without intervening liens, as the first lien upon any assignment of
beneficial interest in the Land Trust Mortgage; (h) the assignment of
beneficial interest with respect to such Land Trust Mortgage held by the
Trust was at the time of such assignment the only assignment of such
beneficial interest in the Land Trust Mortgage,
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such assignment was accepted by, and noted in the records of the land trust
trustee, subsequent assignment of the beneficial interest in whole or in
part has not been made, and such subsequent assignment of the beneficial
interest or any part thereof is not permitted pursuant to a written
agreement between the respective beneficiary and the Mortgagee, until the
expiration of the Note relating to the Land Trust Mortgage; (i) the Land
Trust Mortgage is the first or second lien on the Property; no lien is in
place against the beneficial interests, or any part thereof, of such Land
Trust Mortgage or collateral assignment of beneficial interest, which liens
are superior to the interest held by the Seller and the beneficial
interest, or any part thereof, of any such Land Trust Mortgage or
collateral assignment of beneficial interest has not been pledged as
security for any other debt; and the beneficiary or land trust trustee is
forbidden, pursuant to a written agreement between the beneficiary or the
land trust trustee (as applicable) and the Mortgagee, from using the land
trust property or beneficial interest, or any part of either, as security
for any other debt until the expiration date of its respective Note; and
(x) the terms and conditions of the land trust agreement do not prevent the
free and absolute marketability of the Mortgaged Property. As of the
Cut-Off Date, the aggregate Principal Balances of Land Trust Mortgage Loans
with related Mortgaged Properties subject to land trusts does not exceed
2.50% of the Original Pool Principal Balance;
(lv) With respect to each Property subject to a ground lease (a) the
current ground lessor has been identified and all ground rents which
previously became due and owing have been paid; (b) the ground lease term
extends, or is automatically renewable, for at least five years beyond the
maturity date of the related Mortgage Loan; (c) the ground lease has been
duly executed and recorded; (d) the amount of the ground rent and any
increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (e) the ground rent payment
is included in the Mortgagor's monthly payment as an expense item; (f) the
Trust has the right to cure defaults on the ground lease; and (g) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the aggregate
Principal Balance of Mortgage Loans with related Mortgaged Properties
subject to ground leases does not exceed 5% of the Original Pool Principal
Balance;
(lvi) None of the Mortgage Loans are subject to a plan of bankruptcy
or have borrowers that have sought protection or relief under any state or
federal bankruptcy or insolvency law during the term of the related
Mortgage. With respect to each Mortgage Loan which has been the subject of
bankruptcy or insolvency proceedings, (a) as of the Cut-Off Date, the
Mortgagor is not contractually delinquent more than 30 days with respect to
any payment due under the related plan, (b) the current Loan-to-Value Ratio
is less than or equal to 85% and (c) either (i) if the current
Loan-to-Value Ratio is between 60% and 85%, as of the Cut-Off Date, the
Mortgagor has made at least six consecutive payments under the related Plan
or (ii) if the current Loan-to-Value Ratio is less than 60% as of the
Cut-Off Date, the Mortgagor has made at least three consecutive payments
under the related plan; and
(lvii) To the best of the Seller's knowledge, there is no error,
omission, misrepresentation, fraud or similar occurrence with respect to a
Mortgage Loan has taken place on the part of any person, including without
limitation the Mortgagor, any appraiser, any builder or developer, or any
other party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan.
(c) In the event that any Qualified Replacement Mortgage is delivered by
the Seller to the Trust pursuant to this Section 3.2, the Seller shall be
obligated to take the actions
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described in subsection (a) above with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the Seller, the Master
Servicer, the Transferor, the Certificate Insurer, any Sub-Servicer or the
Trustee that the statements set forth in subsections (ii), (x), (xiii), (xix),
(xxxii), (xxxiii) or (xxxix) of subsection (b) above are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the Trust
or that any of the other statements set forth in subsection (b) hereof are
untrue on the date such Qualified Replacement Mortgage is conveyed to the Trust
such that the interests of the Owners or the Certificate Insurer in the related
Qualified Replacement Mortgage are materially and adversely affected; provided,
however, that for the purposes of this subsection (c) the statements in
subsection (b) hereof referring to items "as of the Cut-Off Date" or "as of the
Startup Day" shall be deemed to refer to such items as of the date such
Qualified Replacement Mortgage is conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth in this
Section 3.2 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgage Loans) to the Trustee.
(e) The Seller hereby assigns to the Trustee on behalf of the Owners and
the Certificate Insurer all of its rights to recovery for breaches of
representations and warranties given by the originators of such Mortgage Loans
that are similar in import to the following (but only to the extent such
representations are given and to the extent such rights are assignable): no
error omission, misrepresentation, fraud or similar occurrence with respect to a
Mortgage Loan has taken place on the part of any person, including without
limitation the Mortgagor, any appraiser, any builder or developer, or any other
party involved in the origination of the Mortgage Loan or in the application of
any insurance in relation to such Mortgage Loan. Notwithstanding such
assignment, none of the Owners, the Certificate Insurer or the Trustee may
enforce any such remedy except to the extent that the Seller is unwilling to
enforce the remedy.
Section 3.3. Conveyance of the Mortgage Loans and Qualified Replacement
Mortgages. (a) The Transferor hereby transfers, assigns, sets over and otherwise
conveys without representation, warranty or recourse, to the Trust, all right,
title and interest of the Transferor in and to each Mortgage Loan listed on the
Mortgage Loan Schedule delivered by the Transferor on the Startup Day, and all
its right, title and interest in and to (i) scheduled payments of interest due
on each Mortgage Loan after the Cut-Off Date, (ii) scheduled payments of
principal due, and unscheduled collections of principal received, on each
Mortgage Loan on and after the Cut-Off Date, and (iii) its Insurance Policies;
such transfer of the Mortgage Loans set forth on the Mortgage Loan Schedule to
the Trust is absolute and is intended by the Owners and all parties hereto to be
treated as a sale to the Trust.
(b) In connection with the transfer and assignment of the Mortgage Loans by
the Seller to the Transferor pursuant to the Purchase and Sale Agreement, and by
the Transferor to the Trust pursuant to this Agreement, on the Startup Day, the
Seller agrees to:
(i) deliver, or cause to be delivered, without recourse to the Trustee
on behalf of the Trust on the Startup Day with respect to each Mortgage
Loan listed on the Mortgage Loan Schedule (A) the original Notes or, if any
original Note has been lost or destroyed, certified copies thereof
(together with a lost note affidavit), endorsed without recourse by the
originator (or most recent payee) thereof "Pay to the order of The Chase
Manhattan Bank, as Trustee", (B) originals (subject to the provisions of
paragraph (d) below relating to items in the process of being recorded) of
all intervening assignments, showing a complete chain of assignment from
origination to assignment to the Trustee, including warehousing
assignments, with evidence of recording thereon, (C) originals of all
assumption and modification agreements, if any, and (D) either: (1) the
original
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Mortgage (subject to the provisions of paragraph (d) below relating to
items in the process of being recorded), with evidence of recording
thereon, or (2) a copy of the Mortgage certified by the public recording
office in those instances where the original recorded Mortgage has been
lost and (E) the original lender's title insurance policy issued on the
date of origination of such Mortgage Loan, together with any endorsements
thereto; provided, however, that, subject to Sections 3.3(d) and 3.4(b),
the Seller shall not be required to prepare an assignment for any Mortgage
as to which the original recording information is lacking; and provided,
further, that pending the issuance of the final title policy, the Seller
shall deliver the title commitment or title binder to insure same; and
(ii) within 10 Business Days following the Startup Day, assignments of
the Mortgages from the related originator to The Chase Manhattan Bank to be
submitted for recording in the appropriate jurisdictions to perfect the
Trustee's lien thereunder as against creditors of or purchasers from the
Seller, provided, however, that the Seller need not cause any assignment to
be submitted with respect to which the Seller provides to the Trustee an
opinion of counsel reasonably acceptable to the Certificate Insurer to the
effect that such recordation is not necessary; the above-listed items
constituting the "File" for the related Mortgage Loan;
(c) Notwithstanding anything to the contrary contained in this Section 3.3,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
(d) Not later than ten days following the end of the 10-Business Day period
referred to in clause (b)(ii) above, the Seller shall deliver, or cause to be
delivered, to the Trustee copies of all Mortgage assignments submitted for
recording, together with a list of all Mortgages for which no Mortgage
assignment has yet been submitted for recording, which list shall state the
reason why such Mortgage assignments have not been submitted for recording. With
respect to any Mortgage assignment disclosed on such list as not yet submitted
for recording for a reason other than a lack of original recording information,
the Trustee shall make an immediate demand on the Seller to prepare, or cause to
be prepared, such Mortgage assignments, and shall inform the Certificate Insurer
of the Seller's failure to prepare such Mortgage assignments. Thereafter, the
Trustee shall cooperate in executing any documents submitted to the Trustee in
connection with this provision. Thereafter, the Seller shall prepare, or cause
to be prepared, a Mortgage assignment for any Mortgage for which original
recording information is subsequently received by the Seller, and shall promptly
deliver a copy of such Mortgage assignment to the Trustee.
Neither the Master Servicer nor the Trustee shall be responsible for the
costs of recording any Mortgage or any assignment of Mortgage pursuant to this
Section 3.3.
Copies of all Mortgage assignments received by the Trustee shall be kept in
the related File. The Seller shall promptly deliver, or cause to be delivered,
to the Trustee such original Mortgage or intervening mortgage assignment with
evidence of recording indicated thereon upon receipt thereof from the public
recording official. If the Seller within nine months from the Startup Day shall
not have received such original Mortgage or intervening mortgage assignment from
the public recording official, it shall obtain and deliver, or cause to be
delivered, to the Trustee within ten months from the Startup Day, a copy of such
original Mortgage or mortgage assignment certified by such public recording
official to be a true and complete copy of such original Mortgage or mortgage
assignment as recorded by such public recording office.
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(e) In the case of Mortgage Loans which have been prepaid in full on or
after the Cut-Off Date and prior to the Startup Day, the Seller, in lieu of the
foregoing, will deliver within 15 days after the Startup Day to the Trustee a
certification of an Authorized Officer in the form set forth in Exhibit J.
(f) The Seller (or an affiliate thereof) shall sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee all its right, title
and interest in and to any Qualified Replacement Mortgage delivered by it to the
Trustee on behalf of the Trust pursuant to Section 3.2 or 3.4 hereof and all its
right, title and interest to principal collected and interest accruing on such
Qualified Replacement Mortgage on and after the applicable Replacement Cut-Off
Date; provided, however, that the Seller (or such affiliate) shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(g) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without representation, warranty
or recourse, on the Seller's order, all of its right, title and interest in and
to such released Mortgage Loan and all the Trust's right, title and interest in
and to principal collected and interest accruing on such released Mortgage Loan
on and after the applicable Replacement Cut-Off Date; provided, however, that
the Trust shall reserve and retain all right, title and interest in and to
payments of principal collected and interest accruing on such released Mortgage
Loan prior to the applicable Replacement Cut-Off Date.
(h) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
deliver to the Trustee the items described in Section 3.3(b) on the date of such
transfer and assignment or, if a later delivery time is permitted by Section
3.3(b), then no later than such later delivery time.
(i) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage the Trustee shall deliver on the
date of conveyance of such Qualified Replacement Mortgage and on the order of
the Seller (i) the original Note, or the certified copy, relating thereto,
endorsed without recourse, to the Seller, and (ii) such other documents as
constituted the File with respect thereto.
(j) If a Mortgage assignment is lost during the process of recording, or is
returned from the recorder's office unrecorded due to a defect therein, the
Seller shall prepare or cause to be prepared a substitute assignment or cure
such defect, as the case may be, and thereafter cause each such assignment to be
duly recorded.
(k) The Seller shall reflect on its records that the Mortgage Loans have
been sold to Transferor and the Transferor shall reflect on its records that the
Mortgage Loans have been sold to the Trust.
Section 3.4. Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee .
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by the Seller in the form
attached as Exhibit K hereto (the "Initial Trustee Certification"), and declares
that it will hold such documents and any amendments, replacement or supplements
thereto, as well as any other assets included in the definition of Trust Estate
and delivered to the Trustee, as Trustee in trust upon and subject to the
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conditions set forth herein for the benefit of the Owners. The Trustee agrees,
for the benefit of the Owners, to review such items within 45 days after the
Startup Day (or, with respect to any document delivered after the Startup Day,
within 45 days of receipt and with respect to any Qualified Replacement
Mortgage, within 45 days after the assignment thereof) and to deliver to the
Seller, the Master Servicer, any Sub-Servicer, the Transferor and the
Certificate Insurer a Pool Certification in the form attached hereto as Exhibit
L (the "Interim Trustee Certification"). Within 12 months from the Startup Day,
the Trustee shall review the contents of the Files and deliver to the Seller,
the Master Servicer, any Sub-Servicer, the Transferor and the Certificate
Insurer a Pool Certification in the form attached hereto as Exhibit M (the
"Final Trustee Certification").
The Trustee shall certify in the Initial Trustee Certification that it has
examined each Note to confirm that except as otherwise described in such
certification it is in possession of an executed original Note endorsed to the
Trustee. The Trustee shall certify in the Interim and Final Trustee
Certifications that except as described in such certification, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such Certification
as not covered by such Certification), (i) all documents required to be
delivered to it pursuant to this Agreement are in its possession and have been
executed, (ii) the original Note bearing an original endorsement to the Trustee
from the original payee (or set of original endorsements evidencing a complete
chain of title from the original payee to the Trustee) is in its possession;
(iii) such documents have been reviewed by it and have not been mutilated,
damaged, torn or otherwise physically altered and relate to such Mortgage Loan
identified in the Mortgage Loan Schedule and (iv) based on its examination and
only as to the foregoing documents, the information set forth on the Mortgage
Loan Schedule as to loan number, name of mortgagor and address, date of
origination, the original stated maturity date, the Original Principal Balance,
the Coupon Rate, the scheduled monthly payment of principal and interest and the
date in each month or which the related payments are due, accurately reflects
the information set forth in the File. The Trustee shall be under no duty or
obligation pursuant to this Section 3.4 to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
are other than what they purport to be on their face, nor shall the Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan. In the Interim and Final Trustee Certifications, the Trustee
based on its examination of the Files shall also either confirm, or list as an
exception that:
(i) each Note and Mortgage bears an original signature or signatures
purporting to be that of the person or persons named as the maker and
mortgagor/trustor;
(ii) the principal amount of the indebtedness secured by the Mortgage
is identical to the original principal amount of the Note;
(iii) the assignment of Mortgage is in the form "The Chase Manhattan
Bank, as Trustee" and bears a signature that purports to be the signature
of an authorized officer of the Person which the related File suggests was
the immediately prior record holder of such Mortgage;
(iv) if intervening assignments are included in the File, each such
intervening assignment bears a signature that purports to be the signature
of the mortgagee/beneficiary and/or the assignee;
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(v) the address of the real property set forth in the title insurance
policy or preliminary title report or commitment to issue a title policy is
identical to the real property address contained in the Mortgage and such
policy or commitment is for an amount equal to the original principal
amount of the Note; and
(vi) it has received an original Mortgage with evidence of recordation
and assignment, in each case, with evidence of recordation thereon or a
copy thereof certified to be true and correct by the public recording
office in possession of such Mortgage and assignment.
Following the delivery of the Final Trustee Certification, the Trustee shall
provide to the Seller, the Master Servicer, the Transferor and the Certificate
Insurer no less frequently than monthly, updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
(b) If the Trustee during such 45-day period in connection with the Interim
Trustee Certification, or 12-month period in connection with the Final Trustee
Certification finds any document constituting a part of a File which is not
properly executed, has not been received, or is unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule or the Trustee is unable to make any of
the other required certifications, or that any Mortgage Loan does not conform in
a material respect to the description thereof as set forth in the Mortgage Loan
Schedule, the Trustee shall promptly so notify the Seller, the Master Servicer,
the Transferor and the Certificate Insurer. In performing any such review, the
Trustee may conclusively rely on the Seller as to the purported genuineness of
any such document and any signature thereon. It is understood that the scope of
the Trustee's review of the items delivered by the Seller pursuant to Section
3.3(b)(i) is limited solely to such procedures as are necessary to enable the
Trustee to complete Exhibits K, L and M hereto.
The Seller agrees to use reasonable efforts to remedy a material defect in
a document constituting part of a File of which it is so notified by the
Trustee. If, however, (i) in the case of a defect consisting of the failure of
the Seller to deliver an original Mortgage and any intervening mortgage
assignment evidencing a complete chain of title to the Trustee with evidence of
recording thereon, on the first Remittance Date following the 12 month period
from the Startup Day and (ii) in the case of all other defects within 60 days
after the Trustee's notice to it respecting such defect the Seller has not
remedied the defect and the defect materially and adversely affects the interest
in the related Mortgage Loan of the Owners or of the Certificate Insurer, the
Seller will on the next succeeding Remittance Date (i) substitute in lieu of
such Mortgage Loan a Qualified Replacement Mortgage and, deliver the
Substitution Amount applicable thereto to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Master Servicer for deposit in the Principal and Interest
Account.
In connection with any such proposed purchase or substitution the Seller
shall cause at the Seller's expense to be delivered to the Trustee and to the
Certificate Insurer an opinion of counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the status
of any of the Upper-Tier REMIC, the Lower-Tier REMIC or REMIC I as a REMIC, and
the Seller shall only be required to take either such action to the extent such
action would not constitute a Prohibited Transaction for any of the Upper-Tier
REMIC, the Lower-Tier REMIC or REMIC I as a REMIC or would not jeopardize the
status of any of the Upper-Tier REMIC, the Lower-Tier REMIC or REMIC I as a
REMIC. Any required purchase or
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substitution, if delayed by the absence of such opinion shall nonetheless occur
upon the earlier of (i) the occurrence of a default or imminent default with
respect to the Mortgage Loan or (ii) the delivery of such opinion.
Section 3.5. Cooperation Procedures . (a) The Seller shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Trustee, provide
the Trustee with the information set forth in the related Mortgage Loan Schedule
with respect to such Qualified Replacement Mortgage.
(b) The Seller and the Trustee covenant to provide each other and the
Certificate Insurer with all data and information required to be provided by
them hereunder at the times required hereunder, and additionally covenant
reasonably to cooperate with each other in providing any additional information
required by any of them or the Certificate Insurer in connection with their
respective duties hereunder.
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates . On the Startup Day, upon the
Trustee's receipt from the Seller of an executed Delivery Order in the form set
forth as Exhibit H hereto, the Trustee shall execute, authenticate and deliver
the Certificates on behalf of the Trust in accordance with the directions set
forth in such Delivery Order.
Section 4.2. Sale of Certificates . At 11 a.m. New York City time on the
Startup Day, at the offices of Dewey Ballantine, 1301 Sixth Avenue, New York,
New York, the Seller will sell and convey the Mortgage Loans and the money,
instruments and other property related thereto to the Transferor, and the
Transferor will sell and convey such property to the Trustee, and the Trustee
will (i) hold the Class A Certificates as transfer agent for the Depository,
with an aggregate Percentage Interest in each Class equal to 100%, registered in
the name of Cede & Co. or in such other names as the Underwriters shall direct
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Trustee for disbursement to the Seller and (ii) deliver
to the Seller, the Class B Certificates and the Residual Certificates, with an
aggregate Percentage Interest equal to 100%, registered as the Seller shall
request. Upon receipt of the proceeds of the sale of the Certificates, the
Seller shall (a) pay the initial premiums due to the Certificate Insurer and (b)
pay other fees and expenses identified by the Seller.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. Terms. (a) The Certificates are pass-through securities having
the rights described therein and herein. Distributions on the Certificates are
payable solely from payments received on or with respect to the Mortgage Loans
(other than the Master Servicing Fees), moneys in the Certificate Account, the
Principal and Interest Account, the Supplemental Interest Payment Account,
Insured Payments made by the Certificate Insurer, Delinquency Advances and
Compensating Interest payments made by the Master Servicer or otherwise held by
the Master Servicer in trust for the Owners, except as otherwise provided
herein, and from earnings on moneys and the proceeds of property held as a part
of the Trust Estate. Each
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Certificate entitles the Owner thereof to receive distributions in accordance
with this Agreement and in a specified portion of the aggregate distribution due
to the related Class of Certificates, pro rata in accordance with such Owner's
Percentage Interest and in the case of the Class A-6 Certificates and the Class
A-7 Certificates, certain amounts payable from the related Supplemental Interest
Payment Account.
(b) Each Owner is required, and hereby agrees, to return to the Trustee any
Certificate with respect to which the Trustee has made the final distribution
due thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.2. Forms. The Certificates of each Class shall be in
substantially the forms set forth as the related Exhibits to this Agreement,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Agreement or as may in the Seller's
judgment be necessary, appropriate or convenient to comply, or facilitate
compliance, with applicable laws, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any applicable securities laws or as
may, consistently herewith, be determined necessary by the Authorized Officer of
the Trustee executing such Certificates, as evidenced by his execution thereof.
Section 5.3. Execution, Authentication and Delivery . Each Certificate
shall be executed on behalf of the Trust, by the manual signature of one of the
Trustee's Authorized Officers and shall be authenticated by the manual signature
of one of the Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall bind the Trust, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the execution and delivery of such Certificates or did not hold such offices at
the date of authentication of such Certificates.
No Certificate shall be valid until executed and authenticated as set forth
above.
Certificates delivered on the Startup Day shall be dated the Startup Day;
all Certificates delivered thereafter shall be dated the date of authentication.
Section 5.4. Registration and Transfer of Certificates. (a)__ The Trustee
shall cause to be kept a register (the "Register") in which, subject to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and the registration of transfer of Certificates.
(b) Subject to the provisions of Section 5.8 hereof with respect to the
Unregistered Certificates, upon surrender for registration of transfer of any
Certificate at the office designated as the location of the Register, the
Trustee shall execute and authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal or notional amount of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class, tenor
and a like aggregate original principal or notional amount and bearing numbers
not contemporaneously outstanding, upon surrender of the Certificates to be
exchanged at the office designated as the
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location of the Register. Whenever any Certificate is so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the Certificate
or Certificates which the Owner making the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Owner thereof
or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates; any
other expenses in connection with such transfer or exchange shall be an expense
of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall be initially issued in the form
of a single fully registered Class A Certificate of the related Class with a
denomination equal to the original principal balance of the related Class. Upon
initial issuance, the ownership of such Class A Certificates shall be registered
in the Register in the name of Cede & Co., or any successor thereto, as nominee
for the Depository.
The minimum denominations shall be $1,000 for any Class A Certificate,
$100,000 for any Class B Certificate, and 10% Percentage Interest for any
Residual Certificate.
The Seller and the Trustee are hereby authorized to execute and deliver the
Representation Letter with the Depository.
With respect to Class A Certificates registered in the Register in the name
of Cede & Co., as nominee of the Depository, the Seller, the Master Servicer,
the Transferor and the Trustee shall have no responsibility or obligation to the
Depository's "Direct Participants" or "Indirect Participants" or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the Seller,
the Master Servicer, the Transferor and the Trustee shall have no responsibility
or obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Class A Certificates, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Owner of a
Class A Certificate as shown in the Register, of any notice with respect to the
Class A Certificates or (iii) the payment to, or withholding with respect to,
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate. The Certificate Issuer shall have no responsibility for or
obligation with respect to the accuracy of the records of the Depository, Cede &
Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Class A Certificates.
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Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) 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 nominee and depository with respect to the
Class A Certificates and the Seller is unable to locate a qualified successor,
(ii) the Seller at its sole option elects to terminate the book-entry system
through the Depository or (iii) after an Event of Default, Owners of
Certificates evidencing at least 51% Percentage Interests of any Class affected
thereby notify the Seller that the continuation of a book-entry system is not in
the best interests of such Class of Owners, the Class A Certificates or any
Class, as applicable, shall no longer be restricted to being registered in the
Register in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository. At that time, the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller, or such depository's agent or
designee but, if the Seller does not select such alternative global book-entry
system, then the Trustee shall notify the Owners of the Class A Certificates in
writing of the termination of the book-entry system and the Class A Certificates
may be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates . If (i) any
mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) in the case of any mutilated Certificate, such mutilated
Certificate shall first be surrendered to the Trustee, and in the case of any
destroyed, lost or stolen Certificate, there shall be first delivered to the
Trustee such security or indemnity as may be reasonably required by it to hold
the Trustee harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expense
in connection with such issuance shall be an expense of the Owner.
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.6. Persons Deemed Owners . The Trustee and the Certificate
Insurer and any of their respective agents may treat the Person in whose name
any Certificate is registered as the Owner of such Certificate for the purpose
of receiving distributions with respect to such Certificate and for all other
purposes whatsoever, and neither the Trustee nor the Certificate Insurer nor any
of their respective agents shall be affected by notice to the contrary.
Section 5.7. Cancellation. All Certificates surrendered for registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. No
Certificate shall be authenticated in lieu of or in exchange for any Certificate
cancelled as provided in this Section, except as expressly permitted by this
Agreement. All cancelled Certificates may be held or destroyed by the Trustee in
accordance with its standard policies.
Section 5.8. Limitation on Transfer of Ownership Rights .
(a) No sale or other transfer of any Unregistered Certificate (other than
the initial sale of the Unregistered Certificates upon the issuance thereof)
shall be made to any Person unless such Person delivers to the Trustee (i) a
completed certificate in the form attached as Exhibit D hereto, (ii) if required
by the terms of such certificate, an opinion to the effect that such sale or
other transfer will not violate any applicable federal or state securities laws
and (iii) an opinion that such transfer will not jeopardize the REMIC status of
any REMIC or the deductibility of interest with respect to the Certificates; no
sale or other transfer of any Unregistered Certificate shall be made to any
Person until such Person delivers to the Trustee either (i) an opinion of
counsel from the prospective transferee of such Certificate, acceptable to, and
in form and substance satisfactory to the Seller, to the effect that such
transferee is not a pension or benefit plan or individual retirement arrangement
that is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or to Section 4975 of the Code or an entity whose underlying
assets are deemed to be assets of such a plan or arrangement by reason of such
plan's or arrangement's investments in the entity, as determined under U.S.
Department of Labor Regulations 29 C.F.R. ss. 2510.3-101 or otherwise,
collectively, a "Plan" or (ii) the representation set forth in Paragraph D of
Exhibit D hereto.
(b) No sale or other transfer of record or beneficial ownership of a
Residual Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization. The transfer, sale or other disposition of a Residual
Certificate (whether pursuant to a purchase, a transfer resulting from a default
under a secured lending agreement or otherwise) to a Disqualified Organization
shall be deemed to be of no legal force or effect whatsoever and such transferee
shall not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Residual Certificate.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Residual Certificate
nor authenticate and make available any new Residual Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit E. Each holder of a Residual Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.8(b).
(c) Notwithstanding anything to the contrary herein, no sale or other
transfer of record or beneficial ownership of a Class B Certificate or a
Residual Certificate shall be made
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to any Person until such Person delivers to the Trustee either (i) an opinion of
counsel from the prospective transferee of such Certificate, acceptable to, and
in form and substance satisfactory to the Seller, to the effect that such
transferee is not a Plan or (ii) the representation set forth in Paragraph D of
Exhibit D hereto. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Seller, the Master Servicer, the
Transferor, the Certificate Insurer and the Trustee against any liability, cost
or expense (including attorney's fees) that may result if the transfer is in
violation of such statute.
Section 5.9. Assignment of Rights. An Owner may pledge, encumber,
hypothecate or assign all or any part of its right to receive distributions
hereunder, but such pledge, encumbrance, hypothecation or assignment shall not
constitute a transfer of an ownership interest sufficient to render the
transferee an Owner of the Trust without compliance with the provisions of
Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. On each Payment Date, the Trustee will
distribute, from funds comprising the Trust Estate, to the Owners of record of
the Certificates as of the related Record Date, such Owners' Percentage
Interests in the amounts required to be distributed to the Owners of each Class
of Certificates on such Payment Date. For so long as the Class A Certificates
are in book-entry form with the Depository, the only "Owner" of the Class A
Certificates will be the Depository.
Section 6.2. Money for Distributions to be Held in Trust; Withholding. (a)
All payments of amounts due and payable with respect to any Certificate that are
to be made from amounts withdrawn from the Certificate Account pursuant to
Section 7.3 hereof shall be made by and on behalf of the Trustee.
(b) The Trustee on behalf of the Trust shall comply with all requirements
of the Code and applicable state and local law with respect to the withholding
from any distributions made by it to any Owner of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting requirements
in connection therewith.
(c) Any money held by the Trustee in trust for the payment of any amount
due with respect to any Class A Certificate, Class B Certificate or Residual
Certificate and remaining unclaimed by the Owner of such certificate for three
years after such amount has become due and payable shall be discharged from such
trust and be paid to the Seller; and the Owner of such Class A Certificate,
Class B Certificate or Residual Certificate shall thereafter, as an unsecured
general creditor, look only to the Seller for payment thereof (but only to the
extent of the amounts so paid to the Seller), and all liability of the Trustee
with respect to such trust money shall thereupon cease; provided, however, that
the Trustee, before being required to make any such payment, shall at the
written request and expense of the Seller cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Seller. The Trustee shall, at the
direction of the Seller, also adopt and employ, at the expense of the Seller,
any other reasonable means of notification of such payment (including, but not
limited to, mailing notice of such payment to Owners whose right to or interest
in moneys due and payable
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but not claimed is determinable from the records of the Trustee at the last
address of record for each such Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee will hold the
Trust Estate in trust for the benefit of the Owners and, upon request of the
Certificate Insurer or the Seller and at the expense of the Seller, will from
time to time execute and deliver all such supplements and amendments hereto
pursuant to Section 12.14 hereof and all instruments of further assurance and
other instruments, and will take such other action upon such reasonable request,
to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans;
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the ownership interests of the Owners represented thereby,
in such Trust Estate against the claims of all Persons and parties; or
(v) perfect a security interest in the Mortgage Loans, in the event
that the conveyance by the Seller did not constitute a sale.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations of the other parties to this Agreement by action, suit or proceeding
at law or equity, and shall also have the power to enjoin, by action or suit in
equity, any acts or occurrences which may be unlawful or in violation of the
rights of the Owners; provided, however, that nothing in this Section shall
require any action by the Trustee unless the Trustee shall first (i) have been
furnished indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such action and (ii) when required
by this Agreement, have been requested to take such action by the Certificate
Insurer, or, with the consent of the Certificate Insurer by a majority of the
Percentage Interests represented by any Class of Class A Certificates, or, if
there are no longer any Class A Certificates then Outstanding, by such
percentage of the Percentage Interests represented by any Class of Class B
Certificates then Outstanding.
(c) The Trustee shall execute any instrument reasonably required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties.
Section 6.4. Performance of Obligations. The Trustee will not take any
action that would release the Seller, the Master Servicer or the Transferor from
any of their respective covenants or obligations under any instrument or
document relating to the Trust Estate or the Certificates or which would result
in the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or document, except
with the prior written consent of the Certificate Insurer, or as expressly
provided in this Agreement or such other instrument or document.
Section 6.5. Negative Covenants . The Trustee will not, to the extent
within the control of the Trustee, take any of the following actions:
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(i) transfer, exchange or otherwise dispose of any of the Trust Estate
except as expressly permitted by this Agreement;
(ii) credit on or make any deduction from the distributions payable in
respect of the Certificates (other than amounts properly withheld from such
payments under the Code) or assert any claim against any present or former
Owner by reason of the payment of any taxes levied or assessed upon any of
the Trust Estate;
(iii) assume or guaranty on behalf of the Trust any indebtedness of
any Person except pursuant to this Agreement;
(iv) liquidate in whole or in part the Trust Estate, except pursuant
to Article VIII hereof; or
(v) (A) impair the validity or effectiveness of this Agreement, or
release any Person from any covenants or obligations with respect to the
Trust or to the Certificates under this Agreement, except as may be
expressly permitted hereby or (B) create or extend any lien, charge,
adverse claim, security interest, mortgage or other encumbrance to or upon
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.6. No Other Powers. The Trustee will not, to the extent within
the control of the Trustee, permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.3 hereof.
Section 6.7. Limitation of Suits. No Owner shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Agreement
or the Certificate Insurance Policy, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(1) such Owner has previously given written notice to the Seller, the
Transferor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by any Class of Class A Certificates, or, if there
are no Class A Certificates then Outstanding, by such percentage
of the Percentage Interests of any Class of Class B Certificates
then Outstanding, shall have made written request to the Trustee
to institute such proceeding in its own name as representative of
the Owners;
(3) the Trustee for 30 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
and
(4) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Certificate
Insurer or by the Owners of a majority of the Percentage
Interests represented by each Class of Class A Certificates or,
if there are no Class A Certificates then Outstanding, by such
percentage of the
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Percentage Interests represented by any Class of Class B
Certificates then Outstanding;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates, the Trustee shall act at the
direction of the Certificate Insurer.
Section 6.8. Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.9. Rights and Remedies Cumulative. Except as otherwise provided
herein, no right or remedy herein conferred upon or reserved to the Seller, the
Master Servicer, the Transferor, the Trustee, to the Owners or to the
Certificate Insurer is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. Except as otherwise
provided herein, the assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the Seller, Master
Servicer, the Transferor, the Trustee, or any Owner of any Certificate or the
Certificate Insurer to exercise any right or remedy under this Agreement shall
impair any such right or remedy or constitute a waiver of any such right or
remedy. Every right and remedy given by this Article VI or by law to the Seller
or to the Owners or the Certificate Insurer may be exercised from time to time,
and as often as may be deemed expedient, by the Seller or by the Owners or the
Certificate Insurer, as the case may be.
Section 6.11. Control by Owners. Either (x) the Certificate Insurer or (y)
with the consent of the Certificate Insurer, the Owners of a majority of the
Percentage Interests represented by each Class of Class A Certificates then
Outstanding or, if there are no Class A Certificates then Outstanding, by such
majority of the Percentage Interests represented by any Class of Class B
Certificates then Outstanding, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, provided
that:
(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; provided,
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however, that the Trustee need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
ARTICLE VII
ACCOUNTS, FLOW OF FUNDS,
DISTRIBUTIONS AND REPORTS
Section 7.1. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including (a) all payments due on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and required to be paid
over to the Trustee by the Master Servicer, or by any Sub-Servicer and (b)
Insured Payments in accordance with the terms of the Certificate Insurance
Policy. The Trustee shall hold all such money and property received by it as
part of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.2. Establishment of Accounts. The Trustee shall establish and
maintain, at the corporate trust office of the Trustee, a Certificate Account, a
Class A Group I Distribution Account, a Class A Group II Distribution Account a
Class A Group III Distribution Account and a Class B Distribution Account, each
to be held by the Trustee as a segregated trust account so long as the Trustee
qualifies as a Designated Depository Institution and if the Trustee does not so
qualify, then by any Designated Depository Institution in the name of the Trust
for the benefit of the Owners of the Certificates and the Certificate Insurer,
as their interests may appear.
In administering the Accounts the Trustee may establish such sub-Accounts
as the Trustee deems desirable.
Section 7.3. Flow of Funds. (a) The Trustee shall deposit to the
Certificate Account:
(i) with respect to the Group I Mortgage Loans, without duplication,
upon receipt, each Group I Monthly Remittance remitted by the
Master Servicer or any Sub-Servicer, together with any amounts
received by the Trustee in connection with the termination of the
Trust insofar as such amounts relate to the Group I Mortgage
Loans;
(ii) with respect to the Group II Mortgage Loans, without duplication,
upon receipt, each Group II Monthly Remittance remitted by the
Master Servicer or any Sub-Servicer, together with any amounts
received by the Trustee in connection with the termination of the
Trust, insofar as such amounts relate to the Group II Mortgage
Loans; and
(iii)with respect to the Group III Mortgage Loans, without
duplication, upon receipt, each Group III Monthly Remittance
remitted by the Master Servicer or any Sub-Servicer, together
with any amounts received by the Trustee in connection with the
termination of the Trust, insofar as such amounts relate to the
Group III Mortgage Loans.
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(b) On each Payment Date, the Trustee shall make the following
allocations, disbursements and transfers from the Group I Available Funds,
from the Group II Available Funds and from the Group III Available Funds in
the following order of priority, and each such allocation, transfer and
disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
(i) first, the Trustee shall pay first, to itself the related
Trustee's Fee then due;
(ii) [Reserved];
(iii)second, the Trustee shall allocate the following amounts in the
following order of priority:
(A) from the Available Funds then on deposit in the Certificate
Account with respect to each Group, the lesser of (x) the
Available Funds with respect to such Group and (y) the
Insured Distribution Amount with respect to such Group shall
be allocated to the Class A Distribution Account with
respect to such Group;
(B) from the remaining Available Funds then on deposit in the
Certificate Account with respect to each Group, the lesser
of (x) such remaining Available Funds, and (y) the excess of
(i) the Insured Distribution Amount with respect to the
either of the other two Groups over (ii) the amount then on
deposit in the Class A Distribution Account with respect to
such Group (such excess, the "Insured Shortfall" with
respect to such Group), shall be allocated to the Class A
Distribution Accounts for the other Groups; if both of the
other Groups have an Insured Shortfall on such Payment Date,
such remaining amount will be applied to both other Groups
pro rata in proportion to the relative amounts of their
respective Insured Shortfalls;
(C) (i) from the remaining Available Funds then on deposit in
the Certificate Account with respect to each Group to the
Certificate Insurer, the lesser of (x) such remaining
Available Funds with respect to each Group and (y) the
Premium Amount and any Reimbursement Amount then due to the
Certificate Insurer;
(ii) from the remaining Available Funds then on deposit in
the Certificate Account with respect to each Group to the
Certificate Insurer, the lesser of (x) such remaining
Available Funds and (y) any amounts remaining due to the
Certificate Insurer after application of (c)(i) above with
respect to the other Groups (such amount, a "Reimbursement
Shortfall" with respect to a Group) shall be paid to the
Certificate Insurer on behalf of the other Groups; if both
of the other Groups have a Reimbursement Shortfall on such
Payment Date, such remaining amount will be applied to both
other Groups pro rata in proportion to the relative amounts
of their respective Reimbursement Shortfalls;
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(iii)from the Available Funds then on deposit in the
Certificate Account with respect to each Group, the lesser
of (x) the Available Funds with respect to such Group and
(y) the excess of (i) the Interest Distribution Amount with
respect to such Group over (ii) the Insured Interest
Distribution Amount with respect to such Group shall be
allocated to the Class A Distribution Account with respect
to such Group;
(D) from the remaining Available Funds then on deposit in the
Certificate Account with respect to such Group, the lesser
of (x) such remaining Available Funds with respect to such
Group and (y) the excess of (i) the Principal Distribution
Amount applicable to such Group and Payment Date over (ii)
all amounts then on deposit in the respective Class A
Distribution Account that are allocable to principal, shall
be allocated to such Class A Distribution Account;
(E) from the remaining Available Funds then on deposit in the
Certificate Account with respect to each Group, the lesser
of (x) such remaining Available Funds and (y) the
Subordination Deficiency Amount applicable to the other
Groups on such Payment Date, shall be allocated to the
respective Class A Distribution Account as a Subordination
Increase Amount; if both of the other Groups have an
Subordination Deficiency Amount on such Payment Date, such
remaining amount will be applied to both other Groups pro
rata in proportion to the relative amounts of their
respective Subordination Deficiency Amount;
(F) from the remaining Available Funds then on deposit in the
Certificate Account with respect to each Group, the lesser
of (x) such remaining Available Funds with respect to such
Group and (y) the Class B Interest, shall be allocated to
the Class B Distribution Account and applied as a
distribution of interest on account of the Class B
Certificates;
(G) fromthe remaining Available Funds then on deposit in the
Certificate Account with respect to such Group, the lesser
of (x) such remaining Available Funds and (y) the Class B
Principal Balance as of such Payment Date, assuming that the
amount then on deposit in the Class B Distribution Account
as a result of the application of clause (F) above has been
applied as a distribution of principal on account of the
Class B Principal Balance on such Payment Date, shall be
allocated to the Class B Distribution Account and applied as
a distribution of principal on the Class B Principal
Balance; and
(H) all amounts then remaining on deposit in the Certificate
Account shall be distributed to the Owners of the Residual
Certificates on such Payment Date.
(c) On each Payment Date, the Trustee shall make the following
disbursements from amounts deposited in the Distribution Accounts pursuant to
Subsection (b) above, together with the amount of any Insured Payment with
respect to a Group deposited to the respective Distribution Account:
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(i) the Trustee shall pay, pari passu from the amount then on
deposit in the Class A Group I Distribution Account:
(A) to the Owners of the Class A-1 Group I Certificates,
the Class A-1 Distribution Amount for such Payment
Date;
(B) to the Owners of the Class A-2 Group I Certificates,
the Class A-2 Distribution Amount for such Payment
Date;
(C) to the Owners of the Class A-3 Group I Certificates,
the Class A-3 Distribution Amount for such Payment
Date; and
(D) to the Owners of the Class A-4 Group I Certificates,
the Class A-4 Distribution Amount for such Payment
Date; and
(E) to the Owners of the Class A-5 Group I Certificates,
the Class A-5 Distribution Amount for such Payment
Date; and
(F) to the Owners of the Class A-IO Group I Certificates,
the Class A-IO Distribution Amount for such Payment
Date;
provided, however, that if, on any Payment Date, (x) the
Certificate Insurer is then in default under the Certificate
Insurance Policy and (y) a Group I Subordination Deficit
exists, then any distribution of the Group I Principal
Distribution Amount on such Payment Date shall be made pro
rata to the Owners of each of the Class A-1 Group I
Certificates, the Class A-2 Group I Certificates, the Class
A-3 Group I Certificates, the Class A-4 Group I Certificates
and the Class A-5 Group I Certificates on such Payment Date;
(ii) the Trustee shall pay from the amount then on deposit in the
Class A Group II Distribution Account, to the Owners of the
Class A-6 Group II Certificates, the Class A-6 Distribution
Amount for such Payment Date; and
(iii)the Trustee shall pay from the amount then on deposit in
the Class A Group III Distribution Account, to the Owners of
the Class A-7 Group III Certificates, the Class A-7
Distribution Amount for such Payment Date; and
(iv) the Trustee shall transfer from the amounts then on deposit
in the Class B Distribution Account, to the Supplemental
Interest Payment Account, the Class B Distribution Amount
for such Payment Date; such transfer shall be deemed a
distribution on the Class B Certificates.
(d) Any amounts properly distributed to the Owners of the Class B
Certificates or to the Owners of the Residual Certificates pursuant to the terms
of this Agreement shall be distributed free of the subordination described
herein, and any such amounts shall in no event be required to be returned to the
Trustee or paid over to the Owners of the Class A Certificates.
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(e) Whenever, during the administration of the Trust, there comes into the
possession of the Trustee any money or property which this Agreement does not
otherwise require to be distributed on account of the Class A Certificates or
the Class B Certificates or to the Certificate Insurer, the Trustee shall
distribute such money or other property to the Owners of the Class RU
Certificates.
(f) Each Owner of a Class A Certificate which pays any Preference Amounts
theretofore received by such Owner on account of such Class A Certificate will
be entitled to receive reimbursement for such amounts from the Certificate
Insurer in accordance with the terms of the Certificate Insurance Policy, but
only after (i) delivering a copy to the Trustee of a final, nonappealable order
(a "Preference Order") of a court having competent jurisdiction under the United
States Bankruptcy Code demanding payment of such amount to the bankruptcy court
and (ii) irrevocably assigning such Owner's claim with respect to such
Preference Order to the Certificate Insurer in such form as is required by the
Certificate Insurer. In no event shall the Certificate Insurer pay more than one
Insured Payment in respect of any Preference Amount.
Section 7.4. Investment of Accounts.(a) All or a portion of any Account
held by the Trustee shall be invested and reinvested by the Trustee in the name
of the Trustee for the benefit of the Owners, as described in Section 7.4(c)
hereof. No investment in any Account shall mature later than the Business Day
immediately preceding the next Payment Date and shall be held until maturity.
(b) Subject to Section 9.1 hereof, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(c) Until it is directed in writing by the Seller to invest in another
Eligible Investment, the Trustee shall invest in Eligible Investments described
in paragraph (h) of Section 7.5 hereof.
(d) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account immediately on receipt, and any loss
resulting from such investments shall be charged to such Account.
Section 7.5. Eligible Investments . The following are Eligible Investments:
(a) Direct general obligations of the United States or the obligations of
any agency or instrumentality of the United States, the timely payment or the
guarantee of which constitutes a full faith and credit obligation of the United
States.
(b) FHLMC senior debt obligations, but excluding any such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemption.
(c) FNMA senior debt obligations, but excluding any such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemption.
(d) Federal funds, certificates of deposit, time and demand deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank
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(which may include the Trustee or its affiliate), the short-term debt
obligations of which have been rated A-1 or better by S&P and P-1 by Moody's.
(e) Deposits of any bank or savings and loan association which has combined
capital, surplus and undivided profits of at least $50,000,000 which deposits
are not in excess of the applicable limits insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, provided that the long-term
deposits of such bank or savings and loan association are rated at least "BBB"
by S&P and "Baa3" by Moody's.
(f) Commercial paper (having original maturities of not more than 270 days)
rated A-1 or better by S&P and P-1 by Moody's.
(g) Investments in money market funds (including those of the Trustee or
its affiliates (for which separate compensation may be received)) rated at least
AAAm or AAAm-G by S&P and Aaa by Moody's.
(h) Such other investments as have been approved in writing by S&P, Moody's
and the Certificate Insurer;
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to 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 provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par.
Any Eligible Investment may be purchased by or through the Trustee or any of its
affiliates. The Trustee or its affiliates may act as sponsor, manager,
depository or advisor with regard to any Eligible Investment.
Section 7.6. Reports by Trustee. (a) On each Payment Date the Trustee shall
report in writing to each Owner and to the Seller, the Master Servicer, and the
Transferor with a copy to the Certificate Insurer, S&P and Moody's:
(i) amount of the distribution with respect to each Class of
Certificates;
(ii) amount of such distributions allocable to principal, separately
identifying the aggregate amount of any Prepayments or other unscheduled
recoveries of principal included therein;
(iii) amount of such distributions allocable to interest;
(iv) amount of such distributions allocable to any Carry-Forward
Amount;
(v) then-outstanding principal balance of each Class of Class A
Certificates (or in the case of the Class A-IO Certificates, the Class A-IO
Notional Amount) as of such Payment Date, together with the principal
amount, by class, of each Class A Certificate (based on a Certificate in
the original principal amount of $1,000) then Outstanding, in each case
after giving effect to any payment of principal on such Payment Date;
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(vi) then-outstanding principal balance of each class of Class B
Certificates, together with the principal amount, by class, of each Class B
Certificate (based on a Certificate in the original principal amount of
$1,000) then Outstanding, in each case after giving effect to any payment
of principal on such Payment Date;
(vii) total of any Substitution Amounts and any Loan Purchase Prices
included in such distribution;
(viii) amount of any Supplemental Interest Payment Amount, Class B-S
Certificate distribution and any Interest Advance on such Payment Date,
together with the amount of any unreimbursed Interest Advance then owed to
the Designated Residual Owner;
(ix) amount of the Master Servicing Fee paid with respect to each of
the three Mortgage Loan Groups with respect to the related Remittance
Period;
(x) amount of any Group I Insured Payment, any Group II Insured
Payment and , any Group III Insured Payment made with respect to such
Payment Date; and
(xi) of such Payment Date, the Group I Subordinated Amount, the Group
II Subordinated Amount and , the Group III Subordinated Amount.
In preparing the report under this Section 7.6, the Trustee shall rely
solely upon the electronic report described in Section 10.8(d)(ii) hereof being
received from the Master Servicer or any Sub-Servicer. The Trustee shall not be
responsible for its obligations under this Section 7.6 unless and until it
receives such report from the Master Servicer.
(b) On each Payment Date the Trustee will additionally inform the Seller,
the Master Servicer, the Transferor, the Certificate Insurer, S&P and Moody's
with respect to the following:
(i) the Group I Available Funds, the Group II Available Funds and the
Group III Available Funds for the related Payment Date;
(ii) the Pool Principal Balance with respect to the three Mortgage
Loan Groups as of the end of the related Remittance Period;
(iii) the number and Principal Balances of all Mortgage Loans in the
three Mortgage Loan Groups which were the subject of Prepayments during the
related Remittance Period;
(iv) the total amount of payments in respect of or allocable to
interest on the Mortgage Loans in the three Mortgage Loan Groups received
or deemed to have been received from the related Mortgagors by the Master
Servicer or any Sub-Servicer during the related Remittance Period
(including any net income from REO Properties received during the related
Remittance Period);
(v) the aggregate of all principal payments received or deemed to have
been received from the related Mortgagors in the three Mortgage Loan Groups
by the Master Servicer or any Sub-Servicer during the related Remittance
Period;
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(vi) the aggregate of any Insurance Proceeds received or deemed to
have been received by the Master Servicer or any Sub-Servicer during the
related Remittance Period with respect to the three Mortgage Loan Groups;
(vii) the aggregate of any Released Mortgaged Property Proceeds
received or deemed to have been received by the Master Servicer or any
Sub-Servicer during the related Remittance Period with respect to the three
Mortgage Loan Groups;
(viii) the aggregate of any Liquidation Proceeds, Liquidation Expenses
and Net Liquidation Proceeds received or deemed to have been received by
the Master Servicer or any Sub-Servicer, and Net Realized Losses incurred,
during the related Remittance Period with respect to the three Mortgage
Loan Groups, the Group I Cumulative Net Realized Losses, the Group II
Cumulative Net Realized Losses, the Group III Cumulative Net Realized
Losses and the aggregate Cumulative Net Realized Losses since the Startup
Day and during the prior 12-month period and the Pool Rolling Three Month
Delinquency Rate;
(ix) the total amount of Compensating Interest payments paid or to be
paid by the Master Servicer or any Sub-Servicer pursuant to Section 10.10
hereof with respect the three Mortgage Loan Groups;
(x) the amount of Delinquency Advances made by the Master Servicer or
any Sub-Servicer pursuant to Section 10.9 hereof with respect to such
Payment Date with respect to the three Mortgage Loan Groups;
(xi) the monthly Master Servicing Fee and any additional servicing
fees paid to the Master Servicer or any Sub-Servicer pursuant to Section
10.15 hereof with respect to the three Mortgage Loan Groups;
(xii) the amount of Delinquency Advances with respect to the three
Mortgage Loan Groups reimbursable to the Master Servicer or any
Sub-Servicer during such Remittance Period pursuant to Section 10.9 hereof
and not previously reimbursed;
(xiii) the amount of any Servicing Advance made by the Master Servicer
or any Sub-Servicer pursuant to Sections 10.9 and 10.13 hereof with respect
to the three Mortgage Loan Groups and not previously reimbursed;
(xiv) the Class A-1 Distribution Amount, the Class A-2 Distribution
Amount, the Class A-3 Distribution Amount, the Class A-4 Distribution
Amount, the Class A-5 Distribution Amount, the Class A-6 Distribution
Amount, the Class A-7 Distribution Amount, the Class A-IO Distribution
Amount and the Class B Distribution Amount, with the components thereof
stated separately;
(xv) the weighted average remaining term to maturity and Net Weighted
Average Coupon Rate of the Mortgage Loans with respect to the three
Mortgage Loan Groups as of the close of business on the last day of the
related Remittance Period;
(xvi) the Group I Subordinated Amount, Group I Subordination
Deficiency Amount, Group I Specified Subordinated Amount, Group I
Subordination Increase Amount, Group II Subordinated Amount, Group II
Subordination Deficiency Amount, Group II Specified Subordinated Amount,
Group II Subordination Increase
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Amount, Group III Subordinated Amount, Group III Subordination Deficiency
Amount, Group III Specified Subordinated Amount and Group III Subordination
Increase Amount;
(xvii) the Group I Excess Subordinated Amount, Group I Subordination
Reduction Amount, Group II Excess Subordinated Amount, Group II
Subordination Reduction Amount, Group III Excess Subordinated Amount and
Group III Subordination Reduction Amount, for the related Payment Date;
(xviii) the number of Mortgage Loans in the three Mortgage Loan Groups
at the beginning and end of the related Remittance Period;
(xix) the Group I Shortfall Amount, the Group II Shortfall Amount and
the Group III Shortfall Amount for the related Payment Date;
(xx) such other information as the Certificate Insurer or the Seller
may reasonably request and which is derived from information which is
produced or available in the ordinary course of the Master Servicer's or
any Sub-Servicer's business or which otherwise materially relates to the
transactions contemplated hereby and is provided to the Trustee by the
electronic report described in Section 10.8(d)(ii) hereof; and
(xxi) the number and Principal Balance of any Mortgage Loans
repurchased during the related Remittance Period pursuant to Section
10.13(f) and the number and cumulative Principal Balance of all Mortgage
Loans so repurchased since the Cut-Off Date.
(c) In addition, on each Payment Date the Trustee will disseminate to each
Owner, the Seller, the Master Servicer and to the Transferor with a copy to the
Certificate Insurer, S & P and Moody's, together with the information described
in Subsection (a) preceding, the following information with respect to the three
Mortgage Loan Groups as of the close of business on the last day of the related
Remittance Period, which is required to be prepared by the Master Servicer or a
Su Servicer and furnished to the Trustee pursuant to Section 10.8(d)(ii) hereof
for such purpose on or prior to the related Remittance Date:
(i) total number of Mortgage Loans and the aggregate Principal
Balances thereof, together with the number and aggregate principal balances
of Mortgage Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and
(c) 90 or more days Delinquent;
(ii) number and aggregate principal balances of all Mortgage Loans in
foreclosure proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause (i));
(iii) number and aggregate principal balances of all Mortgage Loans
relating to Mortgagors in bankruptcy proceedings (and whether any such
Mortgage Loans are also included in any of the statistics described in the
foregoing clauses (i) and (ii));
(iv) number and aggregate principal balances of all Mortgage Loans
relating to REO Properties (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clauses (i),
(ii) and (iii));
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(v) number and aggregate principal balances of all Mortgage Loans as
to which foreclosure proceedings were commenced during the prior Remittance
Period;
(vi) schedule regarding cumulative foreclosures since the Cut-Off
Date; and
(vii) book value of any REO Property and any income received from REO
Properties during the prior Remittance Period.
The Seller, the Master Servicer, the Transferor and the Trustee on behalf
of Certificateholders and the Trust (the "Trust Parties") hereby authorize the
Certificate Insurer to include the information contained in reports provided to
the Certificate Insurer hereunder (the "Information") on Bloomberg, an on-line
computer based information network maintained by Bloomberg L.P. ("Bloomberg"),
or in other electronic or print information services. The Trust Parties agree
not to commence any actions or proceedings, or otherwise assert any claims,
against the Certificate Insurer or its affiliates or any of the Certificate
Insurer's or its affiliates' respective agents, representatives, directors,
officers or employees (collectively, the "Certificate Insurer Parties"), arising
out of, or related to or in connection with the dissemination and/or use of any
Information by the Certificate Insurer, including, but not limited to, claims
based on allegations of inaccurate, incomplete or erroneous transfer of
information by the Certificate Insurer to Bloomberg or otherwise (other than in
connection with the Certificate Insurer's gross negligence or willful
misconduct). The Trust Parties waive their rights to assert any such claims
against the Certificate Insurer Parties and fully and finally release the
Certificate Insurer Parties from any and all such claims, demands, obligations,
actions and liabilities (other than in connection with the Certificate Insurer's
gross negligence or willful misconduct). The Certificate Insurer makes no
representations or warranties, expressed or implied, of any kind whatsoever with
respect to the accuracy, adequacy, timeliness, completeness, merchantability or
fitness for any particular purpose of any Information in any form or manner. The
Certificate Insurer reserves the right at any time to withdraw or suspend the
dissemination of the Information by the Certificate Insurer. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
Section 7.7. Drawings under the Certificate Insurance Policy and Reports by
Trustee.
(a) On each Determination Date the Trustee shall determine, no later than
12:00 noon on such Determination Date, whether a Group I Shortfall Amount, a
Group II Shortfall Amount or a Group III Shortfall Amount has theretofore
occurred and will remain uncured on the following Payment Date, and whether a
Group I Shortfall Amount, a Group II Shortfall Amount or a Group III Shortfall
Amount with respect to the Group I Mortgage Loans, the Group II Mortgage Loans
or the Group III Mortgage Loans will occur on the following Payment Date. If the
Trustee determines that a Group I Shortfall Amount, a Group II Shortfall Amount
or a Group III Shortfall Amount will, based on the amount then on deposit in the
Certificate Account and amounts to be deposited in the Certificate Account prior
to such Payment Date on account of the Trustee's advancing obligations as
successor Master Servicer as set forth in Section 11(j) hereof, occur on the
following Payment Date, the Trustee shall furnish the Certificate Insurer and
the Seller with a completed Notice in the form set forth as Exhibit A to the
Certificate Insurance Policy. The Notice shall specify the amount of the Insured
Payment and shall constitute a claim for an Insured Payment pursuant to the
Certificate Insurance Policy.
(b) The Trustee shall report to the Seller, the Master Servicer, the
Transferor and the Certificate Insurer with respect to the amounts then held in
each Account held by the
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Trustee and the identity of the investments included therein, as the Seller, the
Master Servicer, the Transferor or the Certificate Insurer may from time to time
request. Without limiting the generality of the foregoing, the Trustee shall, at
the request of the Seller, the Master Servicer, the Transferor or the
Certificate Insurer transmit promptly to the Seller, the Master Servicer, the
Transferor and the Certificate Insurer copies of all accountings of receipts in
respect of the Mortgage Loans furnished to it by the Master Servicer or a
Sub-Servicer.
(c) Upon receipt of Insured Payments from the Certificate Insurer under the
Certificate Insurance Policy, the Trustee shall deposit such Insured Payments in
the Policy Payments Account. The Trustee shall withdraw Insured Payments from
the Policy Payments Account in accordance with section 13.4(a). The Trustee
shall distribute all Insured Payments received, or the proceeds thereof, in
accordance with Section 7.3(b) and 7.3(c) to the Owners of the Class A
Certificates of the related Class.
(d) The Trustee shall (i) receive Insured Payments as attorney-in-fact of
each Owner of the Class A Certificates of the related Class receiving any
Insured Payment from the Certificate Insurer and (ii) disburse such Insured
Payment to the Owners of the related Class A Certificates as set forth in
Section 7.3(b) and 7.3(c). The Certificate Insurer shall be entitled to receive
the related Reimbursement Amount pursuant to Section 7.3(b)(iii)(C) hereof with
respect to each Insured Payment made by the Certificate Insurer. The Trustee
hereby agrees on behalf of each Owner of Class A Certificates and the Trust for
the benefit of the Certificate Insurer that it recognizes that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee), to the Owners of such Class A Certificates, the
Certificate Insurer will be entitled to receive the related Reimbursement Amount
pursuant to Section 7.3(b)(iii)(C) hereof.
(e) Insured Payments disbursed by the Trustee from proceeds of the
Certificate Insurance Policy shall not be considered payment by the Trust Fund
nor shall such payments discharge the obligation of the Trust Fund with respect
to the related Class A Certificates, and the Certificate Insurer shall become
the owner of such unpaid amounts due from the Trust Fund in respect of the
related Class A Certificates. The Trustee hereby agrees on behalf of each Holder
of a related Class A Certificate for the benefit of the Certificate Insurer that
it recognizes that to the extent the Certificate Insurer makes Insured Payments,
either directly or indirectly (as by paying through the Trustee), to the Owners
of any Class A Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners with respect to such Insured Payment, shall be deemed to
the extent of payments so made to be a registered Owner of such Class A
Certificates and shall receive all future distributions (subject to the priority
set forth in 7.3(b)(iii)) until all such Insured Payments by the Certificate
Insurer, together with interest thereon at the interest rate borne by the
related Class A Certificates, have been fully reimbursed. To evidence such
subrogation, the Trustee shall note the Certificate Insurer's rights as subrogee
on the registration books maintained by the Trustee upon receipt from the
Certificate Insurer of proof of payment of any Insured Payment.
Section 7.8. Allocation of Realized Losses. If, on any Payment Date,
following the making of all allocations, transfers and distributions (other than
as provided in this Section) on such Payment Date (x) the sum of the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, the
Class A-6 Principal Balance, the Class A-7 Principal Balance, and the Class B
Principal Balance exceeds (y) the Pool Principal Balance as of the close of
business on the last day of the related Remittance Period (any such excess,
"Allocable Losses"), such Allocable Losses shall be applied as a reduction of
the Class B Principal Balance until the Class B Principal Balance has been
reduced to zero.
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Section 7.9. Supplemental Interest Payments.
(a) The parties hereto do hereby create and establish a trust, the "Access
Financial Supplemental Interest Trust 1997-3" (the "Supplemental Interest
Trust"). The Supplemental Interest Trust shall hold two trust accounts, each a
"Supplemental Interest Payment Account", to be held by the Trustee in its name
on behalf of the Supplemental Interest Trust.
If, on any Determination Date, the Trustee determines that the amount to be
available on the next Payment Date in a Supplemental Interest Payment Account
with respect to Class A-6 or Class A-7 (such amount, the "Supplemental Interest
Payment Amount" with respect to such Class) is less than the excess of (i) the
Full Interest Distribution Amount for such Class over (ii) the Interest
Distribution Amount for such Class as of such Payment Date (the difference, if
any, between the Supplemental Interest Payment Amount and such excess, the
"Class A-6 Formula Interest Shortfall" or the "Class A-7 Formula Interest
Shortfall", as the case may be), the Trustee shall deliver a notice in the form
of Exhibit O hereto to the Designated Residual Owner demanding that the
Designated Residual Owner fund such Formula Interest Shortfall on the related
Payment Date. The amount so funded by the Designated Residual Owner on any such
Payment Date is the "Interest Advance" with respect to the related Class for
such Payment Date. The Trustee shall deposit any Interest Advance received by it
in the amount of the Formula Interest Shortfall for such Class into the Class A
Group II Distribution Account or the Class A Group III Distribution Account, as
the case may be.
On each Payment Date, the Trustee shall withdraw from the related
Supplemental Interest Payment Account and deposit the Class A-6 Formula Interest
Shortfall in the Class A Group II Distribution Account or the Class A-7 Formula
Interest Shortfall in the Class A Group III Distribution Account; provided that
the amount to be withdrawn may not exceed the related Supplemental Interest
Payment Amount (such amount, the "Funded Amount").
(b) Any portion of the related Supplemental Interest Payment Amount after
application of clause (a) above (the "Remaining Amount") shall be applied in the
following order of priority:
(i) to the Designated Residual Owner, as reimbursement for unpaid
Interest Advances, together with interest thereon (the "Interest Advance
Reimbursement Amount"), with the earliest Interest Advances being deemed to
be paid first; and
(ii) to the Owners of the Class B-S Certificates, all remaining
amounts then on deposit in the Supplemental Interest Payment Account, to
such Owners pro rata in accordance with the Percentage Interests. --- ----
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1. Termination of Trust. The Trust created hereunder and all
obligations created by this Agreement will terminate upon the earlier of (i) the
payment to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to this Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate or (ii) at any time when a Qualified Liquidation of the
Trust is effected as
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described below. To effect a termination of this Agreement pursuant to clause
(b) above, the Owners of all Certificates then Outstanding shall (x) unanimously
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation with respect to each REMIC, as contemplated by Section 860F(a)(4) of
the Code and (y) provide to the Trustee an opinion of counsel experienced in
federal income tax matters to the effect that such liquidation constitutes a
Qualified Liquidation and the Trustee either shall sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust Estate, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the United Kingdom, living on the date hereof. The Trustee shall give written
notice of termination of the Agreement to the Certificate Insurer and each Owner
in the manner set forth in Section 12.5 hereof.
Section 8.2. Termination Upon Option of the Seller.
(a) On any Remittance Date on or after the Remittance Date on which the
then-outstanding aggregate Principal Balances of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance, the Seller may determine
to purchase and may cause the purchase from the Trust of all (but not fewer than
all) Mortgage Loans and all property theretofore acquired in respect of any
Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate at a price equal to 100% of the aggregate
Principal Balances of the related Mortgage Loans as of the day of termination
minus amounts remitted from the Principal and Interest Account to the
Certificate Account representing collections of principal on the Mortgage Loans
during the current Remittance Period, plus (i) one month's interest on such
amount computed at the weighted average Coupon Rate for the related Mortgage
Loan Group, (ii) the aggregate amount of any unreimbursed Delinquency Advances
and Servicing Advances, including amounts which would be Delinquency Advances
which the Master Servicer has theretofore failed to remit, (iii) any amount
owing to the Trustee, (iv) any Reimbursement Amount owing to the Certificate
Insurer and the Trustee, (v) any Insured Payment due on the related Payment
Date, (vi) the amount of any unpaid Interest Advances and (vii) the aggregate
amount of any unpaid Supplemental Interest Payment Amounts. The Seller shall pay
such termination price to the Trustee for deposit in the Certificate Account. In
connection with such termination, the Master Servicer shall remit to the Trustee
all amounts (net of investment earnings and providing for investment losses
pursuant to Section 10.8(b) hereof, net of the Master Servicing Fee and net of
amounts reimbursable for Delinquency Advances and Servicing Advances) then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) In connection with any such purchase, the Seller shall provide to the
Trustee an opinion of counsel experienced in federal income tax matters to the
effect that such purchase constitutes a Qualified Liquidation with respect to
each REMIC.
(c) Promptly following any such purchase, the Trustee will release the
Files, with appropriate endorsements and transfer documents, to the Seller or
otherwise upon its order.
Section 8.3. Auction Sale. If the Seller fails, by the ninetieth day
following the first Remittance Date on which such option may be exercised, to
exercise its purchase option
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pursuant to Section 8.2 hereof, then upon receipt of written notice and
direction from the Seller, the Trustee will notify the Representative (or, if
the Representative is unable or unwilling, another investment banking or
whole-loan trading firm selected by the Seller (the Representative or such other
investment bank or trading firm, the "Advisor") who will solicit on behalf of
the Trustee competitive bids for the purchase of the Mortgage Loans for fair
market value. Such solicitation shall be conducted substantially in the manner
described in Exhibit N hereto. In the event that satisfactory bids are received
as described below, the proceeds of the sale of such assets shall be deposited
into the Certificate Account. The Trustee will ask the Advisor to solicit, on
behalf of the Trustee, good-faith bids from no fewer than two prospective
purchasers that are considered at the time to be competitive participants in the
home equity market. The Advisor will consult with any securities brokerage
houses identified by the Seller as then making a market in the Class A
Certificates to obtain a determination as to whether the fair market value of
such assets has been offered.
Any purchaser of such Mortgage Loans must agree to the continuation of the
Master Servicer or any successor Master Servicer as servicer of the assets on
terms substantially similar to those in this Agreement.
If the highest good-faith bid received by the Advisor from a qualified
bidder is, in the judgment of the Representative, not less than the fair market
value of such Mortgage Loans and if such bid would equal the amount set forth in
the following sentence, the Trustee, following consultation with and written
direction from the Advisor and the Seller, will sell and assign such Mortgage
Loans without representation, warranty or recourse to such highest bidder and
will redeem the Class A Certificates. For the Trustee to consummate the sale,
the bid must be at least equal to the termination price set forth in Section
8.2(a) hereof. In addition, the bid must be in an amount sufficient to pay the
fees and expenses of the Trustee owing hereunder. If such conditions are not
met, the Trustee will, following consultation with the Advisor and the Seller,
decline to consummate such sale. In addition, the Trustee will decline to
consummate such sale unless it receives from the Advisor an opinion of counsel
addressed to it and the Certificate Insurer that such sale will not give rise
either to any "prohibited transaction" tax under section 860F(a)(1) of the Code
or to any tax on contributions to any REMIC after the "startup day" under
section 860G(d)(1) of the Code. In the event such sale is not consummated in
accordance with the foregoing, the Trustee will not be under any obligation to
solicit any further bids or otherwise to negotiate any further sale of the
Mortgage Loans. In such event, however, if directed by the Seller, the Trustee
may solicit bids from time to time in the future for the purchase of the
Mortgage Loans upon the same terms described above. The Trustee may consult with
the Advisor and the advice of the Advisor shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder. The Seller shall reimburse the Trustee for any fees incurred
under this Section 8.3 if a sale is not consummated.
Section 8.4. Disposition of Proceeds. The Trustee shall, upon receipt
thereof, deposit the proceeds of any liquidation or termination of the Trust
Estate pursuant to this Article VIII to the Certificate Account for application
as provided in Section 7.3 hereof.
ARTICLE IX
THE TRUSTEE
Section 9.1. Certain Duties and Responsibilities.
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(a) The Trustee (i) except during the continuance of an Event of Default,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee and (ii) in the absence of bad faith on
its part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, shall be under a duty
to examine the same to determine whether or not they conform to the requirements
of this Agreement.
During the continuance of an Event of Default, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise as a prudent person would exercise or
use under the circumstances with respect to such person's property or affairs.
(b) Notwithstanding the retention of the Master Servicer pursuant hereto
and subject to the provisions of Section 11.1 hereof, the Trustee is hereby
empowered (but not obligated) to perform the duties of the Master Servicer
hereunder following the failure of the Master Servicer to perform pursuant
hereto. Specifically, and not in limitation of the foregoing, the Trustee shall
have the power (but not the obligation):
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii)to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Article X hereof;
(iv) to deliver instruments of satisfaction pursuant to Article X hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest, in the manner required by this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of clause
(a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by an Authorized Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(iii)the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with
the direction of the Seller or the Certificate Insurer or, with the
Certificate Insurer's consent, of the Owners of a majority in
Percentage Interest of the Certificates of the affected Class or
Classes relating to the time, method
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and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement relating to such Certificates;
(iv) the Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default by the Seller or by the Master
Servicer unless the Trustee shall have received written notice
thereof. In the absence of actual receipt of such notice, the Trustee
may conclusively assume that there is no such default; and
(v) 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 any recording, filing, or depositing of this Agreement, any
Mortgage or any agreement referred to herein or any financing
statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance, (C) to see 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 property of the Trust, (D) to confirm or verify
the contents of any reports or certificates of the Master Servicer or
any Sub-Servicer delivered to the Trustee pursuant to this Agreement
or any Sub-Servicing Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.
(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that 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 hereunder except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties and powers and privileges of, the Master Servicer
in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its reasonable satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken.
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Section 9.2. Removal of Trustee for Cause. (a) The Trustee may be removed
pursuant to clause (b) hereof upon the occurrence of any of the following events
(whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
thereto on any Payment Date amounts available for distribution in
accordance with the terms hereof; or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement
or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall prove to be incorrect in any
material respect as of the time when the same shall have been
made, and such failure or breach shall continue or not be cured
for a period of 30 days after there shall have been given, by
registered or certified mail, to the Trustee by the Seller or the
Certificate Insurer or by the Owners of at least 25% of the
aggregate Percentage Interest represented by any Class of Class A
Certificates, or, if there are no Class A Certificates then
Outstanding, by such Percentage Interest represented by any Class
of Class B Certificates, a written notice specifying such failure
or breach and requiring it to be remedied (unless the Trustee is
aware of such breach as evidenced by notice from the Trustee
pursuant to Section 9.2(b) in which case the 30 day cure period
shall begin at the time such notice was given); or
(3) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Trustee, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Trustee
or relating to all or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due,
file or consent to the filing of a petition to take advantage of
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend
payment of its obligations, or take corporate action for the
purpose of any of the foregoing.
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(b) The Seller and the Trustee shall give notice to each other, to the
Certificate Insurer, the Transferor and to each Owner if it becomes aware that
an event described in Subsection (a) has occurred and is continuing.
(c) If any event described in Subsection (a) occurs and is continuing, then
and in every such case (x) the Seller or the Certificate Insurer or (y) with the
consent of the Certificate Insurer, the Owners of a majority of the Percentage
Interest represented by any Class of Class A Certificates, or, if there are no
Class A Certificates then Outstanding, by such Percentage Interest represented
by any Class of Class B Certificates then Outstanding, may, whether or not the
Trustee resigns pursuant to Section 9.9 hereof, immediately, concurrently with
the giving of notice to the Trustee, appoint a successor trustee pursuant to the
terms of Section 9.9 hereof.
Section 9.3. Certain Rights of the Trustee. Except as otherwise provided in
Section 9.1 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request or direction of the Seller or the Owners of any Class
of Certificates mentioned herein shall be sufficient if evidenced in
writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction
of any of the Owners pursuant to this Agreement, unless such Owners shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order,
bond, note or other paper or document, but the Trustee in its discretion
may make such further inquiry or investigation into such facts or matters
as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
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(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication
of the Certificates.
Section 9.4. Not Responsible for Recitals or Issuance of Certificates. The
recitals contained herein and in the Certificates, except any such recitals
relating to the Trustee, shall be taken as the statements of the Seller and the
Master Servicer and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of this
Agreement, any offering materials relating to the Certificates, or of the
Certificates other than as to the validity and sufficiency of its authentication
of the Certificates.
Section 9.5. May Hold Certificates. The Trustee or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee or such other agent.
Section 9.6. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other trust funds except to the extent
required herein or required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Seller and except to the extent of income or other gain on investments which
are deposits in or certificates of deposit of the Trustee in its commercial
capacity and income or other gain actually received by the Trustee on Eligible
Investments.
Section 9.7. Compensation and Reimbursement. The Trustee shall receive
compensation for fees and reimbursement for expenses pursuant to Section 2.5
hereof and Section 7.3(b)(i) hereof. The Trustee shall have no lien on the Trust
Estate for the payment of such fees and expenses.
Section 9.8. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder which shall be a corporation or association
acceptable to the Certificate Insurer and organized and doing business under the
laws of the United States of America or of any State authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $100,000,000, subject to supervision or examination by the United States
of America, having a rating or ratings acceptable to the Seller and having a
long-term deposit rating of at least BBB from S&P and Baa2 from Moody's (or such
lower rating as may be acceptable to S&P, Moody's and the Certificate Insurer).
If such Trustee 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 or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Seller or the
Certificate Insurer resign immediately in the manner and with the effect
hereinafter specified in this Article IX.
Section 9.9. Resignation and Removal; Appointment of Successor . (a)__ No
resignation or removal of the Trustee and no appointment of a successor trustee
pursuant to this Article IX shall become effective until the acceptance of
appointment by the successor trustee under Section 9.10 hereof.
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(b) The Trustee, or any trustee or trustees hereafter appointed, may resign
at any time by giving written notice of resignation to the Certificate Insurer,
the Seller, the Master Servicer and to the Transferor and by mailing notice of
resignation by first-class mail, postage prepaid, to the Owners at their
addresses appearing on the Register. Upon receiving notice of resignation, the
Seller shall promptly appoint a successor trustee or trustees satisfying the
eligibility requirements of Section 9.8 by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of the Seller, one copy
of which instrument shall be delivered to the Trustee so resigning and one copy
to the successor trustee or trustees. If no successor trustee shall have been
appointed and have 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, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribed, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible under Section 9.8
hereof and shall fail to resign after written request therefor by the Seller or
the Certificate Insurer, the Seller or the Certificate Insurer may remove the
Trustee and the Seller, with the consent of the Certificate Insurer, or the
Certificate Insurer may appoint a successor trustee by written instrument, in
duplicate, executed on behalf of the Trust by an Authorized Officer of the
Seller or the Certificate Insurer, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by any
Class of Class A Certificates with the consent of the Certificate Insurer, or,
if there are no Class A Certificates then Outstanding, by such Percentage
Interest represented by any Class of Class B Certificates then Outstanding, may
at any time remove the Trustee and appoint a successor trustee by delivering to
the Trustee to be removed, to the successor trustee so appointed, to the Seller
and to the Certificate Insurer, copies of the record of the act taken by the
Owners, as provided for in Section 12.3 hereof.
(e) If the Trustee fails to perform its duties in accordance with the terms
of this Agreement or becomes ineligible to serve as Trustee, the Seller or the
Certificate Insurer may remove the Trustee and the Seller, with the consent of
the Certificate Insurer, or the Certificate Insurer may appoint a successor
trustee by written instrument, in triplicate, signed by the Seller or the
Certificate Insurer duly authorized, one complete set to the Seller, one
complete set to the Trustee so removed and one complete set to the successor
trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Seller shall promptly appoint a successor trustee satisfying the eligibility
requirements of Section 9.8.
(g) The Seller shall give notice of any removal of the Trustee by mailing
notice of such event by first-class mail, postage prepaid, to the Owners as
their names and addresses appear in the Register. Each notice shall include the
name of the successor trustee and the address of its corporate trust office.
Section 9.10. Acceptance of Appointment by Successor Trustee. Every
successor trustee appointed hereunder shall execute, acknowledge and deliver to
the Seller on behalf of the Trust and to its predecessor Trustee an instrument
accepting such appointment hereunder and stating its eligibility to serve as
Trustee hereunder, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor trustee, without
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any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Seller or the successor trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such trustee so ceasing to
act hereunder. Upon request of any such successor trustee, the Seller on behalf
of the Trust shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor trustee all such rights, powers and
trusts. The Seller shall reimburse the Trustee for any costs reasonably incurred
hereunder resulting from the Trustee's removal under Section 9.09(d) hereof.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Seller shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing in the Register. The
Seller shall send a copy of such notice to the Rating Agencies. If the Seller
fails to mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Seller.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article IX.
Section 9.11. Merger, Conversion, Consolidation or Succession to Business
of the Trustee. Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article IX. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 9.12. Reporting; Withholding. (a)__ The Trustee shall timely
provide to the Owners the Internal Revenue Service's Form 1099 and any other
statement required by applicable Treasury regulations as determined by the
Seller, and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) The Trustee shall timely file all reports required to be filed by the
Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable. Furthermore, the
Trustee shall report to Owners, if required, with respect to the allocation of
expenses pursuant to Section 212 of the Code in accordance with the specific
instructions to the Trustee by the Seller with respect to such allocation of
expenses. The Trustee shall collect any forms or reports from the Owners
determined by the Seller to be required under applicable federal, state and
local tax laws.
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(c) The Trustee shall provide to the Internal Revenue Service and to
persons described in section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation section 1.860D-1(b)(5)(ii), or any successor
regulation thereto. Such information will be provided in the manner described in
Treasury Regulation section 1.860E-2(a)(5), or any successor regulation thereto.
Section 9.13. Liability of the Trustee. The Trustee shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Trustee herein. Neither the Trustee nor any of the
directors, officers, employees or agents of the Trustee shall be under any
liability on any Certificate or otherwise to any Account, the Seller, the Master
Servicer, any Sub-Servicer, the Transferor or any Owner for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Trustee or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or bad faith in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Subject to the foregoing sentence, the
Trustee shall not be liable for losses on investments of amounts in any Account
(except for any losses on obligations on which the bank serving as Trustee is
the obligor). In addition, the Seller covenants and agrees to indemnify the
Trustee, and when the Trustee is acting as Master Servicer, the Trustee in its
capacity as Master Servicer, from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses (including reasonable and
documented legal fees and expenses) other than those resulting from the
negligence or bad faith of the Trustee. The Trustee and any director, officer,
employee or agent of the Trustee may rely and shall be protected in acting or
refraining from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder.
Section 9.14. 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 Estate or any Property may at the time be located, the Master
Servicer and the Trustee acting jointly and with the consent of the Certificate
Insurer shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-Trustee or
co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Owners and the Certificate Insurer, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 9.14, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. If the Master Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case any event indicated in Section 9.2 of this Agreement
shall have occurred and be continuing, the Trustee alone (with the consent of
the Certificate Insurer) shall have the power to make such appointment. No
co-Trustee or separate Trustee hereunder shall be required to meet the terms of
eligibility as a successor Trustee under Section 9.8 and no notice to Owners of
the appointment of any co-Trustee or separate Trustee shall be required under
Section 9.9.
Every separate Trustee and co-Trustee shall, to the extent permitted, 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
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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 Estate 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 co-Trustee hereunder shall be held personally liable by reason
of any act or omission of any other co-Trustee hereunder; and
(iii) The Master Servicer and the Trustee acting jointly with the
consent of the Certificate Insurer 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 Section 9.14. 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
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.
ARTICLE X
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 10.1. General Servicing Procedures. (a) Acting directly or through
one or more Sub-Servicers as provided in Section 10.3, the Master Servicer shall
service and administer the Mortgage Loans in accordance with this Agreement and
shall have full power and authority, acting alone, to do or cause to be done any
and all things in connection with such servicing and administration which it may
deem necessary or desirable and consistent with the terms of this Agreement.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Master Servicer shall not have any duties, responsibilities, or fiduciary
relationship with the parties hereto except those expressly set forth herein,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or shall otherwise exist against
the Master Servicer.
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(b) The Master Servicer may, and is hereby authorized to, perform any of
its servicing responsibilities with respect to all or certain of the Mortgage
Loans through a Sub-Servicer as it may from time to time designate, but no such
designation of a Sub-Servicer shall serve to release the Master Servicer from
any of its obligations under this Agreement. Such Sub-Servicer shall have all
the rights and powers of the Master Servicer with respect to such Mortgage Loans
under this Agreement.
(c) Without limiting the generality of the foregoing, but subject to the
provisions of this Article X, the Master Servicer in its own name or in the name
of a Sub-Servicer hereby is authorized and empowered, which authorization may
further be evidenced, at the reasonable request of the Master Servicer, by a
power of attorney executed and delivered by the Trustee, on behalf of itself,
the Owners and the Trustee or any of them, (i) to execute and deliver any and
all instruments of satisfaction or cancellation or of partial or full release or
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Properties, (ii) to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of
any Property in the name of the Trust, and (iii) to hold title in the name of
the Trust to any Property upon such foreclosure or deed in lieu of foreclosure
on behalf of the Trustee; provided, however, that to the extent any instrument
described in clause (i) preceding would be delivered by the Master Servicer
outside of its ordinary procedures for mortgage loans held for its own account
the Master Servicer shall, prior to executing and delivering such instrument,
obtain the prior written consent of the Certificate Insurer, and provided
further, however, that Section 10.14(a) shall constitute a power of attorney
from the Trustee to the Master Servicer to execute an instrument of satisfaction
(or assignment of mortgage without recourse) with respect to any Mortgage Loan
paid in full (or with respect to which payment in full has been escrowed).
Subject to Sections 10.13 and 10.14, the Trustee shall execute any powers of
attorney and other documents as the Master Servicer or such Sub-Servicer shall
reasonably request and that are provided to the Trustee to enable the Master
Servicer and such Sub-Servicer to carry out their respective servicing and
administrative duties hereunder. The costs to the Master Servicer of delivering
any satisfactions described in clause (i) above shall be paid by the Master
Servicer to the extent not recoverable from the related Mortgagor under
applicable state law.
(d) The Master Servicer, with the approval of the Seller, shall have the
right to approve requests of Mortgagors for consent to (i) partial releases of
Mortgages and (ii) alterations and removal, demolition or division of Properties
subject to Mortgages. No such request shall be approved by the Master Servicer
unless: (1) (x) the provisions of the related Note and Mortgage have been
complied with; (y) the Loan-to-Value Ratio (which may, for this purpose, be
determined at the time of any such action in a manner reasonably acceptable to
the Certificate Insurer) after any release does not exceed the Loan-to-Value
Ratio set forth for such Mortgage Loan in the Mortgage Loan Schedule; and (z)
the lien priority, monthly payment, Coupon Rate or maturity date of the related
Mortgage is not affected (except in accordance with Section 10.2) or (2) the
Certificate Insurer shall have approved the granting of such request and shall
not unreasonably withhold such approval.
(e) The Master Servicer shall give prompt notice to the Seller, the
Transferor, the Trustee and to the Certificate Insurer of any action, of which
the Master Servicer has actual knowledge, to (i) assert a claim against the
Trust or (ii) assert jurisdiction over the Trust.
(f) Servicing Advances incurred by the Master Servicer or any Sub-Servicer
in connection with the servicing of the Mortgage Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be
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recoverable by the Master Servicer or such Sub-Servicer to the extent described
in this Agreement.
(g) Each of the Seller, the Master Servicer, any Sub-Servicer, the
Transferor, the Trustee and the Certificate Insurer shall be entitled to rely,
and shall be fully protected in relying, upon any promissory note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Mortgagor(s)), independent accountants and other experts selected by the Seller,
the Master Servicer, each Sub-Servicer, the Transferor, the Trustee or the
Certificate Insurer. The Master Servicer shall be fully justified in failing or
refusing to take any action under this Agreement for which failure or refusal it
has sought and received instructions from the Owners and which failure or
refusal has been consented to by the Certificate Insurer. The Master Servicer
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the Mortgage Loans in accordance with an express
written request of the Owners to which the Certificate Insurer has consented,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Seller, the Master Servicer, the Transferor, the Trustee,
the Certificate Insurer and all Owners. In the event of any conflicting
instructions or requests, the instructions or requests delivered by the
Certificate Insurer shall prevail, unless such instructions or requests violate
the express terms of this Agreement or violate applicable law.
(h) The Master Servicer shall have no liability to the Seller, the
Transferor, the Trustee, the Certificate Insurer, the Owners or any other Person
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that the foregoing shall not apply to any breach of representations or
warranties made by the Master Servicer herein, or to any specific liability
imposed upon the Master Servicer pursuant to this Agreement or any liability
that would otherwise be imposed upon the Master Servicer by reason of its
willful misconduct, bad faith or negligence in the performance of its duties
hereunder or by reason of its reckless disregard of its obligations or duties
hereunder.
Section 10.2. Collection of Certain Mortgage Loan Payments. The Master
Servicer shall generally service the Mortgage Loans in a prudent manner
consistent with the Master Servicer's Servicing and Collection Guide (the
"Servicing Standards"), and agrees to 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 collection procedures for all Mortgage Loans at least as rigorous as
those the Master Servicer would take in servicing similar mortgage loans and in
collecting payments thereunder for its own account. Consistent with the
foregoing, the Master Servicer may (i) in its discretion waive or permit to be
waived any late payment charge or assumption fee or any other fee or charge
which the Master Servicer would be entitled to retain pursuant to Section 10.15
as servicing compensation, (ii) extend the due date for payments due on a Note
for a period (with respect to each payment as to which the due date is extended)
not greater than 125 days after the initially scheduled due date for such
payment and (iii) amend any Note to extend the maturity thereof, provided that
no maturity shall be extended beyond the maturity date of the Mortgage Loan with
the latest maturity date and that no more than 3.0% of the Original Pool
Principal Balance of the Mortgage Loans shall have a maturity date which has
been extended beyond the maturity date thereof at the Cut-off Date; provided
further, with respect to clauses (i), (ii) and (iii), that such action does not
violate applicable REMIC provisions. In the event the Master Servicer shall
consent to the deferment of the due dates for payments due on a Note, the Master
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Servicer shall nonetheless make payment of any required Delinquency Advance with
respect to the payments so extended to the same extent as if such installment
were due, owing and Delinquent and had not been deferred, and shall be entitled
to reimbursement therefor in accordance with Sections 10.8(d)(i)(D) and 10.9(a)
hereof.
The Master Servicer may not waive prepayment charges or penalty interest in
connection with Prepayments. Any such amounts so received shall be paid over to
the Seller as received.
Section 10.3. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements for
any servicing and administration of Mortgage Loans with any institution which is
in compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and which (i) has been designated
an approved seller-servicer by FHLMC or FNMA for first and second mortgage loans
and (ii) has equity of at least $15,000,000, as determined in accordance with
generally accepted accounting principles (except for LSI Financial Group), and
(iii) must have demonstrated proficiency in the servicing of mortgage loans
having similar characteristics (including credit characteristics) to the
Mortgage Loans. The Master Servicer shall give notice to the Seller, the
Transferor, the Trustee, Moody's, S&P and the Certificate Insurer of the removal
or appointment of any Sub-Servicer; no such removal or appointment shall be
effective unless the Trustee shall have received the prior consent of Moody's,
the Certificate Insurer and S&P. Any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. For purposes
of this Agreement, the Master Servicer shall be deemed to have received payments
on or with respect to Mortgage Loans when any Sub-Servicer has received such
payments. For purposes of this Agreement, the Master Servicer shall be deemed to
have made a payment required to be made by it hereunder when any Sub-Servicer
has made such payment in the manner required of the Master Servicer hereunder.
For purposes of this Agreement, the Master Servicer shall be deemed to have
delivered any document required to be delivered by it hereunder when any
Sub-Servicer has delivered such document in the manner required of the Master
Servicer hereunder. As of the Startup Day, the only Sub-Servicer is LSI
Financial Group.
Section 10.4. Successor Sub-Servicers. Each Sub-Servicing Agreement shall
expressly provide that the Master Servicer or the Trustee shall be entitled to
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and to enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 10.3. The
Trustee shall have no duty or obligation hereunder to monitor or supervise the
performance of any Sub-Servicer.
Section 10.5. Liability of Master Servicer. The Master Servicer shall not
be relieved of its obligations under this Agreement notwithstanding any
Sub-Servicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a Sub-Servicer or
otherwise, and the Master Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Mortgage Loans. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer by such Sub-Servicer and nothing contained in such Sub-Servicing
Agreement shall be deemed to limit or modify this Agreement.
Section 10.6. No Contractual Relationship Between Sub-Servicer and Trustee
or the Owners. Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer (other than the
Sub-Servicing Agreement dated the
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date hereof among the Master Servicer, LSI Financial Group and the Trustee)
shall be deemed to be between the Sub-Servicer, the Master Servicer and any
other parties thereto alone and the Transferor, the Trustee and the Owners shall
not be deemed parties thereto and shall have no claims, rights, obligations,
duties or liabilities with respect to any Sub-Servicer except as set forth in
Sections 10.4 and 10.7, unless expressly made a party thereto.
Section 10.7. Assumption or Termination of Sub-Servicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Trustee pursuant to Section 11.1, it is understood and agreed
that the Master Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Master Servicer and a Sub-Servicer may be
assumed or terminated by the Trustee at its option, and the Master Servicer
shall cause each Sub-Servicing Agreement to so provide. Each Sub-Servicing
Agreement shall contain term provisions at least as restrictive as those
contained herein with respect to the Master Servicer.
The Master Servicer shall, upon request of the Trustee, but at the expense
of the Master Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 10.8. Principal and Interest Account.
(a) The Master Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account as a
segregated account.
Subject to Subsections (c) and (d) below, the Master Servicer and any
Sub-Servicer shall deposit all collections (other than amounts escrowed for
taxes and insurance) related to the Mortgage Loans to the Principal and Interest
Account on a daily basis (but no later than the first Business Day after
receipt).
On or before the Startup Day, the Master Servicer shall deposit to the
Principal and Interest Account (i) all scheduled payments due and collected
(other than amounts escrowed for taxes and insurance) on the Mortgage Loans
after the Cut-Off Date and prior to the Startup Day and (ii) all unscheduled
collections (other than amounts escrowed for taxes and insurance) on the
Mortgage Loans received on or after the Cut-Off Date and prior to the Startup
Day.
(b) All funds in the Principal and Interest Account shall be invested in
Eligible Investments maturing not later than the Business Day immediately
preceding the related Remittance Date; provided, however, in the event that
Trustee is acting as Successor Master Servicer, such amounts may be held
uninvested. The Principal and Interest Account shall be held in trust in the
name of the Trustee for the benefit of the Owners. Any investment earnings on
funds held in the Principal and Interest Account shall be for the account of the
Master Servicer and may only be withdrawn from the Principal and Interest
Account by the Master Servicer immediately following the remittance of the
Monthly Remittances by the Master Servicer. Any investment losses shall be paid
by the Master Servicer to the Principal and Interest Account from the Master
Servicer's own funds. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings and to additional amounts in respect of investment losses. The Trustee
shall have no responsibility or liability for actions taken by the Master
Servicer, including withdrawals, with respect to the Principal and Interest
Accounts.
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(c) The Master Servicer shall deposit to the Principal and Interest Account
all principal and interest payments from the related Mortgagors received by the
Master Servicer (including any Prepayments), Net Proceeds, other recoveries or
amounts related to the Mortgage Loans received by the Master Servicer,
Compensating Interest, Delinquency Advances together with any amounts which are
reimbursable to the Master Servicer from the Principal and Interest Account, the
amount of any Loan Purchase Price received or paid by the Master Servicer, the
amount of any Substitution Amount received by the Master Servicer, REO income
pursuant to Section 10.13(c) hereof, and amounts required to be deposited
therein pursuant to Section 10.11 hereof in connection with blanket insurance
policies and any proceeds received by the Master Servicer in connection with the
termination of the Trust, but net of (i) the Master Servicing Fee with respect
to each Mortgage Loan and other servicing compensation to the Master Servicer as
permitted by Section 10.15 hereof, (ii) Net Proceeds to the extent such Net
Proceeds exceed the sum of (I) the Principal Balance of the related Mortgage
Loan, plus (II) accrued and unpaid interest on such Mortgage Loan at the Coupon
Rate applicable to the related Remittance Period (net of the Master Servicing
Fee) and (iii) prepayment charges and similar amounts to be paid over to the
Seller pursuant to Section 10.2 hereof. Amounts described in clause (ii) of the
preceding sentence shall be retained by the Master Servicer as additional
servicing compensation or paid over to the related Mortgagor if required by law.
(d) (i) The Master Servicer may make withdrawals from the Principal and
Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the related
Monthly Remittance due on each Remittance Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal and
Interest Account in error;
(D) to reimburse itself for amounts which represent Reimbursable
Advances made by the Master Servicer from its own funds and
subsequently collected from the related Mortgagor; and
(E) to clear and terminate the Principal and Interest Account in
connection with the termination of the Trust.
(ii) On the tenth day of each month (or the immediately following Business
Day if the tenth day does not fall on a Business Day), the Master Servicer shall
send to the Trustee a report, in such electronic form as may be agreed upon by
the Master Servicer, the Seller, the Certificate Insurer and the Trustee,
detailing the payments on the Mortgage Loans for each of the Mortgage Loan
Groups during the prior Remittance Period. Such report shall be in the form and
have the specifications as may be agreed to between the Master Servicer, the
Seller, and the Trustee from time to time and, in any event, shall have such
information as shall be necessary to enable the Trustee to perform its
obligations hereunder.
In addition, on or prior to each Remittance Date, the Master Servicer will
furnish to the Seller, the Transferor, the Trustee and to the Certificate
Insurer the following information for the three Mortgage Loan Groups as of the
close of business on the first business day of the current calendar month:
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(A) the total number of Mortgage Loans and the aggregate Principal
Balances thereof, together with the number and aggregate principal
balances of Mortgage Loans (a) 30-59 days Delinquent, (b) 60-89 days
Delinquent and (c) 90 or more days Delinquent;
(B) the number and aggregate principal balances of all Mortgage Loans in
foreclosure proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause
(A));
(C) the number and aggregate principal balances of all Mortgage Loans
relating to Mortgagors in bankruptcy proceedings (and whether any such
Mortgage Loans are also included in any of the statistics described in
the foregoing clauses (A) and (B));
(D) the number and aggregate principal balances of all Mortgage Loans
relating to REO Properties (and whether any such Mortgage Loans are
also included in any of the statistics described in the foregoing
clauses (A), (B) and (C));
(E) the number and aggregate principal balances of all Mortgage Loans as
to which foreclosure proceedings were commenced during the prior
Remittance Period;
(F) a schedule regarding cumulative foreclosures since the Cut-Off Date;
(G) a schedule regarding the Group I Cumulative Net Realized Losses, the
Group II Cumulative Net Realized Losses, the Group III Cumulative Net
Realized Losses and the Cumulative Net Realized Losses;
(H) the book value of any REO Property and any income received from REO
Properties during the prior Remittance Period;
(I) such other information as the Trustee, the Seller, the Certificate
Insurer or the Transferor may reasonably request and as is produced by
the Master Servicer in the ordinary course of its business; and
(J) the number and Principal Balance of any Mortgage Loans repurchased
during the related Remittance Period pursuant to Section 10.13(f) and
the number and cumulative Principal Balance of all Mortgage Loans so
repurchased since the Cut-Off Date.
(iii) On each Remittance Date the Master Servicer shall remit the Group I
Monthly Remittance, the Group II Monthly Remittance and the Group III Monthly
Remittance to the Trustee by wire transfer, or otherwise make funds available in
immediately available funds.
(e) In connection with any exercise by the Seller of its option and related
termination under Article VIII hereof, upon written request of the Seller, the
Master Servicer shall remit to the Trustee all amounts (net of investment
earnings and providing for investment losses pursuant to Section 10.8(b), net of
the Master Servicing Fee and net of amounts reimbursable for
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Delinquency Advances and Servicing Advances) then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
Section 10.9. Delinquency Advances and Servicing Advances. (a) If the
amount on deposit in the Principal and Interest Account with respect to any
Mortgage Loan Group as of any Remittance Date is less than the related Monthly
Remittance for such Remittance Date, the Master Servicer shall deposit to the
Principal and Interest Account with respect to such Mortgage Loan Group a
sufficient amount of its own funds to make such amount equal to the related
Monthly Remittance for such Remittance Date. Such amounts of the Master
Servicer's own funds so deposited are "Delinquency Advances". Any Delinquency
Advances funded by the Master Servicer from its own funds are reimbursable from
subsequent collections on or with respect to the related Mortgage Loan,
including Liquidation Proceeds, Insurance Proceeds, Released Mortgaged Property
Proceeds, and payments from the related Mortgagor. Notwithstanding anything to
the contrary contained in this Agreement, no Delinquency Advance or Servicing
Advance shall be required to be made by the Master Servicer if such Delinquency
Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance.
The Master Servicer shall be permitted to fund its payment of Delinquency
Advances on any Remittance Date from collections on any Mortgage Loan deposited
to the Principal and Interest Account subsequent to the related Remittance
Period, and shall deposit to the Certificate Account with respect to Delinquency
Advances funded from amounts on deposit in the Principal and Interest Account
(i) collections from the Mortgagor whose delinquency gave rise to the shortfall
which resulted in such Delinquency Advance and (ii) Net Liquidation Proceeds
recovered on account of the related Mortgage Loan to the extent of the amount of
aggregate Delinquency Advances related thereto. In any event, to the extent the
Master Servicer uses such funds, the Master Servicer must reimburse the
Principal and Interest Account by the next Remittance Date to the extent
necessary to provide for the related Monthly Remittance.
(b) The Master Servicer will pay all reasonable and customary
"out-of-pocket" costs and expenses (including reasonable legal fees) incurred in
the performance of its servicing obligations including, but not limited to, the
cost of (i) Preservation Expenses, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of REO Property
(including, without limitation, realtors' commissions) and (iv) advances made
for taxes, insurance and other charges against the Property. Each such
expenditure will constitute a "Servicing Advance". The Master Servicer may
recover Servicing Advances from the Mortgagors to the extent permitted by the
Mortgage Loans or, if not theretofore recovered from the Mortgagor on whose
behalf such Servicing Advance was made, from Liquidation Proceeds, Insurance
Proceeds and/or Released Mortgage Property Proceeds realized with respect to the
related Mortgage Loan. In no case may the Master Servicer recover Servicing
Advances from the principal and interest payments on any Mortgage Loan or from
any amounts relating to any other Mortgage Loan.
Section 10.10. Compensating Interest. If a Prepayment in full of the
outstanding principal balance of a Mortgage Loan occurs during any calendar
month, any difference between the interest collected from the Mortgagor during
such calendar month and the full month's interest at the related Coupon Rate
less the Master Servicing Fee with respect to such Mortgage Loan ("Compensating
Interest") that is due, then prior to the Remittance Date the Master Servicer
shall deposit the Compensating Interest to the Principal and Interest Account
which amount shall be included in the related Monthly Remittance to be made
available to the Trustee on the next succeeding Remittance Date; provided,
however, that Compensating Interest due from the Master
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Servicer on any Remittance Date will not exceed the monthly Servicing Fee. The
Master Servicer shall not be entitled to reimbursement for Compensating Interest
payments.
Section 10.11. Maintenance of Insurance.
(a) The Master Servicer shall cause to be maintained with respect to each
Mortgage Loan a hazard insurance policy with a generally acceptable carrier
licensed in the state in which the Property is located that provides for fire
and extended coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Mortgage Loan in an amount not less than the
least of (i) the outstanding principal balance of the Mortgage Loan (together in
the case of a Second Mortgage Loan, with the outstanding principal balance of
the Senior Lien), (ii) the minimum amount required to compensate for loss or
damage on a replacement cost basis and (iii) the full insurable value of the
premises and which otherwise conforms to the description thereof set forth in
clause (xvii) of Section 3.2(b). The Master Servicer shall indemnify the Trust
out of the Master Servicer's own funds for any loss to the Trust resulting from
the Master Servicer's failure to maintain the insurance required by this
paragraph.
(b) If the Mortgage Loan at the time of origination relates to a Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier, and which provides for a
recovery by the Master Servicer on behalf of the Trust of insurance proceeds
relating to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973, as amended and which otherwise conforms to the description thereof set
forth in clause (xviii) of Section 3.2(b). The Master Servicer shall indemnify
the Trust and the Certificate Insurer out of the Master Servicer's own funds for
any loss to the Trust and the Certificate Insurer resulting from the Master
Servicer's failure to maintain the insurance required by this Section.
(c) In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer acceptable to the Certificate Insurer insuring
against fire and hazards of extended coverage on all of the Mortgage Loans,
then, to the extent such policy names the Master Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Mortgage Loans with co-insurance, and otherwise complies with the
requirements of this Section 10.11, the Master Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 10.11, 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 Property a policy complying with subsection (a) of this Section 10.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the Principal and Interest Account from the Master Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with subsection (a) of this Section 10.11 and the
amount paid under such blanket policy. Upon the request of the Trustee, the
Master Servicer shall cause to be delivered to the Trustee, a certified true
copy of such policy.
(d) The Seller shall indemnify the Master Servicer for any loss to the
Master Servicer if any Mortgage Loan does not, at the time the Master Servicer
assumed the servicing of such Mortgage Loan, have in place the insurance
described in Sections 3.2(b)(xvi) and (xvii) hereof and described herein and, if
applicable, Section 3.2(b)(xviii) hereof. Without limiting the obligations of
the Seller pursuant to Section 3.2, the Master Servicer shall only be required
to
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maintain insurance on any Property if such insurance was in place at the time
the Master Servicer assumed the servicing of the related Mortgage Loan.
Section 10.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.
(a) When a Property has 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 rights to accelerate the maturity of the
related Mortgage Loan under any "due on sale" clause contained in the related
Mortgage or Note; provided, however, that the Master Servicer shall not exercise
any such right if the "due on sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law; and provided, further,
that the Master Servicer may refrain from exercising any such right if the
Certificate Insurer gives its prior consent to such non-enforcement.
(b) The Mortgage Loan, if assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Master
Servicer shall notify the Trustee in writing that any applicable assumption or
substitution agreement has been completed and shall forward to the Trustee the
original recorded copy of such assumption or substitution agreement, which copy
shall be added by the Trustee in writing to the related File and which shall,
for all purposes, be considered a part of such File to the same extent as all
other documents and instruments constituting a part thereof. The Master Servicer
shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement,
the required monthly payment on the related Mortgage Loan shall not be changed
but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed, the Coupon Rate shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Master Servicer as additional
servicing compensation.
(c) Notwithstanding the foregoing clauses (a) and (b) 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 10.13. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trust of Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of Delinquent payments and which the Master Servicer has not
purchased pursuant to Section 10.13(f), unless the Master Servicer reasonably
believes that Net Liquidation Proceeds with respect to such Mortgage Loan would
not be increased as a result of such foreclosure or other action, in which case
such Mortgage Loan will be charged-off and will become a Liquidated Loan. The
Master Servicer shall have no obligation to purchase any Property at any
foreclosure sale. The Master Servicer will give notice of any such charge-off to
the Certificate Insurer by delivery of a Liquidation Report in the form attached
as Exhibit G hereto. In connection with such foreclosure or other conversion,
the Master Servicer shall exercise foreclosure procedures with the same degree
of care and skill in their exercise or use, as it would exercise or use under
the circumstances in the conduct of its own affairs. Any amounts, including
Liquidation Expenses, advanced by the
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Master Servicer in connection with such foreclosure or other action shall
constitute "Servicing Advances" within the meaning of Section 10.9(b) hereof.
(b) The Master Servicer shall sell any REO Property within 23 months of its
acquisition by the Trust, unless the Master Servicer obtains for the Trustee an
opinion of counsel experienced in federal income tax matters, addressed to the
Trustee, the Certificate Insurer and the Master Servicer, to the effect that the
holding by the Trust of such REO Property for a greater specified period will
not result in the imposition of taxes on "Prohibited Transactions" of the Trust
as defined in Section 860F of the Code or cause the REMICs to fail to qualify
under the REMIC Provisions at any time that any Certificates are outstanding.
(c) Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO 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 "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners and the Certificate
Insurer, rent the same, or any part thereof, as the Master Servicer deems to be
in the best interest of the Owners and the Certificate Insurer for the period
prior to the sale of such REO Property. The net income from the sale of an REO
Property shall be deposited in the Principal and Interest Account.
(d) If the Master Servicer has reason to believe that a Property which the
Master Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure contains environmental or hazardous waste risks known to the Master
Servicer, the Master Servicer shall notify the Seller, the Transferor, the
Trustee and the Certificate Insurer prior to acquiring the Property. The Master
Servicer shall not institute foreclosure actions with respect to such a property
if it reasonably believes that such action would not be consistent with the
Servicing Standards, and the Master Servicer is not permitted to take any action
with respect to such a Property without the prior written approval of the
Seller, the Transferor, the Trustee, and the Certificate Insurer, and in no
event shall the Master Servicer be required to manage, operate or take any other
action with respect thereto which the Master Servicer in good faith believes
will result in "clean-up" or other liability under applicable law, unless the
Master Servicer receives an indemnity acceptable to it in its sole discretion.
(e) The Master Servicer shall determine, with respect to each defaulted
Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts, if any, it expects to recover from
or on account of such defaulted Mortgage Loan, whereupon such Mortgage Loan
shall become a "Liquidated Loan". The Master Servicer shall deliver to the
Seller, the Transferor, the Trustee and the Certificate Insurer on each
Remittance Date a Liquidation Report in the form annexed as Exhibit G hereto
with respect to each Mortgage Loan as to which the Master Servicer made a
determination that such Mortgage Loan has become a Liquidated Loan during the
related Remittance Period.
(f) The Master Servicer has the right and the option, but not the
obligation, to purchase for its own account any Mortgage Loan which becomes
Delinquent, in whole or in part, as to four consecutive monthly installments or
any Mortgage Loan as to which enforcement proceedings have been brought by the
Master Servicer pursuant to this Section 10.13 or which is
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in default or as to which a default is imminent. Any such Mortgage Loan so
purchased shall be purchased on a Remittance Date at a purchase price equal to
the Loan Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
(g) The Master Servicer shall consult with the Seller with respect to its
obligations under this Section 10.13.
Section 10.14. Trustee to Cooperate; Release of Files. (a) Upon the payment
in full of any Mortgage Loan (including the repurchase of any Mortgage Loan or
any liquidation of such Mortgage Loan through foreclosure or otherwise), or the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Master Servicer shall
deliver to the Trustee a Master Servicer's Trust Receipt. Upon receipt of such
Master Servicer's Trust Receipt, the Trustee shall promptly release the related
File, in trust to (i) the Master Servicer, (ii) an escrow agent or (iii) any
employee, agent or attorney of the Trustee, in each case pending its release by
the Master Servicer, such escrow agent or such employee, agent or attorney of
the Trustee, as the case may be. Upon any such payment in full, or the receipt
of such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, the Master Servicer may prepare and submit to the Trustee, a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Master Servicer; in such event, the
Trustee shall execute and acknowledge such satisfaction or assignment, as the
case may be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any Mortgage
Loan, including, without limitation, foreclosure or other comparable conversion
of a Mortgage Loan or collection under any applicable Insurance Policy, the
Trustee shall (except in the case of the payment or liquidation pursuant to
which the related File is released to an escrow agent or an employee, agent or
attorney of the Trustee), promptly upon request of the Master Servicer and
delivery to the Trustee of a Master Servicer's Trust Receipt, release the
related File to the Master Servicer and shall execute such documents as shall be
reasonably necessary to the prosecution of any such proceedings, including,
without limitation, an assignment without recourse of the related Mortgage to
the Master Servicer. The Trustee shall complete in the name of the Trustee any
endorsement in blank on any Note prior to releasing such Note to the Master
Servicer. Such receipt shall obligate the Master Servicer to return the File to
the Trustee when the need therefor by the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the
liquidation information, in physical or electronic form, the Master Servicer's
Trust Receipt shall be released by the Trustee to the Master Servicer.
Notwithstanding the foregoing, at no time shall the Trustee release to the
Master Servicer pursuant to this Section 10.14 a quantity of Files in excess of
10% of the number of Mortgage Loans within the Pool, excluding Files relating to
Mortgage Loans which have been paid in full or have become Liquidated Loans
(unless otherwise approved by the Certificate Insurer).
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(c) In all cases where the Master Servicer needs the Trustee to sign any
document or to release a File within a particular period of time, the Master
Servicer shall notify an Authorized Officer of the Trustee by telephone or
telecopy of such need and the Trustee shall thereupon use its best efforts to
comply with the Master Servicer's needs, but in any event will comply within two
Business Days of such request.
Section 10.15. Master Servicing Compensation. As compensation for its
activities hereunder, the Master Servicer shall be entitled to retain the amount
of the Master Servicing Fee with respect to each Mortgage Loan. Additional
servicing compensation in the form of release and satisfaction fees (to the
extent allowed by law), bad check charges, assumption fees, late payment
charges, and any other servicing-related fees, Net Proceeds not required to be
deposited in the Principal and Interest Account pursuant to Section 10.8(c)(ii)
and similar items may, to the extent collected from Mortgagors, be retained by
the Master Servicer.
Section 10.16. Annual Statement as to Compliance. The Master Servicer, at
its own expense, will deliver to the Seller, the Transferor, the Trustee, the
Certificate Insurer, Moody's and S&P annually, commencing in 1998, an Officer's
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Master Servicer during such preceding fiscal year and of
performance under this Agreement has been made under such officer's supervision,
and (ii) to the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement for such
year, or, if there has been a default in the fulfillment of one or more such
obligations, specifying each such default known to such officer and the nature
and status thereof including the steps being taken by the Master Servicer to
remedy such default. Any Sub-Servicer which is not a Master Servicer Affiliate
also shall deliver an annual statement as to compliance in the form described
above or the Master Servicer shall cover their performance in their statement.
These statements shall be available to Owners upon written request.
Section 10.17. Annual Independent Certified Public Accountants' Reports.
Annually, commencing in 1998, the Master Servicer, at its own expense, shall
cause to be delivered to the Seller, the Transferor, the Trustee, the
Certificate Insurer, Moody's and S&P a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has, with respect
to the Master Servicer's overall servicing operations (i) performed applicable
tests in accordance with the compliance testing procedures as set forth in
Appendix 3 of the "Audit Guide for Audits of HUD Approved Non-Supervised
Mortgages" or (ii) 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. These reports will be made available to
Owners upon written request.
Section 10.18. Access to Certain Documentation and Information Regarding
the Mortgage Loans; Confidentiality. The Master Servicer shall provide to the
Seller, the Transferor, the Trustee, the Certificate Insurer, and the
supervisory agents and examiners (as required in the latter case by applicable
state and federal regulations) of each of the foregoing access to the
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the Master
Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a
copy of such computer tape to the Trustee and the Seller and in addition shall
provide a copy of such computer tape to the Trustee and the Seller at such other
times as the Trustee and the Seller may request.
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The Master Servicer, the Trustee, and the Certificate Insurer shall keep
confidential (including from affiliates thereof) information concerning the
Mortgage Loans and the underwriting criteria for the Mortgage Loans, except as
required by law.
Each of the Seller, the Transferor, the Trustee and the Certificate Insurer
acknowledges the proprietary nature of the software, software procedures,
software development tools, know-how, methodologies, processes and technologies
of the Master Servicer and any Sub-Servicer and agrees (i) that it shall use the
same means as it uses to protect its own confidential information, but in no
event less than reasonable means, to avoid disclosure by it or its agents or
employees to any third party of any confidential or proprietary information of
the Master Servicer or any Sub-Servicer, and (ii) that all such software,
software procedures, software development tools, know-how, methodologies,
process and technologies that are based upon trade secrets or proprietary
information of the Master Servicer or any Sub-Servicer shall be and remain the
property of the Master Servicer or any Sub-Servicer and that each of the Seller,
the Transferor, the Trustee and the Certificate Insurer will have no interest
therein or claim thereto. Each Sub-Servicer shall be a third-party beneficiary
of this paragraph.
Section 10.19. Assignment of Agreement. The Master Servicer may not assign
its obligations under this Agreement, in whole or in part, unless it shall have
first obtained (i) the written consent of the Seller, the Trustee and
Certificate Insurer and (ii) the Trustee and Certificate Insurer shall have
received a confirmation letter from each Rating Agency confirming the rating of
the Class A Certificates as AAA or its equivalent; provided, however, that any
assignee must meet the eligibility requirements set forth in Section 11.1(g)
hereof for a successor servicer.
Section 10.20. Inspections by Certificate Insurer and Account Parties;
Errors and Omissions Insurance. (a) At any reasonable time and from time to time
upon reasonable notice, the Seller, the Transferor, the Certificate Insurer, the
Trustee, or any agents or representatives thereof may inspect the Master
Servicer's servicing operations and discuss the servicing operations of the
Master Servicer. The out-of-pocket costs and expenses incurred by the Master
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the requesting party prior to the
occurrence and continuance of an Event of Default, and by the Master Servicer
after the occurrence and during the continuance of an Event of Default.
(b) The Master Servicer agrees to maintain or cause a Sub-Servicer to
maintain errors and omissions coverage and a fidelity bond, each at least to the
extent required by Section 305 of Part I of FNMA Guide or any successor
provision thereof or such other insurance arrangements reasonably satisfactory
to the Certificate Insurer.
Section 10.21. Financial Statements. The Master Servicer understands that,
in connection with the transfer of the Certificates, Owners may request that the
Master Servicer make available upon written request to prospective Owners any
publicly available annual audited financial statements of the Master Servicer
for one or more of the most recently completed four fiscal years for which such
statements are available, which request shall not be unreasonably denied. Such
financial statements shall also be supplied to the Certificate Insurer.
The Master Servicer also agrees to make available on a reasonable basis to
the Seller, the Transferor, the Trustee, the Certificate Insurer, any Owner or
any prospective Owner a knowledgeable financial or accounting officer for the
purpose of answering reasonable questions respecting recent developments
affecting the Master Servicer or the financial statements of the Master Servicer
and to permit the Seller, the Transferor, the Trustee, the Certificate Insurer,
any
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Owner or any prospective Owner to inspect the Master Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Seller, the Transferor, the Trustee, the Certificate Insurer, any Owner or such
prospective Owner that the Master Servicer has the ability to service the
Mortgage Loans in accordance with this Agreement.
Each requesting party shall use the same means as it uses to protect its
own confidential information, but in no event less than reasonable means, to
avoid disclosure by it or its agents or employees to any third party of any
confidential or proprietary information of the Master Servicer.
Section 10.22. REMIC. The Master Servicer covenants and agrees for the
benefit of the Owners (i) to take no action which would result in the
termination of REMIC status for any of the REMICs, (ii) not to engage in any
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code and (iii) not to engage in any other action which may result in the
imposition of any other taxes under the Code.
Section 10.23. The Designated Depository Institution. The Master Servicer
shall give the Seller, the Transferor, the Trustee and the Certificate Insurer
(a) at least thirty days' prior written notice of any anticipated change of the
Designated Depository Institution at which the Principal and Interest Account is
maintained and (b) written notice of any change in the ratings of such
Designated Depository Institution of which the Master Servicer is aware, within
two Business Days after discovery.
Section 10.24. Appointment of Custodian. If the Master Servicer determines
that the Trustee is unable to deliver Files to the Master Servicer as required
pursuant to Section 10.14 hereof, the Master Servicer shall so notify the
Seller, the Transferor, the Trustee, the Certificate Insurer, S&P and Moody's,
and make request that a custodian acceptable to the Seller, the Master Servicer,
the Transferor and the Certificate Insurer be appointed to retain custody of the
Files on behalf of the Trustee. The Seller, the Transferor and the Trustee agree
to co-operate reasonably with the Master Servicer in connection with the
appointment of such custodian. The Trustee shall pay from the Trustee's Fee all
reasonable fees and expenses of such custodian, in an amount not to exceed 1
basis point of the Pool Principal Balance.
ARTICLE XI
EVENTS OF DEFAULT; REMOVAL OF MASTER SERVICER; MERGER
Section 11.1. Removal of Master Servicer; Resignation of Master Servicer.
(a) The Certificate Insurer (or, with the consent of the Certificate Insurer,
the Seller or the Owners of Class A Certificates evidencing at least a majority
in Percentage Interest of all Class A Certificates) may remove the Master
Servicer upon the occurrence of any of the following events (each, an "Event of
Default"):
(i) The Master Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing its
inability to pay its debts generally as they become due, (III) make a
general assignment for the benefit of creditors, (IV) be adjudicated a
bankrupt or insolvent, (V) commence a voluntary case under the federal
bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or
an order for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a
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petition filed against it in any bankruptcy, reorganization or insolvency
proceeding or (VI) cause corporate action to be taken by it for the purpose
of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the Master
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Master
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, conservator, liquidator or custodian or similar entity
with respect to the Master Servicer or of all or any substantial part of
its assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the Master
Servicer in good faith, the same shall (A) result in the entry of an order
for relief or any such adjudication or appointment or (B) continue
undismissed or pending and unstayed for any period of sixty (60)
consecutive days; or
(iii) The Master Servicer shall fail to perform any one or more of its
obligations hereunder (other than its obligations referenced in clauses
(vi) and (vii) below) and shall continue in default thereof for a period of
thirty (30) days after the earlier to occur of (x) the date on which an
Authorized Officer of the Master Servicer knows or reasonably should know
of such failure or (y) receipt by the Master Servicer of a written notice
from the Trustee, any Owner, the Seller, the Transferor or the Certificate
Insurer of said failure; or
(iv) The Master Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.1(c) which materially
and adversely affects the interests of the Owners or Certificate Insurer
for a period of thirty (30) days after the earlier of (x) the date on which
an Authorized Officer of the Master Servicer knows or reasonably should
know of such breach or (y) receipt by the Master Servicer of a written
notice from the Trustee, any Owner, the Seller, the Transferor or the
Certificate Insurer of such breach; or
(v) If the Certificate Insurer pays out any money under the
Certificate Insurance Policy, or if the Certificate Insurer otherwise funds
any shortfall with its own money, because the amounts available to the
Trustee (other than from the Certificate Insurer) are insufficient to make
required distributions on the Class A Certificates; or
(vi) The failure by the Master Servicer to make any required Servicing
Advance for a period of 30 days following the earlier of (x) the date on
which an Authorized Officer of the Master Servicer knows or reasonably
should know of such failure or (y) receipt by the Master Servicer of a
written notice from the Trustee, any Owner, the Seller, the Transferor or
the Certificate Insurer of such failure; or
(vii) The failure by the Master Servicer to make any required
Delinquency Advance, to pay any Compensating Interest or to pay over any
Monthly Remittance or other amounts required to be remitted by the Master
Servicer pursuant to this Agreement; or
(viii) If on any Payment Date the Pool Rolling Three Month Delinquency
Rate (including all foreclosures and REO Properties) exceeds 4.75% during
the period October 1, 1997 through September 30, 1998, 5.50% during the
period October 1, 1998
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through September 30, 1999, 6.25% during the period October 1, 1999 through
September 30, 2000, 7.25% during the period October 1, 2000 through
September 30, 2001, 8.25% during the period October 1, 2001 through
September 30, 2002 or 10.00% after October 1, 2002; or
(ix) If on any Payment Date occurring in October of any year,
commencing in October 1998, the aggregate Pool Cumulative Net Realized
Losses over the prior twelve month period exceed 0.75% of the average Pool
Principal Balance as of the close of business on the last day of each of
the twelve preceding Remittance Periods; or
(x) If on any Payment Date the aggregate Pool Cumulative Net Realized
Losses for all prior Remittance Periods since the Startup Day exceed 3.25%
of the Original Pool Principal Balance;
provided, however, that (x) prior to any removal of the Master Servicer pursuant
to clauses (ii) through (iv) and (vi) of this Section 11.1(a), any applicable
grace period granted by any such clause shall have expired prior to the time
such occurrence shall have been remedied and (y) in the event of the refusal or
inability of the Master Servicer to comply with its obligations described in
clause (vii) above, such removal shall be effective (without the requirement of
any action on the part of the Seller, the Transferor, the Certificate Insurer or
of the Trustee) at 4 p.m. New York City time on the second Business Day
following the day on which the Trustee notifies an Authorized Officer of the
Master Servicer that a required amount described in clause (vii) above has not
been received by the Trustee, unless the required amount described in clause
(vii) above is paid by the Master Servicer prior to such time or the Certificate
Insurer grants an extension of time for such payment. Upon the Trustee's
obtaining actual knowledge that a required amount described in clause (vii)
above has not been made by the Master Servicer, the Trustee shall so notify an
Authorized Officer of the Master Servicer, and the Certificate Insurer, as soon
as is reasonably practical.
(b) Upon the occurrence of an Event of Default as described in clauses
(viii), (ix) or (x) of Section 11.1(a), the Certificate Insurer may remove the
Master Servicer; provided, however, that if such occurrence of an Event of
Default is the result of circumstances beyond the Master Servicer's control, the
Master Servicer shall not be removed, and provided further, that in the event of
any disagreement between the Seller and the Certificate Insurer, the decision of
the Certificate Insurer shall control.
(c) The Master Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Master Servicer so causing such a conflict being of a type and nature
carried on by the Master Servicer at the date of this Agreement. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an opinion of counsel to such effect which shall be delivered to
the Seller, the Transferor, the Trustee and the Certificate Insurer.
(d) No removal or resignation of the Master Servicer shall become effective
until the Trustee or a successor Master Servicer acceptable to the Certificate
Insurer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with this Section.
(e) Upon removal or resignation of the Master Servicer, the Master Servicer
also shall promptly deliver or cause to be delivered to a successor Master
Servicer or the Trustee
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all the books and records (including, without limitation, records kept in
electronic form) that the Master Servicer has maintained for the Mortgage Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Master Servicer's
possession.
(f) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the Trustee (x) may
solicit bids for a successor Master Servicer as described below, and (y) pending
the appointment of a successor Master Servicer as a result of soliciting such
bids, shall serve as Master Servicer; provided, however, that the Trustee shall
not be liable for any acts, omissions or obligations of the Master Servicer
prior to such succession or for any breach by the Master Servicer of any of its
representations and warranties contained in this Agreement or in any related
document or agreement. The Trustee shall, if it is unable to obtain a qualifying
bid and is prevented by law from acting as Master Servicer, appoint, or petition
a court of competent jurisdiction to appoint, any housing and home finance
institution, bank or mortgage servicing institution which (i) has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
mortgage loans, (ii) has equity of not less than $15,000,000, as determined in
accordance with generally accepted accounting principles, and (iii) must have
demonstrated proficiency in the servicing of mortgage loans having similar
characteristics (including credit characteristics) to the Mortgage Loans, (iv)
and must be acceptable to the Certificate Insurer 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.
The compensation of any successor Master Servicer (including, without
limitation, the Trustee) so appointed shall be the aggregate Master Servicing
Fees, together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 10.8 and 10.15.
(h) In the event the Trustee solicits bids as provided above, the Trustee
shall solicit, by public announcement, bids from housing and home finance
institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Master Servicer shall be entitled to the full amount of the aggregate
Master Servicing Fees as servicing compensation (including the servicing
compensation received in the form of assumption fees, late payment charges or
otherwise) as provided in Sections 10.8 and 10.15. Within thirty days after any
such public announcement, the Trustee shall, with the consent of the Certificate
Insurer, negotiate and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid. The Trustee shall deduct from any sum received by the
Trustee from the successor to the Master Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder. After such deductions, the remainder of such sum shall be paid by the
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the successor Master Servicer.
(i) The Trustee and such successor Master Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Trustee and any
successor Master Servicer in effecting the termination of the Master Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor Master Servicer, as applicable, all
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documents and records reasonably requested by it to enable it to assume the
Master Servicer's functions hereunder and shall promptly also transfer to the
Trustee or such successor Master Servicer, as applicable, all amounts which then
have been or should have been deposited in the Principal and Interest Account by
the Master Servicer or which are thereafter received with respect to the
Mortgage Loans. Neither the Trustee nor any other successor Master Servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Master Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.
(j) The Trustee or any other successor Master Servicer, upon assuming the
duties of Master Servicer hereunder, shall immediately make all Delinquency
Advances and pay all Compensating Interest which the Master Servicer has
theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer or another
successor Master Servicer has become the Master Servicer, the Trustee or such
other successor Master Servicer, as the case may be, shall only be required to
make Delinquency Advances (including the Delinquency Advances described in this
clause (j)) if, in the Trustee's or such other successor Master Servicer's, as
the case may be, reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans. The Trustee, while
acting as Master Servicer hereunder, shall only be obligated to make payments
with respect to Compensating Interest to the extent of its Master Servicing Fee.
(k) The Master Servicer that is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor Master Servicer.
(l) Any successor Master Servicer shall assume all rights and obligations
of the predecessor Master Servicer under this Agreement, except those arising
before succession (other than the obligation to make Delinquency Advances) and
under Section 3.1(b) (insofar as such provisions relate to the predecessor
Master Servicer).
(m) If the Master Servicer is removed pursuant to Section 11.1(a) or the
first paragraph of Section 11.1(b) hereof the Master Servicer shall remain
entitled to reimbursement for Reimbursable Advances to the extent that the
related amounts are thereafter recovered with respect to the related Mortgage
Loans.
Section 11.2. Trigger Events; Removal of Master Servicer.
(a) Upon determination by the Certificate Insurer that a Trigger Event has
occurred, the Certificate Insurer shall give notice of such Trigger Event to the
Master Servicer, the Seller, the Trustee and to Moody's and S&P.
(b) At any time after such determination and while a Trigger Event is
continuing, the Certificate Insurer may direct the Trustee to remove the Master
Servicer if the Certificate Insurer makes a determination that the manner of
master servicing was a factor contributing to the end of the delinquencies or
losses incurred in the Trust Fund.
(c) Upon receipt of directions to remove the Master Servicer pursuant to
the preceding clause (b), the Trustee shall notify the Master Servicer that it
has been terminated and the Master Servicer shall be terminated in the same
manner as specified in Section 11.1.
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(d) After notice of occurrence of a Trigger Event has been given and while
a Trigger Event is continuing, until and unless the Master Servicer has been
removed as provided in clause (b), the Master Servicer covenants and agrees to
act as the Master Servicer for a term from the occurrence of the Trigger Event
to the end of the calendar quarter in which such Trigger Event occurs, which
term may at the Certificate Insurer's discretion be extended by notice to the
Trustee for successive terms of three (3) calendar months each, until the
termination of the Trust Fund. The Master Servicer will, upon the receipt of
each such notice of extension (a "Master Servicer Extension Notice") become
bound for the duration of the term covered by such Master Servicer Extension
Notice to continue as Master Servicer subject to and in accordance with this
Agreement. If, as of the fifteenth (15th) day prior to the last day of any term
as the Master Servicer, the Trustee shall not have received any Master Servicer
Extension Notice from the Certificate Insurer, the Trustee shall, within five
(5) days thereafter, give written notice of such nonreceipt to the Certificate
Insurer and the Master Servicer. If any such term expires without a Master
Servicer Extension Notice then the Trustee shall act as Master Servicer as
provided in Section 11.1.
(e) No provision of this Section 11.2 shall have the effect of limiting the
rights of the Company, the Trustee, the Certificateholders or the Certificate
Insurer under Section 11.1.
Section 11.3. Merger, Conversion, Consolidation or Succession to Business
of Master Servicer. Subject to the immediately succeeding sentence, any
corporation into which the Master Servicer 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 Master Servicer shall be a party, or
any corporation succeeding to all or substantially all of the business of the
Master Servicer, shall be the successor of the Master Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto provided (x) that such corporation meets the
qualifications set forth in Section 11.1(g) and (y) that any successor Master
Servicer must meet the qualifications set forth in Section 11.1(g). Any
Affiliate into which the Master Servicer may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation of the Master Servicer and an Affiliate, or any
Affiliate succeeding to all or substantially all of the business of the Master
Servicer, shall be the successor of the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Compliance Certificates and Opinions. Upon any application or
request by the Seller, the Transferor or the Owners to the Trustee to take any
action under any provision of this Agreement, the Seller, the Transferor or the
Owners, as the case may be, shall furnish to the Trustee a certificate stating
that all conditions precedent, if any, provided for in this Agreement relating
to the proposed action have been complied with, except that in the case of any
such application or request as to which the furnishing of any documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:
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(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 12.2. Form of Documents Delivered to the Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate of an Authorized Officer of the Trustee may be based,
insofar as it relates to legal matters, upon an opinion of counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know,
that the opinion is erroneous. Any such certificate of an Authorized Officer of
the Trustee or any opinion of counsel may be based, insofar as it relates to
factual matters upon a certificate or opinion of, or representations by, one or
more Authorized Officers of the Seller, the Master Servicer or of the
Transferor, stating that the information with respect to such factual matters is
in the possession of the Seller, the Master Servicer or the Transferor, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may be based on the written opinion of
other counsel, in which event such opinion of counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 12.3. Acts of Owners. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Owners may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Owners in person or by
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required,
delivered to and with the consent of the Seller, the Transferor and the
Certificate Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any
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purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 12.4. Notices, etc. to Trustee. Any request, demand, authorization,
direction, notice, consent, waiver or act of the Owners or other documents
provided or permitted by this Agreement to be made upon, given or furnished to,
or filed with the Trustee by any Owner or by the Seller shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Trustee at its corporate trust office as set forth in
Section 12.19 hereof.
Section 12.5. Notices and Reports to Owners; Waiver of Notices. Where this
Agreement provides for notice to Owners of any event or the mailing of any
report to Owners, such notice or report shall be sufficiently given (unless
otherwise herein expressly provided) if mailed, first-class postage prepaid, to
each Owner affected by such event or to whom such report is required to be
mailed, at the address of such Owner as it appears on the Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice or the mailing of such report. In any case where a notice
or report to Owners is mailed in the manner provided above, neither the failure
to mail such notice or report nor any defect in any notice or report so mailed
to any particular Owner shall affect the sufficiency of such notice or report
with respect to other Owners, and any notice or report which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given or
provided.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as the
Seller shall direct to the Trustee shall be deemed to be a sufficient giving of
such notice.
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Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 12.6. Rules by Trustee and Seller. The Trustee may make reasonable
rules for any meeting of Owners. The Seller may make reasonable rules and set
reasonable requirements for its functions.
Section 12.7. Successors and Assigns. All covenants and agreements in this
Agreement by any party hereto shall bind its successors and assigns, whether so
expressed or not.
Section 12.8. Severability. In case any provision in this Agreement or in
the Certificates shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 12.9. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, expressed or implied, shall give to any Person, other than the
Owners, the Certificate Insurer and the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement.
Section 12.10. Legal Holidays. In any case where the date of any Remittance
Date, any Payment Date, any other date on which any distribution to any Owner is
proposed to be paid, or any date on which a notice is required to be sent to any
Person pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Remittance Date, such Payment Date, or such other
date for the payment of any distribution to any Owner or the mailing of such
notice, as the case may be, and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 12.11. Governing Law. This Agreement and each Certificate shall be
construed in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein.
Section 12.12. Counterparts. This instrument 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 12.13. Usury. The amount of interest payable or paid on any
Certificate under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of New York or any applicable law of the United
States permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid to the Owner of such Certificate
as a result of an error and the Owner receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Owner, apply the excess to the payment of principal of such Certificate, if
any, remaining unpaid. In addition, all sums paid or agreed to be paid to the
Trustee for the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by
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applicable law, be amortized, prorated, allocated and spread throughout the full
term of such Certificates.
Section 12.14. Amendment. The Seller, the Master Servicer, the Transferor
and the Trustee, may at any time and from time to time, with the prior written
consent of the Certificate Insurer but without the consent of the Owners, amend
this Agreement, and the Trustee shall consent to such amendment, for the purpose
of (i) curing any ambiguity, or correcting or supplementing any provision hereof
which may be inconsistent with any other provision hereof, or to add provisions
hereto which are not inconsistent with the provisions hereof, (ii) upon receipt
of an opinion of counsel experienced in federal income tax matters to the effect
that no entity-level tax will be imposed on the Trust or upon the transferor of
a Residual Certificate as a result of the ownership of any Residual Certificate
by a Disqualified Organization, removing the restriction on transfer set forth
in Section 5.8(b) hereof or (iii) complying with the requirements of the Code
and the regulations proposed or promulgated thereunder; provided, however, that
any such action shall not, as evidenced by an opinion of counsel delivered to
the Trustee, materially and adversely affect the interests of any Owner or
materially and adversely affect (without its written consent) the rights and
interests of the Certificate Insurer.
This Agreement may also be amended by the Seller, the Master Servicer, the
Transferor and the Trustee at any time and from time to time, with the prior
written approval of the Certificate Insurer and of not less than 66 2/3% of the
Percentage Interest represented by each affected Class of Certificates then
Outstanding, for the purpose of adding any provisions or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Owners hereunder; provided, however, that no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Owner without the consent
of the Owner of such Certificate or (b) reduce the aforesaid percentages of
Percentage Interests which are required to consent to any such amendments,
without the consent of the Owners of all Certificates of the Class or Classes
affected then Outstanding.
The Trustee shall be entitled to receive upon request, and shall be fully
protected in relying in good faith upon, an opinion of counsel reasonably
acceptable to the Trustee stating that the execution of such amendment is
authorized or permitted by this Agreement.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Owner
and to the Rating Agencies.
The Certificate Insurer and the Owners, if they so request, shall be
provided with copies of any amendments to this Agreement, together with copies
of any opinions or other documents or instruments executed in connection
therewith.
The Trustee shall not be required to enter into any amendment which affects
its rights or obligations hereunder.
The definitions of "Group I Specified Subordinated Amount", "Group II
Specified Subordinated Amount" and "Group III Specified Subordinated Amount" may
be amended by the Seller, the Master Servicer, the Transferor and the Trustee,
with the consent of the Certificate Insurer, in any respect without the consent
of, or notice to, the Owners of any Certificates; provided, (x) that the
Certificate Insurer is not then in default, (y) that the effect of such change
would not be to alter materially (in the judgment of the Seller) the weighted
average
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life of the related Class A Certificates and (z) the then-current ratings on the
related Class A Certificates are not thereby reduced.
Section 12.15. REMIC Status; Taxes. (a) The Tax Matters Person shall
prepare and file or cause to be filed with the Internal Revenue Service Federal
tax or information returns with respect to each REMIC and the Certificates
containing such information and at the times and in such manner as may be
required by the Code or applicable Treasury regulations, and shall furnish to
Owners such statements or information at the times and in such manner as may be
required thereby. For this purpose, the Tax Matters Person may, but need not,
rely on any proposed regulations of the United States Department of the
Treasury. The Tax Matters Person shall indicate the election to treat each REMIC
as a REMIC (which election shall apply to the taxable period ending December 31,
1996 and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe. The Trustee, as Tax Matters Person appointed
pursuant to Section 12.17 hereof shall sign all tax information returns filed
pursuant to this Section 12.16. The Tax Matters Person shall provide information
necessary for the computation of tax imposed on the transfer of a Residual
Certificate to a Disqualified Organization, or an agent of a Disqualified
Organization, or a pass-through entity in which a Disqualified Organization is
the record holder of an interest. The Trustee shall not be required to file a
separate tax return for the Supplemental Interest Trust.
(b) The Tax Matters Person shall timely file all reports required to be
filed by the Trust with any federal, state or local governmental authority
having jurisdiction over the Trust, including other reports that must be filed
with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q
and the form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Tax Matters Person shall report to Owners, if required, with
respect to the allocation of expenses pursuant to Section 212 of the Code in
accordance with the specific instructions to the Tax Matters Person by the
Seller with respect to such allocation of expenses. The Tax Matters Person shall
collect any forms or reports from the Owners determined by the Seller to be
required under applicable federal, state and local tax laws.
(c) The Tax Matters Person shall provide to the Internal Revenue Service
and to persons described in Section 860E(e)(3) and (6) of the Code the
information described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any
successor regulation thereto. Such information will be provided in the manner
described in Treasury Regulation Section 1.860E-2(a)(5), or any successor
regulation thereto.
(d) The Seller covenants and agrees to within ten Business Days after the
Startup Day provide to the Trustee any information necessary to enable the
Trustee to meet its obligations under subsections (b) and (c) above.
(e) The Trustee, the Seller and the Master Servicer each covenants and
agrees for the benefit of the Owners (i) to take no action which would result in
the termination of "REMIC" status for any of the REMICs, (ii) not to engage in
any "prohibited transaction", as such term is defined in Section 860F(a)(2) of
the Code and (iii) not to engage in any other action which may result in the
imposition on the Trust of any other taxes under the Code, including, without
limitation, for purposes of this paragraph any alteration, modification,
amendment, extension, waiver or forbearance with respect to any Mortgage Loan.
(f) The Trust shall, for federal income tax purposes, maintain books on a
calendar year basis and report income on an accrual basis.
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(g) No Eligible Investment shall be sold prior to its stated maturity
(unless sold pursuant to a plan of liquidation in accordance with Article VIII
hereof).
(h) Neither the Seller nor the Trustee shall enter into any arrangement by
which the Trustee will receive a fee or other compensation for services rendered
pursuant to this Agreement, which fee or other compensation is paid from the
Trust Estate, other than as expressly contemplated by this Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the Trustee, the
Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters to the effect that such transaction does not
result in a tax imposed on the Trust or cause a termination of REMIC status for
any of the REMICs; provided, however, that such transaction is otherwise
permitted under this Agreement.
Section 12.16. Additional Limitation on Action and Imposition of Tax. (a)
Any provision of this Agreement to the contrary notwithstanding, the Trustee
shall not, without having obtained an opinion of counsel experienced in federal
income tax matters to the effect that such transaction does not result in a tax
imposed on the Trust or cause a termination of REMIC status for either REMIC,
(i) sell any assets in the Trust Estate, (ii) accept any contribution of assets
after the Startup Day or (iii) agree to any modification of this Agreement.
(b) In the event that any tax is imposed on "prohibited transactions" as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure
property" as defined in Section 860G(c) of the Code, on any contribution to
either REMIC after the Startup 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 the Trustee's negligence or willful misconduct,
(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 otherwise
(iii) the Owners of the Residual Certificates in proportion to their Percentage
Interests. To the extent such tax is chargeable against the Owners of the
Residual Certificates, notwithstanding anything to the contrary contained
herein, the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Owners of the Residual Certificates on any Payment Date
sufficient funds for the payment of such tax.
Section 12.17. Appointment of Tax Matters Person. A Tax Matters Person will
be appointed by the Owners of the Residual Certificates for all purposes of the
Code and such Tax Matters Person will perform, or cause to be performed, such
duties and take, or cause to be taken, such actions, as are required to be
performed or taken by the Tax Matters Person under the Code. The Trustee hereby
agrees to act as the Tax Matters Person (and the Trustee is hereby appointed by
the Owners of the Residual Certificates as the Tax Matters Person) for each
REMIC held by the Trust.
Section 12.18. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to 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 Master Servicer and the Seller 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 as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.
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Section 12.19. Notices. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
The Seller Access Financial Lending Corp.
and Master 400 Highway 169 South
Servicer: Suite 400
St. Louis Park, Minnesota 55426-1106
Attention: General Counsel
Tel: (612) 542-6500
Fax: (612) 542-6510
The Transferor: Access Financial Receivables Corp.
400 Highway 169 South
Suite 410
St. Louis Park, Minnesota 55426-1106
Attention: General Counsel
The Trustee: The Chase Manhattan Bank
450 West 33rd Street, 15th Floor New
York, NY 10001
Attention: Global Trust Services
Access Financial Mortgage Loan Trust 1997-3
Tel: (212) 946-3200
Fax: (212) 946-8191
The Certificate
Insurer: Financial Security Assurance, Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Tel: (212) 826-0100
Fax: (212) 888-5278
or such other address or telecopy number as may
hereafter be furnished to the Trustee and the
Master Servicer in writing by the Certificate
Insurer. In each case in which a notice or other
communication to the Certificate Insurer refers
to an Event of Default or a claim under 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 should also be
sent to the attention of the General Counsel and
the Head-Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED."
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity
Monitoring Department
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S & P: Standard & Poor's
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Surveillance
Dept.
Underwriters: c/o Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10292-2015
Tel: (212) 778-1000
Fax: (212) 778-7401
Section 12.20. Grant of Security Interest. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans and all other assets
constituting the Trust Estate by the Transferor to the Trust be, and be
construed as, a sale of the Mortgage Loans and such other assets constituting
the Trust Estate by the Transferor and not a pledge by the Seller to secure a
debt or other obligation of the Transferor. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans and
other assets constituting the Trust Estate are held to be property of the
Seller, then (a) it is the express intent of the parties that such conveyance be
deemed as a pledge of the Mortgage Loans and all other assets constituting the
Trust Estate to the Trust to secure a debt or other obligation of the Seller and
this Agreement shall be deemed to be a security agreement within the meaning of
the Uniform Commercial Code and the conveyance provided for in Section 3.3
hereof shall be deemed a grant by the Transferor to the Trust of a security
interest in all of the Transferor's right, title and interest in and to the
Mortgage Loans and all other assets constituting the Trust Estate.
Accordingly, the Transferor hereby grants to the Trustee a security
interest in the Mortgage Loans and all other assets constituting the Trust
Estate for the purpose of securing to the Trust the performance by the
Transferor of the obligations under this Agreement. Notwithstanding the
foregoing, the parties hereto intend the conveyance pursuant to Section 3.3 to
be a true, absolute and unconditional sale of the Mortgage Loans and all other
assets constituting the Trust Estate by the Transferor to the Trust. The
Transferor shall take such actions, and the Trustee shall take such actions as
directed in writing by the Transferor, as may be necessary to ensure that if
this Agreement were deemed to create a security interest, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such for the term of this Agreement.
Without limiting the generality of the foregoing, the Seller shall file, or
shall cause to be filed, all filings necessary to maintain the effectiveness of
any original filings necessary under the Uniform Commercial Code to perfect the
Trustee's security interest in or lien on the Mortgage Loans for the benefit of
the Owners, including, without limitation, (x) continuation statements and (y)
such other statements as may be occasioned by (i) any change of name of the
Transferor or Trustee, (ii) any change of location of the place of business or
the chief executive office of the Transferor or (iii) any transfer of any
interest of the Transferor in any Mortgage Loan; provided, however, that with
respect to clauses (i) through (iii) above, the Transferor shall notify the
Trustee of any changes related thereto.
Section 12.21. Indemnification.
(a) The Master Servicer agrees to indemnify and hold the Trustee, the
Transferor, the Certificate Insurer, each Certificateholder harmless against any
and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any
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other reasonable costs, fees and expenses that were caused by (i) the failure of
the Master Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement and the Servicing Standards and (ii)
a breach of any of the Master Servicer's representations, covenants and
warranties contained in this Agreement. This indemnity shall survive the
termination of this Agreement and the payment of the Mortgage Loans, provided,
that the Master Servicer shall have no liability to indemnify any such
indemnified party under this Agreement to the extent that any such losses,
penalties, fines, forfeitures, costs, fees, judgments, liabilities, damages,
claims or expenses were caused by the negligence, willful misconduct or bad
faith of such indemnified party. If the Master Servicer shall have made any
indemnity payment pursuant to this Section 12.21(a) and the recipient thereafter
collects from another Person any amount relating to the matters covered by the
foregoing indemnity, the recipient shall promptly repay such amount to the
Master Servicer.
Promptly after receipt by any of the above-mentioned indemnified parties of
notice of any claim or commencement of any action discussed above, such
indemnified party shall, if a claim in respect thereof is to be made against the
Master Servicer, promptly notify the Master Servicer in writing of the claim or
the commencement of that action; provided, however, that the failure to notify
the Master Servicer shall not relieve it from any liability which it may have
under this Section 12.21(a) except to the extent it has been materially
prejudiced by such failure; and provided, further, that the failure to notify
the Master Servicer shall not relieve it from any liability which it may have to
the above-mentioned indemnified parties otherwise than under this Section
12.21(a).
(b) The Seller agrees to indemnify and hold the Master Servicer, the
Transferor, the Certificate Insurer, the Trustee, each Certificateholder
harmless against any and all claims, losses, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other reasonable costs,
fees and expenses that were caused by (i) the failure of the Seller to perform
its duties in accordance with the terms of this Agreement or (ii) a breach of
any of the Seller's representations, covenants, and warranties contained in this
Agreement. This indemnity shall survive the termination of this Agreement, the
payment of the Mortgage Loans and the removal or resignation of the Trustee;
provided, that the Seller shall have no liability to indemnify any such
indemnified party under this Agreement to the extent that any such losses,
penalties, fines, forfeitures, costs, fees and judgments, liabilities, damages,
claims or expenses were caused by the negligence, willful misconduct or bad
faith of such indemnified party. If the Seller shall have made any indemnity
payment pursuant to this Section 12.21 and the recipient thereafter collects
from another Person any amount relating to the matters covered by the foregoing
indemnity, the recipient shall promptly repay such amount to the Seller.
Promptly after receipt by any of the above-mentioned indemnified parties of
notice of any claim or commencement of any action discussed above, such
indemnified party shall, if a claim in respect thereof is to be made against the
Seller, promptly notify the Seller in writing of the claim or the commencement
of that action; provided, however, that the failure to notify the Seller shall
not relieve it from any liability which it may have under this Section 12.21(b)
except to the extent it has been materially prejudiced by such failure; and
provided, further, that the failure to notify the Seller shall not relieve it
from any liability which it may have to the above-mentioned indemnified parties
otherwise than under this Section 12.21(b).
(c) The Seller hereby covenants and agrees to indemnify, exonerate and hold
the Master Servicer, the Transferor, the Trustee, the Trust Estate, the Owners,
the Certificate Insurer, their respective directors, officers, agents and
employees (collectively, the "Indemnified Persons") harmless from and against
any and all damages, losses, liabilities, obligations, penalties, fines, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
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disbursements or expenses (including, without limitation, reasonable attorneys'
and experts' fees and disbursements as they become due and without waiting for
the ultimate outcome of the matter) of any kind or of any nature whatsoever
which may at any time be imposed upon, incurred by or asserted or awarded
against any Indemnified Person arising from or out of any Hazardous Substances
(as defined below) on, in, under or affecting all or any portion of any of the
Properties. The matters covered by the foregoing indemnity shall include,
without limitation, all of the following: (i) the costs of removal of any and
all Hazardous Substances from all or any portion of the Properties or any
adjacent property, (ii) the costs required to take necessary precautions to
protect against the release of Hazardous Substances on, in, under or affecting
any of the Properties into the air, ground, water, other public domain or any
adjacent property to the extent required by applicable Environmental Laws or any
governmental authority, including, without limitation, the costs and expenses of
environmental testing and assessments, and (iii) the costs incurred to comply,
in connection with all or any portion of the Properties, with all applicable
Environmental Laws, including without limitation fines, penalties, and
administrative and overhead costs charged by any governmental entity.
The obligations of the Seller under this Section to compensate the
Indemnified Persons and to reimburse them for expenses (including, without
limitation, litigation expenses), disbursements and advances shall survive the
termination of this Agreement and the resignation or removal of the Trustee, and
continue thereafter for so long as any liability or expenses indemnified against
may be imposed under applicable Environmental Law (as defined below) against any
Indemnified Person.
(d) In no event shall any Person be indemnified for any losses, expenses,
damages, claims or liabilities incurred by such Person by reason of such
Person's (or such Person's agents) willful malfeasance, bad faith or negligence.
"Hazardous Substance" shall include, without limitation: (i) those
substances included within the definitions of one or more of the terms
"hazardous substances," "hazardous materials" and "toxic substances" in CERCLA,
RCRA, and the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
ss.ss. 1801 et seq., and in the regulations promulgated pursuant to said laws
under applicable law; (ii) those substances listed in the United States
Department of Transportation Table (49 CFR 172 1 01 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); (iii) such other
substances, materials and wastes as are or become regulated under applicable
local, state or Federal laws or regulations, or which are classified as
hazardous or toxic under Federal, state, or local laws or regulations; and (iv)
any material, waste or substance which is (a) petroleum; (b) friable asbestos;
(c) polychlorinated biphenyls; (d) designated as a "Hazardous Substance"
pursuant to Section 311 of the Clean Water Act, as amended, 13 U.S.C. ss.ss.
1321 et seq. (33 U.S.C. ss.ss. 1321) or designated as "toxic pollutants" subject
to Chapter 26 of the Clean Water Act pursuant to Section 307 of the Clean Water
Act (33 U.S.C. ss.ss. 1317); (e) flammable explosive; or (f) radioactive
materials.
"Environmental Law" shall mean any Federal, state or local statute, law,
regulation, order, consent decree, judgment, permit, license, code, covenant,
deed restriction, common law, ordinance or other requirement relating to public
health, safety or the environment, including, without limitation, those relating
to releases, discharges or emissions to air, water, land or ground water, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, treatment, storage or management of
hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction
thereof, or to exposure to toxic hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid Hazardous Substances
and any regulation, order, notice or demand issued
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pursuant to such law, statute or ordinance, in each case applicable to the
property of Borrower or the operation, construction or modification of any
thereof, including without limitation the following: CERCLA, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials
Transportation Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking Water Control Act, the
Clean Air Act of 1966, as amended, the Toxic Substances Control Act of 1976, the
Occupational Safety and Health Act of 1977, as amended, the Emergency Planning
and Community Right-to-Know Act of 1986, the National Environmental Policy Act
of 1975 and the Oil Pollution Act of 1990 and any similar or implementing state
law, and any state statute and any further amendments to these laws, providing
for financial responsibility for cleanup or other actions with respect to the
release or threatened release of Hazardous Substances or crude oil, or any
fraction thereof and all rules, regulations, guidance documents and publication
promulgated thereunder.
ARTICLE XIII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 13.1. Rights of the Certificate Insurer to Exercise Rights of the
Owners of the Class A Certificates. By accepting its Certificate, each Owner of
a Class A Certificate agrees that unless a Certificate Insurer Default exists,
the Certificate Insurer shall be deemed to be the Class A Certificateholders for
all purposes (other than with respect to payment on the Class A Certificates)
and will be entitled to exercise all rights of the Class A Certificateholders
under this Agreement.
In addition, each Owner of a Class A Certificate agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Owners of Class A Certificates only with the prior written
consent of the Certificate Insurer.
Section 13.2. Trustee to Act Solely with Consent of the Certificate Insurer
. Unless a Certificate Insurer Default exists, the Trustee shall not:
(i) agree to any amendment to this Agreement; or
(ii) undertake any litigation pursuant to or in connection with this
Agreement; or
(iii)terminate or assume any Sub-Servicing Agreement pursuant to this
Agreement;
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld; provided, however, if a Certificate Insurer
Default occurs hereunder, the Trustee shall act hereunder without Certificate
Insurer consent.
Section 13.3. Trust Fund and Accounts Held for Benefit of the Certificate
Insurer. The Trustee shall hold the Trust Estate and the Mortgage Files for the
benefit of the Owners and the Certificate Insurer and all references in this
Agreement and in the Certificates to the benefit of Owners 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.
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The Master Servicer hereby acknowledges and agrees that it shall service
and administer the Mortgage Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer.
Section 13.4. Claims Upon the Policy; Policy Payments Account. (a) The
Trustee shall establish a separate special purpose trust account for the benefit
of Owners of the Class A Certificates and the Certificate Insurer referred to
herein as the "Policy Payments Account" over which the Trustee shall have
exclusive control and sole right of withdrawal. The Trustee shall deposit any
amount paid under the Certificate Insurance Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to Owners of
Class A Certificates of the Insured Payments for which a claim was made and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Master Servicer, the Trustee or the Trust. Amounts paid under the Certificate
Insurance Policy shall be transferred to the related Class A Distribution
Account in accordance with the next succeeding paragraph and disbursed by the
Trustee to Owners of Class A Certificates in accordance with Section 7.3. It
shall not be necessary for such payments to be made by checks or wire transfers
separate from the checks or wire transfers used to pay the Insured Payments with
other funds available to make such payment. However, the amount of any payment
of principal of or interest on the Class A Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted as provided in
paragraph (b) below in the Register and in the statement to be furnished to
Owners of the Certificates pursuant to Section 7.6. Funds held in the Policy
Payments Account shall not be invested by the Trustee.
On any Payment Date with respect to which a claim has been made under the
Certificate Insurance Policy, the amount of any funds received by the Trustee as
a result of any claim under the Certificate Insurance Policy, to the extent
required to pay the related Insured Distribution Amount on such Payment Date
shall be withdrawn from the Policy Payments Account and deposited in the related
Distribution Account and applied by the Trustee, together with the other funds
to be withdrawn from the related Distribution Account pursuant to this
Agreement, directly to the payment in full of the related Insured Distribution
Amount due on the related Class A Certificates. Funds received by the Trustee as
a result of any claim under the Certificate Insurance Policy shall be deposited
by the Trustee in the Policy Payments Account and used solely for payment to the
Owners of the Class A Certificates and may not be applied to satisfy any costs,
expenses or liabilities of the Master Servicer, the Trustee or the Trust Fund.
Any funds remaining in the Policy Payments Account on the first Business Day
following a Payment Date shall be remitted to the Certificate Insurer, pursuant
to the instructions of the Certificate Insurer, by the end of such Business Day.
(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 notice to the Trustee.
(c) The Trustee shall promptly notify the Certificate Insurer and Fiscal
Agent of any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Class A Certificates. Each Owner of a Class A Certificate, by its purchase of
Class A Certificates, the Master Servicer and the Trustee hereby agree that, the
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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. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Master Servicer, the Trustee and each Owner of a Class A Certificate in the
conduct of any such Preference Claim, including, without limitation, all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such Preference Claim.
Section 13.5. Effects of Payments by the Certificate Insurer. To the extent
that the Certificate Insurer makes Insured Payments it will be entitled to
receive the related Reimbursement Amounts, pursuant to Section 7.3(b)(iii)(C)
hereof.
The Trustee and the Master Servicer shall cooperate in all respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Owners as
otherwise set forth herein.
Section 13.6. Notices to the Certificate Insurer. All notices, statements,
reports, certificates or opinions required by this Agreement to be sent to any
other party hereto or to any of the Owners shall also be sent to the Certificate
Insurer.
Section 13.7. Third-Party Beneficiary. Subject to the provisions below, the
Certificate Insurer is a third party beneficiary of each provision of this
Agreement that creates a right of or benefit to the Certificate Insurer. Any
right conferred to the Certificate Insurer shall not arise until the issuance by
the Certificate Insurer of the Certificate Insurance Policy and shall be
suspended during any Certificate Insurer Default described in clause (a) of the
definition thereof (except that subrogation rights which have previously arisen
shall not be so suspended). During the period of any such suspension, such
rights shall vest in the Owners of the Class A Certificates, and may be
exercised by the Owners of a majority in Percentage Interest of each Class of
Class A Certificates then Outstanding or, if there are no Class A Certificates
then Outstanding, by such Percentage Interest represented by the Class B
Certificates then Outstanding.
[Except for these words (and the accompanying punctuation) the rest of this
page has been intentionally left blank.]
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IN WITNESS WHEREOF, the Seller, the Master Servicer, the Transferor and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
ACCESS FINANCIAL LENDING CORP.,
as Seller
By: __________________________________
Name: Leslie Zejdlik Foster
Title: President
ACCESS FINANCIAL LENDING CORP.,
as Master Servicer
By: __________________________________
Name: Leslie Zejdlik Foster
Title: President
ACCESS FINANCIAL RECEIVABLES CORP.,
as Transferor
By: __________________________________
Name: Leslie Zejdlik Foster
Title: President
THE CHASE MANHATTAN BANK,
as Trustee
By: __________________________________
Name: Cynthia Kerpen
Title: Trust Officer
[Pooling and Servicing Agreement]
<PAGE>
STATE OF MINNESOTA )
: ss.:
COUNTY OF HENNEPIN )
On the 31st day of October, 1997, before me personally came Leslie Zejdlik
Foster, to me known, who, being by me duly sworn did depose and say that her
office is located at 400 Highway 169 South, Suite 400, St. Louis Park, Minnesota
55426-1106, that she is the President of Access Financial Lending Corp., a
Delaware corporation, which is described in and which executed the above
instrument; and that she signed her name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Pooling and Servicing Agreement]
<PAGE>
STATE OF MINNESOTA )
: ss.:
COUNTY OF HENNEPIN )
On the 31st day of October, 1997, before me personally came Leslie Zejdlik
Foster, to me known, who, being by me duly sworn did depose and say that her
office is located at 400 Highway 169 South, Suite 410, St. Louis Park, Minnesota
55426-1106, that she is the President of Access Financial Receivables Corp., a
Delaware corporation, which is described in and which executed the above
instrument; and that she signed her name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Pooling and Servicing Agreement]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 31st day of October, 1997, before me personally came Cynthia Kerpen,
to me known, who, being by me duly sworn did depose and say that her office is
located at 450 West 33rd Street, 15th Floor, New York, NY 10001; that she is a
Trust Officer of The Chase Manhattan Bank, the New York banking corporation
described in and that executed the above instrument as Trustee; and that she
signed her name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Pooling and Servicing Agreement]
EXHIBIT 10.1
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ACCESS FINANCIAL LENDING CORP.,
ACCESS FINANCIAL RECEIVABLES CORP.,
PRUDENTIAL SECURITIES INCORPORATED
and
MORGAN STANLEY & CO. INCORPORATED
Dated as of October 23, 1997
$199,870,000 Access Financial Mortgage Loan Trust 1997-3,
Mortgage Loan Pass-Through Certificates, Series 1997-3
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions.................................................. 1
SECTION 2. Representations, Warranties and
Agreements of Financial Security............................. 3
SECTION 3. Representations, Warranties and
Agreements of the Underwriter................................ 5
SECTION 4. Indemnification.............................................. 6
SECTION 5. Indemnification Procedures................................... 7
SECTION 6. Contribution................................................. 8
SECTION 7. Miscellaneous................................................ 9
EXHIBIT A Opinion of General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of October 23, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), ACCESS FINANCIAL RECEIVABLES
CORP. (the "Transferor"), ACCESS FINANCIAL LENDING CORP. (the "Company"),
PRUDENTIAL SECURITIES INCORPORATED ("Prudential") and MORGAN STANLEY & CO.
INCORPORATED (each of Prudential and Morgan Stanley & Co. Incorporated, an
"Underwriter"):
Section 1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as amended from time to
time.
"Company Party" means any of the Company, its parent and subsidiaries and
any shareholder, director, officer, employee, agent or "controlling person"
(as such term is used in the Securities Act) of any of the foregoing.
"Federal Securities Laws" means the Securities Act, the Securities Exchange
Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of
1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement and the Insurance
Agreement.
"Financial Security Information" has the meaning provided in Section 2(g)
hereof.
"Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the
Securities Act) of any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide indemnification
pursuant to Section 4 hereof.
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"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
of October 1, 1997, among Financial Security, the Transferor and the
Company.
"Losses" means (a) any actual out-of-pocket damages incurred by the party
entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including
reasonable fees or expenses of its counsel and other expenses incurred in
connection with investigating or defending any claim, action or other
proceeding which entitle such party to be indemnified hereunder (subject to
the limitations set forth in Section 5 hereof), to the extent not paid,
satisfied or reimbursed from funds provided by any other Person other than
an affiliate of such party (provided that the foregoing shall not create or
imply any obligation to pursue recourse against any such other Person),
plus (c) interest on the amount paid by the party entitled to
indemnification or contribution from the date of such payment to the date
of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of
contract.
"Offering Circular" means the Prospectus Supplement relating to the
Securities dated October 23, 1997.
"Offering Document" means the Offering Circular and any other material or
documents delivered by an Underwriter to any Person in connection with the
offer or sale of the Securities.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).
"Policy" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.
"Securities" means the Class A Group I Certificates, Class A-6 Group II
Certificates and Class A-7 Group III Certificates issued pursuant to the
Pooling and Servicing Agreement, dated as of October 1, 1997, among the
Company, the Transferor and Chase Manhattan Bank, as trustee.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Transferor Party" means any of the Transferor, its parent and subsidiaries
and any shareholder, director, officer, employee, agent or "controlling
person" (as such term is used in the Securities Act) of any of the
foregoing.
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"Underwriter Information" has the meaning provided in Section 3(c) hereof.
"Underwriter Party" means either Underwriter, or, with respect to either
Underwriter, the parent, subsidiaries and affiliates thereof and any
shareholder, director, officer, employee, agent or "controlling person" (as
such item is used in the Securities Act) of any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement between the
Company and the Underwriters in respect of the Securities.
Section 2. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees to and with the
other parties hereto as follows:
(a) Organization, Etc. Financial Security is a stock insurance company duly
organized, validly existing and authorized to transact financial guaranty
insurance business under the laws of the State of New York.
(b) Authorization, Etc. The Policy and the Financial Security Agreements
have been duly authorized, executed and delivered by Financial Security.
(c) Validity, Etc. The Policy and the Financial Security Agreements
constitute valid and binding obligations of Financial Security, enforceable
against Financial Security in accordance with their terms, subject, as to
the enforcement of remedies, to bankruptcy, insolvency, reorganization,
rehabilitation, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of
the bankruptcy or insolvency of Financial Security and to the application
of general principles of equity and subject, in the case of this Agreement,
to principles of public policy limiting the right to enforce the
indemnification provisions contained herein.
(d) Exemption From Registration. The Policy is exempt from registration
under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by Financial Security
of the Policy or the Financial Security Agreements, nor the performance by
Financial Security of its obligations thereunder, will conflict with any
provision of the certificate of incorporation or the bylaws of Financial
Security nor result in a breach of, or constitute a default under, any
material agreement or other instrument to which Financial Security is a
party or by which any of its property is bound nor violate any judgment,
order or decree applicable to Financial Security of any governmental or
regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that, in the published opinion
of the
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Securities and Exchange Commission, the indemnification provisions of this
Agreement, insofar as they relate to indemnification for liabilities
arising under the Securities Act, are against public policy as expressed in
the Securities Act and are therefore unenforceable).
(f) Financial Information. The consolidated balance sheets of Financial
Security as of December 31, 1995 and December 31, 1996 and the related
consolidated statements of income, changes in shareholder's equity and cash
flows for the fiscal years then ended and the interim consolidated balance
sheet of Financial Security as of June 30, 1997, and the related statements
of income, changes in shareholder's equity and cash flows for the interim
period then ended, furnished by Financial Security to the Underwriters,
fairly present in all material respects the financial condition of
Financial Security as of such dates and for such periods in accordance with
generally accepted accounting principles consistently applied (subject as
to interim statements to normal year-end adjustments), and since the date
of the most current interim consolidated balance sheet referred to above
there has been no change in the financial condition of Financial Security
which would materially and adversely affect its ability to perform its
obligations under the Policy.
(g) Financial Security Information. The information in the Offering
Circular set forth under the caption "The Certificate Insurance Policy and
the Certificate Insurer--Certificate Insurer" (as revised from time to time
in accordance with the provisions hereof, the "Financial Security
Information") is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a
registrant in connection with the offer and sale of securities of such
registrant registered under the Securities Act. Within such limited scope
of disclosure, however, as of the date of the Offering Circular and as of
the date hereof, the Financial Security Information does not contain any
untrue statement of a material fact, or omit to state a material fact
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(h) Additional Information. Financial Security will furnish to the
Underwriters or the Company, upon request of an Underwriter or the Company,
as the case may be, copies of Financial Security's most recent financial
statements (annual or interim, as the case may be) which fairly present in
all material respects the financial condition of Financial Security as of
the dates and for the periods indicated, in accordance with generally
accepted accounting principles consistently applied except as noted therein
(subject, as to interim statements, to normal year-end adjustments);
provided, however, that, if an Underwriter or the Company shall require a
manually signed report or consent of Financial Security's auditors in
connection with such financial statements, such report or consent shall be
at the expense of the relevant Underwriter or the Company, as the case may
be. In
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addition, if the delivery of an Offering Circular relating to the
Securities is required at any time prior to the expiration of nine months
after the time of issue of the Offering Circular in connection with the
offering or sale of the Securities, the Company or an Underwriter will
notify Financial Security of such requirement to deliver an Offering
Circular and Financial Security will promptly provide the Underwriters and
the Company with any revisions to the Financial Security Information that
are in the judgment of Financial Security necessary to prepare an amended
Offering Circular or a supplement to the Offering Circular which will
correct such statement or omission.
(i) Opinion of Counsel. Financial Security will furnish to the
Underwriters, the Company and the Transferor on the closing date for the
sale of the Securities an opinion of its General Counsel, to the effect set
forth in Exhibit A attached hereto, dated such closing date and addressed
to the Transferor, the Company and the Underwriters.
(j) Consents and Reports of Independent Accountants. Financial Security
will furnish to the Underwriters and the Company, upon request, as comfort
from its independent accountants in respect of its financial condition, (i)
at the expense of the Person specified in the Insurance Agreement, a copy
of the Offering Circular, including either a manually signed consent or a
manually signed report of Financial Security's independent accountants and
(ii) the quarterly review letter by Financial Security's independent
accountants in respect of the most recent interim financial statements of
Financial Security.
Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its claims-paying ability by Moody's
Investors Service, Inc. or Standard & Poor's, a division of the McGraw-Hill
Companies or any other rating agency (collectively, the "Rating Agencies"). The
Rating Agencies, in assigning such ratings, take into account facts and
assumptions not described in the Offering Circular and the facts and assumptions
which are considered by the Rating Agencies, and the ratings issued thereby, are
subject to change over time.
Section 3. Representations, Warranties and Agreements of the Underwriters.
Each Underwriter represents, warrants and agrees with respect to itself as
follows:
(a) Compliance With Laws. Such Underwriter will comply in all material
respects with all legal requirements in connection with offers and sales of
the Securities and make such offers and sales in the manner provided in the
Offering Circular.
(b) Offering Document. Such Underwriter will not use, or distribute to
other broker-dealers for use, any Offering Document in connection with the
offer and sale of the Securities unless such Offering Document includes
such information as
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has been furnished by Financial Security for inclusion therein and the
informa tion therein concerning Financial Security has been approved by
Financial Security in writing. Financial Security hereby consents to the
information in respect of Financial Security included in the Offering
Circular. Each Offering Document will include the following statement: "The
Policy is not covered by the property/casualty insurance security fund
specified in Article 76 of the New York Insurance Law".
(c) Underwriter Information. All material provided by such Underwriter for
inclusion in the Offering Circular (as revised from time to time, the
"Underwriter Information"), insofar as such information relates to such
Underwriter, is true and correct in all material respects. In respect of
the Offering Circular, the Underwriter Information is limited to the
information set forth under the caption "Underwriting" and any information
relating to any potential market-making, over-allotment or price
stabilization activities of the related Underwriter in the Offering
Circular.
Section 4. Indemnification. (a) Financial Security agrees, upon the terms
and subject to the conditions provided herein, to indemnify, defend and hold
harmless each Transferor Party, each Company Party, and each Underwriter Party
against (i) any and all Losses incurred by them with respect to the offer and
sale of the Securities and resulting from Financial Security's breach of any of
its representations, warranties or agreements set forth in Section 2 hereof and
(ii) any and all Losses to which any Transferor Party, Company Party or
Underwriter Party may become subject, under the Securities Act or otherwise,
insofar as such Losses arise out of or result from an untrue statement of a
material fact contained in any Offering Document or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in the Financial
Security Information included therein in accordance with the provisions hereof.
(b) Each Underwriter agrees, severally and not jointly, upon the terms and
subject to the conditions provided herein, to indemnify, defend and hold
harmless each Financial Security Party against (i) any and all Losses incurred
by them with respect to the offer and sale of the Securities and resulting from
such Underwriter's breach of any of its representations, warranties or
agreements set forth in Section 3 hereof and (ii) any and all Losses to which
any Financial Security Party may become subject, under the Securities Act or
otherwise, insofar as such Losses arise out of or result from an untrue
statement of a material fact contained in any Offering Document or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or omission was made in the
Underwriter Information included therein.
(c) Upon the incurrence of any Losses for which a party is entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party
<PAGE>
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promptly upon establishment by the Indemnified Party to the Indemnifying Party
of the Losses incurred.
Section 5. Indemnification Procedures. Except as provided below in Section
6 with respect to contribution, the indemnification provided herein by an
Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Indemnifying Party, but the fees and
expenses of such counsel will be at the expense of such Indemnified Party,
unless (a) the employment of counsel by the Indemnified Party at its expense has
been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Indemnifying Party and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Indemnifying Party (it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all
Transferor Parties, one such firm for all Underwriter Parties relating to
Prudential, one such firm for all Underwriter Parties relating to Morgan Stanley
& Co. Incorporated, one such firm for all Company Parties, and one such firm for
all Financial Security Parties, as the case may be, which firm shall be
designated in writing by the Transferor in respect of the Transferor Parties, by
the relevant Underwriter in respect of the Underwriter Parties, by the Company
in respect of the Company Parties and by Financial Security in respect of the
Financial Security Parties), in each of which cases the fees and expenses of
counsel will be at the expense of the Indemnifying Party and all such fees and
expenses will be reimbursed promptly as they are incurred. The Indemnifying
Party shall not be liable for any settlement of any such claim or action unless
the Indemnifying Party shall have consented thereto or be in default in its
obligations hereunder. Any failure by an Indemnified Party to comply with the
provisions
<PAGE>
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of this Section shall relieve the Indemnifying Party of liability only if such
failure is prejudicial to the position of the Indemnifying Party and then only
to the extent of such prejudice.
Section 6. Contribution. (a) To provide for just and equitable contribution
if the indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of this
Section), each Indemnifying Party shall contribute to the Losses arising from
any breach of any of its representations, warranties or agreements contained in
this Agreement on the basis of the relative fault of each of the parties as set
forth in Section 6(b) below; provided, however, that an Indemnifying Party shall
in no event be required to contribute to all Indemnified Parties an aggregate
amount in excess of the Losses incurred by such Indemnified Parties resulting
from the breach of representations, warranties or agreements contained in this
Agreement.
(b) The relative fault of each Indemnifying Party, on the one hand, and of
each Indemnified Party, on the other, shall be determined by reference to, among
other things, whether the breach of, or alleged breach of, any representations,
warranties or agreements contained in this Agreement relates to information
supplied by, or action within the control of, the Indemnifying Party or the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.
(c) The parties agree that Financial Security shall be solely responsible
for the Financial Security Information and the Underwriters shall be solely
responsible for the Underwriter Information and that the balance of each
Offering Document shall be the responsibility of the Transferor and the Company
as described in the Insurance Agreement.
(d) Notwithstanding anything in this Section 6 to the contrary, an
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total re-offering price at which the Securities underwritten
by such Underwriter and distributed and offered to the public exceeds the amount
paid under the Underwriting Agreement by such Underwriter for such Securities.
(e) No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(f) Upon the incurrence of any Losses entitled to contribution hereunder,
the contributor shall reimburse the party entitled to contribution promptly upon
establishment by the party entitled to contribution to the contributor of the
Losses incurred.
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Section 7. Miscellaneous.
(a) Notices. All notices and other communications provided for under this
Agreement shall be delivered to the address set forth below or to such
other address as shall be designated by the recipient in a written notice
to the other party or parties hereto.
If to Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President--
Surveillance (with a copy to the attention of the General Counsel)
If to Transferor:
Access Financial Receivables Corp.
400 Highway 169 South, Suite 410
St. Louis Park, Minnesota 55426-0365
Attention: General Counsel
If to Company:
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
St. Louis Park, Minnesota 55426-0365
Attention: General Counsel
If to Prudential:
Prudential Securities Incorporated
Asset-Backed Finance Group
One New York Plaza, 15th Floor
New York, New York 10292-2015
If to Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
Asset Backed Finance Group
1585 Broadway, 3rd Floor
New York, New York 10036
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(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(c) Assignments. This Agreement may not be assigned by any party without
the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing signed by
each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements contained in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any
Indemnifying Party, (ii) the issuance of the Securities or (iii) any
termination of this Agreement or the Policy. The indemnification provided
in this Agreement will be in addition to any liability which the parties
may otherwise have and shall in no way limit any obligations of the
Transferor or the Company under the Underwriting Agreement or the Insurance
Agreement, as applicable.
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE
INC.
By_______________________________
Name ____________________________
Authorized Officer
ACCESS FINANCIAL LENDING CORP.
By
Name Dan J. Cheever
Title Chief Financial Officer
ACCESS FINANCIAL RECEIVABLES
CORP.
By_______________________________
Name ____________________________
Title ___________________________
PRUDENTIAL SECURITIES
INCORPORATED
By_______________________________
Name ____________________________
Title ___________________________
MORGAN STANLEY & CO.
INCORPORATED
By_______________________________
Name ____________________________
Title ___________________________
<PAGE>
EXHIBIT A
OPINION OF GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized, validly
existing and authorized to transact financial guaranty insurance business under
the laws of the State of New York.
2. The Policy and the Agreements have been duly authorized, executed and
delivered by Financial Security.
3. The Policy and the Agreements constitute valid and binding obligations
of Financial Security, enforceable against Financial Security in accordance with
their terms, subject, as to the enforcement of remedies, to bankruptcy,
insolvency, reorganization, rehabilitation, moratorium and other similar laws
affecting the enforceability of creditors' rights generally applicable in the
event of the bankruptcy or insolvency of Financial Security and to the
application of general principles of equity and subject, in the case of the
Indemnification Agreement, to principles of public policy limiting the right to
enforce the indemnification provisions contained therein insofar as they relate
to indemnification for liabilities arising under applicable securities laws.
4. The Policy is exempt from registration under the Securities Act of 1933,
as amended (the "Act").
5. Neither the execution or delivery by Financial Security of the Policy or
the Agreements, nor the performance by Financial Security of its obligations
thereunder, will conflict with any provision of the certificate of incorporation
or the by-laws of Financial Security or, to the best of my knowledge, result in
a breach of, or constitute a default under, any agreement or other instrument to
which Financial Security is a party or by which it or any of its property is
bound or, to the best of my knowledge, violate any judgment, order or decree
applicable to Financial Security of any governmental or regulatory body,
administrative agency, court or arbitrator having jurisdiction over Financial
Security (except that in the published opinion of the Securities and Exchange
Commission the indemnification provisions of the Indemnification Agreement,
insofar as they relate to indemnification for liabilities arising under the Act,
are against public policy as expressed in the Act and are therefore
unenforceable).
In addition, please be advised that I have reviewed the description of
Financial Security under the caption "The Certificate Insurance Policy and the
Certificate Insurer--Certificate Insurer" in the Prospectus Supplement dated
October 23, 1997 (the "Offering Document") of the Transferor with respect to the
Securities. The information
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provided in the Offering Document with respect to Financial Security is limited
and does not purport to provide the scope of disclosure required to be included
in a prospectus with respect to a registrant under the Act in connection with
the public offer and sale of securities of such registrant. Within such limited
scope of disclosure, however, there has not come to my attention any information
which would cause me to believe that the description of Financial Security
referred to above, as of the date of the Offering Document or as of the date of
this opinion, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that I express no opinion with respect to any financial
statements or other financial information contained or referred to therein).
