AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1997
REGISTRATION STATEMENT NO. 333-32577
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------
DIRECTORS ASSET CONDUIT CORPORATION
(Exact name of registrant as specified in governing instruments)
DELAWARE APPLICATION PENDING
(State or other jurisdiction (IRS Employee
of incorporation or organization) Identification Number)
7485 NEW HORIZON WAY
FREDERICK, MARYLAND 21703
(301) 846-8101
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------------------------
LAWRENCE D. RUBENSTEIN, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
DIRECTORS ASSET CONDUIT CORPORATION
C/O NORWEST MORTGAGE, INC.
343 THORNALL STREET, 5TH FLOOR
EDISON, NEW JERSEY 08837
(732) 906-3909
(Name and Address of agent for service)
--------------------------------------
COPY TO:
JERRY R. MARLATT, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 806-5400
--------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.
--------------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _____
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
--------------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED PROPOSED MAXIMUM AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED(1) MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION FEE
PRICE PER UNIT (1) PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Home Equity $1,000,000,000(2) 100% $1,000,000,000 $303,030.31 (3)
Asset-Backed Certificates
===================================================================================================================================
(1) Pursuant to this Amendment No. 1 to the Form S-3, the amount of
securities to be registered is hereby increased from the amount of
Securities previously reported.
(2) Estimated solely for purposes of calculating the registration fee.
(3) $303.04 of which was previously paid.
</TABLE>
--------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
DIRECTORS ASSET CONDUIT CORPORATION
CROSS REFERENCE SHEET
ITEM AND CAPTION IN FORM S-3 LOCATION IN PROSPECTUS
1 Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus.................. Forepart of Registration
Statement and Outside Front
Cover
2 Inside Front Cover and Outside Back Cover Pages of
Prospectus...................................... Inside Front and Outside
Back Cover Pages
3 Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges....................... Summary of Prospectus; Risk
Factors and Special
Considerations; Prepayment
and Yield Considerations;
Description of the
Certificates
4 Use of Proceeds................................. Use of Proceeds
5 Determination of Offering Price................. *
6 Dilution........................................ *
7 Selling Security Holders........................ *
8 Plan of Distribution............................ Cover Page; Plan of
Distribution
9 Description of Securities to be Registered...... Description of the
Certificates
10 Interests of Named Experts and counsel *
11 Material Changes *
12 Incorporation of Certain Information by Reference Incorporation of Certain
Information by Reference
13 Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.. *
- ----------------------
* Omitted since answer is negative or item is not applicable.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. All such expenses except for the
registration fees are estimated.
SEC Registration Fee.......................................... $303,030.31
Legal Fees and Expenses....................................... 475,000.00
Accounting Fees and Expenses.................................. 60,000.00
Trustee's Fees and Expenses
(including counsel fees)...................................... 25,000.00
Printing and Engraving Fees................................... 160,000.00
Rating Agency Fees............................................ 500,000.00
Miscellaneous................................................. 0.00
Total..................................................... $1,523,030.31
=============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are made, or are threatened to be made, parties to any
threatened, pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of such corporation), by reason of the fact that such person is or was
an officer or director of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests and, for criminal proceedings, had no reasonable cause to believe that
his conduct was illegal. A Delaware corporation may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses which such officer or director actually and reasonably
incurred.
The By-laws of Directors Asset Conduit Corporation provide for
indemnification of officers and directors to the full extent permitted by the
Delaware General Corporation Law.
The Pooling and Servicing Agreement or Indenture for each Series of
Securities provide either that the Registrant and the partners, directors,
officers, employees and agents of the Registrant, or that the Master Servicer
and the partners, directors, officers, employees and agents of the Master
Servicer, will be entitled to indemnification by the Trust Estate and will be
held harmless against any loss, liability or expense incurred in connection with
any legal action relating to the Pooling and Servicing Agreement, the Indenture
or the Securities, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or gross negligence in the performance of his
or its duties thereunder or by reason of reckless disregard of his or its
obligations and duties thereunder.
ITEM 16. EXHIBITS.
(a) FINANCIAL STATEMENTS:
NONE.
(b) EXHIBITS:
*1.1 --Form of Underwriting Agreement.
**3.1 --Certificate of Incorporation of Directors Asset
Conduit Corporation.
**3.2 --By-Laws of Directors Asset Conduit Corporation.
*4.1 --Form of Indenture.
*4.2 --Form of Pooling and Servicing Agreement.
*4.3 --Form of Purchase Agreement.
*4.4 --Form of Trust Agreement.
*5.1 --Opinion of Stroock & Stroock & Lavan LLP
with respect to the securities being registered.
*8.1 --Opinion of Stroock & Stroock & Lavan LLP with
respect to tax matters (included as part of
Exhibit 5.1).
*10.1 --Form of Sale and Servicing Agreement.
*23.1 --Consent of Stroock & Stroock & Lavan LLP (included as
part of Exhibit 5.1).
**24.1 --Powers of Attorney of Directors and
Officers of Issuer (included on signature page).
- ---------------------
* Filed herewith.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) UNDERTAKING PURSUANT TO RULE 415.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) AS TO DOCUMENTS SUBSEQUENTLY FILED THAT ARE INCORPORATED BY REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed a new registration statement relating to
the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
(d) AS TO THE ELIGIBILITY OF A TRUSTEE FOR QUALIFICATION OF TRUST
INDENTURES UNDER THE TRUST INDENTURE ACT OF 1939.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the Trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations provided by the Commission under Section 305(b)(2) of the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Edison, State of New Jersey on the
20th day of October 1997.
By: /S/ Lawrence D. Rubenstein
Name: Lawrence D. Rubenstein
Title: Vice President and General Counsel
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Form S-3 Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated on October
20, 1997.
NAME TITLE DATE
President, Secretary,
Stephen D Morrison* Director and Chief October 20, 1997
Executive Officer
Executive Vice
Robert Chapman* President and Chief October 20, 1997
Financial Officer
James B. Svinth* Executive Vice October 20, 1997
President and Director
Robert Gorsche* Director October 20, 1997
*By: /S/ Lawrence D. Rubenstein
Lawrence D. Rubenstein
As Attorney in Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
NO.
*1.1 Form of Underwriting Agreement................................
**3.1 Certificate of Incorporation of Directors
Asset Conduit Corporation.....................................
**3.2 By-Laws of Directors Asset Conduit Corporation................
*4.1 Form of Indenture.............................................
*4.2 Form of Pooling and Servicing Agreement.......................
*4.3 Form of Loan Purchase Agreement...............................
*4.4 Form of Trust Agreement.......................................
*5.1 Opinion of Stroock & Stroock & Lavan LLP
with respect to the securities being registered...............
*8.1 Opinion of Stroock & Stroock & Lavan LLP
with respect to tax matters (included as part of Exhibit 5.1).
*10.1 Form of Sale and Servicing Agreement..........................
*23.1 Consent of Stroock & Stroock & Lavan LLP
(included as part of Exhibit 5.1).............................
**24.1 Powers of Attorney of Directors and Officers of Issuer
(included on signature page)..................................
- ------
* Filed herewith.
** Previously filed.
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1997
REGISTRATION STATEMENT NO. 333-32577
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
EXHIBITS TO
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------
DIRECTORS ASSET CONDUIT CORPORATION
(Exact name of registrant as specified in governing instruments)
DELAWARE APPLICATION PENDING
(State or other jurisdiction (IRS Employee
of incorporation or organization) Identification Number)
7485 NEW HORIZON WAY
FREDERICK, MARYLAND 21703
(301) 846-8101
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------------------------
LAWRENCE D. RUBENSTEIN, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
DIRECTORS ASSET CONDUIT CORPORATION
C/O NORWEST MORTGAGE, INC.
343 THORNALL STREET, 5TH FLOOR
EDISON, NEW JERSEY 08837
(732) 906-3909
(Name and Address of agent for service)
--------------------------------------
COPY TO:
JERRY R. MARLATT, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 806-5400
--------------------------------------
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1997
REGISTRATION STATEMENT NO. 333-32577
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
EXHIBITS TO
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------
DIRECTORS ASSET CONDUIT CORPORATION
(Exact name of registrant as specified in governing instruments)
DELAWARE APPLICATION PENDING
(State or other jurisdiction (IRS Employee
of incorporation or organization) Identification Number)
7485 NEW HORIZON WAY
FREDERICK, MARYLAND 21703
(301) 846-8101
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------------------------
LAWRENCE D. RUBENSTEIN, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
DIRECTORS ASSET CONDUIT CORPORATION
C/O NORWEST MORTGAGE, INC.
343 THORNALL STREET, 5TH FLOOR
EDISON, NEW JERSEY 08837
(732) 906-3909
(Name and Address of agent for service)
--------------------------------------
===============================================================================
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NO.
*1.1 Form of Underwriting Agreement.....................................
**3.1 Certificate of Incorporation of Directors
Asset Conduit Corporation........................................
**3.2 By-Laws of Directors Asset Conduit Corporation.....................
*4.1 Form of Indenture..................................................
*4.2 Form of Pooling and Servicing Agreement............................
*4.3 Form of Loan Purchase Agreement....................................
*4.4 Form of Trust Agreement............................................
*5.1 Opinion of Stroock & Stroock & Lavan LLP
with respect to the securities being
registered.........................................................
*8.1 Opinion of Stroock & Stroock & Lavan LLP
with respect to tax matters (included
as part of Exhibit 5.1)............................................
*10.1 Form of Sale and Servicing Agreement...............................
*23.1 Consent of Stroock & Stroock & Lavan LLP
(included as part of Exhibit 5.1)..................................
**24.1 Powers of Attorney of Directors and
Officers of Issuer (included on
signature page)....................................................
- ------
* Filed herewith.
** Previously filed.
Exhibit 1.1
STANDARD FORM
DIRECTORS ASSET CONDUIT CORPORATION
Home Equity Loan Asset-Backed Certificates
(Issuable in Series)
UNDERWRITING AGREEMENT
[Date]
[Underwriter]
[Address]
Ladies and Gentlemen:
Directors Asset Conduit Corporation, a Delaware corporation ("DACC")
proposes to issue and sell from time to time its Home Equity Loan Asset-Backed
Certificates in various series, each series of which may be divided into classes
and each class of which may be divided into subclasses, in one or more offerings
on terms determined at the time of sale. One or more series of Home Equity Loan
Asset- Backed Certificates may be offered through you, as underwriter (the
"Underwriter"). Whenever DACC determines to make an offering of a series of its
Home Equity Loan Asset-Backed Certificates through the Underwriter, DACC and
Norwest Mortgage, Inc., a California corporation ("Norwest Mortgage"), will
enter into an agreement (the "Terms Agreement") with the Underwriter, in
substantially the form attached hereto as Exhibit A, providing for the sale of
such series of Home Equity Loan Asset-Backed Certificates to the Underwriter.
DACC is a wholly-owned subsidiary of Norwest Mortgage. The Home Equity Loan
Asset-Backed Certificates of the series, classes and subclasses to be sold in
each offering to the Underwriter under this Underwriting Agreement, as
supplemented by the applicable Terms Agreement, are hereinafter referred to as
the "Certificates". The Certificates will have the characteristics set forth in
the applicable Terms Agreement and will evidence the ownership interests in a
trust consisting of mortgage loans acquired by DACC (the "Mortgage Loans") and
related property but excluding the Fixed Retained Yield, if any, specified in
the Terms Agreement (collectively, the "Trust Estate"). The Mortgage Loans will
be of the type described in, and will have the characteristics and aggregate
principal balance set forth in, the Prospectus Supplement (as hereinafter
defined).
The Certificates will be issued under a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), dated as of the close of
business on the date specified in the applicable Terms Agreement, by and among
DACC, as depositor, Norwest Mortgage, as seller, Norwest Bank Minnesota,
National Association, a national banking association ("Norwest Bank"), as master
servicer (in such capacity, the "Master Servicer"), the trustee identified in
the applicable Terms Agreement, as trustee (the "Trustee") and, if applicable,
the trust administrator identified in the applicable Terms Agreement, as trust
administrator (the "Trust Administrator"). The Certificates will be issued in
denominations of $100,000, or such lesser amount as may be specified in the
applicable Terms Agreement, and will have the terms set forth in the Prospectus
Supplement. The Certificates will conform in all material respects to the
description thereof contained in the applicable Terms Agreement and the
Prospectus Supplement. The Terms Agreement may take the form of an exchange of
any standard form of written communication between the Underwriter, DACC and
Norwest Mortgage. Each offering of Home Equity Loan Asset- Backed Certificates
under this Underwriting Agreement will be governed by this Underwriting
Agreement, as supplemented by the applicable Terms Agreement. This Underwriting
Agreement, as supplemented by the applicable Terms Agreement, is referred to
herein as "this Agreement".
1. REPRESENTATIONS AND WARRANTIES. (a) DACC represents and warrants
to, and agrees with, the Underwriter as of the date of the applicable Terms
Agreement that:
(i) A registration statement (File No. 333-32577), including a
prospectus, has been filed with the Securities and Exchange Commission
(the "Commission") and has become effective under the Securities Act
of 1933, as amended (the "Act"), and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceedings for that purpose have been initiated or to DACC's
knowledge threatened by the Commission; and the prospectus in the form
in which it will be used in connection with the offering of the
Certificates is proposed to be supplemented by a prospectus supplement
relating to the Certificates and, as so supplemented, to be filed with
the Commission pursuant to Rule 424 under the Act. (Such registration
statement, as amended to the date of the applicable Terms Agreement,
excluding for purposes of this Agreement any information contained in
any Form 8-K filed and incorporated by reference therein pursuant to
Section 9 hereof or pursuant to any other underwriting agreement
entered into by DACC, is hereinafter referred to as the "Registration
Statement"; such prospectus supplement, as first filed with the
Commission, is hereinafter referred to as the "Prospectus Supplement";
and such prospectus, in the form in which it will first be filed with
the Commission in connection with the offering of the Certificates, as
supplemented by the Prospectus Supplement, is hereinafter referred to
as the "Prospectus"; all references herein to the Prospectus or to the
Prospectus, as revised, amended, or supplemented, shall be deemed to
exclude any information contained in any Form 8-K filed and
incorporated by reference therein pursuant to Section 9 hereof or
pursuant to any other underwriting agreement entered into by DACC).
(ii) The Registration Statement and the Prospectus, as of the
date of the Prospectus Supplement, will conform, and the Registration
Statement and the Prospectus, as revised, amended or supplemented and
filed with the Commission prior to the termination of the offering of
the Certificates, as of their respective effective or issue dates,
will conform in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder applicable
to such documents as of such respective dates, and the Registration
Statement and the Prospectus, as revised, amended or supplemented and
filed with the Commission as of the "Closing Date" (as hereinafter
defined), will conform in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder
applicable to such documents; and the Registration Statement and the
Prospectus, as of the date of the Prospectus Supplement, will not
include any untrue statement of a material fact or will not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading and, in the case of the
Prospectus, as revised, amended or supplemented and filed prior to the
Closing Date, as of the Closing Date, will not include any untrue
statement of a material fact or will not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that DACC makes no
representations, warranties or agreements (A) as to the information
contained in or omitted from the Prospectus or any revision or
amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to DACC by or on
behalf of the Underwriter specifically for use in connection with the
preparation of the Prospectus or any revision or amendment thereof or
supplement thereto or (B) based on the failure by the Underwriter to
deliver to DACC in a timely manner any information required to be
filed by DACC pursuant to Section 9 or as to any untrue statement or
alleged untrue statement of a material fact contained in such
information, or an omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, when considered in conjunction with the
Prospectus, and in the light of the circumstances under which they
were made, not misleading, except to the extent that such
misstatements are the result of inaccurate information with respect to
the Mortgage Loans supplied by DACC to the Underwriter which was not
corrected by information subsequently supplied by DACC to the
Underwriter at any time prior to the earlier of (Y) the written
confirmation of a sale of the Certificates, which sale results in the
loss, claim, damage or liability arising out of or based upon such
misstatement, and (Z) the 90th day following the filing of the
Prospectus, as amended or supplemented, with the Commission.
(iii) Assuming that certain of the Certificates are rated at the
time of issuance in one of the two highest rating categories by a
nationally recognized statistical rating organization, each such
Certificate at such time will be a "mortgage related security" as such
term is defined in Section 3(a)(41) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(iv) Each of the Certificates will conform in all material
respects to the description thereof contained in the Prospectus, and
each of the Certificates, when validly authenticated, issued and
delivered in accordance with the Pooling and Servicing Agreement, will
be duly and validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement, and immediately prior
to the delivery of the Certificates to the Underwriter, DACC will own
the Certificates, and upon such delivery the Underwriter will acquire
title thereto, free and clear of any lien, pledge, encumbrance or
other security interest other than one created or granted by the
Underwriter or permitted by the Pooling and Servicing Agreement.
(v) This Agreement has been duly authorized, executed and
delivered by DACC and, as of the Closing Date, the Pooling and
Servicing Agreement will have been duly authorized, executed and
delivered by DACC and will conform in all material respects to the
description thereof contained in the Prospectus and, assuming the
valid execution thereof by the Trustee, the Trust Administrator, if
applicable, Norwest Mortgage and the Master Servicer, the Pooling and
Servicing Agreement will constitute a valid and binding agreement of
DACC enforceable in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights and by
general equity principles.
(vi) DACC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus and to enter into and
perform its obligations under the Pooling and Servicing Agreement and
this Agreement.
(vii) Neither the issuance or delivery of the Certificates, nor
the consummation of any other of the transactions contemplated herein,
nor compliance with the provisions of the Pooling and Servicing
Agreement or this Agreement, will conflict with or result in the
breach of any material term or provision of the certificate of
incorporation or bylaws of DACC, and DACC is not in breach or
violation of or in default (nor has an event occurred which with
notice or lapse of time or both would constitute a default) under the
terms of (i) any indenture, contract, lease, mortgage, deed of trust,
note agreement or other evidence of indebtedness or other agreement,
obligation or instrument to which DACC is a party or by which it or
its properties are bound, or (ii) any law, decree, order, rule or
regulation applicable to DACC of any court or supervisory, regulatory,
administrative or governmental agency, body or authority, or
arbitrator having jurisdiction over DACC, or its properties, the
default in or the breach or violation of which would have a material
adverse effect on DACC or the ability of DACC to perform its
obligations under the Pooling and Servicing Agreement; and neither the
delivery of the Certificates, nor the consummation of any other of the
transactions contemplated herein, nor the compliance with the
provisions of the Pooling and Servicing Agreement or this Agreement
will result in such a breach, violation or default which would have
such a material adverse effect.
(viii) No filing or registration with, notice to, or consent,
approval, authorization or order or other action of, any court or
governmental authority or agency is required for the consummation by
DACC of the transactions contemplated by this Agreement or the Pooling
and Servicing Agreement (other than as required under state securities
laws or Blue Sky laws, as to which no representations and warranties
are made by DACC), except such as have been, or will have been prior
to the Closing Date, obtained under the Act, and such recordations of
the assignment of the Mortgage Loans to the Trustee or, if applicable,
to the Trust Administrator on behalf of the Trustee, pursuant to the
Pooling and Servicing Agreement that have not yet been completed.
(ix) There is no action, suit or proceeding before or by any
court, administrative or governmental agency, or other tribunal,
domestic or foreign, now pending to which DACC is a party, or to the
best of DACC's knowledge threatened against DACC, which could
reasonably result individually or in the aggregate in any material
adverse change in the condition (financial or otherwise), earnings,
affairs, regulatory situation or business prospects of DACC or could
reasonably interfere with or materially and adversely affect the
consummation of the transactions contemplated herein.
(x) At the Closing Date the representations and warranties made
by DACC in the Pooling and Servicing Agreement will be true and
correct in all material respects as of the date made.
(xi) At the time of execution and delivery of the Pooling and
Servicing Agreement, DACC will own the mortgage notes (the "Mortgage
Notes") being transferred to the Trust Estate pursuant thereto, free
and clear of any lien, mortgage, pledge, charge, encumbrance, adverse
claim or other security interest (collectively, "Liens"), except to
the extent permitted in the Pooling and Servicing Agreement, and will
not have assigned to any person other than the Trust Estate any of its
right, title or interest, exclusive of the Fixed Retained Yield, if
any, in the Mortgage Notes. DACC will have the power and authority to
transfer the Mortgage Notes to the Trust Estate and to transfer the
Certificates to the Underwriter, and, upon execution and delivery to
the Trustee of the Pooling and Servicing Agreement, payment by the
Underwriter for the Certificates, and delivery to the Underwriter of
the Certificates, the Trust Estate will own the Mortgage Notes
(exclusive of the Fixed Retained Yield, if any) and the Underwriter
will acquire title to the Certificates, in each case free of Liens
except to the extent permitted by the Pooling and Servicing Agreement.
(xii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the Pooling and Servicing Agreement and the Certificates
have been or will be paid by DACC at or prior to the Closing Date,
except for fees for recording assignments of mortgage loans to the
Trustee or, if applicable, to the Trust Administrator on behalf of the
Trustee, pursuant to the Pooling and Servicing Agreement that have not
yet been completed, which fees will be paid by DACC in accordance with
the Pooling and Servicing Agreement.
(xiii) The transfer of the Mortgage Loans and the related assets
to the Trust Estate at the Closing Date will be treated by DACC for
financial accounting and reporting purposes as a sale of assets and
not as a pledge of assets to secure debt.
(b) Norwest Mortgage represents and warrants to, and agrees with, the
Underwriter as of the date of the applicable Terms Agreement that:
(i) Norwest Mortgage has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of California with corporate power and authority to own its properties
and conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement.
(ii) The execution and delivery by Norwest Mortgage of this
Agreement are within the corporate power of Norwest Mortgage and have
been duly authorized by all necessary corporate action on the part of
Norwest Mortgage.
(iii) Neither the execution and delivery of this Agreement, nor
the consummation by Norwest Mortgage of any other of the transactions
contemplated herein, nor compliance with the provisions of this
Agreement, will conflict with or result in the breach of any material
term or provision of the certificate of incorporation or bylaws of
Norwest Mortgage.
(iv) This Agreement has been duly authorized, executed and
delivered by Norwest Mortgage.
2. PURCHASE PRICE. The purchase price at which the Underwriter will
purchase the Certificates shall be the aggregate purchase price set forth in the
applicable Terms Agreement.
3. DELIVERY AND PAYMENT. The Certificates shall be delivered at the
office, on the date and at the time specified in the applicable Terms Agreement,
which place, date and time may be changed by agreement between the Underwriter
and DACC (such date and time of delivery of and payment for the Certificates
being hereinafter referred to as the "Closing Date"). Delivery of the
Certificates shall be made to the Underwriter against payment by the Underwriter
of the purchase price therefor to or upon the order of DACC in same-day funds.
The Certificates shall be registered in such names and in such denominations as
the Underwriter may have requested not less than two business days prior to the
Closing Date. DACC agrees to have the Certificates available for inspection,
checking and packaging in New York, New York, on the business day prior to the
Closing Date.
4. OFFERING BY UNDERWRITER. It is understood that the Underwriter
proposes to offer the Certificates for sale as set forth in the Prospectus and
that the Underwriter will not offer, sell or otherwise distribute the
Certificates (except for the sale thereof in exempt transactions) in any state
in which the Certificates are not exempt from registration under state
securities laws or Blue Sky laws (except where the Certificates will have been
qualified for offering and sale at the direction of the Underwriter under such
state securities laws or Blue Sky laws). In connection with such offering(s),
the Underwriter agrees to provide DACC with information related to the offer and
sale of the Certificates that is reasonably requested by DACC, from time to time
(but not in excess of one year from the Closing Date), and necessary for
complying with its tax reporting obligations, including, without limitation, the
issue price of the Certificates.
The Underwriter further agrees that it will not sell or transfer any
Certificate or interest therein in the initial sale or transfer of such
Certificate by the Underwriter in an amount less than the minimum denomination
for such Certificate to be set forth in the Prospectus Supplement.
5. AGREEMENTS. DACC agrees with the Underwriter that:
(a) DACC will cause the Prospectus to be filed with the Commission
pursuant to Rule 424 under the Act and, if necessary, within 15 days of the
Closing Date, will file a report on Form 8-K setting forth specific information
concerning the Certificates (but will not include any information required to be
filed under Section 9), and will promptly advise the Underwriter when the
Prospectus has been so filed, and, prior to the termination of the offering of
the Certificates, will also promptly advise the Underwriter (i) when any
amendment to the Registration Statement has become effective or any revision of
or supplement to the Prospectus has been so filed (unless such amendment,
revision or supplement does not relate to the Certificates), (ii) of any request
by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information (unless such request does not
relate to the Certificates), and (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement with
respect to the Certificates or the institution or, to the knowledge of DACC, the
threatening of any proceeding for that purpose. DACC will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof. Except as otherwise provided in Section 5(b)
hereof, DACC will not file prior to the termination of such offering any
amendment to the Registration Statement or any revision of or supplement to the
Prospectus (other than any such amendment, revision or supplement which does not
relate to the Certificates) which shall be disapproved by the Underwriter after
reasonable notice and review of such filing.
(b) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act (i) any event occurs 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 a material fact necessary to make
the statements therein in the light of the circumstances under which they were
made not misleading, or (ii) it shall be necessary to revise, amend or
supplement the Prospectus to comply with the Act or the rules and regulations of
the Commission thereunder, DACC promptly will notify the Underwriter and will,
upon request of the Underwriter, or may, after consultation with the
Underwriter, prepare and file with the Commission a revision, amendment or
supplement which will correct such statement or omission or effect such
compliance, and furnish without charge to the Underwriter as many copies as the
Underwriter may from time to time reasonably request of an amended Prospectus or
a supplement to the Prospectus which will correct such statement or omission or
effect such compliance.
(c) DACC will (i) furnish to the Underwriter and counsel for the
Underwriter, without charge, conformed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus relating
to the Certificates is required under the Act, as many copies of the Prospectus
and any revisions or amendments thereof or supplements thereto as may be
reasonably requested, and (ii) file promptly all reports and any definitive
proxy or information statements required to be filed by DACC with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (as such
requirements may be modified pursuant to Section 12(h) of the Exchange Act)
subsequent to the date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Certificates.
(d) DACC will, as between itself and the Underwriter, pay all expenses
incidental to the performance of its obligations under this Agreement including,
without limitation, (i) expenses of preparing, printing and reproducing the
Registration Statement, the Prospectus, the Pooling and Servicing Agreement and
the Certificates, (ii) the cost of delivering the Certificates to the
Underwriter, insured to the satisfaction of the Underwriter, (iii) the fees
charged by securities rating services for rating the Certificates, (iv) the fees
and expenses of the Trustee, the Trust Administrator, if applicable, and any
agent of the Trustee or the Trust Administrator, if applicable, and the fees and
disbursements of counsel for the Trustee and the Trust Administrator, if
applicable, in connection with the Pooling and Servicing Agreement and the
Certificates, and (v) all other costs and expenses incidental to the performance
by DACC of DACC's obligations hereunder which are not otherwise specifically
provided for in this subsection. It is understood that, except as provided in
this paragraph (d) and in Sections 7 and 12 hereof, the Underwriter will pay all
of its own expenses, including (i) the fees of any counsel to the Underwriter,
(ii) any transfer taxes on resale of any of the Certificates by it, (iii) any
advertising expenses connected with any offers that the Underwriter may make,
(iv) any expenses for the qualification of the Certificates under state
securities laws or Blue Sky laws, including filing fees and the fees and
disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of any Blue Sky survey and (v) any expenses
incurred in connection with the preparation of any Computational Materials,
Structural Term Sheets and Collateral Term Sheets (each as defined in Section 9)
and the filing of such materials with the Commission.
(e) So long as any Certificates are outstanding, upon the request of
the Underwriter, DACC will, or will cause the Master Servicer to, furnish to the
Underwriter, as soon as available, a copy of (i) the annual statement of
compliance delivered by the Master Servicer to the Trustee under the Pooling and
Servicing Agreement, (ii) the annual independent public accountants' servicing
report furnished to the Trustee pursuant to the Pooling and Servicing Agreement,
(iii) each report of DACC regarding the Certificates filed with the Commission
under the Exchange Act or mailed to the holders of the Certificates, and (iv)
from time to time, such other information concerning the Certificates which may
be furnished by DACC or the Master Servicer without undue expense and without
violation of applicable law.
6. CONDITIONS TO THE OBLIGATION OF THE UNDERWRITER. The obligation of
the Underwriter to purchase the Certificates shall be subject to the accuracy in
all material respects of the representations and warranties on the part of DACC
and Norwest Mortgage contained herein as of the date of the applicable Terms
Agreement and as of the Closing Date, to the accuracy of the statements of DACC
and Norwest Mortgage made in any officer's certificate pursuant to the
provisions hereof, to the performance in all material respects by DACC of its
obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement with respect to the Certificates shall have been issued and no
proceedings for that purpose shall have been instituted and be pending or shall
have been threatened, and the Prospectus shall have been filed or mailed for
filing with the Commission not later than required pursuant to the rules and
regulations of the Commission.
(b) DACC shall have furnished to the Underwriter a certificate, dated
the Closing Date, of DACC, signed by a vice president of DACC, to the effect
that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus and this Agreement and that:
(i) The representations and warranties of DACC herein are true
and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date, and DACC has
complied with all agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement with respect to the Certificates has been
issued, and no proceedings for that purpose have been instituted and
are pending or, to his knowledge, have been threatened as of the
Closing Date; and
(iii) Nothing has come to the attention of such person that would
lead him or her to believe that the Prospectus contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) DACC shall have caused Norwest Mortgage to furnish to the
Underwriter a certificate, dated the Closing Date, of Norwest Mortgage, signed
by a vice president or an assistant vice president of Norwest Mortgage, to the
effect that the representations and warranties of Norwest Mortgage herein are
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date, and Norwest Mortgage has in all
material respects complied with all agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing Date.
(d) DACC shall have furnished to the Underwriter an opinion, dated the
Closing Date, of Stroock & Stroock & Lavan LLP, counsel to DACC, to the effect
that:
(i) DACC is a corporation validly existing as a corporation in
good standing under the laws of the State of Delaware;
(ii) The Certificates have been duly authorized and executed and,
assuming authentication and delivery in the manner contemplated in the
Pooling and Servicing Agreement, are validly issued and outstanding
and entitled to the benefits provided by the Pooling and Servicing
Agreement and this Agreement, and upon delivery by DACC of the
Certificates to the Underwriter and payment by the Underwriter of the
purchase price therefor in the manner contemplated by this Agreement,
the Underwriter will acquire the Certificates free and clear of any
lien, pledge, encumbrance or other security interest other than one
created or granted by the Underwriter or permitted by the Pooling and
Servicing Agreement;
(iii) Assuming that the Certificates are rated at the time of
issuance in one of the two highest rating categories by a nationally
recognized statistical rating organization, each such Certificate at
such time will be a "mortgage related security" as such term is
defined in Section 3(a)(41) of the Exchange Act;
(iv) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by DACC and, assuming valid
execution and delivery thereof by the Master Servicer, Norwest
Mortgage, the Trustee and the Trust Administrator, if applicable,
constitutes a valid and legally binding agreement of DACC, enforceable
against DACC in accordance with its terms, subject to bankruptcy,
insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights generally and to general
equity principles, regardless of whether such enforcement is
considered in a proceeding at law or in equity;
(v) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Estate (as defined in the Pooling and Servicing Agreement) is
not required to be registered under the Investment Company Act of
1940, as amended;
(vi) The Registration Statement has become effective under the
Act, and, to the best of the knowledge of such counsel, (x) no stop
order suspending the effectiveness of the Registration Statement with
respect to the Certificates has been issued and no proceedings for
that purpose have been instituted or are pending or have been
threatened under the Act; (y) the Registration Statement and the
Prospectus, as of the date of the Prospectus Supplement, and each
revision or amendment thereof or supplement thereto relating to the
Certificates, as of its effective or issue date, appeared on their
respective faces to be appropriately responsive in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder applicable to such documents as of such
respective dates; and (z) the Prospectus, as revised, amended or
supplemented as of the Closing Date, will conform in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder applicable to such documents as to be
used as of the Closing Date; in the course of such counsel's review of
the Registration Statement and the Prospectus and discussion of the
same with certain officers of DACC and its accountants, no facts came
to the attention of such counsel that caused such counsel to believe
that the Registration Statement or the Prospectus, as of the date of
the Prospectus Supplement, or any revision or amendment thereof or
supplement thereto, as of its effective or issue date, contained any
untrue statement of a material fact or omitted to state 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, or that the Prospectus, or any revision or amendment
thereof or supplement thereto filed prior to the date of such opinion,
as of the date of such opinion, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; the descriptions in the Registration
Statement and the Prospectus, as of the date of such opinion, of the
Certificates and the Pooling and Servicing Agreement and such
descriptions, as of the date of the Prospectus Supplement, of the
aspects of certain statutes as set forth in the Prospectus under the
headings "ERISA Considerations" and "Certain Federal Income Tax
Consequences" were, to the extent that they constitute matters of law
or legal conclusions, accurate; and such counsel does not know of any
contracts or documents relating to DACC of a character required to be
described in or to be filed as exhibits to the Registration Statement,
as of the date of the Prospectus Supplement, which were not described
and filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial,
numerical or statistical data contained in the Registration Statement
or the Prospectus or any material incorporated by reference in the
Registration Statement or the Prospectus;
(vii) This Underwriting Agreement and the applicable Terms
Agreement have been duly authorized, executed and delivered by DACC;
(viii) No consent, approval, authorization or order of any State
of New York or federal governmental agency or body or, to the
knowledge of such counsel, any State of New York or federal court is
required for the consummation by DACC of the transactions contemplated
by the terms of this Agreement or the Pooling and Servicing Agreement
except such as may be required under the Blue Sky laws of any
jurisdiction in connection with the offering, sale or acquisition of
the Certificates, any recordations of the assignment of the mortgage
loans to the Trustee or, if applicable, to the Trust Administrator on
behalf of the Trustee, pursuant to the Pooling and Servicing Agreement
that have not yet been completed and such other approvals as have been
obtained;
(ix) The sale of the Certificates to the Underwriter pursuant to
this Agreement and the consummation of any of the transactions
contemplated by the terms of the Pooling and Servicing Agreement or
this Agreement do not conflict with or result in a breach or violation
of any material term or provision of, or constitute a default under,
the certificate of incorporation or bylaws of DACC, or, to the
knowledge of such counsel, without independent investigation, any
indenture or other agreement or instrument to which DACC is a party or
by which it is bound, or any State of New York or federal statute or
regulation applicable to DACC or, to the knowledge of such counsel,
without independent investigation, an order of any State of New York
or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over DACC; and
(x) To the knowledge of such counsel, without independent
investigation, after due inquiry, there are no legal or governmental
actions, investigations or proceedings pending to which DACC is a
party, or threatened against DACC, (A) asserting the invalidity of
this Agreement, the Pooling and Servicing Agreement or the
Certificates, (B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement, (C) which might materially and adversely affect the
performance by DACC of its obligations under, or the validity or
enforceability of, this Agreement, the Pooling and Servicing Agreement
or the Certificates or (D) seeking to affect adversely the federal
income tax attributes of the Certificates as described in the
Prospectus under the heading "Certain Federal Income Tax
Consequences." For purposes of the foregoing, such counsel may state
that it has not regarded any legal or governmental actions,
investigations or proceedings to be "threatened" unless the potential
litigant or governmental authority has manifested to DACC a present
intention to initiate such proceedings.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement and the Pooling and
Servicing Agreement. Such opinion may assume the due authorization, execution
and delivery of the instruments and documents referred to therein by the parties
thereto other than DACC. Such opinion may be qualified as an opinion only on the
laws of the State of New York, the laws of each state in which the writer of the
opinion is admitted to practice law and the federal law of the United States. To
the extent that such firm relies upon the opinion of other counsel in rendering
any portion of its opinion, the opinion of such other counsel shall be attached
to and delivered with the opinion of such firm that is delivered to the
Underwriter.
(e) Norwest Bank shall have furnished to the Underwriter an opinion,
dated the Closing Date, of counsel to Norwest Bank (who may be an employee of
Norwest Bank), to the effect that:
(i) Norwest Bank has been duly incorporated and is validly
existing as a national banking association and has the power and
authority to enter into, and to take all action required of it under,
the Pooling and Servicing Agreement;
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by Norwest Bank and, assuming valid
execution and delivery thereof by DACC, Norwest Mortgage, the Trustee
and the Trust Administrator, if applicable, the Pooling and Servicing
Agreement constitutes a valid and legally binding agreement of Norwest
Bank, enforceable against Norwest Bank in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting creditors' rights
generally and to general equity principles regardless of whether such
enforcement is considered in a proceeding at law or in equity;
(iii) No consent, approval, authorization or order of any
Minnesota or federal court or governmental agency or body is required
for the consummation by Norwest Bank of the transactions contemplated
by the Pooling and Servicing Agreement except any such as may be
required under the Blue Sky laws of any jurisdiction in connection
with the offering, sale or acquisition of the Certificates, any
recordations of the assignment of the mortgage loans evidenced by the
Certificates pursuant to the Pooling and Servicing Agreement that have
not yet been completed and any approvals as have been obtained;
(iv) The consummation by Norwest Bank of any of the transactions
contemplated by the terms of the Pooling and Servicing Agreement does
not, to the knowledge of such counsel, conflict with or result in a
breach or violation of any material term or provision of, or
constitute a default under, the charter or bylaws of Norwest Bank, any
indenture or other agreement or instrument to which Norwest Bank is a
party or by which it is bound, any state or federal statute or
regulation applicable to Norwest Bank or, to the knowledge of such
counsel, any order of any state or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over
Norwest Bank; and
(v) To the best knowledge of such counsel, there are no legal or
governmental actions, investigations or proceedings pending to which
Norwest Bank is a party, or threatened against Norwest Bank, (A)
asserting the invalidity of the Pooling and Servicing Agreement or (B)
which might materially and adversely affect the performance by Norwest
Bank of its obligations under, or the validity or enforceability of,
the Pooling and Servicing Agreement. For purposes of the foregoing,
such counsel may state that it has not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested
to a member of the legal department of Norwest Bank having
responsibility for litigation matters involving the master servicing
activities of Norwest Bank a present intention to initiate such
proceedings.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to the Pooling and Servicing Agreement.
Such opinion may assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto other than
Norwest Bank. Such opinion may be qualified as an opinion only on the laws of
the State of Minnesota and the federal law of the United States and, with
respect to the opinions set forth in paragraph (e)(ii) above, the laws of the
State of New York. To the extent that such counsel relies upon the opinion of
other counsel in rendering any portion of its opinion, the opinion of such other
counsel shall be attached to and delivered with the opinion of such counsel that
is delivered to the Underwriter.
(f) The Underwriter shall have received from counsel for the
Underwriter such opinion or opinions, dated the Closing Date, with respect to
the issuance and sale of the Certificates, the Registration Statement and the
Prospectus, and such other related matters as the Underwriter may reasonably
require.
(g) DACC's independent accountants, as identified in the applicable
Terms Agreement (the "Independent Accountants"), shall have furnished to the
Underwriter a letter dated as of or prior to the date of first use of the
Prospectus Supplement in the form and reflecting the performance of the
procedures previously agreed to by DACC and the Underwriter.
(h) Subsequent to the date hereof, there shall not have occurred any
change, or any development involving a prospective change, in or affecting the
business or properties of DACC which the Underwriter concludes, in the
reasonable judgment of the Underwriter, materially impairs the investment
quality of the Certificates so as to make it impractical or inadvisable to
proceed with the public offering or the delivery of the Certificates as
contemplated by the Prospectus.
(i) The Certificates shall be rated not lower than the required
ratings set forth in the applicable Terms Agreement, such ratings shall not have
been rescinded and no public announcement shall have been made that either
rating of the Certificates has been placed under review (otherwise than for
possible upgrading).
(j) You shall have received an opinion of special counsel to DACC,
dated the Closing Date, in form and substance satisfactory to you, with respect
to certain state tax consequences under the tax laws of the jurisdiction in
which the Trustee is located relating to the Trust Estate and the holders of the
Certificates.
(k) You shall have received copies of any opinions of counsel to DACC
supplied to the rating organizations relating to certain matters with respect to
the Certificates. Any such opinions shall be dated the Closing Date and
addressed to you or accompanied by reliance letters to you or shall state that
you may rely upon them.
(l) DACC shall have furnished to the Underwriter such further
information, certificates and documents as the Underwriter may reasonably have
requested, and all proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be in all material
respects reasonably satisfactory in form and substance to the Underwriter and
its counsel.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
this Agreement and all obligations of the Underwriter hereunder may be canceled
at, or at any time prior to, the Closing Date by the Underwriter. Notice of such
cancellation shall be given to DACC in writing, or by telephone or telegraph
confirmed in writing.
7. INDEMNIFICATION AND CONTRIBUTION. (a) DACC agrees to indemnify and
hold harmless the Underwriter and each person who controls the Underwriter
within the meaning of either the 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 Act, the Exchange Act, or other federal or state
statutory law or regulation, at common law 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 or alleged untrue statement of a material
fact contained in the Registration Statement or in the Prospectus, or in any
revision or amendment thereof or supplement thereto, 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 it or him in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that DACC
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon (A) any such untrue statement
or alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to DACC by or
on behalf of the Underwriter specifically for use in connection with the
preparation thereof or (B) any untrue statement or alleged untrue statement of a
material fact contained in any information delivered by the Underwriter to DACC
pursuant to Section 9(e), 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, when considered in conjunction with
the Prospectus, and in the light of the circumstances under which they were
made, not misleading, except to the extent that such misstatements are the
result of inaccurate information with respect to the Mortgage Loans supplied by
DACC to the Underwriter which was not corrected by information subsequently
supplied by DACC to the Underwriter at any time prior to the earlier of (i) the
written confirmation of a sale of the Certificates, which sale results in the
loss, claim, damage or liability arising out of or based upon such misstatement,
and (ii) the 90th day following the filing of the Prospectus, as amended or
supplemented, with the Commission; provided, further, that DACC shall not be
liable to the Underwriter and each person who controls the Underwriter with
respect to any Prospectus or any Prospectus Supplement to the extent that any
loss, claim, damage or liability results from the fact that the Certificates
were offered or sold to a person to whom there was not delivered, at or prior to
the written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then revised, amended or supplemented in any case where such
delivery is required by the Act or the Exchange Act, if DACC has previously
furnished copies thereof to the Underwriter. This indemnity agreement will be in
addition to any liability which DACC may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless DACC, its
officers who signed the Registration Statement or any amendment thereof, its
directors, and each person who controls DACC within the meaning of either the
Act or the Exchange Act, and Norwest Mortgage, and each person who controls
Norwest Mortgage within the meaning of either the Act or the Exchange Act, (i)
to the same extent as the foregoing indemnities from DACC to the Underwriter,
but only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to DACC by or on behalf of the Underwriter
specifically for use in connection with the preparation of the Prospectus or any
revision or amendment thereof or supplement thereto or (ii) insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) are based
on, result from or arise out of any untrue statement or alleged untrue statement
of a material fact contained in any information delivered by the Underwriter to
DACC pursuant to Section 9(e), or arise out of or are based upon the omission or
alleged omission to state in such information a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus, and in the light of the circumstances under
which they were made, not misleading; except to the extent that such
misstatements are the result of inaccurate information with respect to the
Mortgage Loans supplied by DACC to the Underwriter which was not corrected by
information subsequently supplied by DACC to the Underwriter at any time prior
to the earlier of (A) the written confirmation of a sale of the Certificates,
which sale results in the loss, claim, damage or liability arising out of or
based upon such misstatement, and (B) the 90th day following the filing of the
Prospectus, as amended or supplemented, with the Commission. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 7, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 7. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation by the indemnified party
undertaken with notice to and approval by the indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to (A) in subsection (a) or (b)(i) above
in such proportion as is appropriate to reflect both (i) the relative benefits
received by DACC on the one hand and the Underwriter on the other from the
offering of the Certificates and (ii) the relative fault of DACC on the one hand
and the Underwriter on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations and (B) in subsection (b)(ii) above, in
such proportion as is appropriate to reflect the relative fault of the
Underwriter on the one hand and DACC on the other in connection with the
actions, statements or omissions that resulted in such losses, claims, damages
or liabilities. The relative benefits received by DACC on the one hand and the
Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
DACC bear to the difference between (i) the total price at which the
Certificates underwritten by the Underwriter and distributed to the public were
offered to the public, and (ii) the portion of the total net proceeds from the
offering (before deducting expenses) received by DACC attributable to the
Certificates. The relative fault for the purposes of clauses (A) and (B) above
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 related to information supplied by DACC or the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. DACC,
Norwest Mortgage and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), and with respect to losses, claims, damages
or liabilities referred to in subsection (a) or (b) above, the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Certificates underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of DACC under this Section 7 shall be in addition
to any liability which DACC may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Underwriter
within the meaning of the Act; and the obligations of the Underwriter under this
Section 7 shall be in addition to any liability which the Underwriter may
otherwise have and shall extend, upon the same terms and conditions, to (i) the
officers of DACC who signed the Registration Statement or any amendment thereof,
to its directors, and to each person who controls DACC within the meaning of
either the Act or the Exchange Act and (ii) each person who controls Norwest
Mortgage within the meaning of either the Act or the Exchange Act.
8. OBLIGATIONS OF NORWEST MORTGAGE. Norwest Mortgage agrees with the
Underwriter, for the sole and exclusive benefit of the Underwriter and each
person who controls the Underwriter within the meaning of either the Act or the
Exchange Act and not for the benefit of any assignee thereof or any other person
or persons dealing with the Underwriter, in consideration of and as an
inducement to its agreement to purchase the Certificates from DACC, to indemnify
and hold harmless the Underwriter against any failure by DACC to perform its
obligations to the Underwriter pursuant to Section 7 hereof; provided, however,
that the aggregate liability of Norwest Mortgage for the foregoing indemnity
shall not exceed an amount equal to the aggregate principal amount of the
Certificates.
9. FILING OF INVESTOR INFORMATION. (a) DACC agrees to file with the
Commission current reports on Form 8-K under the Exchange Act in accordance with
paragraph (c) below, containing the Computational Materials, Structural Term
Sheets and Collateral Term Sheets described in paragraph (b) below, provided by
the Underwriter to DACC in accordance with paragraph (e) below and subject, in
the case of Computational Materials and Structural Term Sheets, to the
conditions precedent set forth in paragraph (d) below for the purpose of
permitting the Underwriter to comply as to the Certificates with the No-Action
Letter of May 20, 1994 issued by the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation and the No-Action Letter of May 27, 1994 issued by the Commission to
the Public Securities Association (collectively, the "Kidder/PSA Letter") and
the No-Action Letter of February 17, 1995 issued by the Commission to the Public
Securities Association (the "PSA Letter").
(b)(i) For purposes of Section 9(a), Computational Materials shall
mean any information with respect to the Certificates which constitutes
"computational materials", as defined in the Kidder/PSA Letter ("Computational
Materials"), excluding (i) complex multi-scenario vector analyses, (ii)
option-adjusted spreads and (iii) option-adjusted durations, prepared by the
Underwriter and delivered to investors, which information may be aggregated and
filed in consolidated form to the extent described in the Kidder/PSA Letter, and
that meets the criteria set forth in Section 9(b)(ii).
For purposes of Section 9(a), Structural Term Sheets and Collateral
Term Sheets shall mean any information with respect to the Certificates which
constitutes "Structural Term Sheets" and "Collateral Term Sheets" as defined in
the PSA Letter and that, with respect to Structural Term Sheets meets the
criteria set forth in Section 9(b)(ii).
(ii) For purposes of Section 9(a), Computational Materials and
Structural Term Sheets are those that:
(A) are generated based on assumptions regarding the payment
priorities and characteristics of a class or subclass of
Certificates that will be actually issued and purchased by the
Underwriter; and
(B) are provided to prospective investors under the
following conditions prior to the time of filing of the
Prospectus pursuant to Rule 424(b) under the Act:
(x) in the case of each prospective investor that has
orally indicated to the Underwriter that it will purchase
all or a portion of a class or subclass of Certificates to
which such Computational Materials or Structural Term
Sheets, as the case may be, relate, the Computational
Materials or Structural Term Sheets, as the case may be,
relating to such class or subclass that are sent to such
prospective investor; and
(y) for any prospective investor, all Computational
Materials or Structural Term Sheets, as the case may be,
that are sent to such prospective investor after the
structure for the entire issue of Certificates is finalized.
Computational Materials and Structural Term Sheets required to be
filed with the Commission will not include materials relating to abandoned
structures or materials that are furnished to prospective investors prior to the
time that the structure of the entire issue of Certificates is finalized where
such investors have not indicated to the Underwriter their intention to purchase
the Certificates described in such materials.
(c)(i) Subject to the timely receipt pursuant to Section 9(e)(i) of
the Computational Materials and Structural Term Sheets to be filed and the
satisfaction of the condition precedent set forth in paragraph (d), DACC agrees
and covenants to file the Computational Materials and Structural Term Sheets
delivered to it by the Underwriter not later than the filing of the Prospectus
pursuant to Rule 424 under the Act.
(ii) Subject to the timely receipt pursuant to Section 9(e)(ii) of the
Collateral Term Sheets to be filed, DACC agrees and covenants to file the
Collateral Term Sheets delivered to it by the Underwriter within two business
days of delivery.
(iii) DACC agrees to file any information delivered to DACC for filing
pursuant to Section (9)(e)(v) (A) or (C) on the business day following the
receipt of the accountant's letter pursuant to Section 9(d) with respect to such
information.
(iv) DACC agrees to file any Collateral Term Sheet delivered to DACC
for filing pursuant to Section 9(e)(v)(B) within two business days following the
receipt of such Collateral Term Sheet.
(d)(i) It shall be a condition precedent to DACC's obligation to file
Computational Materials and Structural Term Sheets pursuant to this Section 9,
that DACC shall have received a letter not later than 5:00 P.M. on the business
day prior to such filing from DACC's Independent Accountants, reflecting the
performance of procedures previously agreed to by DACC and otherwise in form and
substance satisfactory to DACC with respect to the structural, financial,
numerical or statistical information to be filed. DACC agrees to cooperate with
the Independent Accountants to facilitate the obtaining of such letter but
nothing contained herein shall be construed as a representation by DACC that it
will cause the Independent Accountants to provide such letter or shall require
DACC to accept a letter in substance unsatisfactory to it. Such letter will be
obtained at the sole expense of the Underwriter. The Underwriter acknowledges
and agrees that DACC is not able to obtain such letter with respect to (i)
complex multi-scenario vector analyses, (ii) option-adjusted spreads and (iii)
option-adjusted durations, and accordingly, the Underwriter agrees it will not
disseminate any such information in written form to an investor prior to its
delivery of a final Prospectus to such investor.
(ii) The Underwriter agrees to cooperate with the Independent
Accountants and agrees to furnish revised Computational Materials or
Structural Term Sheets, if necessary, in order for the accountants to
provide such letter.
(iii) DACC intends, but is not obligated, to obtain a letter from
the Independent Accountants regarding the information set forth in any
Collateral Term Sheets filed or to be filed pursuant to Section 9(a).
Any such letter will be at the expense of the Underwriter. If the
Independent Accountants are unable to deliver such letter because of
inaccuracies in the Collateral Term Sheets, the provisions of Section
9(e)(v)(B) shall apply.
(e)(i) The Underwriter agrees and covenants to deliver to DACC no later
than four business days before the delivery of the final Prospectus to the
Underwriter copies of all Computational Materials and Structural Term Sheets
that are required under the Kidder/PSA Letter or the PSA Letter, as the
case may be, to be filed with the Commission.
(ii) The Underwriter agrees and covenants to deliver to DACC any
Collateral Term Sheets that are required under the PSA Letter to be
filed with the Commission simultaneously with the delivery of such
Collateral Term Sheets to an investor.
(iii) The Underwriter represents and warrants to DACC that the
Computational Materials, Structural Term Sheets and Collateral Term
Sheets to be furnished to DACC by the Underwriter for filing with the
Commission pursuant to Section 9(c)(i) or (ii) will constitute all
Computational Materials (either in original, aggregated or
consolidated form), Structural Term Sheets and Collateral Term Sheets
with respect to the Certificates that (i) were furnished to
prospective investors by the Underwriter in connection with its offer
and sale of the Certificates and (ii) are required to be filed with
the Commission in order to secure the relief granted under the
Kidder/PSA Letter or the PSA Letter, as the case may be.
(iv) The Underwriter represents and warrants to, and covenants
with, DACC that any information produced by it and filed by DACC with
the Commission pursuant to this Section 9 as of the date of filing
will not include any untrue statements of a material fact and, when
considered in conjunction with the Prospectus, will not omit to state
any material facts required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
Underwriter makes no representation with respect to the accuracy of
the Prospectus exclusive of any information filed with the Commission
pursuant to this Section 9 and any other written information furnished
to DACC by or on behalf of the Underwriter specifically for use in
connection with the Prospectus and, provided further, that the
Underwriter makes no representation to the extent such misstatements
are the result of inaccurate information with respect to the Mortgage
Loans supplied by DACC to the Underwriter which was not corrected by
information subsequently supplied by DACC to the Underwriter prior to
the earlier of (A) the written confirmation of a sale of the
Certificates which sale results in a loss, claim, damage or liability
arising out of or based upon such misstatement, and (B) the 90th day
following the filing of the Prospectus, as amended or supplemented,
with the Commission.
(v) The Underwriter covenants with DACC that:
(A) if a filing was made with the Commission with respect to
a structure which was considered final with respect to any class
or subclass of Certificates, and such structure is subsequently
revised, the Underwriter shall prepare and deliver to DACC for
filing with the Commission, pursuant to Section 9(c)(ii), revised
Computational Materials and Structural Term Sheets based on such
revised structure; and
(B) in the event that DACC determines that any information
contained in a Collateral Term Sheet is inaccurate, the
Underwriter shall prepare and deliver to any investor that
received the inaccurate Collateral Term Sheet and to DACC for
filing with the Commission pursuant to Section 9(c)(iv), a
revised Collateral Term Sheet.
(C) if any Computational Materials or Structural Term Sheets
filed with the Commission are determined by the Underwriter or
DACC, at any time prior to the 90th day following the filing of
the Prospectus, as amended or supplemented, with the Commission,
to contain any information that is inaccurate or misleading, and
DACC determines that as a result such Computational Materials or
Structural Term Sheets include an untrue statement of a material
fact or, when considered in conjunction with the Prospectus, will
omit to state any material fact required to be stated therein or
necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading, the
Underwriter shall prepare and deliver to DACC for filing with the
Commission pursuant to Section 9(c)(iii), corrected Computational
Materials or Structural Term Sheets, as the case may be;
provided, however, that if such information is inaccurate or
misleading solely because it is based on inaccurate information
with respect to the Mortgage Loans supplied by DACC to the
Underwriter, the Underwriter shall be under no obligation to
prepare and deliver to DACC corrected Computational Materials or
Structural Term Sheets, as the case may be, unless and until
corrected information is supplied by DACC to the Underwriter and
such corrected information is supplied by DACC to the Underwriter
at any time prior to the 90th day following the filing of the
Prospectus, as amended or supplemented, with the Commission.
(vi) The Underwriter covenants with DACC that any Computational
Materials, Structural Term Sheets or Collateral Term Sheets delivered
to prospective investors shall contain the following legend:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY [UNDERWRITER] AND NOT
BY THE ISSUER OF THE SECURITIES OR ANY OF ITS AFFILIATES.
[UNDERWRITER] IS ACTING AS UNDERWRITER AND NOT ACTING AS AGENT FOR THE
ISSUER OR ITS AFFILIATES IN CONNECTION WITH THE PROPOSED TRANSACTION."
or shall contain the legend mutually agreed upon between the
Underwriter and DACC as set forth in Exhibit B hereto.
In addition, the Underwriter covenants with DACC that any Collateral
Term Sheets delivered to prospective investors shall contain the additional
legend:
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE MORTGAGE LOANS CONTAINED IN THE PROSPECTUS
SUPPLEMENT."
and, except for the initial Collateral Term Sheet sent to an investor,
"SUCH INFORMATION SUPERSEDES THE INFORMATION IN ALL PRIOR COLLATERAL
TERM SHEETS."
(f) Notwithstanding any other provision herein, the Underwriter and
DACC each agree to pay all costs and expenses of the other party including,
without limitation, legal fees and expenses, incurred in connection with any
successful action by the Underwriter or DACC against the other party to enforce
any of its rights set forth in this Section 9.
(g) The Underwriter covenants with DACC that it will make available to
DACC such personnel as are familiar with the Underwriter's compliance procedures
for the purpose of answering questions concerning the Underwriter's practices
and procedures for the preparation and dissemination of written materials
concerning the Certificates to prospective investors prior to the delivery of
the final Prospectus to such investors.
(h) The Underwriter covenants with DACC that after the final
Prospectus is available the Underwriter shall not distribute any written
information concerning the Certificates to a prospective investor unless such
information is preceded or accompanied by the final Prospectus.
10. TERMINATION. Subsequent to the execution of the applicable Terms
Agreement, this Agreement shall be subject to termination in the absolute
discretion of the Underwriter, by notice given to DACC prior to delivery of and
payment for the Certificates, if prior to such time (i) trading in securities
generally on the New York Stock Exchange shall have been suspended or materially
limited or any setting of minimum prices for trading on such exchange shall have
been instituted, (ii) a general moratorium on commercial banking activities in
the State of New York shall have been declared by either federal or New York
State authorities, or (iii) there shall have occurred any material outbreak or
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Underwriter, impracticable or inadvisable to market the
Certificates on the terms and in the manner contemplated by the Prospectus as
amended or supplemented. In addition, following receipt of notice from DACC that
the Mortgage Loans will not conform to the specifications set forth in the
applicable Terms Agreement, if, in the reasonable judgment of the Underwriter,
such disparity would have a material adverse effect on the marketing and sale of
the Certificates, the Underwriter may terminate this Agreement not later than
the close of business on the first business day after receipt of such notice or,
if earlier, the Closing Date.
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
DACC, Norwest Mortgage and their respective officers and of the Underwriter set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter,
DACC, Norwest Mortgage or any of the officers, directors or controlling persons
referred to in Section 7 hereof, and will survive delivery of and payment for
the Certificates. The provisions of Section 5(d), Section 7, Section 8 and
Section 12 hereof shall survive the termination or cancellation of this
Agreement.
12. REIMBURSEMENT OF EXPENSES. If for any reason, other than default
by the Underwriter in its obligation to purchase the Certificates, the material
breach by the Underwriter of any of its covenants in Section 9 hereof (without
the fault of DACC) or termination by the Underwriter pursuant to Section 10
hereof, the Certificates are not delivered by or on behalf of DACC as provided
herein, DACC will reimburse the Underwriter for all out-of-pocket expenses of
the Underwriter, including reasonable fees and disbursements of its counsel,
reasonably incurred by the Underwriter in making preparations for the purchase,
sale and delivery of the Certificates, but DACC and Norwest Mortgage shall then
be under no further liability to the Underwriter with respect to the
Certificates except as provided in Section 5(d), Section 7 and Section 8 hereof.
If the Certificates are not delivered by or on behalf of DACC as provided herein
because of the default by the Underwriter in its obligation to purchase the
Certificates or the material breach by the Underwriter of any of its covenants
in Section 9 hereof (without the fault of DACC), the Underwriter will reimburse
DACC for all out-of-pocket expenses of DACC, including reasonable fees and
disbursements of its counsel, reasonably incurred by DACC in making preparations
for the issuance and delivery of the Certificates, but the Underwriter shall
then be under no further liability to DACC with respect to the Certificates
except as provided in Sections 5(d) and 7 hereof.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 7 hereof and
their respective successors and assigns, and no other person will have any right
or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
15. FINAL STRUCTURE DUE DATE. The Underwriter agrees to submit to DACC
not later than 9:00 a.m. New York City Time on the Final Structure Due Date
specified in the applicable Terms Agreement its determination of the final
structure relating to, among other items, the class designations, approximate
principal amounts and payment priorities of the Certificates. Changes to such
final structure may be made by the Underwriter after the Final Structure Due
Date if the changes are of a non-material nature. The determination as to
whether such changes are non-material shall be in the sole discretion of DACC.
In addition, on or before the Final Structure Due Date the Underwriter may elect
an extension thereof for an additional one or two business days beyond the
original Final Structure Due Date if the Underwriter notifies DACC of its
election not later than 9:00 a.m. New York City Time on such original Final
Structure Due Date and the Underwriter pays to DACC, on or prior to the Closing
Date, an extension fee of $100,000 for each day the Final Structure Due Date is
extended as reimbursement for DACC's costs and expenses arising from such
extension.
16. MISCELLANEOUS. Time shall be of the essence of this Agreement.
This Agreement supersedes all prior or contemporaneous agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
17. NOTICES. All communications hereunder will be in writing and
effective only on receipt and, if sent to the Underwriter, will be delivered to
[Underwriter], or if sent to DACC, will be delivered to DACC at 7485 New Horizon
Way, Frederick, Maryland 21703; or if sent to Norwest Mortgage, will be
delivered to Norwest Mortgage at 405 Southwest 5th Street, Des Moines, Iowa
50328.
* * *
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement by
and among DACC, Norwest Mortgage and the Underwriter.
Very truly yours,
DIRECTORS ASSET CONDUIT
CORPORATION
By:___________________________
Name:
Title:
NORWEST MORTGAGE, INC.
By:___________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby
confirmed and accepted as of
the date first above written.
[UNDERWRITER]
By:___________________________
Name:
Title:
<PAGE>
Exhibit A
DIRECTORS ASSET CONDUIT CORPORATION
Home Equity Loan Asset-Backed Certificates
Terms Agreement
[Underwriter]
[Address]
Underwriting Agreement dated [ ].
Title of Certificates: Home Equity Loan Asset-Backed Certificates,
Series 199_, [Classes] (the "Offered
Certificates").
Subclasses of Certificates: Each of the Class __ Certificates and the
Class __ Certificates will consist of one
or more Subclasses with the prior consent
of DACC, which consent shall not be
unreasonably withheld. The Class __ and
Class __ Certificates will not be divided
into subclasses.
Aggregate Principal Amount
of the Offered Certificates: $__________ (Approximate)
Certificates Not Offered Hereby: [Classes]
Enhancement:
Minimum Denominations of
Offered Certificates: $100,000 initial principal balance and
integral multiples of $1,000 in excess
thereof.
Description of the Mortgage Loans: Fixed or adjustable interest rate,
conventional, monthly pay, fully
amortizing, one- to four-family,
residential first mortgage loans having
original stated terms to maturity of
approximately [ ] years.
REMIC Election: Yes.
Cut-Off Date: ________ 1, 199_
Final Structure Due Date: ________ __, 199_
Distributions: Distributions will be made monthly on
the 25th day of each month or the next
succeeding Business Day (the "Distribution
Date").
Sub-Servicing Fee (Monthly fee
payable to the Sub-Servicer): [ ]% per to [ ]% per annum.
Master Servicing Fee (Monthly fee
payable to the Master Servicer): [ ]% per annum.
Fixed Retained Yield: [Yes][No].
Trustee:
[Trust Administrator: ]
Independent Accountants:
Book-Entry Registration: Settlement in "same-day" funds, to the
extent practicable. Any REMIC residual,
floating rate, stripped and Class __
Certificates will not be issued in
book-entry form, unless authorized by DACC.
Optional Termination: [ ].
Required Ratings: [Ratings]
Closing Date, Location and Time: ________ __, 199_; offices of Stroock &
Stroock & Lavan LLP, New York, New York;
10:00 a.m. New York City Time.
Purchase Price for the
Certificates: [ ]% of the initial aggregate principal
amount of the Offered Certificates plus
accrued interest thereon.
Date of Pooling and Servicing The Closing Date.
Agreement:
Notwithstanding any other provision of the related Underwriting Agreement, the
certificate of DACC required under Section 6(b) of the Underwriting Agreement
may be signed by a vice president or an assistant vice president of DACC.
Exhibit 4.1
[ ] HOME EQUITY LOAN TRUST 199_-__,
Issuer
AND
[-----------------]
INDENTURE TRUSTEE
-----------------------------------------
INDENTURE
Dated as of _________, 199_
------------------------------------------
HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 199__-__
<PAGE>
Cross-reference sheet showing the location in the indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.
TIA INDENTURE SECTION
- --- -----------------
Section 310
(a) (1) ............................... 6.11
(a) (2) ............................... 6.11
(a) (3) ............................... 6.10(b)(i)
(a) (4) ............................... Not Applicable
(a) (5) ............................... 6.11
(b) ............................... 6.11
............................... 6.08
............................... 11.05
(c) ............................... Not Applicable
Section 311
(a) ............................... 6.12
(b) ............................... 6.12
Section 312
(a) ............................... 7.01(a)(i)
................................ 7.02(a)(i)
(b) ................................ 7.02(a)(ii)
(c) ................................ 7.02(a)(iii)
Section 313
(a) ................................ 7.04
(b) ................................ 7.04
(c) ................................ 7.04
................................ 11.05
(d) ................................ 7.04
Section 314
(a) ................................ 7.03
................................ 11.05
................................ 3.11
(b) (1) ................................ 2.03
(b) (2) ................................ 3.07
(c) (1) ................................ 2.03
................................ 4.10
................................ 11.01
(c) (2) ................................ 2.03
................................ 4.10
................................ 11.01
(c) (3) ................................ 1.01
................................ 2.02
(d) (1) ................................ 1.01
................................ 8.05
(d) (2) ................................ 1.01
................................ Not Applicable
(d) (3) ................................ 1.01
................................ 2.02
(e) ................................ 11.01
Section 315
(a) ................................ 6.01(b)
................................ 6.01(c)(i)
(b) ................................ 6.05
................................ 11.05
(c) ................................ 6.01(a)
(d) ................................ 6.01(c)
(d) (1) ................................ 6.01(b)
(d) (2) ................................ 6.01(c)(ii)
(d) (3) ................................ 6.01(c)(iii)
(e) ................................ 5.16
Section 316
(a) (1) (A)............................. 5.11
................................ 8.01
(a) (1) (B)............................. 5.02
................................ 5.12
(a) (2) ................................ Not Applicable
(b) ................................ 5.07
(c) ................................ Not Applicable
Section 317
(a) (1) ................................ 5.03
(a) (2) ................................ 5.03(d)(iv)
(b) ................................ 3.03
Section 318
(a) ................................ 11.07
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
Definition
1.01. Definitions...................................................3
1.02. Incorporation by Reference of Trust Indenture Act.............3
1.03. Rules of Construction.........................................3
ARTICLE II
Original Issuance of Notes
2.01. Form .........................................................5
2.02. Execution, Authentication and Delivery........................5
2.03. Opinions of Counsel...........................................5
ARTICLE III
Covenants
3.01. Collection of Payments on Mortgage Loan Accounts..............7
3.02. Maintenance of Office or Agency...............................7
3.03. Money for Payments To Be Held in Trust; Paying
Agent; Certificate Paying Agent...........................7
3.04. Existence.....................................................9
3.05. Payment of Principal and Interest; Defaulted Interest.........9
3.06. Protection of Trust Estate...................................11
3.07. Opinions as to Trust Estate..................................12
3.08. [Reserved]...................................................12
3.09. Performance of Obligations; Master Servicing
Agreement.................................................13
3.10. Negative Covenants...........................................14
3.11. Annual Statement as to Compliance............................15
3.12. Recording of Assignments.....................................15
3.13. Representations and Warranties Concerning the
Mortgage Loans............................................15
3.14. Indenture Trustee's Review of Related Documents..............15
3.15. Trust Estate; Related Documents..............................16
3.16. Amendments to Master Servicing Agreement.....................17
3.17. Master Servicer as Agent and Bailee of Indenture
Trustee...................................................18
3.18. Investment Company Act.......................................18
3.19. Issuer May Consolidate, etc., Only on Certain Terms..........18
3.20. Successor or Transferee......................................20
3.21. No Other Business............................................20
3.22. No Borrowing.................................................20
3.23. Guarantees, Loans, Advances and Other Liabilities............20
3.24. Capital Expenditures.........................................20
3.25. [Reserved]...................................................20
3.26. Restricted Payments..........................................20
3.27. Notice of Events of Default..................................21
3.28. Further Instruments and Acts.................................21
3.29. Statements to Noteholders....................................21
3.30. [Reserved] [Grant of the Additional Loans....................21
3.31. Determination of Note Rate and Certificate Rate..............22
3.32. Payments under the Credit Enhancement Instrument.............22
3.33. Replacement Credit Enhancement Instrument....................23
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
4.01. The Notes....................................................23
4.02 Registration of and Limitations on Transfer and
Exchange of Notes; Appointment of Certificate Registrar...24
4.03. Mutilated, Destroyed, Lost or Stolen Notes...................25
4.04. Persons Deemed Owners........................................26
4.05. Cancellation.................................................26
4.06. Book-Entry Notes.............................................26
4.07. Notices to Depository........................................27
4.08. Definitive Notes.............................................27
4.09. Tax Treatment................................................27
4.10. Satisfaction and Discharge of Indenture......................28
4.11. Application of Trust Money...................................29
4.12. Subrogation and Cooperation..................................29
4.13. Repayment of Moneys Held by Paying Agent.....................30
ARTICLE V
Remedies
5.01. Events of Default............................................31
5.02. Acceleration of Maturity, Rescission and Annulment...........31
5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee......................................32
5.04. Remedies; Priorities.........................................34
5.05. Optional Preservation of the Trust Estate....................35
5.06. Limitation of Suits..........................................36
5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest....................................36
5.08. Restoration of Rights and Remedies...........................37
5.09. Rights and Remedies Cumulative...............................37
5.10. Delay or Omission Not a Waiver...............................37
5.11. Control by Noteholders.......................................37
5.12. Waiver of Past Defaults......................................38
5.13. Undertaking for Costs........................................38
5.14. Waiver of Stay or Extension Laws.............................38
5.15. Sale of Trust Estate.........................................38
5.16. Action on Notes..............................................40
5.17. Performance and Enforcement of Certain Obligations...........40
ARTICLE VI
The Indenture Trustee
6.01. Duties of Indenture Trustee..................................42
6.02. Rights of Indenture Trustee..................................43
6.03. Individual Rights of Indenture Trustee.......................43
6.04. Indenture Trustee's Disclaimer...............................43
6.05. Notice of Event of Default...................................44
6.06. Reports by Indenture Trustee to Holders......................44
6.07. Compensation and Indemnity...................................44
6.08. Replacement of Indenture Trustee.............................45
6.09. Successor Indenture Trustee by Merger........................45
6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.........................................46
6.11. Eligibility; Disqualification................................47
6.12 Preferential Collection of Claims Against Issuer.............47
6.13. Representation and Warranty..................................47
6.14 Directions to Indenture Trustee..............................47
6.15. No Consent to Certain Acts of Depositor......................48
ARTICLE VII
Noteholders' Lists and Reports
7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders..................................49
7.02. Preservation of Information; Communications to
Noteholders...............................................49
7.03. Reports by Issuer............................................49
7.04. Reports by Indenture Trustee.................................50
ARTICLE VIII
Accounts, Disbursements and Releases
8.01. Collection of Money..........................................51
8.02. Trust Accounts...............................................51
8.03. Opinion of Counsel...........................................52
8.04. Termination Upon Distribution to Noteholders.................52
8.05. Release of Trust Estate......................................53
8.06. Surrender of Notes Upon Final Payment........................53
ARTICLE IX
Supplemental Indentures
9.01. Supplemental Indentures Without Consent of
Noteholders...............................................54
9.02. Supplemental Indentures With Consent of Noteholders..........55
9.03. Execution of Supplemental Indentures.........................56
9.04. Effect of Supplemental Indenture.............................56
9.05. Conformity with Trust Indenture Act..........................57
9.06. Reference in Notes to Supplemental Indentures................57
ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
11.01. Compliance Certificates and Opinions, etc...................59
11.02 Form of Documents Delivered to Indenture Trustee............60
11.03. Acts of Noteholders.........................................61
11.04. Notices, etc., to Indenture Trustee, Issuer,
[Credit Enhancer] and Rating Agencies....................62
11.05. Notices to Noteholders; Waiver..............................62
11.06. Alternate Payment and Notice Provisions.....................63
11.07. Conflict with Trust Indenture Act...........................63
11.08. Effect of Headings..........................................63
11.09. Successors and Assigns......................................63
11.10. Separability................................................64
11.11. Benefits of Indenture.......................................64
11.12. Legal Holidays..............................................64
11.13. GOVERNING LAW...............................................64
11.14. Counterparts................................................64
11.15. Recording of Indenture......................................64
11.16. Issuer Obligation...........................................64
11.17. No Petition.................................................65
11.18. Inspection..................................................65
11.19. Authority of the Administrator..............................65
Signatures .........................................................65
Acknowledgments ....................................................66
EXHIBITS
Exhibit A- Form of Note
Exhibit B- Mortgage Loan Schedule
<PAGE>
This Indenture, dated as of ______, 199_, between [_____________] HOME
EQUITY LOAN TRUST 199_-_,] a [___________] business trust, as Issuer (the
"Issuer"), and [________________], as Indenture Trustee (the "Indenture
Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Issuer's Home Equity
Loan Asset Backed Notes, Series 199__-__ (the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to whether now existing or hereafter
created (a) the Mortgage Loans and all monies and proceeds due thereon after the
Cut-off Date (exclusive of payments in respect of accrued interest due on a
prior to the Cut-off Date or due in the month of ___________), (b) an assignment
of the Depositor's rights under the Mortgage Loan Purchase Agreement, (c) all
funds on deposit in the Funding Account, including all income from the
investment and reinvestment of funds therein, (d) all funds on deposit from time
to time in the Collection Account allocable to the Mortgage Loans; (e) all funds
on deposit from time to time in the Payment Account and in all proceeds thereof;
[(f) the Policy]; (g) all Additional Balances; (h) all REO properties; and (i)
all present and future claims, demands, causes and choses in action in respect
of any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in respect of, any or all of the foregoing and
all payments on or under, and all proceeds of every kind and nature whatsoever
in the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every kind
(including but not limited to all proceeds of any hazard insurance policy with
respect to any Mortgaged Property), and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively,
the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions hereof and agrees to perform its duties as
Indenture Trustee as required herein.
ARTICLE I
Definition
Section 1.01. DEFINITIONS. For all purposes of this Indenture, except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A hereto which are incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
Section 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
Section 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) term has the meaning assigned to it;
(ii) accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to
its permitted successors and assigns.
<PAGE>
ARTICLE II
Original Issuance of Notes
Section 2.01. FORM. The Notes together with the Indenture Trustee's
certificate of authentication, shall be in substantially the forms set forth in
Exhibit A with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Indenture.
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and
deliver Notes for original issue in an aggregate initial principal amount of
$[______________]. The aggregate principal amount of Notes outstanding at any
time may not exceed $[_____________].
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum initial Security Balances
of $[________] and in integral multiples of $[______] in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
Section 2.03. OPINIONS OF COUNSEL. On the Closing Date, the Indenture
Trustee shall have received: (i) an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee and its counsel, with respect
to securities law matters; (ii) an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee and its counsel, with respect
to the tax status of the arrangement created by the Indenture; and (iii) an
Opinion of Counsel to the Issuer, in form and substance reasonably satisfactory
to the Indenture Trustee and its counsel, with respect to the due authorization,
valid execution and delivery of this Indenture and with respect to its binding
effect on the Issuer.
<PAGE>
ARTICLE III
Covenants
Section 3.01. COLLECTION OF PAYMENTS ON MORTGAGE LOAN ACCOUNTS. The
Indenture Trustee shall establish and maintain with itself a trust account (the
"Payment Account") in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from the Master
Servicer, each remittance received by the Indenture Trustee with respect to the
Mortgage Loans. The Indenture Trustee shall make all payments of principal of
and interest on the Notes, subject to Section 3.03 as provided in Section 3.05
herein from moneys on deposit in the Payment Account.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where, subject to satisfaction of conditions set forth herein, Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee to serve as
its agent for the foregoing purposes. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST; PAYING AGENT;
CERTIFICATE PAYING AGENT. (a) As provided in Section 3.01, all payments of
amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Payment Account pursuant to Section 3.01 shall be
made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent,
and no amounts so withdrawn from the Payment Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; PROVIDED, HOWEVER, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
an Authorized Newspaper published in the English language, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Holder).
The Issuer hereby appoints [__________________] as Certificate Paying
Agent and Residual Ownership Interest Paying Agent to make payments to
Certificateholders and holders of the Residual Ownership Interest on behalf of
the Issuer in accordance with the provisions of the Certificates, Section 3.05
hereof and the provisions of the Trust Agreement, and [_______________] hereby
accepts such appointment and further agrees that it will be bound by the
provisions of the Trust Agreement relating to the Certificate Paying Agent and
Residual Ownership Interest Paying Agent and will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Certificates and the Residual Ownership Interest in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided and as provided in the Trust Agreement and pay such sums to
such Persons as herein and therein provided;
(ii) give the Owner Trustee notice of any default by the Issuer
of which it has actual knowledge in the making of any payment required
to be made with respect to the Certificates;
(iii) at any time during the continuance of any such default,
upon the written request of the Owner Trustee forthwith pay to the
Owner Trustee on behalf of the Issuer all sums so held in trust by
such Certificate Paying Agent;
(iv) immediately resign as Certificate Paying Agent and forthwith
pay to the Owner Trustee on behalf of the Issuer all sums held by it
in trust for the payment of Certificates and the Residual Ownership
Interest if at any time it ceases to meet the standards required to be
met by the Certificate Paying Agent or the Residual Ownership Interest
Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Certificates or the
holders of the Residual Ownership Interest of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; and
(vi) deliver to the Owner Trustee a copy of the report to
Certificateholders and holders of Residual Ownership Interest prepared
with respect to each Payment Date by the Master Servicer pursuant to
Section 4.01 of the Master Servicing Agreement.
Section 3.04. EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of [__________] (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
Section 3.05. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST.
(a) On each Payment Date from amounts on deposit in the Payment Account after
making (x) any deposit to the Funding Account pursuant to Section 8.02(b) and
(y) any deposits to the Payment Account pursuant to Section 8.02(c)(ii) and
Section 8.02(c)(i)(2), the Indenture Trustee, on behalf of the Issuer shall pay
to the Noteholders and the Certificate Paying Agent, on behalf of the Issuer
shall pay to the Certificateholders and the Certificate Paying Agent, on behalf
of the Issuer shall pay to the holders of the Residual Ownership Interest, and
the Indenture Trustee, in its capacity as agent for the Issuer shall pay to
other Persons, the amounts to which they are entitled as set forth below:
(i) The sum of (x) to the Noteholders the sum of (a) one month's
interest at the Note Rate on the Security Balances of Notes
immediately prior to such Payment Date and (b) any previously accrued
and unpaid interest for prior Payment Dates and (y) to the
Certificateholders, the Certificate Distribution Amount for such
Payment Date;
(ii) as principal on the Notes and the Certificates, the
applicable Security Percentage of the Principal Collection
Distribution Amount;
(iii) to the Noteholders and the Certificateholders, as the case
may be, as principal on the Notes and the Certificates, pro rata,
based on the Security Balances from the amount remaining on deposit in
the Payment Account, up to the applicable Security Percentage of
Liquidation Loss Amounts for the related Collection Period;
(iv) to the Noteholders and the Certificateholders, as the case
may be, as principal on the Notes and the Certificates, pro rata,
based on the Security Balances from the amount remaining on deposit in
the Payment Account, up to the applicable Security Percentage of
Carryover Loss Amounts;
(v) [to the Credit Enhancer, in the amount of the premium for the
Credit Enhancement Instrument [and for any Additional Credit
Enhancement Instrument];
(vi) to the Credit Enhancer, to reimburse it for prior draws made
on the Credit Enhancement Instrument [and on any Additional Credit
Enhancement Instrument] (with interest thereon as provided in the
Insurance Agreement);]
(vii) to the Noteholders and the Certificateholders, as the case
may be, as principal on the Notes and the Certificates, pro rata,
based on the Security Balances from Security Interest Collections, up
to the Accelerated Principal Distribution Amount for such Payment Date
(such amount, if any, paid pursuant to this clause (vii) being
referred to herein as the "Accelerated Principal Payment Amount");
(viii) [to the Credit Enhancer, any other amounts owed to the
Credit Enhancer pursuant to the Insurance Agreement;]
(ix) [Reserved];
(x) to reimburse the Administrator for expenditures made on
behalf of the Issuer with respect to the performance of its duties
under the Indenture; and
(xi) any remaining amounts to the holders of the Residual
Ownership Interest as described in Section 5.01 of the Trust
Agreement;
PROVIDED, HOWEVER, [in the event that on a Payment Date a Credit Enhancer
Default shall have occurred and be continuing then the priorities of
distributions described above will be adjusted such that payments of the
Certificate Distribution Amount and all other amounts to be paid in respect of
principal on the Certificates will not be paid until the full amount of interest
and principal in accordance with clauses (i)(x) and (ii) through (iv) above that
are due on the Notes on such Payment Date have been paid and PROVIDED, FURTHER,]
that on the Final Scheduled Payment Date or other final Payment Date, the amount
to be paid pursuant to clause (ii) above shall be equal to the Security Balances
of the Securities immediately prior to such Payment Date.
The amounts paid to Noteholders shall be paid to each Class in
accordance with paragraph (b) below. Interest will accrue on the Notes during an
Interest Period on the basis of the actual number of days in such Interest
Period and a year assumed to consist of 360 days.
Any installment of interest or principal, if any, payable on any Note
or Certificate that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall, if such Holder holds Notes or Certificates other
than the Designated Certificate of an aggregate initial Principal Balance of at
least $[___________] be paid to each Holder of record on the preceding Record
Date, by wire transfer to an account specified in writing by such Holder
reasonably satisfactory to the Indenture Trustee as of the preceding Record Date
or in all other cases or if no such instructions have been delivered to the
Indenture Trustee, by check to such Noteholder mailed to such Holder's address
as it appears in the Note Register the amount required to be distributed to such
Holder on such Payment Date pursuant to such Holder's Securities; PROVIDED,
HOWEVER, that the Indenture Trustee shall not pay to such Holders any amount
required to be withheld from a payment to such Holder by the Code.
(b) The principal of each Note shall be due and payable in full on the
Final Scheduled Payment Date for such Note as provided in the related form of
Note set forth in Exhibit A. All principal payments on each Class of Notes shall
be made to the Noteholders of such Class entitled thereto in accordance with the
Percentage Interests represented by such Notes. Upon notice to the Indenture
Trustee by the Issuer, the Indenture Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Final Scheduled Payment Date or other final Payment Date. Such notice shall
be mailed no later than five Business Days prior to such Final Scheduled Payment
Date or other final Payment Date and shall specify that payment of the principal
amount and any interest due with respect to such Note at the Final Scheduled
Payment Date or other final Payment Date will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for such final payment.
Section 3.06. PROTECTION OF TRUST ESTATE. (a) The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
(b) Except as otherwise provided in the Master Servicing Agreement or
this Indenture, the Indenture Trustee shall not remove any portion of the Trust
Estate that consists of money or is evidenced by an instrument, certificate or
other writing from the jurisdiction in which it was held at the date of the most
recent Opinion of Counsel delivered pursuant to Section 3.06 (or from the
jurisdiction in which it was held as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 3.07(a), if no Opinion of
Counsel has yet been delivered pursuant to Section 3.07(b) unless the Trustee
shall have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.06.
Section 3.07. OPINIONS AS TO TRUST ESTATE. On the Closing Date, the
Issuer shall furnish to the Indenture Trustee, the Owner Trustee and to the
Administrator an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the delivery of the Mortgage
Notes, the recording of the Assignments of Mortgage, the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the lien and security interest of this Indenture and reciting the
details of such action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) On or before December 31 in each calendar year, beginning in 199_,
the Issuer shall furnish to the Indenture Trustee and to the Administrator an
Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording of the Assignments of Mortgage, the recording, filing, re- recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
lien and security interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture until December 31 in the
following calendar year.
Section 3.08. [Reserved]
Section 3.09. PERFORMANCE OF OBLIGATIONS; MASTER SERVICING AGREEMENT.
The Issuer will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document, including without limitation the
Master Servicing Agreement or any provision thereof without the consent of the
Indenture Trustee or the Holders of at least a majority of the Security Balances
of the Notes, the Master Servicer [and the Credit Enhancer]. Upon the taking of
any such action with respect to any Basic Document the Issuer shall give written
notice thereof to the Rating Agencies.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Administrator to assist the Issuer in performing
its duties under this Indenture.
(c) The Issuer will not take any action or permit any action to be
taken by others which would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating to
the Mortgage Loans or any such instrument, except such actions as the Master
Servicer is expressly permitted to take in the Master Servicing Agreement.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Servicing Termination, the Issuer shall promptly notify the Indenture Trustee
thereof, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such Event of Servicing Termination. If such Event of
Servicing Termination arises from the failure of the Master Servicer to perform
any of its duties or obligations under the Master Servicing Agreement with
respect to the Mortgage Loans, the Issuer may remedy such failure, provided that
if such Event of Servicing Termination arises from the failure by the Master
Servicer to comply with requirements imposed upon it under Section 3.04 of the
Master Servicing Agreement with respect to hazard insurance for the Mortgaged
Properties securing the Mortgage Loans, the Issuer shall promptly, as the case
may be, pay such premiums or obtain substitute insurance coverage meeting the
requirements of said Section 3.04. So long as any such Event of Servicing
Termination shall be continuing, the Indenture Trustee may exercise its remedies
set forth in Section 7.01 of the Master Servicing Agreement. Unless granted or
permitted by [the Credit Enhancer or] the Holders of Securities to the extent
provided above, the Issuer may not waive any such Event of Servicing Termination
or terminate the rights and powers of the Master Servicer under the Master
Servicing Agreement.
(e) Upon any termination of the Master Servicer's rights and powers
pursuant to Section 7.01 of the Master Servicing Agreement, all rights, powers,
duties and responsibilities of the Master Servicer with respect to the Mortgage
Loans shall vest in and be assumed by the Indenture Trustee, and the Indenture
Trustee shall be the successor in all respect to the Master Servicer in its
capacity as servicer with respect to the Mortgage Loans under the Master
Servicing Agreement. Upon any such termination, the Indenture Trustee is hereby
authorized, and the Indenture Trustee hereby agrees, to mail a notice to each
Mortgagor directing each such Mortgagor to mail all payments in respect of the
related Mortgage Loan to the Indenture Trustee or its agent at the address
specified in such notice. The Indenture Trustee may resign as the Master
Servicer by giving written notice of such resignation to the Issuer [and the
Credit Enhancer] and in such event will be released from such duties and
obligations, such release to be effective on the date a new servicer enters into
a servicing agreement with the Issuer as provided below. Upon delivery of any
such notice to the Issuer, the Issuer shall obtain a new servicer, satisfactory
in all respects to the Indenture Trustee [and the Credit Enhancer], which shall
enter into a servicing agreement with the Issuer and the Indenture Trustee,
[such agreement to be not less favorable to the Credit Enhancer in its
reasonable judgment, or the Noteholders if a Credit Enhancer Default shall have
occurred and be continuing,] than the Master Servicing Agreement in any material
respect. If, within 30 days after the delivery of the notice referred to above,
the Issuer shall not have obtained such new servicer, the Indenture Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
successor servicer [acceptable to the Credit Enhancer] to service the Mortgage
Loans. In connection with any such appointment, the Indenture Trustee may make
such arrangements for the compensation of such successor as it and such
successor shall agree, and the Issuer shall enter into an agreement with such
successor for the servicing of the Mortgage Loans, such agreement to be
substantially similar to the Master Servicing Agreement [or otherwise acceptable
to the Credit Enhancer]; PROVIDED that any such compensation of the successor
servicer [unless otherwise agreed to by the Credit Enhancer,] shall not be in
excess of the Servicing Fee payable to the Master Servicer under the Master
Servicing Agreement. If the Indenture Trustee shall succeed to the Master
Servicer's duties as servicer of the Mortgage Loans as provided herein, it shall
do so in its individual capacity and not in its capacity as Indenture Trustee.
(f) The Issuer shall at all times retain an Administrator [(approved
by the Credit Enhancer under the Administration Agreement)] and may enter into
contracts with other Persons for the performance of the Issuer's obligations
hereunder, and performance of such obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.
Section 3.10. NEGATIVE COVENANTS. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate, unless
directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof or permit the lien of this Indenture not to
constitute a valid first priority security interest in the Trust
Estate.
Section 3.11. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Indenture Trustee, within 120 days after the end of each fiscal
year of the Issuer (commencing with the fiscal year 199_), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.12. RECORDING OF ASSIGNMENTS. The Issuer shall exercise its
right under the Mortgage Loan Purchase Agreement with respect to the obligation
of the Seller to submit or cause to be submitted for recording all Assignments
of Mortgages on or prior to _________, 199_ with respect to the Initial Loans
and within [__] days following the related Deposit Date with respect to any
Additional Loans.
Section 3.13. REPRESENTATIONS AND WARRANTIES CONCERNING THE MORTGAGE
LOANS. The Issuer has pledged to the Indenture Trustee all of its right under
the Mortgage Loan Purchase Agreement and the Indenture Trustee has the benefit
of the representations and warranties made by the Seller in Section [_____]
thereof, Section [____] thereof and Section [__] thereof concerning the Mortgage
Loans and the right to enforce any remedy against the Seller provided in such
Section [_____] or Section [_____] to the same extent as though such
representations and warranties were made directly to the Indenture Trustee.
Section 3.14. INDENTURE TRUSTEE'S REVIEW OF RELATED DOCUMENTS. (a) The
Indenture Trustee agrees, for the benefit of the holders of the Notes, to
review, or the related Custodian shall review, unless the Indenture Trustee or
such Custodian made such review prior to the Closing Date, on or prior to
________, 199_ the Related Documents delivered to it on or prior to the Closing
Date and within 90 days of the related Deposit Date, the Related Documents
delivered to it in connection with any Additional Loan, in each case in
connection with the Grant of the Mortgage Loan listed on the Schedule of
Mortgage Loans as security for the Notes. Such review shall be limited to a
determination that all documents referred to in the definition of the term
Related Documents have been executed and are appropriately endorsed in the
manner called for in the Mortgage Loan Purchase Agreement and that the Related
Documents have been delivered with respect to each such Mortgage Loan (other
than the documents related to (i) any Mortgage Loan so listed which has been
subject to a Prepayment in full and termination of related Mortgage Loan, the
proceeds of which have been deposited in the Collection Account in lieu of
delivery of the applicable Related Documents, (ii) any Mortgage Loan with
respect to which the related Mortgaged Property was foreclosed, repossessed or
otherwise converted subsequent to the Cut-off Date and prior to the Closing Date
or with respect to which foreclosure proceedings have been commenced and for
which the related Related Documents are required in connection with the
prosecution of such foreclosure proceedings and for which the Issuer has
delivered a trust receipt called for by Section 3.15(c) and (iii) any Mortgage
Loan as to which the original Assignment of Mortgage has been submitted for
recording), that all such documents have been executed, and that all such
documents relate to the Mortgage Loans listed on the Schedule of Mortgage Loans.
In performing such review, the Trustee may rely upon the purported genuineness
and due execution of any such document and on the purported genuineness of any
signature thereon.
(b) If any Related Document is defective in any material respect which
may materially and adversely affect the value of the related Mortgage Loan, the
interest of the Indenture Trustee or the Noteholders in such Mortgage Loan, or
if any document required to be delivered to the Indenture Trustee has not been
delivered, the Indenture Trustee or the related Custodian on behalf of the
Indenture Trustee shall notify the Issuer, the Seller, [the Credit Enhancer] and
the Master Servicer immediately after obtaining knowledge thereof and the
Indenture Trustee, as assignee of the Issuer's rights under the Mortgage Loan
Purchase Agreement, shall exercise its remedies in respect of any such defect
against the Seller as provided in the Mortgage Loan Purchase Agreement.
Section 3.15. TRUST ESTATE; RELATED DOCUMENTS. (a) When required by
the provisions of this Indenture, the Indenture Trustee shall execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
which are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided in this
Article III shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(b) In order to facilitate the servicing of the Mortgage Loans, the
Master Servicer is hereby authorized in the name and on behalf of the Indenture
Trustee and the Issuer, to execute assumption agreements, substitution
agreements, and instruments of satisfaction or cancellation or of partial or
full release or discharge, or any other document contemplated by the Master
Servicing Agreement and other comparable instruments with respect to the
Mortgage Loans and with respect to the Mortgaged Properties subject to the
Mortgages (and the Indenture Trustee and the Owner Trustee shall promptly
execute any such documents on request of the Master Servicer), subject to the
obligations of the Master Servicer under the Master Servicing Agreement. If from
time to time the Master Servicer shall deliver to the Indenture Trustee or the
related Custodian copies of any written assurance, assumption agreement or
substitution agreement or other similar agreement pursuant to Section 3.05 of
the Master Servicing Agreement, the Indenture Trustee or the related Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original executed document if the original executed copy has
been submitted for recording and has not yet been returned) and, if so, shall
file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Indenture Trustee or the related Custodian to the Master Servicer, with a
direction to the Master Servicer to forward the correct documentation.
(c) Upon Issuer Request accompanied by an Officers' Certificate of the
Master Servicer pursuant to Section 3.07 of the Master Servicing Agreement to
the effect that a Mortgage Loan has been the subject of a final payment or a
prepayment in full and the related Mortgage Loan has been terminated or that
substantially all Liquidation Proceeds which have been determined by the Master
Servicer in its reasonable judgment to be finally recoverable have been
recovered, and upon deposit to the Collection Account of such final monthly
payment, prepayment in full together with accrued and unpaid interest to the
date of such payment with respect to such Mortgage Loan or, if applicable,
Liquidation Proceeds, the Indenture Trustee and the Issuer shall promptly
release the Related Documents to the Master Servicer upon the order of the
Issuer, along with such documents as the Master Servicer or the Mortgagor may
request as contemplated by the Master Servicing Agreement to evidence
satisfaction and discharge of such Mortgage Loan. If from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Master
Servicer requests the Indenture Trustee or the related Custodian to release the
Related Documents and delivers to the Indenture Trustee or the related Custodian
a trust receipt reasonably satisfactory to the Indenture Trustee or the related
Custodian and signed by a Responsible Officer of the Master Servicer, the Issuer
and the Indenture Trustee or the related Custodian shall release the Related
Documents to the Master Servicer. If such Mortgage Loans shall be liquidated and
the Indenture Trustee or the related Custodian receives a certificate from the
Master Servicer as provided above, then, upon request of the Issuer, the
Indenture Trustee or the related Custodian shall release the trust receipt to
the Master Servicer upon the order of the Issuer.
(d) The Indenture Trustee shall, at such time as there are no Notes
Outstanding [and no amounts due to the Credit Enhancer], release all of the
Trust Estate to the Issuer (other than any cash held for the payment of the
Notes pursuant to Section 3.03 or 4.11), subject, however, to the rights of the
Indenture Trustee under Section 6.07.
Section 3.16. AMENDMENTS TO MASTER SERVICING AGREEMENT. The Indenture
Trustee may enter into any amendment or supplement to the Master Servicing
Agreement only in accordance with Section 8.01 of the Master Servicing
Agreement. The Indenture Trustee may, in its discretion, decline to enter into
or consent to any such supplement or amendment if its own rights, duties or
immunities shall be adversely affected.
Section 3.17. MASTER SERVICER AS AGENT AND BAILEE OF INDENTURE
TRUSTEE. Solely for purposes of perfection under Section 9-305 of the Uniform
Commercial Code or other similar applicable law, rule or regulation of the state
in which such property is held by the Master Servicer, the Indenture Trustee
hereby acknowledges that the Master Servicer is acting as agent and bailee of
the Indenture Trustee in holding amounts on deposit in the Collection Account
pursuant to Section 3.02 of the Master Servicing Agreement, as well as its agent
and bailee in holding any Related Documents released to the Master Servicer
pursuant to Section 3.15(c), and any other items constituting a part of the
Trust Estate which from time to time come into the possession of the Master
Servicer. It is intended that, by the Master Servicer's acceptance of such
agency pursuant to Section 3.02 of the Master Servicing Agreement, the Trustee,
as a secured party, will be deemed to have possession of such Related Documents,
such moneys and such other items for purposes of Section 9-305 of the Uniform
Commercial Code of the state in which such property is held by the Master
Servicer.
Section 3.18. INVESTMENT COMPANY ACT. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
PROVIDED, HOWEVER, that the Issuer shall be in compliance with this Section 3.18
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
Section 3.19. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form reasonably satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and
Certificates and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed
or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the Rating Agencies shall have notified the Issuer that
such transaction shall not cause the rating of the Notes or the
Certificates to be reduced, suspended or withdrawn or to be considered
by either Rating Agency to be below investment grade [without taking
into account the Credit Enhancement Instrument];
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any state, expressly assumes, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual payment of
the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided
herein, expressly agrees by means of such supplemental indenture that
all right, title and interest so conveyed or transferred shall be
subject and subordinate to the rights of Holders of the Notes, unless
otherwise provided in such supplemental indenture, expressly agrees to
indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes and expressly agrees by means of such supplemental
indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Commission (and any
other appropriate Person) required by the Exchange Act in connection
with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agencies shall have notified the Issuer that
such transaction shall not cause the rating of the Notes or the
Certificates to be reduced, suspended or withdrawn;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.20. SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.19(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.19(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee that the Issuer is to be so released.
Section 3.21. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Mortgage Loans in the manner contemplated by this Indenture and the Basic
Documents and all activities incidental thereto.
Section 3.22. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.23. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by this Indenture, the Issuer shall not make any loan or
advance or credit to, or guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any obligation
or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
Section 3.24. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.25. [Reserved]
Section 3.26. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; PROVIDED, HOWEVER, that
the Issuer may make, or cause to be made, (w) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under the Trust Agreement, (x) payment to the Master
Servicer pursuant to the terms of the Master Servicing Agreement and (y)
payments to the Indenture Trustee pursuant to Section 1(a)(ii) of the
Administration Agreement and (z) make distributions to the holders of the
Residual Ownership Interest as contemplated by the Trust Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Basic
Documents.
Section 3.27. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee, [the Credit Enhancer] and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.28. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
Section 3.29. STATEMENTS TO NOTEHOLDERS. The Indenture Trustee and the
Certificate Registrar shall forward by mail to each Noteholder and
Certificateholder, respectively, the Statement delivered to it pursuant to
Section 4.01 of the Master Servicing Agreement.
Section 3.30. [Reserved] [GRANT OF THE ADDITIONAL LOANS. (a) In
consideration of the delivery on each Deposit Date to or upon the order of the
Issuer of all or a portion of the amount in respect of Security Principal
Collections on deposit in the Funding Account, the Issuer shall, to the extent
of the availability thereof, on such Deposit Date during the Funding Period
Grant to the Indenture Trustee all of its right, title and interest in the
Additional Loans and simultaneously with the Grant of the Additional Loans the
Issuer will deliver the related Related Documents to the Indenture Trustee or
the related Custodian.
(i) The obligation of the Indenture Trustee to accept the Grant of the
Additional Loans and the other property and rights related thereto described in
paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to each Deposit Date:
(i) the Indenture Trustee shall not have received written notice
from any Rating Agency [or the Credit Enhancer] to the effect that
such transfer of Additional Loans would adversely affect the then
current rating of the Notes or cause the rating assigned to the
Securities to be below investment grade [without taking into account
the Credit Enhancement Instrument];
(ii) the Indenture Trustee shall have received a revised Mortgage
Loan Schedule, listing the Additional Loans;
(iii) the Master Servicer shall confirm to the Indenture Trustee
that it has deposited in the Collection Account all Principal
Collections and Interest Collections in respect of such Additional
Loans on or after the related Deposit Date for the Additional Loans;
(iv) the Indenture Trustee shall have received a duly completed
and executed Transfer Certificate in the form of Exhibit 1 to the
Mortgage Loan Purchase Agreement;
(v) the Seller at its expense and the Issuer at its expense, as
appropriate, shall have provided the Rating Agencies [and the Credit
Enhancer] with an opinion of counsel relating to the sale of the
Additional Loans to the Issuer and the Grant of the Additional Loans
to the Indenture Trustee which opinion shall be in the form of Exhibit
2 to the Mortgage Loan Purchase Agreement; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel confirming the
satisfaction of each condition precedent specified in this paragraph
(b).
(i) The obligation of the Indenture Trustee to accept the Grant of an
Additional Loan on the related Deposit Date is subject to each Additional Loan
and the Additional Loans in the aggregate, as the case may be, satisfying the
conditions set forth in the Mortgage Loan Purchase Agreement.]
[Section 3.31. DETERMINATION OF NOTE RATE AND CERTIFICATE RATE. (a) On
the second LIBOR Business Day immediately preceding (i) the Closing Date in the
case of the first Interest Period and (ii) the first day of each succeeding
Interest Period, the Indenture Trustee shall determine LIBOR and the Note Rate
and the Certificate Rate for such Interest Period and shall inform the Issuer,
the Master Servicer and the Depositor at their respective facsimile numbers
given to the Indenture Trustee in writing thereof.]
[Section 3.32. PAYMENTS UNDER THE CREDIT ENHANCEMENT INSTRUMENT. (a)
On any Payment Date, other than a Dissolution Payment Date, the Indenture
Trustee on behalf of the Noteholders, and in its capacity as Certificate Paying
Agent on behalf of the Certificateholders shall make a draw on the Credit
Enhancement Instrument in an amount if any equal to the sum of (x) the amount by
which the sum of interest accrued at the Note Rate on the Security Balance of
the Notes plus the Certificate Distribution Amount exceeds the amount on deposit
in the Payment Account available to be distributed therefor on such Payment Date
and (y) the Guaranteed Principal Payment Amount (the "Credit Enhancement Draw
Amount").
(b) The Indenture Trustee shall submit, if a Credit Enhancement Draw
Amount is specified in any Statement to Holders prepared by the Master Servicer
pursuant to Section 4.01 of the Master Servicing Agreement, the Notice for
Payment (as defined in the Credit Enhancement Instrument) in the amount of the
Credit Enhancement Draw Amount to the Credit Enhancer no later than 2:00 P.M.,
New York City time, on the second Business Day prior to the applicable Payment
Date. Upon receipt of such Credit Enhancement Draw Amount in accordance with the
terms of the Credit Enhancement Instrument, the Indenture Trustee shall deposit
such Credit Enhancement Draw Amount in the Payment Account for distribution to
Holders pursuant to Section 3.05.
In addition, a draw may be made under the Credit Enhancement
Instrument in respect of any Avoided Payment (as defined in and pursuant to the
terms and conditions of the Credit Enhancement Instrument) and the Indenture
Trustee shall submit a Notice for Payment with respect thereto together with the
other documents required to be delivered to the Credit Enhancer pursuant to the
Credit Enhancement Instrument in connection with a draw in respect of any
Avoided Payment.
(c) In the event that any Additional Credit Enhancement Instruments
are issued pursuant to Section 4.01 and Section 2.02(B) of the Insurance
Agreement, the Indenture Trustee shall be authorized to make draws thereon
subject to the terms and conditions therein.]
[Section 3.33. REPLACEMENT CREDIT ENHANCEMENT INSTRUMENT. In the event
of a Credit Enhancer Default or if the claims paying ability rating of the
Credit Enhancer is downgraded and such downgrade results in a downgrading of the
then current rating of the Securities (in each case, a "Replacement Event"), the
Issuer, at its expense, in accordance with and upon satisfaction of the
conditions set forth in the Credit Enhancement Instrument, including, without
limitation, payment in full of all amounts owed to the Credit Enhancer, may, but
shall not be required to, substitute a new surety bond or surety bonds for the
existing Credit Enhancement Instrument or may arrange for any other form of
credit enhancement; PROVIDED, HOWEVER, that in each case the Notes and the
Certificates shall be rated no lower than the rating assigned by each Rating
Agency to the Notes and the Certificates immediately prior to such Replacement
Event and the timing and mechanism for drawing on such new credit enhancement
shall be reasonably acceptable to the Indenture Trustee and provided further
that the premiums under the proposed credit enhancement shall not exceed such
premiums under the existing Credit Enhancement Instrument. It shall be a
condition to substitution of any new credit enhancement that there be delivered
to the Indenture Trustee (i) an Opinion of Counsel, acceptable in form to the
Indenture Trustee, from counsel to the provider of such new credit enhancement
with respect to the enforceability thereof and such other matters as the
Indenture Trustee may require and (ii) an Opinion of Counsel to the effect that
such substitution would not (a) adversely affect in any material respect the tax
status of the Notes and the Certificates or (b) cause the Issuer to be subject
to a tax at the entity level or to be classified as a taxable mortgage pool
within the meaning of Section 7701(i) of the Code. Upon receipt of the items
referred to above and payment of all amounts owing to the Credit Enhancer and
the taking of physical possession of the new credit enhancement, the Indenture
Trustee shall, within five Business Days following receipt of such items and
such taking of physical possession, deliver the replaced Credit Enhancement
Instrument to the Credit Enhancer. In the event of any such replacement the
Issuer shall give written notice thereof to the Rating Agencies.]
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. THE NOTES. (a) The Notes shall be registered in the name
of a nominee designated by the Depository. Beneficial Owners will hold interests
in the Notes through the book-entry facilities of the Depository in minimum
initial Principal Balances of $[________] and integral multiples of $[_________]
in excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Holders of Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial Owners. Requests and directions from, and
votes of, the Depository as Holder of the Notes shall not be deemed inconsistent
if they are made with respect to different Beneficial Owners. The Indenture
Trustee may establish a reasonable record date in connection with solicitations
of consents from or voting by Noteholders and give notice to the Depository of
such record date. Without the consent of the Issuer and the Indenture Trustee,
no Note may be transferred by the Depository except to a successor Depository
that agrees to hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the
Issuer by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Note Registrar and delivered by the Indenture
Trustee to or upon the order of the Issuer.
Section 4.02 REGISTRATION OF AND LIMITATIONS ON TRANSFER AND EXCHANGE
OF NOTES; APPOINTMENT OF CERTIFICATE REGISTRAR. The Note Registrar shall cause
to be kept at its Corporate Trust Office a Note Register in which, subject to
such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Indenture Trustee shall execute and the Note Registrar shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes in authorized initial Security Balances
evidencing the same aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may
be exchanged for other Notes of like tenor or, in each case in authorized
initial Principal Balances evidencing the same aggregate Percentage Interests
upon surrender of the Notes to be exchanged at the Corporate Trust Office of the
Note Registrar. Whenever any Notes are so surrendered for exchange, the
Indenture Trustee shall execute and the Note Registrar shall authenticate and
deliver the Notes which the Noteholder making the exchange is entitled to
receive. Each Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Note Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Note Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing. Notes delivered upon any such transfer or exchange will
evidence the same obligations, and will be entitled to the same rights and
privileges, as the Notes surrendered.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall
be cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
The Issuer hereby appoints [___________________] as Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Residual Ownership Interests and of transfers and exchanges
thereof pursuant to Section 3.05 of the Trust Agreement. [___________________]
hereby accepts such appointment.
Section 4.03. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, instead
of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 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 Notes.
Section 4.04. PERSONS DEEMED OWNERS. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Request that they be destroyed or returned to it; PROVIDED, that such Issuer
Request is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
Section 4.06. BOOK-ENTRY NOTES. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository,
by, or on behalf of, the Issuer. Such Notes shall initially be registered on the
Note Register in the name of Cede & Co., the nominee of the initial Depository,
and no Beneficial Owner will receive a definitive Note representing such
Beneficial Owner's interest in such Note, except as provided in Section 4.08.
Unless and until definitive, fully registered Notes (the "Definitive Notes")
have been issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Depository for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole holder of the Notes, and shall have no obligation to the Owners
of Notes;
(iii) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions
of this Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Depository and shall be limited to those established by
law and agreements between such Owners of Notes and the Depository
and/or the Depository Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes are issued pursuant to
Section 4.08, the initial Depository will make book-entry transfers
among the Depository Participants and receive and transmit payments of
principal of and interest on the Notes to such Depository
Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Security Balances of the
Notes, the Depository shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Beneficial Owners and/or Depository Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Indenture Trustee.
Section 4.07. NOTICES TO DEPOSITORY. Whenever a notice or other
communication to the Note Holders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. DEFINITIVE NOTES. If (i) the Administrator advises the
Indenture Trustee in writing that the Depository is no longer willing or able to
properly discharge its responsibilities with respect to the Notes and the
Administrator is unable to locate a qualified successor, (ii) the Administrator
at its option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, Owners of Notes representing beneficial
interests aggregating at least a majority of the Security Balances of the Notes
advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Beneficial
Owners, then the Depository shall notify all Beneficial Owners and the Indenture
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Beneficial Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book- Entry Notes by
the Depository, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Depository. None of the Issuer, the Note
Registrar or the Indenture Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes, the
Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders.
Section 4.09. TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and each
Beneficial Owner by its acceptance of an interest in the applicable Book-Entry
Note), agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
Section 4.10. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.10,
3.19, 3.21 and 3.22, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.11) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(i) either
(i) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
i) have become due and payable, or
ii) will become due and payable at the Final Scheduled
Payment Date within one year,
and the Issuer, in the case of a. or b. above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
and Certificates then outstanding not theretofore delivered to the
Indenture Trustee for cancellation when due on the Final Scheduled
Payment Date;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee [and the
Credit Enhancer] an Officer's Certificate, an Opinion of Counsel and
(if required by the TIA or the Indenture Trustee) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.01 and, subject to Section
11.01 each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been
complied with and, if the Opinion of Counsel relates to a deposit made
in connection with Section 4.10(A)(2)b. above, such opinion shall
further be to the effect that such deposit will not have any material
adverse tax consequences to the Issuer, any Noteholders or any
Certificateholders.
Section 4.11. APPLICATION OF TRUST MONEY. All moneys deposited with
the Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of Securities, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or required by law.
[Section 4.12. SUBROGATION AND COOPERATION. (a) The Issuer and the
Indenture Trustee acknowledge that (i) to the extent the Credit Enhancer makes
payments under the Credit Enhancement Instrument on account of principal of or
interest on the Notes or the Certificates, the Credit Enhancer will be fully
subrogated to the rights of such Holders to receive such principal and interest
from the Issuer, and (ii) the Credit Enhancer shall be paid such principal and
interest but only from the sources and in the manner provided herein and in the
Insurance Agreement for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interest under this Indenture or the Insurance
Agreement without limiting the rights of the Noteholders as otherwise set forth
in the Indenture, including, without limitation, upon the occurrence and
continuance of a default under the Insurance Agreement, a request to take any
one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture in respect to Notes and
all amounts payable under the Insurance Agreement enforce any judgment
obtained and collect from the Issuer moneys adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private Sales called and
conducted in any manner permitted by law;
(iii) file or record all Assignments that have not previously
been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Credit Enhancer hereunder.]
Section 4.13. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Administrator other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.05 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
<PAGE>
ARTICLE V
Remedies
Section 5.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, shall have the meaning provided in Appendix A[; PROVIDED, HOWEVER, that
no Event of Default will occur under clause (i) or clause (ii) of the definition
of "Event of Default" if the Issuer fails to make payments of principal of and
interest on the Notes so long as the Credit Enhancer makes payments sufficient
therefore under the Credit Enhancement Instrument].
The Issuer shall deliver to the Indenture Trustee [and the Credit
Enhancer], within five days after the occurrence of an Event of Default, written
notice in the form of an Officer's Certificate of any event which with the
giving of notice and the lapse of time would become an Event of Default under
clause (iii) of the definition of "Event of Default", its status and what action
the Issuer is taking or proposes to take with respect thereto.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default should occur and be continuing, then and in every such case
the Indenture Trustee or the Holders of Notes representing not less than a
majority of the Security Balances of all Notes may declare the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Class of Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately due
and payable. [Unless the prior written consent of the Credit Enhancer shall have
been obtained by the Indenture Trustee, the Payment Date upon which such
accelerated payment is due and payable shall not be a Payment Date under the
Credit Enhancement Instrument and the Indenture Trustee shall not be authorized
under Section 3.32 to make a draw therefor.]
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Security Balances of all Notes,
by written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(i) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon
the Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(iii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section
5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, the Issuer will, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Holders of Notes [and of the Credit
Enhancer], the whole amount then due and payable on the Notes for principal and
interest, with interest upon the overdue principal, and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel.
(i) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 11.17 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor the Notes, wherever
situated, the moneys adjudged or decreed to be payable.
(ii) If an Event of Default occurs and is continuing, the Indenture
Trustee subject to the provisions of Section 11.17 hereof may, as more
particularly provided in Section 5.04, in its discretion, proceed to protect and
enforce its rights and the rights of the Noteholders [and the Credit Enhancer],
by such appropriate Proceedings as the Indenture Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(iii) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including any
claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(iv) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(v) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(vi) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default shall
have occurred and be continuing, the Indenture Trustee subject to the provisions
of Section 11.17 hereof may do one or more of the following (subject to Section
5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, and all amounts payable under the Insurance
Agreement, enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee, the Holders of the Notes [and
the Credit Enhancer]; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, other than a default
in the payment of any principal or interest on the Notes for thirty (30) days or
more, unless the Holders of 100% of the Security Balances of the Securities [and
the Credit Enhancer], which consent will not be unreasonably withheld consent
thereto, the proceeds of such sale or liquidation distributable to Holders are
sufficient to discharge in full all amounts then due and unpaid upon the
Securities for principal and interest [and to reimburse the Credit Enhancer for
any amounts drawn under the Credit Enhancement Instrument and any other amounts
due the Credit Enhancer under the Insurance Agreement] or the Indenture Trustee
determines that the Mortgage Loans will not continue to provide sufficient funds
for the payment of principal of and interest on either the Notes or the
Certificates, as they would have become due if the Notes had not been declared
due and payable, and the Indenture Trustee obtains the consent of [the Credit
Enhancer, which consent will not be unreasonably withheld, and of] the Holders
of not less than 66-2/3% of the Security Balances of the Securities. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose. Notwithstanding the foregoing, so long as an
Event of Servicer Termination has not occurred, any Sale of the Trust Estate
shall be made subject to the continued Servicing of the Mortgage Loans by the
Master Servicer as provided in the Master Servicing Agreement.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07;
SECOND: to each Class of Noteholders for amounts due and unpaid
on the related Class of Notes for interest and to each Noteholder
of such Class in each case, ratably, without preference or
priority of any kind, according to the amounts due and payable on
such Class of Notes for interest from amounts available in the
Trust Estate for such Noteholders;
THIRD: to Holders of each Class of Notes for amounts due and
unpaid on the related Class of Notes for principal, from amounts
available in the Trust Estate for such Noteholders, and to each
Noteholder of such Class in each case ratably, without preference
or priority of any kind, according to the amounts due and payable
on such Class of Notes for principal, until the Security Balances
of each Class of Notes is reduced to zero;
FOURTH: to the Issuer for amounts required to be distributed to
the Certificateholders in respect of interest and principal
pursuant to the Trust Agreement;
FIFTH: [Reserved] [To the payment of all amounts due and owing to
the Credit Enhancer under the Insurance Agreement];
SIXTH: to the Issuer for amounts due under Article VIII of the
Trust Agreement; and
SEVENTH: to the payment of the remainder, if any to the Issuer or
any other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
Section 5.05. OPTIONAL PRESERVATION OF THE TRUST ESTATE. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Securities and other obligations of the Issuer [including
payment to the Credit Enhancer], and the Indenture Trustee shall take such
desire into account when determining whether or not to maintain possession of
the Trust Estate. In determining whether to maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. LIMITATION OF SUITS. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless and subject to the provisions of Section 11.17
hereof:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Security Balances of
the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Security Balances of the Notes.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Security Balances of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
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. 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 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as
the case may be.
Section 5.11. CONTROL BY NOTEHOLDERS. The Holders of a majority of the
Security Balances of Notes shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; PROVIDED that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall
be by Holders of Notes representing not less than 100% of the Security
Balances of Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee
by Holders of Notes representing less than 100% of the Security
Balances of Notes to sell or liquidate the Trust Estate shall be of no
force and effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.
Section 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Security Balances of the
Notes may waive any past Event of Default and its consequences except an Event
of Default with respect to payment of principal of or interest on any of the
Notes or in respect of a covenant or provision hereof which cannot be modified
or amended without the consent of the Holder of each Note [or the waiver of
which would materially and adversely affect the interests of the Credit Enhancer
or modify its obligation under the Credit Enhancement Instrument]. In the case
of any such waiver, the Issuer, the Indenture Trustee and the Holders of the
Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Security
Balances of the Notes or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture.
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15. SALE OF TRUST ESTATE. (a) The power to effect any sale
or other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 is expressly subject to the provisions of Section 5.05 and this
Section 5.15. The power to effect any such Sale shall not be exhausted by any
one or more Sales as to any portion of the Trust Estate remaining unsold, but
shall continue unimpaired until the entire Trust Estate shall have been sold or
all amounts payable on the Notes and under this Indenture and under the
Insurance Agreement shall have been paid. The Indenture Trustee may from time to
time postpone any public Sale by public announcement made at the time and place
of such Sale. The Indenture Trustee hereby expressly waives its right to any
amount fixed by law as compensation for any Sale.
(i) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless
(i) the Holders of all Securities and the Credit Enhancer consent
to or direct the Indenture Trustee to make, such Sale, or
(ii) the proceeds of such Sale would be not less than the entire
amount which would be payable to the Noteholders under the Notes,
Certificateholders under the Certificates [and the Credit Enhancer in respect of
amounts drawn under the Credit Enhancement Instrument and any other amounts due
the Credit Enhancer under the Insurance Agreement], in full payment thereof in
accordance with Section 5.02, on the Payment Date next succeeding the date of
such Sale, or
(iii) The Indenture Trustee determines, in its sole discretion,
that the conditions for retention of the Trust Estate set forth in Section 5.05
cannot be satisfied (in making any such determination, the Indenture Trustee may
rely upon an opinion of an Independent investment banking firm obtained and
delivered as provided in Section 5.05, [and the Credit Enhancer consents to such
Sale, which consent will not be unreasonably withheld] and the Holders
representing at least 66-2/3% of the Security Balances of the Securities consent
to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(ii) Unless the Holders [and the Credit Enhancer] have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (2) of subsection (b) of this Section 5.15 has not
been established by the Indenture Trustee and no Person bids an amount equal to
or greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(iii) In connection with a Sale of all or any portion of the Trust
Estate
(i) any Holder or Holders of Notes may bid for and [with the
consent of the Credit Enhancer] purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of cash
up to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Notes and Holders of Certificates
[and amounts owing to the Credit Enhancer] as a result of such Sale in
accordance with Section 5.04(b) on the Payment Date next succeeding the date of
such Sale and (B) the expenses of the Sale and of any Proceedings in connection
therewith which are reimbursable to it, without being required to produce the
Notes in order to complete any such Sale or in order for the net Sale price to
be credited against such Notes, and any property so acquired by the Indenture
Trustee shall be held and dealt with by it in accordance with the provisions of
this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of
the Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
Section 5.16. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller and the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Mortgage Loan Purchase
Agreement and the Master Servicing Agreement, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Mortgage Loan Purchase Agreement and the Master
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Mortgage
Loan Purchase Agreement and the Master Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee [subject to the rights of the Credit Enhancer under the Master
Servicing Agreement] may, and at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3% of the Security Balances of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Seller
or the Master Servicer under or in connection with the Mortgage Loan Purchase
Agreement and the Master Servicing Agreement, including the right or power to
take any action to compel or secure performance or observance by the Seller or
the Master Servicer, as the case may be, of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Mortgage Loan Purchase Agreement and the Master
Servicing Agreement, as the case may be, and any right of the Issuer to take
such action shall not be suspended.
<PAGE>
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. DUTIES OF INDENTURE TRUSTEE. If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations
shall be read into this Indenture against the Indenture
Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to
the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and
opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it (A) pursuant to Section 5.11 [or (B) from
the Credit Enhancer, which it is entitled to give under any of the
Basic Documents].
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
6.01.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
Section 6.02. RIGHTS OF INDENTURE TRUSTEE. The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Indenture Trustee's conduct does
not constitute willful misconduct, [______] negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
Section 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Administrator, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
Section 6.05. NOTICE OF EVENT OF DEFAULT. If an Event of Default occurs
and is continuing and if it is known to a Responsible Officer of the Indenture
Trustee, [the Indenture Trustee shall give notice thereof to the Credit
Enhancer.] The Indenture Trustee shall mail to each Noteholder notice of the
Event of Default within 90 days after it occurs. Except in the case of an Event
of Default in payment of principal of or interest on any Note, the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
Section 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns. In
addition, upon the Issuer's written request, the Indenture Trustee shall
promptly furnish information reasonably requested by the Issuer that is
reasonably available to the Indenture Trustee to enable the Issuer to perform
its federal and state income tax reporting obligations.
Section 6.07. COMPENSATION AND INDEMNITY. The Issuer shall or shall
cause the Administrator to pay to the Indenture Trustee on each Payment Date
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall or shall cause the Administrator to reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall or shall cause the Administrator to
indemnify the Indenture Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Administrator promptly of any claim for which it
may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and
the Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder. The Issuer shall or shall cause the Administrator to
defend any such claim, and the Indenture Trustee may have separate counsel and
the Issuer shall or shall cause the Administrator to pay the fees and expenses
of such counsel. Neither the Issuer nor the Administrator need reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
specified in Section 5.01(iv) or (v) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee
may resign at any time by so notifying the Issuer [and the Credit Enhancer]. The
Holders of a majority of Security Balances of the Notes may remove the Indenture
Trustee by so notifying the Indenture Trustee [and the Credit Enhancer] and may
appoint a successor Indenture Trustee. The Issuer shall remove the Indenture
Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of Security Balances
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section
6.07 shall continue for the benefit of the retiring Indenture Trustee.
Section 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; PROVIDED, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE
INDENTURE TRUSTEE. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust Estate may at the time be located,
the Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust Estate, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08 hereof.
(i) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture 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 the Indenture 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 Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(ii) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. 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
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(iii) Any separate trustee or co-trustee may at any time
constitute the Indenture 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 Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee
shall at all times satisfy the requirements of TIA ss. 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of [____] or better by [______]. The
Indenture Trustee shall comply with TIA ss. 310(b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
Section 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. REPRESENTATION AND WARRANTY. The Indenture Trustee
represents and warrants to the Issuer, for the benefit of the Noteholders, that
this Indenture has been executed and delivered by one of its Responsible
Officers who is duly authorized to execute and deliver such document in such
capacity on its behalf.
Section 6.14 DIRECTIONS TO INDENTURE TRUSTEE. The Indenture Trustee is
hereby directed:
(i) to accept assignment of the Mortgage Loans and hold the assets of
the Trust in trust for the Noteholders;
(ii) to issue, execute and deliver the Notes substantially in the form
prescribed by Exhibit A in accordance with the terms of this Indenture; and
(iii) to take all other actions as shall be required to be taken by
the terms of this Indenture.
Section 6.15. NO CONSENT TO CERTAIN ACTS OF DEPOSITOR. The Indenture
Trustee shall not consent to any action proposed to be taken by the Depositor
pursuant to Article [_______________] of the Depositor's Certificate of
Incorporation.
<PAGE>
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after each Record Date, a list, in
such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee [and the Credit Enhancer] may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; PROVIDED, HOWEVER, that so long as the Indenture Trustee
is the Note Registrar, no such list shall be required to be furnished.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(i) Noteholders may communicate pursuant to TIA ss. 312(b) witH other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(ii) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA ss. 312(c).
Section 7.03. REPORTS BY ISSUER. The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss. 313(c))
such summaries of any information, documents and reports required to
be filed by the Issuer pursuant to clauses (i) and (ii) of this
Section 7.03(a) and by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA ss.
313(a), within 60 days after each January 1 beginning with ___________, 199_,
the Indenture Trustee shall mail to each Noteholder as required by TIA ss.
313(c) [and to the Credit Enhancer] a brief report dated as of such date that
complies with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA
ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
<PAGE>
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. TRUST ACCOUNTS. (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders [and the Credit Enhancer], the Payment Account as provided in
Section 3.01 of this Indenture.
(b) All moneys deposited from time to time in the Payment Account
pursuant to the Master Servicing Agreement and all deposits therein pursuant to
this Indenture are for the benefit of the Noteholders, the Certificateholders
and the holders of the Residual Ownership Interest and all investments made with
such moneys including all income or other gain from such investments are for the
benefit of the Master Servicer as provided by the Master Servicing Agreement.
On each Payment Date during the Funding Period the Indenture Trustee
shall withdraw Net Principal Collections from the Payment Account and deposit
Net Principal Collections to the Funding Account.
On each Payment Date, the Indenture Trustee shall distribute all
amounts on deposit in the Payment Account (after giving effect to the withdrawal
referred to in the preceding paragraph) to Noteholders in respect of the Notes
and in its capacity as Certificate Paying Agent to Certificateholders in the
order of priority set forth in Section 3.05 (except as otherwise provided in
Section 5.04(b).
The Master Servicer may direct the Indenture Trustee to invest any
funds in the Payment Account in Eligible Investments maturing no later than the
Business Day preceding each Payment Date and shall not be sold or disposed of
prior to the maturity. Unless otherwise instructed by the Master Servicer, the
Indenture Trustee shall invest all funds in the Payment Account in its
[__________] Short Term Investment Fund so long as it is an Eligible Investment.
[(c) On or before the Closing Date the Issuer shall open, at the
Corporate Trust Office, an account which shall be the "Funding Account". The
Master Servicer may direct the Indenture Trustee to invest any funds in the
Funding Account in Eligible Investments maturing no later than the Business Day
preceding each Payment Date and shall not be sold or disposed of prior to the
maturity. [Unless otherwise instructed by the Master Servicer, the Indenture
Trustee shall invest all funds in the Payment Account in its
_________________________ Fund so long as it is an Eligible Investment.] During
the Funding Period, any amounts received by the Indenture Trustee in respect of
Net Principal Collections for deposit in the Funding Account, together with any
Eligible Investments in which such moneys are or will be invested or reinvested
during the term of the Notes, shall be held by the Indenture Trustee in the
Funding Account as part of the Trust Estate, subject to disbursement and
withdrawal as herein provided.
(i) Amounts on deposit in the Funding Account in respect of Net
Principal Collections may be withdrawn on each Deposit Date and paid
to the Issuer in payment for Additional Loans by the deposit of such
amount to the Collection Account and at the end of the Funding Period
any amounts remaining in the Funding Account after the withdrawal
called for by clause (1) shall be deposited in the Payment Account to
be included in the payment of principal on the Payment Date that is
the last day of the Funding Period.
(ii) Amounts on deposit in the Funding Account in respect of
investment earnings shall be withdrawn on each Payment Date and
deposited in the Payment Account and included in the amounts paid to
Noteholders and Certificateholders.
[(d) (i) Any investment in the institution with which the Funding
Account is maintained may mature on such Payment Date and any other investment
may mature on such Payment Date if the Indenture Trustee shall advance funds on
such Payment Date to the Funding Account in the amount payable on such
investment on such Payment Date, pending receipt thereof to the extent necessary
to make distributions on the Notes and the Certificates) and shall not be sold
or disposed of prior to maturity.]
Section 8.03. OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 8.05(a), accompanied by copies of any instruments to be
executed, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
PROVIDED, HOWEVER, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
Section 8.04. TERMINATION UPON DISTRIBUTION TO Noteholders. This
Indenture and the respective obligations and responsibilities of the Issuer and
the Indenture Trustee created hereby shall terminate upon the distribution to
Noteholders, Certificateholders, holders of the Residual Ownership Interest and
the Indenture Trustee of all amounts required to be distributed pursuant to
Article III; PROVIDED, HOWEVER, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
Section 8.05. RELEASE OF TRUST ESTATE. (a) Subject to the payment of
its fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Indenture Trustee as provided in Article IV hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as (i) there are no
Notes Outstanding, (ii) all sums due the Indenture Trustee pursuant to this
Indenture have been paid, [and (iii) all sums due the Credit Enhancer have been
paid,] release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section 8.05 only upon receipt
of an request from the Issuer accompanied by an Officers' Certificate, an
Opinion of Counsel, and (if required by the TIA) Independent Certificates in
accordance with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements
as described herein[, and a letter from the President or any Vice President or
any Secretary of the Credit Enhancer, if any, stating that the Credit Enhancer
has no objection to such request from the Issuer].
Section 8.06. SURRENDER OF NOTES UPON FINAL PAYMENT. By acceptance of
any Note, the Holder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
<PAGE>
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with [the consent of the
Credit Enhancer and] prior notice to the Rating Agencies [and the Credit
Enhancer], the Issuer and the Indenture Trustee, when authorized by an Issuer
Request, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with
any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; PROVIDED, that
such action shall not adversely affect the interests of the Holders of
the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA;
PROVIDED, HOWEVER, that no such indenture supplements shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel that
entering into such indenture supplement will not have any material adverse tax
consequences to the Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, also without the consent of any of the Holders of the Notes but
with [the consent of the Credit Enhancer and] prior notice to the Rating
Agencies [and the Credit Enhancer], enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; PROVIDED, however, that such action shall not, as evidenced by an
Opinion of Counsel, (i) adversely affect in any material respect the interests
of any Noteholder or (ii) cause the Issuer to be subject to an entity level tax
or be classified as a taxable mortgage pool within the meaning of Section
7701(i) of the Code.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and, [with the written consent of
the Credit Enhancer and] with the consent of the Holders of not less than a
majority of the Security Balances of each Class of Notes, by Act of such Holders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; PROVIDED, however, that no such supplemental indenture shall, without
the consent of the Holder of each Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof or the
interest rate thereon, change the provisions of this Indenture
relating to the application of collections on, or the proceeds of the
sale of, the Trust Estate to payment of principal of or interest on
the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof;
(ii) reduce the percentage of the Security Balances of the Notes,
the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding" or modify or alter the exception
in the definition of the term "Holder";
(iv) reduce the percentage of the Security Balances of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation); or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture; and PROVIDED, FURTHER, that
such action shall not, as evidenced by an Opinion of Counsel, cause
the Issuer to be subject to an entity level tax or be classified as a
taxable mortgage pool within the meaning of Section 7701(i) of the
Code.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section 9.02, the Indenture
Trustee shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
<PAGE>
ARTICLE X
[Reserved]
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee [and to the Credit Enhancer] an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with and (if required by the TIA) an Independent Certificate from a
firm of certified public accountants meeting the applicable requirements of this
Section 11.01, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(5) if the signer of such Certificate or Opinion is required to
be Independent, the Statement required by the definition of the term
"Independent".
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Security Balances of the Notes, but such a
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Security
Balances of the Notes.
(iii) Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating that
in the opinion of such person the proposed release will not impair the security
under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the Security Balances of
the Notes, but such certificate need not be furnished in the case of any release
of property or securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the then
Security Balances of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the requirements of the other provisions of this
Section 11.01, (A) collect, sell or otherwise dispose of Mortgage Loans and
Mortgaged Properties as and to the extent permitted or required by the Basic
Documents or (B) make cash payments out of the Payment Account as and to the
extent permitted or required by the Basic Documents, so long as the Issuer shall
deliver to the Indenture Trustee every six months, commencing __________, 199_,
an Officer's Certificate of the Issuer stating that all the dispositions of
Collateral described in clauses (A) or (B) above that occurred during the
preceding six calendar months were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the Basic
Documents.
Section 11.02 FORM OF DOCUMENTS DELIVERED TO INDENTURE 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 or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Seller, the Issuer or the Administrator, stating that the information with
respect to such factual matters is in the possession of the Seller, the Issuer
or the Administrator, 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.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 11.03. ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents 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 Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders 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 purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 11.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER, [CREDIT
ENHANCER] AND RATING AGENCIES. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders is to be
made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at the
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
mailed first-class, postage prepaid to the Issuer addressed to:
[______________] Home Equity Loan Trust 199_-__ in care of
[_____________], [______________] Attention of [_________] with a copy
to the Administrator at [______________], Attention: [_____________],
or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer or the Administrator. The Issuer shall
promptly transmit any notice received by it from the Noteholders to
the Indenture Trustee, or
(iii) [the Credit Enhancer by the Issuer, the Indenture Trustee
or by any Noteholders shall be sufficient for every purpose hereunder
to in writing and mailed, first-class postage pre-paid, or personally
delivered or telecopied to: [_______________], Attention:
[______________], Telephone: [_____________], Telecopier:
[-----------].]
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to [(i) in the case of
DCR, at the following address: [________________];] [and] [(ii) in the case of
Fitch Investors Service, L.P., at the following address: [______________];]
[and] [(iii) in the case of Moody's, at the following address: Moody's Investors
Service, ABS Monitoring Department, 99 Church Street, New York, New York 10007];
[and] [(iv) in the case of Standard & Poor's, at the following address: Standard
& Poor's Corporation, 26 Broadway (15th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department;] or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
Section 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture 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 Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a 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 Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
Section 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Administrator to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer will furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
Section 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.08. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 11.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
Section 11.10. SEPARABILITY. In case any provision in this Indenture
or in the Notes 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 11.11. BENEFITS OF INDENTURE. [The Credit Enhancer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture.] Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Trust Estate, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 11.12. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment 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 on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.14. COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 11.16. ISSUER OBLIGATION. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
Section 11.17. NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
Section 11.18. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
Section 11.19. AUTHORITY OF THE ADMINISTRATOR. Each of the parties to
this Indenture acknowledges that the Issuer and the Owner Trustee have each
appointed the Administrator to act as its agent to perform the duties and
obligations of the Issuer hereunder. Unless otherwise instructed by the Issuer
or the Owner Trustee, copies of all notices, requests, demands and other
documents to be delivered to the Issuer or the Owner Trustee pursuant to the
terms hereof shall be delivered to the Administrator. Unless otherwise
instructed by the Issuer or the Owner Trustee, all notices, requests, demands
and other documents to be executed or delivered, and any action to be taken, by
the Issuer or the Owner Trustee pursuant to the terms hereof may be executed,
delivered and/or taken by the Administrator pursuant to the Administration
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
[_________________] HOME EQUITY LOAN
TRUST 199_-__ as Issuer
By: [______________________],
not in its individual capacity
but solely as Owner Trustee
By:___________________________________
Name:
Title:
[--------------------------------],
as Indenture Trustee, as Certificate
Paying Agent and as Certificate Registrar
By:___________________________________
Name:
Title:
[--------------------]
hereby accepts the appointment
as Certificate Paying Agent pursuant to
Section 3.03 hereof and as Certificate
Registrar pursuant to Section 4.02
hereof.
- ----------------------------------
By:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of __________, before me personally appeared
______________, to me known, who being by me duly sworn, did depose and say,
that he resides at _________________, __________________ _____, that he is the
__________ of the Owner Trustee, one of the corporations described in and which
executed the above instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
----------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of __________, before me personally appeared , to me
known, who being by me duly sworn, did depose and say, that he resides at , that
he is the ______________ of ________________, as Indenture Trustee, one of the
corporations described in and which executed the above instrument; that he knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation; and that he signed his name thereto by like order.
----------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of __________, before me personally appeared , to me
known, who being by me duly sworn, did depose and say, that he resides at , that
he is an ________________ of _______________, as Indenture Trustee, one of the
corporations described in and which executed the above instrument; that he knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation; and that he signed his name thereto by like order.
----------------------------------
Notary Public
[NOTARIAL SEAL]
EXHIBIT 4.2
DIRECTORS ASSET CONDUIT CORPORATION,
as Depositor,
and
NORWEST MORTGAGE, INC.,
as Seller,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Master Servicer,
and
[---------------------------],
as Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of _____________, 199__
----------------------
Home Equity Loan Asset-Backed Certificates
Series 199__-__
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
Section 1.01. Definitions...................................................1
Section 1.02. Interest Calculations........................................19
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of Certificates, Tax Treatment
Section 2.01. Conveyance of Mortgage Loans.................................20
Section 2.02. Acceptance by Trustee........................................23
Section 2.03. Representations and Warranties Regarding the
Seller and the Master Servicer...............................24
Section 2.04. Representations and Warranties of the Seller
Regarding the Mortgage Loans.................................27
Section 2.05. Representations and Warranties of the Depositor..............32
Section 2.06. Substitution of Mortgage Loans...............................33
Section 2.07. Execution and Authentication of Certificates.................34
Section 2.08. Designation of Interests in REMIC............................34
Section 2.09. REMIC Certificate Maturity Date..............................34
Section 2.10. Tax Returns and Reports to Certificateholders................35
Section 2.11. Tax Matters Person...........................................35
Section 2.12. REMIC Related Covenants......................................35
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Master Servicer..........................................38
Section 3.02. Collection of Certain Mortgage Loan Payments.................40
Section 3.03. Withdrawals from the Collection Account......................41
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses..........................................42
Section 3.05. Maintenance of Mortgage Impairment Insurance
Policy.......................................................43
Section 3.06. Fidelity Bond................................................43
Section 3.07. Management and Realization Upon Defaulted
Mortgage Loans...............................................44
Section 3.08. Trustee to Cooperate.........................................45
Section 3.09. Servicing Compensation; Payment of Certain
Expenses by Master Servicer..................................46
Section 3.10. Annual Statement as to Compliance............................46
Section 3.11. Annual Servicing Report......................................47
Section 3.12. Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................47
Section 3.13. Maintenance of Certain Servicing Insurance
Policies.....................................................47
Section 3.14. Reports to the Securities and Exchange Commission............47
Section 3.15. Reports of Foreclosures and Abandonments of
Mortgaged Property, Returns Relating to
Mortgage Interest Received from
Individuals and Returns Relating
to Cancellation of Indebtedness .............................48
Section 3.16. Advances by the Master Servicer..............................48
Section 3.17. Optional Purchase of Defaulted Mortgage Loans................48
Section 3.18. Superior Liens...............................................49
Section 3.19. Assumption Agreements........................................49
Section 3.20. Payment of Taxes, Insurance and Other Charges................50
ARTICLE IV
Spread Account [and Certificate Insurance Policy]
Section 4.01. Establishment of Spread Account; Deposits in
Spread Account; Permitted
Withdrawals from Spread Account..............................51
ARTICLE V
Payments and Statements to Certificateholders; Rights of
Certificateholders
Section 5.01. Distributions................................................53
Section 5.02. Calculation of the Certificate Rate..........................54
Section 5.03. [Reserved]...................................................54
Section 5.04. Compensating Interest........................................54
Section 5.05. Statements...................................................54
Section 5.06. [Intentionally Omitted]......................................57
Section 5.07. Distribution Account.........................................57
Section 5.08. Investment of Accounts.......................................57
ARTICLE VI
The Certificates
Section 6.01. The Certificates.............................................59
Section 6.02. Registration of Transfer and Exchange of Certificates........59
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates............64
Section 6.04. Persons Deemed Owners........................................64
Section 6.05. Appointment of Paying Agent..................................64
ARTICLE VII
The Seller, the Master Servicer and the Depositor
Section 7.01. Liability of the Seller, the Master Servicer and
the Depositor................................................65
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the
Master Servicer or the Depositor.............................65
Section 7.03. Limitation on Liability of the Master Servicer
and Others...................................................65
Section 7.04. Master Servicer Not to Resign................................66
Section 7.05. Delegation of Duties.........................................66
Section 7.06. Indemnification of the Trust by the Master Servicer..........66
ARTICLE VIII
Default
Section 8.01. Events of Default............................................68
Section 8.02. Trustee to Act; Appointment of Successor.....................70
Section 8.03. Waiver of Defaults...........................................70
Section 8.04. Notification to Certificateholders...........................71
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee............................................72
Section 9.02. Certain Matters Affecting the Trustee........................73
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans........74
Section 9.04. Trustee May Own Certificates.................................75
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses...........75
Section 9.06. Eligibility Requirements for Trustee.........................76
Section 9.07. Resignation or Removal of Trustee............................76
Section 9.08. Successor Trustee............................................77
Section 9.09. Merger or Consolidation of Trustee...........................77
Section 9.10. Appointment of Co-Trustee or Separate Trustee................77
Section 9.11. Limitation of Liability......................................78
Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates...................................79
Section 9.13. Suits for Enforcement........................................79
ARTICLE X
Termination
Section 10.01. Termination.................................................80
Section 10.02. Additional Termination Requirements.........................81
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment...................................................83
Section 11.02. Recordation of Agreement....................................84
Section 11.03. Limitation on Rights of Certificateholders..................84
Section 11.04. Governing Law...............................................85
Section 11.05. Notices.....................................................85
Section 11.06. Severability of Provisions..................................85
Section 11.07. Assignment..................................................86
Section 11.08. Certificates Nonassessable and Fully Paid...................86
Section 11.09. Third-Party Beneficiaries...................................86
Section 11.10. Counterparts................................................86
Section 11.11. Effect of Headings and Table of Contents....................86
<PAGE>
PAGE
EXHIBIT A - FORM OF CLASS A CERTIFICATE....................................A-1
EXHIBIT B - FORM OF RESIDUAL CERTIFICATE...................................B-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE.........................................C-1
EXHIBIT D - MONTHLY INFORMATION DELIVERED TO TRUSTEE.......................D-1
EXHIBIT E - FORM OF MORTGAGE NOTE..........................................E-1
EXHIBIT F - FORM OF MORTGAGES..............................................F-1
EXHIBIT G - TRANSFER AFFIDAVIT.............................................G-1
EXHIBIT H - LETTER OF REPRESENTATIONS......................................H-1
EXHIBIT I - FORM OF REQUEST FOR RELEASE....................................I-1
EXHIBIT J - FORM OF INVESTMENT LETTER......................................J-1
EXHIBIT K - SPECIMEN CERTIFICATE INSURANCE POLICY..........................K-1
EXHIBIT L - DELINQUENCY AND LOSS INFORMATION...............................L-1
<PAGE>
This Pooling and Servicing Agreement, dated as of _____________,
199__, among Directors Asset Conduit Corporation, as Depositor (the
"Depositor"), [Norwest Mortgage, Inc. ("Norwest Mortgage")], as Seller (the
"Seller"), [Norwest Bank Minnesota, National Association ("Norwest Bank") as
Master Servicer (the "Master Servicer")], and [_________________________], as
Trustee (the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
ACCOUNTS: Collectively, the Collection Account, the Distribution
Account and the Spread Account.
ACCRUAL PERIOD: As to any Mortgage Loan and Monthly Payment, the
period commencing from and after the date through which interest was last paid
up to and including the date of receipt of such Monthly Payment.
ADJUSTMENT DATE: With respect to any Interest Period, the [second
LIBOR Business Day] preceding the first day of such Interest Period.
AFFILIATE: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
AMOUNT AVAILABLE: As to any Distribution Date, the sum of (i) the
Available Remittance Amount, (ii) the amount deposited to the Distribution
Account from the Spread Account pursuant to Section 4.01(b)(i) and (iii) Insured
Payments, in each case with respect to such Distribution Date.
APPRAISED VALUE: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan, or the sales price of the Mortgaged Property at
the time of such origination, whichever is less, or with respect to any Mortgage
Loan originated in connection with a refinancing, the appraised value of the
Mortgaged Property based upon the appraisal made at the time of such
refinancing.
ASSIGNMENT OF MORTGAGE: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
AUTHORIZED NEWSPAPER: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
AVAILABLE REMITTANCE AMOUNT: With respect to any Distribution Date,
the sum of all amounts described in clauses (i) through (vii) inclusive, of
Section 3.02(b) received by the Master Servicer (including any amounts paid by
the Master Servicer and the Seller and excluding (a) any amounts not required to
be deposited in the Collection Account pursuant to Section 3.02(b) and (b)
excluding any amounts paid to the Master Servicer pursuant to Section 3.03(ii),
(iii), (vi), (vii) and (viii) as of the related Determination Date) during the
related Due Period and deposited into the Collection Account as of the
Determination Date. No amount included in the Available Remittance Amount by
virtue of being described by any component of the definition thereof shall be
included twice by virtue of also being described by any other component or
otherwise.
BASE SPREAD ACCOUNT REQUIREMENT: As such amount may be reduced in
accordance with the provisions hereof: (a) with respect to any Distribution Date
occurring during the period commencing after the Closing Date and ending on the
last day of the Due Period with respect to the Distribution Date occurring in
[_________, 199__], [_____]% of the Cut-Off Date Pool Principal Balance; and (b)
with respect to each Distribution Date commencing on _________, 199__, the Base
Spread Account Requirement will equal the amount that is the greatest of (i)
[__]% of the aggregate outstanding principal balance of the Mortgage Loans as of
the last day of the most recently ended Due Period and (ii) [_____]% of the
Cut-Off Date Pool Principal Balance less the amount that is the product of (x)
the amount (if any) by which [___]% of the Cut-Off Date Pool Principal Balance
exceeds [___]% of the aggregate outstanding principal balance of the Mortgage
Loans as of the last day of the most recently ended Due Period and (y) a
fraction, not to exceed 100%, the numerator of which is a whole number equal to
the number of Distribution Dates, commencing on [_________, 199__], on which a
Delinquency Trigger Event or a Loss Trigger Event did not occur, and the
denominator of which is [___]; PROVIDED, HOWEVER, that upon the occurrence and
continuance of a Capture Delinquency Trigger Event or a Capture Loss Trigger
Event, on any Distribution Date the Base Spread Account Requirement shall equal
the Base Spread Account Requirement on the previous Distribution Date plus the
Monthly Excess Spread Amount for such Distribution Date; PROVIDED, FURTHER,
HOWEVER, that the Base Spread Account Requirement shall not exceed the then
outstanding Pool Balance. Notwithstanding the foregoing, after the period
described in clause (a) above the minimum Base Spread Account Requirement shall
not be less than [_____]% of the Cut-Off Date Pool Principal Balance.
BIF: The Bank Insurance Fund, as from time to time constituted,
created under the Financial Institutions Reform, Recovery and Enhancement Act of
1989, or if at any time after the execution of this instrument the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
BOOK-ENTRY CERTIFICATE: Any Class A Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York are required or
authorized by law to be closed.
CAPTURE DELINQUENCY TRIGGER EVENT: A Capture Delinquency Trigger Event
will have occurred with respect to any Due Period if the average outstanding
principal balance of Mortgage Loans in the Trust more than __ days delinquent
over the prior _ months, each computed as of the first day of the related Due
Period, is greater than or equal to [______]% of the aggregate outstanding
principal balance of the Mortgage Loans as of the first day of such Due Period.
A Capture Delinquency Trigger Event will be deemed to have terminated as to any
Distribution Date (subject to the reoccurrence of such event), if a Capture
Delinquency Trigger Event shall not have occurred as of the first day of the
most recently ended Due Period.
CAPTURE LOSS TRIGGER EVENT: A Capture Loss Trigger Event will have
occurred with respect to any Due Period (i) if as of the first day of such Due
Period, the cumulative Loan Losses since the Cut- Off Date are greater than or
equal to (A) if the first day of the Due Period is prior to [____________,
199__], [_____]% of the Cut-Off Date Pool Principal Balance, (B) if the first
day of the Due Period is after [________, 199__] and prior to [_________,
199__], [_____]% of the Cut-Off Date Pool Principal Balance, (C) if the first
day of such Due Period is after [________, 199__] and prior to [___________,
199__], [___]% of the Cut-Off Date Pool Principal Balance, (D) if the first day
of such Due Period is after [__________, 199__] and prior to [__________,
199__], [____]% of the Cut- Off Date Pool Principal Balance, or (E) if the first
day of such Due Period is after [_________, 199__], [____]% of the Cut-Off Date
Pool Principal Balance or (ii) if in the 12-month period ending on the first day
of such Due Period cumulative Loan Losses during such 12-month period are
greater than or equal to [____]% of the Cut-Off Date Pool Principal Balance. A
Capture Loss Trigger Event will be deemed to have terminated as to any
Distribution Date (subject to the reoccurrence of such event), if a Capture Loss
Trigger Event shall not have occurred as of the first day of the most recently
ended Due Period.
CERTIFICATE: Any Regular Certificate or Residual Certificate.
CERTIFICATE OWNER: The Person who is the beneficial owner of a
Book-Entry Certificate.
CERTIFICATE RATE: With respect to the first Interest Period [____]%,
and for any subsequent Interest Period, the sum of (a) LIBOR on the applicable
Adjustment Date and (b) [___]%; PROVIDED, HOWEVER, that in no event shall the
Certificate Rate with respect to any Interest Period exceed the Weighted Average
Net Loan Rate for such Interest Period.
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register
maintained and the registrar appointed pursuant to Section 6.02.
CERTIFICATEHOLDER OR HOLDER: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Class A Certificate registered in the name of the Depository or any Person
known to a Responsible Officer to be an Affiliate of the Depositor and (y) any
Class A Certificate for which the Depositor or any Person known to a Responsible
Officer to be an Affiliate of the Depositor is the Certificate Owner shall be
deemed not to be outstanding (unless to the knowledge of a Responsible Officer
(i) the Depositor or such Affiliate is acting as trustee or nominee for a Person
who is not an Affiliate of such Depositor and who makes the voting decision with
respect to such Class A Certificates or (ii) the Depositor or such Affiliate is
the Certificate Owner of all the Class A Certificates) and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent, direction, waiver or request has been obtained.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (ii) the sum of (a) one month's interest on the
Principal Balance of such Mortgage Loan at the rate equal to the sum of the
Certificate Rate and the Premium Percentage, plus (b) the Servicing Fee for such
Mortgage Loan payable to the Master Servicer for such Due Period.
CLASS: As to the Certificates, the Class A or Residual Certificates.
CLASS A CARRY-FORWARD AMOUNT: As of any Distribution Date, the excess
of (i) the Class A Remittance Amounts as of each preceding Distribution Date
over (y) the amount of the actual distributions of principal and interest to the
Class A Certificateholders pursuant to Section 5.01(a)(i) and (ii) hereof on
each such Distribution Date and not subsequently distributed.
CLASS A CERTIFICATE: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A hereto.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A INTEREST REMITTANCE AMOUNT: As to any Distribution Date and
the Class A Certificates, interest accrued during the related Interest Period at
the Certificate Rate on the Class A Principal Balance immediately prior to the
related Distribution Date, reduced by an amount equal to the Civil Relief Act
Interest Shortfall, if any, for such Distribution Date.
CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class A Certificate Principal Balance reduced by the
sum of all amounts previously distributed to Class A Certificateholders in
respect of principal on all previous Distribution Dates.
CLASS A PRINCIPAL REMITTANCE AMOUNT: As to any Distribution Date, an
amount equal to the lesser of (A) the Class A Principal Balance and (B) the sum
of (i) each payment of principal received by the Master Servicer (exclusive of
amounts described in clauses (ii) and (iii) hereof) in the related Due Period,
(ii) all Curtailments and all Principal Prepayments received during such related
Due Period, (iii) all Insurance Proceeds and Net Liquidation Proceeds allocable
to recoveries of principal of Mortgage Loans that are not yet Liquidated
Mortgage Loans received during the related Due Period, (iv) the Unrecovered
Class A Portion, (v) the Class A Carry-Forward Amount, and (vi) (a) the
principal portion of the Purchase Price of any Defective Mortgage Loans and (b)
any Substitution Adjustments (other than the portion of Substitution Adjustments
relating to Servicing Advances) required to be deposited in the Collection
Account as of the related Determination Date.
CLASS A REMITTANCE AMOUNT: As to any Distribution Date, the sum of (i)
the Class A Principal Remittance Amount and (ii) the Class A Interest Remittance
Amount.
CLOSING DATE: [________, 199__].
CODE: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
COLLECTION ACCOUNT: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
COMBINED LOAN-TO-VALUE RATIO or CLTV: With respect to any Mortgage
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the First Lien, if any, as of the date of
origination of the Mortgage Loan, divided by the Appraised Value.
COMPENSATING INTEREST: As to any Distribution Date, the amount
calculated pursuant to Section 5.04.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which
at any particular time its corporate business shall be administered, which
office on the Closing Date is located at
[_______________________________________________], Attention: [NAME] Home Equity
Loan Trust - 199__-__.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
CUT-OFF DATE: _____________, 199__.
CUT-OFF DATE POOL PRINCIPAL BALANCE: $[------------------].
CUT-OFF DATE PRINCIPAL BALANCE: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.04).
DCR: Duff & Phelps Credit Rating Co. or its successor in interest.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction of the Monthly Payment due on such Mortgage
Loan.
DEFECTIVE MORTGAGE LOAN: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
DEFINITIVE CERTIFICATES: As defined in Section 6.02(c).
DELINQUENCY TRIGGER EVENT: A Delinquency Trigger Event will have
occurred with respect to any Due Period if the average outstanding principal
balance of Mortgage Loans in the Trust more than __ days delinquent over the
prior _ months each computed as of the first day of the related Due Period, is
greater than or equal to [____]% of the aggregate outstanding principal balance
of the Mortgage Loans as of the first day of such Due Period. A Delinquency
Trigger Event will be deemed to have terminated as to any Distribution Date
(subject to the reoccurrence of such event), if a Delinquency Trigger Event
shall not have occurred as of the first day of the most recently ended Due
Period.
DEPOSITORY: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., as the registered Holder of
Class A Certificates evidencing $[_________] in initial aggregate principal
amount of the Class A Certificates. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the UCC of the State of
New York.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
DISTRIBUTION ACCOUNT: The account established by the Trustee pursuant
to Section 5.07 hereof. The Distribution Account shall be an Eligible Account.
DISTRIBUTION DATE: The fifteenth day of each month, or if such day is
not a Business Day, then the next Business Day, beginning in the month
immediately following the month of the initial issuance of the Certificates.
DUE DATE: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
DUE PERIOD: With respect to each Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.
ELECTRONIC LEDGER: The electronic master record of home equity
mortgage loans maintained by the Master Servicer.
ELIGIBLE ACCOUNT: An account that is either (i) maintained with a
depository institution whose (a) short-term debt obligations at the time of any
deposit therein and throughout the time the interest is maintained are rated in
the highest short-term debt rating category by [________________] (b) short term
and long-term debt obligations at the time of any deposit therein are rated at
least [___] and [___], respectively, by [__________], (ii) an account or
accounts maintained with a depository institution with a minimum long-term
unsecured debt rating of [______], provided that the deposits in such account or
accounts are fully insured by either the BIF or the SAIF, or (iii) a segregated
trust account maintained (A) with the corporate trust department of the Trustee
or an Affiliate of the Trustee in its fiduciary capacity or (B) with an
institution with capital and surplus of not less than $50,000,000 and with a
minimum long-term unsecured debt rating of [______], by [________], or (iv) an
account otherwise acceptable to each Rating Agency, as evidenced by a letter
from such Rating Agency to the Trustee, without reduction or withdrawal of the
then current ratings of the Certificates.
ELIGIBLE INVESTMENTS: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition
thereof, provided that the short-term unsecured debt obligations of
the party agreeing to repurchase such obligations are at the time
rated by each Rating Agency in its highest short-term rating category
(which is [____] for [____________________] and [_____] for [______];
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days) of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof and subject to supervision and examination by federal and/or
state banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the
date of acquisition thereof have been rated by each of [___________]
and [________________] in its highest unsecured short-term debt rating
category;
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition
has been rated by [________________] and [__________] in their highest
short-term rating categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of
the United States or any state thereof which on the date of
acquisition has been rated by [______________] and [________] in their
respective highest rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time as
the interest is held in such fund has a rating of [____] or [______]
by [_________] and either [______] or [_____] by [_______________] or
such lower rating as will not result in the qualification, downgrading
or withdrawal of the then-current rating assigned to the Certificates
by each Rating Agency; and
(vii) other obligations or securities that are acceptable to each
Rating Agency as an Eligible Investment hereunder and will not result
in a reduction in the then current rating of the Certificates, as
evidenced by a letter to such effect from such Rating Agency and with
respect to which the Master Servicer has received confirmation that,
for tax purposes, the investment complies with the last clause of this
definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than [____]% of
the yield to maturity at par of the underlying obligations; and provided,
further, that no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price less
than its purchase price prior to its stated maturity.
ELIGIBLE SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not more than [___]% less
than the Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate
not less than the Loan Rate of the Defective Mortgage Loan and not more than
[___]% in excess of the Loan Rate of such Defective Mortgage Loan; (iii) have a
Loan Rate based on the same Index with adjustments to such Loan Rate made on the
same Interest Rate Adjustment Date as that of the Defective Mortgage Loan; (iv)
have a Margin that is not less than the Margin of the Defective Mortgage Loan
and not more than [___] basis points higher than the Margin for the Defective
Mortgage Loan; (v) have a Mortgage of the same or higher level of priority as
the Mortgage relating to the Defective Mortgage Loan at the time such Mortgage
was transferred to the Trust; (vi) have a remaining term to maturity not more
than six months earlier and not later than the remaining term to maturity of the
Defective Mortgage Loan; (vii) comply with each representation and warranty set
forth in Section 2.04 (deemed to be made as of the date of substitution); (viii)
have an original Combined Loan-to-Value Ratio not greater than that of the
Defective Mortgage Loan; and (ix) have a Lifetime Rate Cap and a Periodic Rate
Cap no lower than the Lifetime Rate Cap and Periodic Rate Cap, respectively,
applicable to the Defective Mortgage Loan. More than one Eligible Substitute
Mortgage Loan may be substituted for a Defective Mortgage Loan if such Eligible
Substitute Mortgage Loans meet the foregoing attributes in the aggregate.
EVENT OF DEFAULT: As defined in Section 8.01.
EXCESS SPREAD: With respect to any Distribution Date, the amount equal
to the excess, if any, of the Amount Available (exclusive of Insured Payments)
over the sum of the amounts distributed pursuant to Section 5.01(a)(i)-(iii).
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation.
FIRST LIEN: With respect to any Mortgage Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
FITCH: Fitch Investors Service, L.P. or its successor in interest.
FNMA: The Federal National Mortgage Association.
FORECLOSURE PROFITS: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Liquidation Proceeds) of such Liquidated
Mortgage Loan immediately prior to the final recovery of its Liquidation
Proceeds.
I&I PAYMENTS: Payments due and owing under the Insurance and Indemnity
Agreement other than pursuant to Section 3.02(a), the first sentence of Section
3.02(b), Section 3.02(c) and Section 3.04 of such Agreement.
INDEX: With respect to each Interest Rate Adjustment Date for a
Mortgage Loan, the lowest reported prime rate published daily in THE WALL STREET
JOURNAL forty-five days prior to the related Interest Rate Adjustment Date; or
if no such rate is published on such date, the lowest reported prime rate
published in THE WALL STREET JOURNAL on the next date such rate is published,
or, if the prime rate shall no longer be published in THE WALL STREET JOURNAL,
or any successor thereto, then such other index as the Master Servicer shall
reasonably select.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan, or amounts required to be paid by the
Master Servicer pursuant to Section 3.05, net of any component thereof (i)
covering any expenses incurred by or on behalf of the Master Servicer in
connection with obtaining such proceeds, (ii) that is applied to the restoration
or repair of the related Mortgaged Property, (iii) released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures or (iv)
required to be paid to any holder of a mortgage senior to such Mortgage Loan.
INTEREST PERIOD: With respect to any Distribution Date other than the
first Distribution Date, the period beginning on the preceding Distribution Date
and ending on the day preceding such Distribution Date, and in the case of the
first Distribution Date, the period beginning on the Closing Date and ending on
the day preceding the first Distribution Date.
INTEREST RATE ADJUSTMENT DATE: With respect to each Mortgage Loan, the
date or dates on which the Loan Rate is adjusted in accordance with the related
Mortgage Note.
LIBOR: As to any Interest Period as follows: the rate for United
States dollar deposits for one month which appear on the Reuters Screen LIBO
Page (as defined below) as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of such Interest Period. "Reuters Screen
LIBO Page" means with respect to the first Interest Period, the rate for United
States dollar deposits for one month which appears on the Reuters Screen LIBO
Page as of _____ A.M., _________________ time, two LIBOR Business Days prior to
the Closing Date. If such rate does not appear on such page (or such other page
as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Indenture Trustee after consultation with the Master
Servicer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Payment Date.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
LIFETIME RATE CAP: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a lifetime rate cap, the maximum
Loan Rate permitted over the life of such Mortgage Loan under the terms of such
Mortgage Note, as set forth on Exhibit C hereto.
LIQUIDATED MORTGAGE LOAN: As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related Due
Period that all Liquidation Proceeds which it expects to recover with respect to
the liquidation of the Mortgage Loan or disposition of the related REO Property
have been recovered.
LIQUIDATION LOAN LOSSES: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon plus unreimbursed Servicing Advances is in excess of the Liquidation
Proceeds realized thereon.
LIQUIDATION PROCEEDS: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Certificate Insurance Policy) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
LOAN LOSSES: The aggregate of the Liquidation Loan Losses for all
Liquidated Mortgage Loans.
LOAN RATE: With respect to any Mortgage Loan as of any day, the per
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.
LOAN RATE CAP: With respect to each Mortgage Loan, the lesser of (i)
the Lifetime Rate Cap, if any, or (ii) the applicable state usury ceiling, if
any.
LOSS TRIGGER EVENT: A Loss Trigger Event will have occurred with
respect to any Due Period if (i) as of the first day of such Due Period, the
cumulative Loan Losses since the Cut-Off Date exceed (A) if the first day of
such Due Period is prior to [__________, 199__], [____]% of the Cut-Off Date
Pool Principal Balance, (B) if the first day of such Due Period is after
[__________, 199__] and prior to [__________, 199___], [____]% of the Cut-Off
Date Pool Principal Balance, (C) [________, 199__] if the first day of such Due
Period is after [______, 199__] and prior to [_____________, 199__], [_____]% of
the Cut-Off Date Pool Principal Balance, or (D) if the first day of such Due
Period is after [
MAJORITY CERTIFICATEHOLDER: The Holder or Holders of Class A
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
MARGIN: As to any Mortgage Loan, the percentage set forth as the
"Margin" for such Mortgage Loan on Exhibit C hereto.
MASTER SERVICER: [Norwest Bank Minnesota, National Association
("Norwest Bank"), an affiliate of Norwest Mortgage, Inc.] or any successor
thereto or any successor hereunder.
MINIMUM LOAN RATE: With respect to each Mortgage Loan, the minimum
Loan Rate under the terms of the related Mortgage Note, as set forth on Exhibit
C hereto.
MONTHLY ADVANCE: An advance made by the Master Servicer pursuant to
Section 3.16 hereof.
MONTHLY EXCESS SPREAD AMOUNT: On any Distribution Date, the amount
equal to the product of (i) 100% and (ii) the amount of the Excess Spread as of
such Distribution Date; PROVIDED, HOWEVER, that the percentage set forth in
clause (i) above may be reduced, at which time written notice shall be sent to
the Seller, the Trustee, [________] and [_________].
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
MORTGAGE FILE: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE LOAN SCHEDULE: With respect to any date, the schedule of
Mortgage Loans included in the Trust on such date. The initial schedule of
Mortgage Loans as of the Cut-Off Date is the schedule set forth herein as
Exhibit C, which schedule sets forth as to each Mortgage Loan (i) the Cut- Off
Date Principal Balance, (ii) the account number, (iii) the original principal
amount, (iv) the CLTV as of the date of the origination of the related Mortgage
Loan, (v) the Due Date, (vi) the Loan Rate as of the Cut-Off Date, (vii) the
first date on which a Monthly Payment is due under the Mortgage Note, (viii) the
original stated maturity date of the Mortgage Note, (ix) the remaining number of
months to maturity as of the Cut-Off Date, (x) the Mortgaged Property State,
(xi) the Periodic Rate Cap, (xii) the Margin, (xiii) the Lifetime Rate Cap,
(xiv) the Minimum Loan Rate, (xv) the original Loan Rate, (xvi) the next
Adjustment Date after the Cut-Off Date, (xvii) the type of property and (xviii)
the lien status.
MORTGAGE LOANS: The mortgage loans that are transferred and assigned
to the Trustee pursuant to Sections 2.01 and 2.06, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Depositor,
the Master Servicer or the Seller, as the case may be, from time to time
pursuant to Section 2.02, 2.04, or 3.17, as from time to time are held as a part
of the Trust, such mortgage loans originally so held being identified in the
Mortgage Loan Schedule delivered on the Closing Date.
MORTGAGE NOTE: With respect to a Mortgage Loan, the note pursuant to
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
MORTGAGED PROPERTY: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan.
MORTGAGED PROPERTY STATE: As to any Mortgage Loan, the state in which
the related Mortgaged Property is located.
MORTGAGOR: The obligor or obligors under a Mortgage Note.
NET LIQUIDATION PROCEEDS: With respect to any Liquidated Mortgage
Loan, Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing
Advances and Monthly Advances with respect thereto.
NET LOAN RATE: With respect to any Mortgage Loan as to any day, the
Loan Rate less the Servicing Fee Rate.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii), or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Master Servicer, as evidenced by an Officer's
Certificate delivered to the Seller and the Trustee no later than the Business
Day following such determination, would not be ultimately recoverable pursuant
to Sections 3.03(ii), 3.03(vi), 4.01(b)(ii), 4.01(c), 5.01(a)(iv) and
5.01(a)(v).
OFFICER'S CERTIFICATE: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Master Servicer
and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Master Servicer or the
Depositor (except that any opinion relating to the qualification of the Trust as
a REMIC or compliance with the REMIC Provisions must be an opinion of
independent outside counsel) and who, in the case of opinions delivered to each
Rating Agency, is reasonably acceptable to it.
ORIGINAL CLASS A CERTIFICATE PRINCIPAL BALANCE: $[-------------].
ORIGINAL MORTGAGE LOANS: The Mortgage Loans identified in Exhibit C
hereto, and conveyed, transferred, sold and assigned to, and deposited with, the
Trustee pursuant to Section 2.01 hereof on the Closing Date.
OWNERSHIP INTEREST: As to any Certificate, or security interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
PAYING AGENT: Any paying agent appointed pursuant to Section 6.05.
PERCENTAGE INTEREST: As to any Class A Certificate, the percentage
obtained by dividing the principal denomination of such Class A Certificate by
the aggregate of the principal denominations of all Class A Certificates. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%.
PERIODIC RATE CAP: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a periodic rate cap, the maximum
percentage increase or decrease in the Loan Rate permitted for such Mortgage
Loan over the Loan Rate in effect as of an Interest Rate Adjustment Date, as set
forth on Exhibit C hereto.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, or
any State or any political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives describe in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C), (v) a Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless or its connection with the conduct of a trade or business
within the United States, and (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the FHLMC, a majority
of its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
POOL BALANCE: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.
POOL FACTOR: With respect to any Distribution Date, the percentage,
carried to six places, obtained by dividing the Class A Certificate Principal
Balance for such Distribution Date by the Original Class A Certificate Principal
Balance.
PREPAYMENT ASSUMPTION: An assumed constant rate of prepayment equal to
[___]% per annum.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Net Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act and/or any Debt Service Reduction) over
(ii) the amount of interest actually remitted by the Mortgagor in connection
with such Principal Prepayment less the Servicing Fee for such Mortgage Loan in
such month.
PRINCIPAL BALANCE: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation Proceeds and
a Principal Balance of zero thereafter.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
PROSPECTUS: The base prospectus dated [_______, 19__].
PROSPECTUS SUPPLEMENT: The prospectus supplement dated [_______,
199_], relating to the offering of the Class A Certificates.
PURCHASE PRICE: As to any Defective Mortgage Loan repurchased on any
date pursuant to Section 2.02 or 2.04, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the greater of (a) all unpaid accrued
interest thereon and (b) 30 days' interest thereon, computed at the applicable
Loan Rate and (iii) any unreimbursed Servicing Advances with respect to such
Mortgage Loan; PROVIDED, HOWEVER, that if at the time of repurchase the Seller
is the Master Servicer, the amount described in clause (ii) shall be computed at
the Net Loan Rate.
RATING AGENCY: Any statistical credit rating agency, or its successor,
that rated the Class A Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean [____] or
better in the case of [_____________] and [_____] or better in the case of
[________] and in the case of any other Rating Agency shall mean such equivalent
ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "[____]" in the case of [_______________] and "[___]" in the
case of [_______] and in the case of any other Rating Agency, such equivalent
rating.
RECORD DATE: The last Business Day of the month immediately preceding
the month in which the related Distribution Date occurs.
REFERENCE BANK RATE: As to any Interest Period as follows: the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
one percent) of the offered rates for United States dollar deposits for one
month which are offered by the Reference Banks as of 11:00 A.M., London time, on
the second LIBOR Business Day prior to the first day of such Interest Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class A Principal Balance; PROVIDED that
at least two such Reference Banks provide such rate. If fewer than two offered
rates are provided, LIBOR will be the arithmetic mean of the rates quoted by one
or more major banks in New York City, selected by the Depositor after
consultation with the Trustee, as of 11:00 A.M., New York City time, on such
date for loans in U.S. Dollars to leading European Banks for a period of one
month in amounts approximately equal to the outstanding Class A Principal
Balance. If no such quotations can be obtained, LIBOR will be LIBOR applicable
to the preceding Distribution Date.
REFERENCE BANKS: Three major banks that are engaged in the London
interbank market, selected by the Depositor after consultation with the Trustee.
REGULAR CERTIFICATES: The Class A Certificates.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Master Servicer or the Seller with respect to (i) Monthly
Advances and Servicing Advances not previously reimbursed, (ii) any advances
reimbursable and not previously reimbursed pursuant to Section 3.03(vi), Section
5.01(a)(iv), Section 4.01(b)(ii) or Section 4.01(c), and (iii) any other amounts
reimbursable to the Master Servicer or the Seller prior to a distribution to the
Residual Certificateholders pursuant to this Agreement.
RELATED DOCUMENTS: As defined in Section 2.01.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan,
proceeds received by the Master Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise,
which are not released to the Mortgagor in accordance with applicable law,
second mortgage servicing standards the Master Servicer would use in servicing
second mortgage loans for its own account and this Agreement.
REMAINDER EXCESS SPREAD AMOUNT: As of any Distribution Date, the
amount equal to the excess of the Excess Spread over the Monthly Excess Spread
Amount.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC CERTIFICATE MATURITY DATE: The "latest possible maturity date"
of the Regular Certificates as that term is defined in Section 2.10.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO PROPERTY: A Mortgaged Property that is acquired by the Master
Servicer on behalf of the Trustee in foreclosure or by deed in lieu of
foreclosure.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development or a townhouse.
RESIDUAL CERTIFICATE: The Certificates executed and authenticated by
the Trustee substantially in the form set forth in Exhibit B hereto.
RESIDUAL CERTIFICATEHOLDER: The holder of a Residual Certificate.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer of the Trustee with direct responsibility for the administration of this
Agreement and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to the Seller or
Master Servicer, the President or any Vice President, Assistant Vice President
or any Secretary or Assistant Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
SELLER: [Norwest Mortgage, Inc., a California corporation,] or any
successor thereto.
SERVICING ADVANCES: All reasonable and customary unanticipated "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.07 or 3.20 and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.18, all of which reasonable
and customary unanticipated out-of-pocket costs and expenses are reimbursable to
the Master Servicer to the extent provided in Sections 3.03(ii), 3.03(vi), 3.07,
5.01(a)(iv), 5.01(a)(v), 4.01(b)(ii) and 4.01(c).
SERVICING CERTIFICATE: A certificate completed and executed by a
Servicing Officer on behalf of the Master Servicer.
SERVICING COMPENSATION: The Servicing Fee and other amounts to which
the Master Servicer is entitled pursuant to Section 3.09.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Master Servicer, which is calculated as an amount equal to [___]% per annum of
the Principal Balance thereof. Such fee shall be calculated and payable monthly
only from the amounts received in respect of interest on such Mortgage Loan and
shall be computed on the basis of the same principal amount and for the period
respecting which any related interest payment on a Mortgage Loan is computed.
The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
SERVICING FEE RATE: [_____]%.
SERVICING OFFICER: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer, as such list may be amended from time to
time.
SPREAD ACCOUNT: The account maintained pursuant to Section 4.01 which
account shall not be an asset of the Trust for which a REMIC election is made.
SPREAD ACCOUNT EXCESS: As defined in Section 4.01 hereof.
STANDARD & POOR'S: Standard & Poor's Ratings Group, a division of
McGraw-Hill Inc., or its successor in interest.
STARTUP DAY: The day designated as such pursuant to Section 2.09
hereof.
SUBSERVICER: Any Person with whom the Master Servicer has entered into
a Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Master Servicer and
any Subservicer relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 3.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Section 2.06, the excess of (i) the aggregate Principal Balances
(after application of principal payments received on or before the date of
substitution of any Eligible Substitute Mortgage Loans as of the date of
substitution), together with the greater of (i) all accrued and unpaid interest
thereon and (ii) 30 days' interest calculated on a 360-day year thereon at the
Loan Rate (or Net Loan Rate if the Seller is the Master Servicer), plus the
amount of any unreimbursed Servicing Advances made by the Master Servicer with
respect to such Defective Mortgage Loan over (ii) the Principal Balance of such
Eligible Substitute Mortgage Loan.
TAX MATTERS PERSON RESIDUAL INTEREST: A 0.000001% interest in the
Residual Certificates, which shall be issued to and held by the Trustee.
TRUST: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account, the Spread Account and/or the Distribution
Account in accordance with this Agreement, property that secured a Mortgage Loan
and that has become REO Property, the Certificate Insurance Policy, certain
hazard insurance policies maintained by the Mortgagors or the Master Servicer in
respect of the Mortgage Loans and an assignment of the Depositor's rights
hereunder and all proceeds of each of the foregoing.
TRUSTEE: [_________________________], or any successor Trustee
appointed in accordance with this Agreement that has accepted such appointment
in accordance with this Agreement.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
UNRECOVERED CLASS A PORTION: With respect to any Distribution Date and
any Mortgage Loan that becomes a Liquidated Mortgage Loan during the related Due
Period, the excess, if any, of the Principal Balance thereof immediately prior
to liquidation over Net Liquidation Proceeds of received during such Due Period.
VALUATION: With respect to any Mortgaged Property at the time referred
to herein, the Appraised Value of the Mortgaged Property based upon the most
recent appraisal made by or on behalf of the Master Servicer or the originator
of the related Mortgage Loan.
WEIGHTED AVERAGE NET LOAN RATE: As to any Distribution Date, the
average of the Net Loan Rates of the Mortgage Loans, as of the first day of the
month preceding the month of such Distribution Date, weighted on the basis of
the related Principal Balances as of such date (adjusted to an effective rate
reflecting accrued interest calculated on the basis of a 360-day year consisting
of twelve 30-day months).
Section 1.02. INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made on the basis of the actual number of days in an Accrual Period and
a year assumed to consist of 365 days. All calculations of interest on the
Certificates shall be made on the basis of a 360-day year consisting of twelve
30-day months. The calculation of the Servicing Fee shall be made on the basis
of the actual number of days in an Accrual Period and a year assumed to consist
of 365 days. All dollar amounts calculated hereunder shall be rounded to the
nearest penny with one-half of one penny being rounded down.
<PAGE>
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. CONVEYANCE OF MORTGAGE LOANS.
(a) The Seller, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the
Depositor, without recourse, all of its right, title and interest in and to each
Mortgage Loan, including all interest and principal received or receivable by
the Seller on or with respect to the Mortgage Loans after the Cut-Off Date and
all interest and principal payments on the Mortgage Loans received prior to the
Cut-Off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable
on the Mortgage Loans on or before the Cut-Off Date. On or prior to the Closing
Date, the Seller shall deliver to the Depositor or, at the Depositor's
direction, to the Trustee or other designee of the Depositor, the Mortgage File
for each Mortgage Loan listed in the Mortgage Loan Schedule. Such delivery of
the Mortgage Files shall be made against payment by the Depositor of the
purchase price, previously agreed to by the Seller and Depositor, for the
Mortgage Loans. With respect to any Mortgage Loan that does not have a first
payment date on or before the Due Date in the month of the first Distribution
Date, the Seller shall deposit into the Distribution Account on or before the
Distribution Account Deposit Date relating to the first Distribution Date, an
amount equal to one month's interest at the related Adjusted Mortgage Rate on
the Cut-Off Date Principal Balance of such Mortgage Loan.
(b) The Depositor, concurrently with the execution and delivery of
this Agreement, does hereby sell, transfer, assign, set over and otherwise
convey to the Trust, without recourse (subject to Sections 2.02 and 2.04), (i)
all of its right, title and interest in and to each Mortgage Loan, including its
Principal Balance and all collections in respect thereof received after the
Cut-Off Date (exclusive of (a) payments in respect of accrued interest on the
Mortgage Loans through the related Due Date in __________, 199__ and (b) the
product of interest collections during the first Due Period and [_____]); (ii)
all other assets included or to be included in the Trust for the benefit of
Certificateholders; and (iii) the Depositor's rights [hereunder], including,
without limitation, the representations and warranties of the Seller [hereunder]
together with all rights of the Depositor to require the Seller to cure any
breach thereof or to repurchase or substitute for any affected Mortgage Loan.
(c) In connection with such transfer, assignment and conveyance set
forth in clause (b) above, the Depositor shall deliver to, and deposit with the
Trustee, on or before the Closing Date, the following documents or instruments
with respect to each Mortgage Loan (the "Related Documents"):
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the
Mortgage Loan to the Trustee, endorsed by such Person "Pay to the
order of [_________________________], as Trustee for [________] Home
Equity Loan Trust 199__-__ without recourse" and signed, by facsimile
or manual signature, in the name of the Seller by a Responsible
Officer;
(ii) Any of: (1) the original Mortgage, and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of
the Mortgage and related power of attorney, if any, certified as a
true copy of the original Mortgage or power of attorney by a
Responsible Officer of the Seller or by the closing attorney by
facsimile or manual signature, or by an officer of the title insurer
or agent of the title insurer that issued the related title insurance
policy if the original has been transmitted for recording until such
time as the original is returned by the public recording office or (3)
a copy of the Mortgage and related power of Attorney, if any,
certified by the public recording office;
(iii) The original Assignment of Mortgage in recordable form,
from the Seller to "[_________________________], as Trustee for
[________] Home Equity Loan Trust 199__-__". Any such Assignments of
Mortgage may be made by blanket assignments for Mortgage Loans secured
by the Mortgaged Properties in the same county, if permitted by
applicable law;
(iv) The original lender's policy of title insurance or a true
copy thereof, or if such original lender's title insurance policy has
been lost, a copy thereof certified by the appropriate title insurer
to be true and complete, or if such lender's title insurance policy
has not been issued as of the Closing Date, a marked up commitment
(binder) to issue such policy;
(v) All intervening assignments, if any, showing a complete chain
of assignments from the originator to the Seller, including any
recorded warehousing assignments, with evidence of recording thereon,
certified by a Responsible Officer of the Seller by facsimile or
manual signature as a true copy of the original of such intervening
assignments; and
(vi) Originals of all assumption, written assurance, substitution
and modification agreements, if any.
In instances where the original recorded Mortgage cannot be delivered
by the Depositor to the Trustee prior to or concurrently with the execution and
delivery of this Agreement, due to a delay in connection with recording, the
Depositor may in lieu of delivering such original recorded Mortgage, deliver to
the Trustee a copy thereof, provided that the Seller certifies that the original
Mortgage has been delivered to a title insurance company for recordation after
receipt of its policy of title insurance or binder therefor. In all such
instances, the Depositor will deliver or cause to be delivered the original
recorded Mortgage to the Trustee promptly upon receipt of the original recorded
Mortgage but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledger relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trustee and constitute part of the Trust in accordance with the terms of
the trust created hereunder.
(d) The parties hereto intend that the transaction set forth herein be
a sale by the Depositor to the Trust of all the Depositor's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Depositor
hereby grants to the Trust a security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans and other property
described above; and this Agreement shall constitute a security agreement under
applicable law.
(e) Within 60 days of the Closing Date, the Seller, at its own
expense, shall either (i) prepare and send for recording the Assignments of
Mortgage in favor of the Trustee (which may be a blanket assignment if permitted
by applicable law) in the appropriate real property or other records or (ii)
deliver to the Trustee the Assignments of Mortgage in favor of the Trustee in
form for recordation, together with an Opinion of Counsel to the effect that
recording is not required to protect the Trustee's right, title and interest in
and to the related Mortgage Loan (to the extent provided herein) or, in the
event a court should recharacterize the conveyance of the Mortgage Loans (to the
extent provided herein) as a loan or a security for a loan, to perfect a first
priority security interest in favor of the Trustee in the related Mortgage Loan.
With respect to any Assignment of Mortgage as to which the related recording
information is unavailable within [ ] days following the Closing Date, such
Assignment of Mortgage shall be submitted for recording within [ ] days after
receipt of such information but in no event later than one year after the
Closing Date. The Trustee shall be required to retain a copy of each Assignment
of Mortgage submitted for recording. In the event that any such Assignment of
Mortgage is lost or returned unrecorded because of a defect therein, the Seller
shall promptly prepare a substitute Assignment of Mortgage or cure such defect,
as the case may be, and thereafter the Trustee shall be required to submit each
such Assignment of Mortgage for recording. Any failure of the Seller to comply
with this Section 2.01(e) shall result in the obligation of the Seller to
purchase or substitute for the related Mortgage Loans pursuant to the provisions
of Section 2.02.
(f) The Trustee agrees, for the benefit of Certificate-holders, within
[ ] days after execution and delivery of this Agreement, to review the Mortgage
Files to ascertain that all required documents set forth in paragraphs (i) - (v)
of Section 2.01(c) have been executed and received, and that the Mortgage Notes
have been endorsed as set forth in Section 2.01(c), and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule and in so
doing the Trustee may rely on the purported due execution and genuineness of any
signature thereon. If within such [ ]-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Seller and the Depositor, and the
Seller shall have a period of [ ] days after such notice within which to correct
or cure any such defect.
(g) The Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in subsection (f) of Section 2.01.
Without limiting the effect of the preceding sentence, in reviewing any Mortgage
File pursuant to such subsection, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded, but shall not be required to
determine whether any Person executing any document is authorized to do so or
whether any signature thereon is genuine.
Section 2.02. ACCEPTANCE BY TRUSTEE. The Trustee hereby acknowledges
its receipt of the Certificate Insurance Policy and the sale and assignment of
the Mortgage Loans, and, subject to the review and period for delivery provided
for in Section 2.01, its receipt of the Mortgage Files, and declares that the
Trustee holds and will hold such documents and all amounts received by it
thereunder and hereunder in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders. If the Seller is given
notice under Section 2.01(f) above and if the Seller does not correct or cure
such omission or defect within the [ ]-day period specified in Section 2.01(f)
above, the Seller shall purchase such Mortgage Loan from the Trustee on the
Determination Date in the month following the month in which such [ ]-day period
expired at the Purchase Price of such Mortgage Loan or upon the expiration of
such [ ]-day period if the omission or defect would result in the related
Mortgage Loan not being a Qualified Mortgage Loan for purposes of Section
860G(a)(3) of the Code. The Purchase Price for the purchased Mortgage Loan shall
be deposited in the Collection Account no later than the applicable
Determination Date or the Business Day preceding the expiration of such [ ]-day
period, as the case may be, and, upon receipt by the Trustee of written
notification of such deposit signed by an officer of the Seller, the Trustee
shall release to the Seller the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Seller or its designee
any Mortgage Loan released pursuant hereto. It is understood and agreed that the
obligation of the Seller to purchase any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the sole
remedy against the Seller respecting such defect or omission available to the
Certificateholders or the Trustee on behalf of Certificateholders. An Opinion of
Counsel to the effect set forth in Section 2.06(d) shall be delivered to the
Trustee in connection with any such repurchase.
The Master Servicer, promptly following the transfer of (i) a
Defective Mortgage Loan from or (ii) an Eligible Substitute Mortgage Loan to the
Trust pursuant to this Section and Section 2.06, as the case may be, shall amend
the Mortgage Loan Schedule, appropriately mark the Electronic Ledger and make
appropriate entries in its general account records to reflect such transfer and
the addition of any Eligible Substitute Mortgage Loan, if applicable.
Section 2.03. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND
THE MASTER SERVICER.
(a) The Seller represents and warrants that as of the Closing
Date:
(i) The Seller is duly organized, validly existing, and in good
standing under the laws of the State of California and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Seller and to perform its obligations as Seller
hereunder; the Seller has the full power and authority corporate and otherwise
to own its property, to carry on its business as presently conducted to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action; this Agreement evidences the valid, binding
and enforceable obligation of the Seller; and all requisite action has been
taken by the Seller to make this Agreement valid, binding and enforceable upon
the Seller in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium and
other, similar laws relating to or affecting creditors' rights generally or by
the application of general equitable principles in any proceeding, whether at
law or in equity;
(ii) 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 in connection with the purchase and sale of the Certificates and
the execution and delivery by the Seller of the documents relating to the
transactions contemplated by this Agreement, to which it is a party, have been
duly taken, given or obtained, as the case may be, are in full force and effect,
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
documents on the part of the Seller and the performance by the Seller of its
obligations as Seller under this Agreement and such of the other documents to
which it is a party;
(iii) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the
articles of incorporation or bylaws of the Seller or result in the breach of any
term or provision of, or conflict with or constitute a default under or result
in the acceleration of any obligation under, any material agreement, indenture,
contract or loan or credit agreement or other material instrument to which the
Seller or its property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Seller or its property is
subject;
(iv) Neither this Agreement nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(v) There is no action, suit, proceeding or investigation pending or,
to the best of the knowledge of the Seller, threatened, before any court,
administrative agency or tribunal against the Seller which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Seller or
in any material prohibition or impairment of the right or ability of the Seller
to carry on its business substantially as now conducted, or in any material
liability on the part of the Seller or which would draw into question the
validity or enforceability of this Agreement or the Mortgage Loans or of the
Certificates or of any action taken or to be taken in connection with the
obligations of the Seller contemplated herein, or which would be likely to
impair materially the ability of the Seller to perform under the terms of this
Agreement or that might prohibit its entering into this Agreement or render the
Certificates invalid, seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated hereby;
(vi) The Seller is not in violation of or in default with respect to,
and the execution and delivery of this Agreement by the Seller and its
performance of and compliance with the terms hereof will not constitute a
violation or 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 violation or default 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 or under any Subservicing Agreement;
(vii) With respect to any Mortgage Loan purchased by the Seller, the
Seller acquired title to the Mortgage Loan in good faith, without notice of any
adverse claim; and
(b) The Master Servicer represents and warrants that as of the
Closing Date:
(i) The Master Servicer is duly organized, validly existing, and in
good standing under the laws of the United States and has all licenses necessary
to carry on its business as now being conducted and is licensed, qualified and
in good standing in each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Master Servicer and to perform its obligations as Master
Servicer hereunder; the Master Servicer has the full power and authority
corporate and otherwise to own its property, to carry on its business as
presently conducted to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Master Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action; this Agreement evidences the valid, binding and enforceable obligation
of the Master Servicer; and all requisite action has been taken by the Master
Servicer to make this Agreement valid, binding and enforceable upon the Master
Servicer in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other,
similar laws relating to or affecting creditors' rights generally or by the
application of general equitable principles in any proceeding, whether at law or
in equity;
(ii) 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 in connection with the purchase and sale of the
Certificates and the execution and delivery by the Master Servicer of the
documents relating to the transactions contemplated by this Agreement, to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect, 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 documents on the part of the Master Servicer and the performance
by the Master Servicer of its obligations as Master Servicer under this
Agreement and such of the other documents to which it is a party;
(iii) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of its
charter or bylaws of the Master Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement, indenture,
contract or loan or credit agreement or other material instrument to which the
Master Servicer or its property is subject, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Master Servicer or
its property is subject;
(iv) Neither this Agreement nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(v) There is no action, suit, proceeding or investigation pending or,
to the best of the knowledge of the Master Servicer, threatened, before any
court, administrative agency or tribunal against the Master Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Master Servicer or in any material prohibition or impairment of
the right or ability of the Master Servicer to carry on its business
substantially as now conducted, or in any material liability on the part of the
Master Servicer or which would draw into question the validity or enforceability
of this Agreement or of any action taken or to be taken in connection with the
obligations of the Master Servicer contemplated herein, or which would be likely
to impair materially the ability of the Master Servicer to perform under the
terms of this Agreement or that might prohibit its entering into this Agreement
or the consummation of any of the transactions contemplated hereby;
(vi) The Master Servicer is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Master
Servicer and its performance of and compliance with the terms hereof will not
constitute a violation or 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 violation or default 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 or under
any Subservicing Agreement;
(vii) The Master Servicer is an approved seller/servicer of
conventional first and second mortgage loans for FNMA and an approved
seller/servicer of conventional second mortgage loans for FHLMC in good
standing, and the Master Servicer's deposits are insured by the FDIC to the
maximum extent permitted by law.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders, the Person discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
its discovery or its receipt of notice of breach, or, with the prior written
consent of a Responsible Officer of the Trustee, such longer period specified in
such consent, the Seller or the Master Servicer, as the case may be, shall cure
such breach in all material respects.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING
THE MORTGAGE LOANS. The Seller represents and warrants to the Trustee on behalf
of the Certificateholders as follows as of the Closing Date:
(i) the information set forth in the schedule of Mortgage
Loans appearing as Exhibit C hereto is correct in all material respects
at the date or dates respecting which such information is furnished as
specified therein;
(ii) immediately prior to the transfer and assignment
contemplated by this Agreement, the Seller is the sole owner and holder
of the Mortgage Loan, free and clear of any and all liens, charges or
security interests of any nature and has full right and authority to
sell and assign the same;
(iii) the mortgage is a valid, subsisting and enforceable
first lien or second lien of record on the related Mortgaged Property
subject, in the case of any second Mortgage Loan, only to a First Lien
on such Mortgaged Property, and the Mortgaged Property is free and
clear of all encumbrances and liens having priority over the lien of
the Mortgage except for [a first lien as disclosed,] liens for real
estate taxes and special assessments not yet due and payable and liens
or interests arising under or as a result of any federal, state or
local law, regulation or ordinance relating to hazardous wastes or
hazardous substances; and, if the Mortgaged Property is a condominium
unit, any lien for common charges permitted by statute or home owners
association fees, and, if the Mortgaged Property consists of shares of
a cooperative housing corporation, any lien for amounts due to the
cooperative housing corporation for unpaid assessments or charges or
any lien of any assignment of rents or maintenance expenses secured by
the real property owned by the cooperative housing corporation; and any
security agreement, chattel mortgage or equivalent document related to,
and delivered to the Trustee or a custodian with, any Mortgage which
establishes in the Seller a valid first lien on the property described
therein and the Seller has full right to sell and assign the same to
the Trustee;
(iv) neither the Seller nor any prior holder of the Mortgage
or the related Mortgage Note has modified the Mortgage in any material
respect; satisfied, cancelled or subordinated the Mortgage or the
related Mortgage Note in whole or in part; or released the Mortgaged
Property in whole or in part from the lien of the Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction, except in each case as reflected in a document delivered
by the Seller to the Trustee or a custodian together with the related
Mortgage;
(v) all taxes, governmental assessments, insurance premiums,
and water, sever and municipal charges previously due and owing have
been paid, or an escrow of funds in an amount sufficient to pay for
every such item which remains unpaid has been established to the
extent permitted by law; and the Seller has not advanced funds or
received any advance of funds by a party other than the mortgagor,
directly or indirectly (except pursuant to any Buy-Down Loan or
Subsidy Loan arrangement), for the payment of any amount required by
the Mortgage, except for interest accruing from the date of the
related Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is later, to the date which precedes by 30 days
the first Due Date under the related Mortgage Note;
(vi) the Mortgaged Property is undamaged by water, fire,
earthquake or earth movement, windstorm, flood, tornado or similar
casualty (excluding casualty from the presence of hazardous wastes or
hazardous substances, as to which the Seller makes no representation),
so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were
intended and to the best of the Seller's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation
of the Mortgaged Property;
(vii) the Mortgaged Property is free and clear of all
mechanics' and materialmen's liens or liens in the nature thereof;
provided, however, that this warranty shall be deemed not to have been
made at the time of the initial issuance of the Certificates if a
title policy affording, in substance, the same protection afforded by
this warranty is furnished to the Trustee by the Seller;
(viii) except for Mortgage Loans secured by shares in
cooperatives, the Mortgaged Property consists of a fee simple or
leasehold estate in real property, all of the improvements which are
included for the purpose of determining the appraised value of the
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property and no improvements on adjoining
properties encroach upon the Mortgaged Property (unless insured
against under an applicable title insurance policy) and, to the best
of the Seller's knowledge, the Mortgaged Property and all improvements
thereon comply with all requirements of any applicable zoning and
subdivision laws and ordinances;
(ix) the Mortgage Loan meets, or is exempt from, applicable
state or federal laws, regulations and other requirements pertaining
to usury, and the Mortgage Loan is not usurious;
(x) to the best of the Seller's knowledge, 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;
(xi) all payments required to be made up to the Due Date
immediately preceding the Cut-Off Date for such Mortgage Loan under
the terms of the related Mortgage Note have been made and no Mortgage
Loan had more than one delinquency in the 13 months preceding the
Cut-Off Date;
(xii) the Mortgage Note, the related Mortgage and other
agreements executed in connection therewith are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally
and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law); and,
to the best of the Seller's knowledge, all parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage Note
and the Mortgage and each Mortgage Note and Mortgage has been duly and
properly executed by the mortgagor;
(xiii) any and all requirements of any federal, state or
local law with respect to the origination of the Mortgage Loans
including, without limitation, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loans have
been complied with;
(xiv) the proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have
been complied with, except for escrow funds for exterior items which
could not be completed due to weather; and all costs, fees and
expenses incurred in making, closing or recording the Mortgage Loan
have been paid, except recording fees with respect to Mortgages not
recorded as of the date hereof;
(xv) the Mortgage Loan (except a T.O.P. Loan (loans
originated by Norwest Mortgage or Norwest Funding in connection with
the "Title Option Plus" program, as more fully described in the
Prospectus under "Mortgage Loan Underwriting") and any Mortgage
Loan secured by Mortgaged Property located in Iowa as to which an
opinion of counsel of the type customarily rendered in such State in
lieu of title insurance is instead received) is covered by an ALTA
mortgagee title insurance policy or other generally acceptable form of
policy or insurance acceptable to FNMA or FHLMC, issued by a title
insurer acceptable to FNMA or FHLMC insuring the originator, its
successors and assigns, as to the first priority or subordinate (as
indicated) lien of the Mortgage in the original principal amount of
the Mortgage Loan and subject only to (A) the lien of current real
property taxes and assessments not yet due and payable, (B) covenants,
conditions and restrictions, rights-of- way, easements and other
matters of public record as of the date of recording of such Mortgage
acceptable to mortgage lending institutions in the area in which the
Mortgaged Property is located or specifically referred to in the
appraisal performed in connection with the origination of the related
Mortgage Loan, (C) liens created pursuant to any federal, state or
local law, regulation or ordinance affording liens for the costs of
clean-up of hazardous substances or hazardous wastes or for other
environmental protection purposes and (D) such other matters to which
like properties are commonly subject which do not individually, or in
the aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage; the Seller is the sole
insured of such mortgagee title insurance policy, the assignment to
the Trustee of the Seller's interest in such mortgagee title insurance
policy does not require any consent of or notification to the insurer
which has not been obtained or made, such mortgagee title insurance
policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Trustee and no claims have been
made under such mortgagee title insurance policy, and no prior holder
of the related Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of such mortgagee
title insurance policy;
(xvi) the Mortgaged Property securing each Mortgage Loan is
insured by an insurer acceptable to FNMA or FHLMC against loss by fire
and such hazards as are covered under a standard extended coverage
endorsement, in an amount which is not less than the lesser of 100% of
the insurable value of the Mortgaged Property and the outstanding
principal balance of the Mortgage Loan, but in no event less than the
minimum amount necessary to fully compensate for any damage or loss on
a replacement cost basis; if the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project; if upon origination of the Mortgage Loan, the
improvements on the Mortgaged Property were in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of
(A) the outstanding principal balance of the Mortgage Loan, (B) the
full insurable value of the Mortgaged Property and (C) the maximum
amount of insurance which was available under the Flood Disaster
Protection Act of 1973; and each Mortgage obligates the mortgagor
thereunder to maintain all such insurance at the mortgagor's cost and
expense;
(xvii) to the best of the Seller's knowledge, there is on
default, breach, violation or event of acceleration existing under any
Mortgage or the related Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration; and the Seller has not waived any default, breach,
violation or event of acceleration; no foreclosure action is
threatened or has been commenced with respect to the Mortgage Loan;
(xviii) no Mortgage Note or Mortgage is subject to any right
of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note or Mortgage, or the exercise of any right thereunder,
render such Mortgage unenforceable, in whole or in part, or subject it
to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto;
(xix) each Mortgage Note is payable in monthly payments,
resulting in complete amortization of the Mortgage Loan over a term of
not more than 360 months;
(xx) each Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security, including realization by judicial
foreclosure (subject to any limitation arising from any bankruptcy,
insolvency or other law for the relief of debtors), and there is no
homestead or other exemption available to the mortgagor which would
interfere with such right of foreclosure;
(xxi) to the best of the Seller's knowledge, no mortgagor is
a debtor in any state or Federal bankruptcy or insolvency proceeding;
(xxii) each Mortgage Property is located in the United
States and consists of a one- to four-unit single family residential
property which may include a detached home, townhouse, condominium
unit, unit in a planned unit development or a leasehold interest with
respect to any of the forgoing or, in the case of Mortgage Loans
secured by shares of cooperatives, leases or occupancy agreements;
(xxiii) with respect to each Buy-Down Loan, the funds
deposited in the Buy- Down Fund, if any, will be sufficient, together
with interest thereon at the rate customarily received by the Seller
on such funds, compounded monthly, and adding the amount required to
be paid by the mortgagor, to make the scheduled payments stated in the
Mortgage Note for the term of the buy-down agreement; and
(xxiv) each Mortgage Loan is a "Qualified Mortgage" within
the meaning of Section 860G of the Code.
No representations or warranties are made by the Seller or any other
party as to the absence or effect of hazardous wastes or hazardous substances on
any of the Mortgaged Properties or on the lien of any Mortgage or with respect
to the absence or effect of fraud in the origination of any Mortgage Loan, and
any loss or liability resulting from the presence or effect of such hazardous
wastes, hazardous substances or fraud will be borne solely by
Certificateholders.
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Depositor, the Seller,
the Master Servicer or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the
respective Mortgage Files to the Trustee and the termination of the rights and
obligations of the Master Servicer pursuant to Section 7.04 or 8.01. Upon
discovery by the Depositor, the Seller, the Master Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, without regard to any limitation set forth therein concerning the
knowledge of the Seller as to the facts stated therein, which materially and
adversely affects the interests of the Trust or the Certificateholders in the
related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. Within 60 days of its discovery or its
receipt of notice of breach, the Seller shall use all reasonable efforts to cure
such breach in all material respects or shall purchase from the Trust or
substitute an Eligible Substitute Mortgage Loan as provided in Section 2.06 for
such Mortgage Loan from the Trust. Any such purchase by the Seller shall be at
the Purchase Price, and in each case shall be accomplished in the manner set
forth in Section 2.02. It is understood and agreed that the obligation of the
Seller to cure, substitute or purchase any Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedies against
the Seller respecting such breach available to Certificateholders or the Trustee
on behalf of Certificateholders. An Officers' Certificate and Opinion of Counsel
to the effect set forth in Section 2.06(d) shall be delivered to the Trustee in
connection with any such repurchase.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. (a) The
Depositor represents and warrants to the Trustee on behalf of the
Certificateholders as follows:
(i) This Agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee of each Mortgage Loan, (x) the Depositor had
good and marketable title to each Mortgage Loan subject to no prior
lien, claim, participation interest, mortgage, security interest,
pledge, charge or other encumbrance or other interest of any nature
and (y) the Depositor had full authority under all governmental and
regulatory bodies having jurisdiction over the ownership of the
Mortgage Loan to sell the Mortgage Loan to the Trustee and such
transfer will not impair the enforceability of the Mortgage Loans;
(iii) As of the Closing Date, the Depositor has transferred
all right, title and interest in the Mortgage Loans to the Trustee;
and
(iv) The Depositor has not transferred the Mortgage Loans to
the Trustee with any intent to hinder, delay or defraud any of its
creditors.
Section 2.06. SUBSTITUTION OF MORTGAGE LOANS. (a) On a Determination
Date within two years following the Closing Date and which is on or before the
date on which the Seller would otherwise be required to repurchase a Mortgage
Loan under Section 2.02 or 2.04, the Seller may deliver to the Trustee one or
more Eligible Substitute Mortgage Loans in substitution for any one or more of
the Defective Mortgage Loans which the Seller would otherwise be required to
repurchase pursuant to Sections 2.02 or 2.04.
(b) The Seller shall notify the Master Servicer and the Trustee in
writing not less than five Business Days before the related Determination Date
which is on or before the date on which the Seller would otherwise be required
to repurchase such Mortgage Loan pursuant to Section 2.02 or 2.04 of its
intention to effect a substitution under this Section. On such Determination
Date (the "Substitution Date"), the Seller shall deliver to the Trustee (1) the
Eligible Substitute Mortgage Loans to be substituted for the Original Mortgage
Loans, (2) a list of the Original Mortgage Loans to be substituted for by such
Eligible Substitute Mortgage Loans, (3) an Officers' Certificate (A) stating
that no failure by the Master Servicer described in Section 8.01 shall have
occurred and be continuing, (B) stating that the aggregate principal balance of
all Eligible Substitute Mortgage Loans (determined with respect to each Eligible
Substitute Mortgage Loan as of the Determination Date on which it was
substituted) including the principal balance of Eligible Substitute Mortgage
Loans being substituted on such Determination Date does not exceed an amount
equal to 5% of the aggregate principal balance of all Mortgage Loans as of the
Closing Date, (C) stating that all conditions precedent to such substitution
specified in subsection (a) have been satisfied and attaching as an exhibit a
supplemental Mortgage Loan schedule (the "Supplemental Mortgage Loan Schedule")
setting forth the same type of information as appears on the Mortgage Loan
Schedule and representing as to the accuracy thereof and (D) confirming that the
representations and warranties contained in Section 2.04 are true and correct in
all material respects with respect to the Substitute Mortgage Loans on and as of
such Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this Section
2.06, (4) an Opinion of Counsel to the effect set forth below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been deposited to the Collection Account. Upon receipt
of the foregoing, the Trustee shall release such Original Mortgage Loans to the
Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Section 2.06(a) and (b) above and the grant of such Eligible Substitute Mortgage
Loans to the Trustee pursuant to Section 2.06(a) above, Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) In connection with any Mortgage Loan that the Seller is required
to purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or substitution will not cause (x) any
federal tax to be imposed on the Trust, including without limitation, any
Federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start-up day" under Section 860G(d)(1) of
the Code or (y) any portion of the Trust to fail to qualify as a REMIC at any
time that any Certificate is outstanding. In the event that such opinion
indicates that a repurchase or substitution will result in the imposition of a
prohibited transaction tax, give rise to net taxable income or be deemed a
contribution to the REMIC after the "start-up day", the Seller shall not be
required to repurchase or replace any such Mortgage Loan unless and until the
Master Servicer has determined there is an actual or imminent default with
respect thereto or that such defect or breach adversely affects the
enforceability of such Mortgage Loan.
Section 2.07. EXECUTION AND AUTHENTICATION OF CERTIFICATES. The
Trustee on behalf of the Trust shall cause to be executed, authenticated and
delivered on the Closing Date to or upon the order of the Depositor, in exchange
for the Mortgage Loans, concurrently with the sale, assignment and conveyance to
the Trustee of the Mortgage Loans, Class A Certificates in authorized
denominations and the Residual Certificates, together evidencing the ownership
of the entire Trust.
Section 2.08. DESIGNATION OF INTERESTS IN REMIC. The Residual
Certificates are hereby designated as the single class of "residual interests"
in the Trust for purposes of the REMIC Provisions. The Regular Certificates are
hereby designated as "regular interests" in the Trust for purposes of the REMIC
Provisions.
Section 2.09. REMIC CERTIFICATE MATURITY DATE. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the Regular Certificates is the Distribution Date in
[__________].
Section 2.10. TAX RETURNS AND REPORTS TO CERTIFICATEHOLDERS. (a) For
federal income tax purposes, the Trust shall have a calendar year and shall
maintain its books on the accrual method of accounting.
(b) The Trustee shall prepare or cause to be prepared, execute and
deliver to the Master Servicer or Certificateholders, as applicable, any income
tax information returns for each taxable year with respect to the Trust
containing such information at the times and in the manner as may be required by
the Code or state or local tax laws, regulations, or rules, and shall furnish or
cause to be furnished to the Trust and the Certificateholders the schedules,
statements or information at such times and in such manner as may be required
thereby. Within thirty (30) days of the Closing Date, the Trustee shall furnish
or cause to be furnished to the Internal Revenue Service, on Form 8811 or as
otherwise required by the Code, the name, title, address and telephone number of
the person that Holders of the Certificates may contact for tax information
relating thereto, together with such additional information at the time or times
and in the manner required by the Code. Such federal, state, or local income tax
or information returns shall be signed by the Trustee, or such other Person as
may be required to sign such returns by the Code or state or local tax laws,
regulations, or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending _______________, 199__, REMIC status shall be elected with
respect to all assets of the Trust other than the Spread Account for such
taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to the Trust, including but not limited to the income, expenses, assets
and liabilities of the Trust, and the fair market value and adjusted basis of
the Trust property and assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information.
(e) The Master Servicer, upon request, shall promptly furnish the
Trustee with all such information as may be required in connection with the
Trustee's obligations pursuant to this Section 2.11.
Section 2.11. TAX MATTERS PERSON. The tax matters person with respect
to the Trust shall be the Trustee. The Trustee shall at all times hold the Tax
Matters Person Residual Interest and shall have the same duties with respect to
the Trust as those of a "tax matters partner" under Subchapter C of Chapter 63
of Subtitle F of the Code. Each holder of a Residual Certificate shall be deemed
to have agreed, by acceptance thereof, to be bound by this Section 2.12.
Section 2.12. REMIC RELATED COVENANTS. For as long as the Trust shall
exist, the Trustee shall act in accordance herewith to assure continuing
treatment of the Trust as a REMIC and avoid the imposition of tax on the Trust.
In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" in the Trust within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates and the Residual
Certificates.
(b) Except as otherwise provided in the Code, the Depositor shall not
grant and the Trustee shall not accept property unless (i) substantially all of
the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
start-up day unless such grant would not subject the Trust to the 100% tax on
contributions to a REMIC after the start-up day of the REMIC imposed by Code
Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any
portion of the Mortgage Loans (other than in accordance with Section 2.02, 2.04
or 3.17), unless such sale is pursuant to a "qualified liquidation" as defined
in Code Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee shall maintain books with respect to the Trust on a
calendar year taxable year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of Class R Certificates with respect to the
following matters:
(i) The original projected principal and interest cash flows on
the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(ii) The Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the
end of such calendar quarter with respect to each class of regular or
residual interests created hereunder and with respect to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing
and amount of any cancellation of indebtedness income of the REMIC
with respect to such regular interests or bad debt deductions claimed
with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section 51
23151(a) or 23153(a) of the California Revenue and Taxation Code) is imposed,
such tax shall be paid by (i) the Trustee, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Agreement,
(ii) the Master Servicer, if such tax arises out of or results from a breach by
the Master Servicer of any of any of its obligations under this Agreement, or
otherwise (iii) the Holders of the Class R Certificates in proportion to their
Percentage Interests. To the extent such tax is chargeable against the holders
of the Class R Certificates, notwithstanding anything to the contrary contained
herein, the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R Certificates on any Distribution
Date sufficient funds to reimburse the Trustee for the payment of such tax (to
the extent that the Trustee has not been previously reimbursed or indemnified
therefor). Any tax imposed on the Trust Fund by Section 23151 or Section 23153
of the California Revenue and Taxation Code shall be timely paid by the Trustee
out of its own funds without right of reimbursement therefor if such taxes arise
solely from the Trustee's presence in California, and otherwise by the Master
Servicer.
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Depositor, the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify the Trust from treatment as
a REMIC; and provided, that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Certificates.
(g) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all tax related expenses of the Trust (including, but not
limited to, tax return preparation and filing expenses and any professional fees
or expenses related to audits or any administrative or judicial proceedings with
respect to the Trust that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any Opinion of Counsel
required pursuant to Sections 2.06, 3.07 and 10.02 and other than taxes except
as specified herein.
<PAGE>
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. THE MASTER SERVICER. (a) It is intended that the Trust
formed hereunder shall constitute, and that the affairs of the Trust shall be
conducted so as to qualify it as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Master Servicer covenants and agrees that it
shall not knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of the Trust.
(b) The Master Servicer, as independent contract servicer, shall
service and administer the Mortgage Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Master Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. The Master Servicer
may enter into Subservicing Agreements for any servicing and administration of
Mortgage Loans with any institution which is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Subservicing
Agreement and (1) (x) has been designated an approved Seller-Master Servicer by
FHLMC or FNMA for first and second mortgage loans, or (y) is an affiliate of the
Master Servicer, or (2) is otherwise approved by the Class A Certificateholders
aggregating 51% of the Percentage Interests thereof. Any such Subservicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. The Master Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and either itself directly service the related Mortgage Loans or enter
into a Subservicing Agreement with a successor subservicer which qualifies
hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and primarily liable for
the servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Mortgage Loans when the
Subservicer has received such payments. The Master Servicer shall be entitled to
enter into any agreement with a Subservicer for indemnification of the Master
Servicer by such Subservicer, and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 3.01(e). The Master Servicer shall be solely
liable for all fees owed by it to any Subservicer irrespective of whether the
Master Servicer's compensation pursuant to this Agreement is sufficient to pay
such fees.
(e) In the event the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of an Event of Default), the Trustee or
its designee shall thereupon assume all of the rights and obligations of the
Master Servicer under each Subservicing Agreement that the Master Servicer may
have entered into, unless the Trustee or designee elects to terminate any
Subservicing Agreement. If the Trustee does not terminate a Subservicing
Agreement, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Master Servicer's interest therein
and to have replaced the Master Servicer as a party to each Subservicing
Agreement to the same extent as if the Subservicing Agreements had been assigned
to the assuming party, except that the Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreements with
regard to events that occurred prior to the date the Master Servicer ceased to
be the Master Servicer hereunder. The Master Servicer at its expense and without
right of reimbursement therefor, shall, upon request of the Trustee, deliver to
the assuming party all documents and records relating to each Subservicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreements to the
assuming party.
(f) Consistent with the terms of this Agreement, the Master Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Master Servicer, imminent, and (y) such waiver,
modification, postponement or indulgence would not cause the REMIC to be
disqualified or otherwise cause a tax to be imposed on the REMIC) the Master
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Loan Rate or the Margin, defer or forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan) or extend the final maturity date on the Mortgage Loan. No costs
incurred by the Master Servicer or any Subservicer in respect of Servicing
Advances shall for the purposes of distributions to Certificateholders be added
to the amount owing under the related Mortgage Loan. Without limiting the
generality of the foregoing, the Master Servicer shall continue, and is hereby
authorized and empowered to execute and deliver on behalf of the Trustee and
each Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Master Servicer, the Trustee shall furnish the Master
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the Master
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted second mortgage servicing practices of
prudent lending institutions and giving due consideration to the
Certificateholders' reliance on the Master Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Master Servicer from its rights and obligations
under this Agreement, and with respect to resignation pursuant to Section 7.04,
after receipt by the Trustee of the Opinion of Counsel required pursuant to
Section 7.04, the Trustee or its designee shall assume all of the rights and
obligations of the Master Servicer, subject to Section 8.02 hereof. The Master
Servicer shall, upon request of the Trustee but at the expense of the Master
Servicer, deliver to the Trustee all documents and records relating to the
Mortgage Loans and an accounting of amounts collected and held by the Master
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(h) The Master Servicer shall deliver a list of Servicing Officers to
the Trustee by the Closing Date.
(i) Consistent with the terms of this Agreement, the Master Servicer
may consent to the placing of a lien senior to that of the Mortgage on the
related Mortgaged Property; PROVIDED, that such senior lien secures a mortgage
loan that refinances a First Lien and the combined loan-to-value ratio of the
related Mortgage Loan immediately following the refinancing (based on the
outstanding principal balance of the Mortgage Loan and the original principal
balance of such refinanced mortgage loan) is not greater than the Combined
Loan-to-Value Ratio of such Mortgage Loan as of the Cut-Off Date.
Section 3.02. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS. The Master
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid for no more than 125 days; PROVIDED such arrangement is
consistent with the Master Servicer's policies with respect to the mortgage
loans it owns or services; PROVIDED, FURTHER, that notwithstanding such
arrangement such Mortgage Loans will be included in the monthly information
delivered by the Master Servicer to the Trustee pursuant to Section 5.05.
(b) The Master Servicer shall establish and maintain with
[_______________________] a separate trust account (the "Collection Account")
titled "[_________________________], as Trustee, in trust for the registered
holders of Home Equity Loan Asset-Backed Certificates, Series 199__-__." The
Collection Account shall be an Eligible Account. The Master Servicer shall on
the Closing Date deposit any amounts representing payments on and any
collections in respect of the Mortgage Loans received after the Cut-Off Date and
prior to the Closing Date, and thereafter shall use its best efforts to deposit
within one Business Day, and shall in any event deposit within two Business Days
following receipt thereof the following payments and collections received or
made by it (without duplication):
(i) all payments received after the Cut-Off Date on account of
principal on the Mortgage Loans and all Principal Prepayments and
Curtailments collected after the Cut-Off Date;
(ii) all payments received after the Cut-Off Date on account of
interest on the Mortgage Loans;
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant
to Sections 2.02, 2.04, 2.06 and 3.17; and
(vii) any amount required to be deposited in the Collection
Account pursuant to Section 3.05, 3.07, 3.16, 3.17, 5.03, 5.04, 5.08
or 10.01;
provided, however, with respect to each Due Period, the Master Servicer shall be
permitted to retain from payments in respect of interest on the Mortgage Loans,
the Servicing Fee for such Due Period. The foregoing requirements respecting
deposits to the Collection Account are exclusive, it being understood that,
without limiting the generality of the foregoing, the Master Servicer need not
deposit in the Collection Account amounts representing Foreclosure Profits, fees
(including annual fees) or late charge penalties payable by Mortgagors, or
amounts received by the Master Servicer for the accounts of Mortgagors for
application towards the payment of taxes, insurance premiums, assessments and
similar items.
The Master Servicer may cause the institution maintaining the
Collection Account to invest any funds in the Collection Account in Eligible
Investments (including obligations of the Master Servicer or any of its
Affiliates, if such obligations otherwise qualify as Eligible Investments)
pursuant to Section 5.08.
Section 3.03. WITHDRAWALS FROM THE COLLECTION ACCOUNT. The Trustee
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes:
(i) on the Business Day prior to each Distribution Date, to
deposit the Available Remittance Amount to the Distribution Account;
(ii) to reimburse the Master Servicer for any accrued unpaid
Servicing Fees and for unreimbursed Monthly Advances and Servicing
Advances. The Master Servicer's right to reimbursement for unpaid
Servicing Fees and unreimbursed Servicing Advances shall be limited to
late collections on the related Mortgage Loan, including Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Master Servicer from the
related Mortgagor or otherwise relating to the Mortgage Loan in
respect of which such reimbursed amounts are owed. The Master
Servicer's right to reimbursement for unreimbursed Monthly Advances
shall be limited to late collections of interest on any Mortgage Loan
and to liquidation proceeds and insurance proceeds on related Mortgage
Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(iv) to make investments in Eligible Investments and (b) subject
to Section 5.08(e), to pay to the Spread Account or the Master
Servicer, as the case may be, interest earned in respect of Eligible
Investments or on funds deposited in the Collection Account;
(v) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error and to pay such funds
to the appropriate Person;
(vi) to pay the Master Servicer Servicing Compensation pursuant
to Section 3.09 hereof to the extent not retained or paid pursuant to
Section 3.02(b);
(vii) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.07;
(viii) to reimburse the Master Servicer for (a) Nonrecoverable
Advances that are not, with respect to aggregate Servicing Advances on
any single Mortgage Loan or REO Property, in excess of the Principal
Balance thereof and (b) expenses incurred pursuant to Section 7.03;
(ix) to pay to the Seller (a) collections received in respect of
accrued interest on the Mortgage Loans through the related Due Date in
_____________ 199__ and (b) the product of collections in respect of
interest during the first Due Period and [____]; and
(x) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein
to the Residual Certificateholders.
Section 3.04. MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION
EXPENSES. The Master Servicer shall cause to be maintained for each Mortgage
Loan fire and hazard insurance naming the Master Servicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time, (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan and (iii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis. The Master Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property, (ii) the combined principal balance owing on such Mortgage Loan and
any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis at the
time of such foreclosure, fire and or deed in lieu of foreclosure plus accrued
interest and the good-faith estimate of the Master Servicer of related Servicing
Advances to be incurred in connection therewith. Amounts collected by the Master
Servicer under any such policies shall be deposited in the Collection Account to
the extent called for by Section 3.02. In cases in which any Mortgaged Property
is located in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance to the
extent such flood insurance is available and the Master Servicer has determined
such insurance to be necessary in accordance with accepted second mortgage loan
servicing standards. All such flood insurance shall be in amounts equal to the
least of the amount in clause (i) above, clause (ii) above and the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended. The Master Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
Section 3.05. MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY. In
the event that the Master Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy rating of A:VIII or better in Best's Key
Rating Guide, 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 without co-insurance, and otherwise
complies with the requirements of Section 3.04, the Master Servicer shall be
deemed conclusively to have satisfied its obligations with respect to fire and
hazard insurance coverage under Section 3.04, it being understood and agreed
that such blanket policy may contain a deductible clause, in which case the
Master Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with Section 3.04, and there
shall have been a loss which would have been covered by such policy, deposit in
the Collection Account the difference, if any, between the amount that would
have been payable under a policy complying with Section 3.04 and the amount paid
under such blanket policy. Upon the request of the Trustee or any
Certificateholder, the Master Servicer shall cause to be delivered to the
Trustee or such Certificateholder, as the case may be, a certified true copy of
such policy. In connection with its activities as administrator and servicer of
the Mortgage Loans, the Master Servicer agrees to prepare and present, on behalf
of itself, the Trustee and Certificateholders, claims under any such policy in a
timely fashion in accordance with the terms of such policy.
Section 3.06. FIDELITY BOND. The Master Servicer shall maintain with a
responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, in a minimum amount acceptable to FNMA or
FHLMC or otherwise in an amount as is commercially available at a cost that is
not generally regarded as excessive by industry standards, with broad coverage
on all officers, employees or other persons acting in any capacity requiring
such persons to handle funds, money, documents or papers relating to the
Mortgage Loans ("Master Servicer Employees"). Any such fidelity bond and errors
and omissions insurance shall protect and insure the Master Servicer against
losses, including losses resulting from forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Master Servicer Employees. Such
fidelity bond shall also protect and insure the Master Servicer against losses
in connection with the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.06 requiring such fidelity bond and errors and omissions
insurance shall diminish or relieve the Master Servicer from its duties and
obligations as set forth in this Agreement. Upon the request of the Trustee or
any Certificateholder, the Master Servicer shall cause to be delivered to the
Trustee or such Certificateholder a certified true copy of such fidelity bond
and insurance policy. On the Closing Date, such bond and insurance is maintained
with certain underwriters at [____________________] and [________________].
Section 3.07. MANAGEMENT AND REALIZATION UPON DEFAULTED MORTGAGE
LOANS. The Master Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prudent and
prompt disposition and sale. The Master Servicer shall, either itself or through
an agent selected by the Master Servicer, manage, conserve, protect and operate
the REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed. The
Master Servicer shall attempt to sell the same (and may temporarily rent the
same) on such terms and conditions as the Master Servicer deems to be in the
best interest of the Certificateholders.
The Master Servicer shall cause to be deposited, no later than five
Business Days after the receipt thereof, in the Collection Account, all revenues
received with respect to the related REO Property and shall retain, or cause the
Trustee to withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property and the fees of any managing
agent acting on behalf of the Master Servicer.
The disposition of REO Property shall be carried out by the Master
Servicer for cash at such price, and upon such terms and conditions, as the
Master Servicer deems to be in the best interest of the Certificateholders and,
as soon as practicable thereafter, the expenses of such sale shall be paid. The
cash proceeds of sale of the REO Property shall be promptly deposited in the
Collection Account, net of Foreclosure Profits and of any related unreimbursed
Servicing Advances, accrued and unpaid Servicing Fees and unreimbursed Monthly
Advances payable to the Master Servicer in accordance with Section 3.03, for
distribution to the Certificateholders in accordance with Section 5.01 hereof.
The Master Servicer shall foreclose upon or otherwise comparably
convert to ownership Mortgaged Properties securing such of the Mortgage Loans as
come into and continue in default either when no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section 3.02 subject
to the provisions contained in the last paragraph of this Section 3.07.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Master Servicer shall (i) dispose of such Mortgaged Property within two
years after its acquisition or (ii) prior to the expiration of any extension to
such two-year grace period which is requested on behalf of the Trust by the
Master Servicer (at the expense of the Trust) more than 60 days prior to the end
of such two-year grace period and granted by the Internal Revenue Service,
unless the Master Servicer shall have received an Opinion of Counsel to the
effect that the holding of such Mortgaged Property subsequent to two years after
its acquisition will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code or cause the Trust to fail
to qualify as a REMIC at any time that any Class A Certificates are outstanding.
Notwithstanding any other provision of this Agreement, (i) no Mortgaged Property
acquired by the Master Servicer pursuant to this Section shall be rented (or
allowed to continue to be rented) or otherwise used for the production of income
by or on behalf of the Trust, and (ii) no construction shall take place on such
Mortgaged Property in such a manner or pursuant to any terms, in either case,
that would cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "net income from foreclosure property" which is
subject to taxation within the meaning of Sections 860G(c) and 857(b)(4)(B) of
the Code. If a period greater than two years is permitted under this Agreement
and is necessary to sell any REO Property, the Master Servicer shall give
appropriate notice to the Trustee and the Certificateholders and shall report
monthly to the Trustee as to the progress being made in selling such REO
Property.
Nothing in this Section shall affect the Master Servicer's right to
deem certain advances proposed to be made Nonrecoverable Advances. For the
purpose of this Section 3.07, actual knowledge of the Master Servicer means
actual knowledge of a Responsible Officer of the Master Servicer involved in the
servicing of the relevant Mortgage Loan. Actual knowledge of the Master Servicer
does not include knowledge imputable by virtue of the availability of or
accessibility to information relating to environmental or hazardous waste sites
or the locations thereof.
Section 3.08. TRUSTEE TO COOPERATE. Upon any Principal Prepayment in
full, the Master Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01, if the related Assignment of Mortgage
has been recorded as required hereunder, an instrument of satisfaction regarding
the related Mortgage, which instrument of satisfaction shall be recorded by the
Master Servicer if required by applicable law and be delivered to the Person
entitled thereto. It is understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or transfer shall be reimbursed
from amounts deposited in the Collection Account. If the Trustee is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall, upon request of the Master
Servicer and delivery to the Trustee of a Request for Release, in the form
annexed hereto as Exhibit I, signed by a Servicing Officer, release the related
Mortgage File to the Master Servicer, and the Trustee shall execute such
documents, in the forms provided by the Master Servicer, as shall be necessary
to the prosecution of any such proceedings or the taking of other servicing
actions. Such Request for Release shall obligate the Master Servicer to return
the Mortgage 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 a certificate of a Servicing Officer similar to that hereinabove
specified, the Request for Release shall be released by the Trustee to the
Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Master Servicer, execute an appropriate assignment
in the form provided to the Trustee by the Master Servicer to assign such
Mortgage Loan for the purpose of collection to the Master Servicer (any such
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only), and, upon such assignment, such assignee for collection
will thereupon bring all required actions in its own name and otherwise enforce
the terms of the Mortgage Loan and deposit or credit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the
Collection Account. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the Mortgagor and any other defaults are cured then
the assignee for collection shall promptly reassign such Mortgage Loan to the
Trustee and return it to the place where the related Mortgage File was being
maintained.
Section 3.09. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
MASTER SERVICER. Subject to Section 5.04, the Master Servicer shall be entitled
to retain the Servicing Fee in accordance with Section 3.02 as compensation for
its services in connection with servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account, including,
without limitation, Foreclosure Profits, shall be retained by the Master
Servicer. The Master Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of all other
fees and expenses not expressly stated hereunder to be for the account of the
Trust or the Certificateholders) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Master
Servicer will deliver to the Trustee and the Rating Agencies, on or before the
last day of the fifth month following the end of the Master Servicer's fiscal
year, beginning in 199__, an Officer's Certificate, signed by two (2) officers
of the Master Master Servicer, stating that (i) the Master Servicer has fully
complied with the provisions of Articles III and V, if applicable, (ii) a review
of the activities of the Master Servicer during the preceding fiscal year (or
such shorter period as is applicable in the case of the first report) and of its
performance under this Agreement has been made under such officer's supervision
and (iii) to the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all its material obligations under this Agreement
throughout such fiscal year, or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and status thereof. The Master Servicer shall promptly notify the
Depositor, the Trustee, [___] and [________] upon any change in the basis on
which its fiscal year is determined.
(b) The Master Servicer shall deliver to the Trustee, the Depositor
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become an Event of Default.
Section 3.11. ANNUAL SERVICING REPORT. Not later than the last day of
the fifth month following the end of the Master Servicer's fiscal year,
beginning in 199__, the Master Servicer, at its expense, shall cause a firm of
independent public accountants reasonably acceptable to the Trustee to furnish a
letter or letters to the Trustee, [______] and [________] to the effect that
such firm has with respect to the Master Servicer's overall servicing operations
examined such operations in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS. (a) The Master Servicer shall provide to the
Trustee, Certificateholders which are federally insured savings and loan
associations, the Office of Thrift Supervision, successor to the Federal Home
Loan Bank Board, the FDIC and the supervisory agents and examiners of the Office
of Thrift Supervision access to the documentation regarding the Mortgage Loans
required by applicable regulations of the Office of Thrift Supervision and the
FDIC (acting as operator of the SAIF or the BIF), such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Master Servicer. Nothing in this Section 3.12 shall
derogate from the obligation of the Master Servicer to observe any applicable
law prohibiting disclosure of information regarding the Mortgagors and the
failure of the Master Servicer to provide access as provided in this Section
3.12 as a result of such obligation shall not constitute a breach of this
Section 3.12.
(b) The Master Servicer shall supply information in such form as the
Trustee shall reasonably request to the Trustee and the Paying Agent, on or
before the start of the fourth Business Day following the last day of a Due
Period, as is required in the Trustee's reasonable judgment to enable the Paying
Agent or the Trustee, as the case may be, to make required distributions and to
furnish the required reports to Certificateholders and to make any claim under
the Certificate Insurance Policy.
Section 3.13. MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES. The
Master Servicer shall during the term of its service as servicer maintain in
force (i) a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of the
Federal National Mortgage Association for persons performing servicing for
mortgage loans purchased by such Association.
Section 3.14. REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller, the Master Servicer and the
Depositor shall cooperate with the Trustee in the preparation of any such report
and shall provide to the Trustee in a timely manner all such information or
documentation as the Trustee may reasonably request in connection with the
performance of its duties and obligations under this Section.
Section 3.15. REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED
PROPERTY, RETURNS RELATING TO MORTGAGE INTEREST RECEIVED FROM INDIVIDUALS AND
RETURNS RELATING TO CANCELLATION OF Indebtedness. The Master Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in [__________]. The Master Servicer shall file reports relating to
each instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Trustee acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050J, 6050H and 6050P of the Code.
Section 3.16. ADVANCES BY THE MASTER SERVICER. (a) Not later than the
close of business on each Determination Date, the Master Servicer shall remit to
the Trustee for deposit in the Collection Account an amount (as indicated in the
Trustee's Remittance report prepared pursuant to Section 5.05), to be
distributed on the related Distribution Date pursuant to Section 5.01, equal to
the sum of (a) the interest accrued on each Mortgage Loan through the related
Due Date, but not received as of the close of business on the last day of the
related Due Period (net of the Servicing Fee) and (b) with respect to each REO
Property which was acquired during or prior to the related Due Period and as to
which an REO Property Disposition did not occur during the related Due Period,
an amount equal to the excess, if any, of interest on the Principal Balance of
such REO Property at the Net Loan Rate for the most recently ended Due Period
prior to the related Determination Date for the related Mortgage Loan over the
net income from the REO Property transferred to the Collection Account for such
Distribution Date pursuant to Section 3.07; such sum being defined herein as the
"Monthly Advance".
(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the Master
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance.
Section 3.17. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. Any
Affiliate of the Seller, in its sole discretion, shall have the right to elect
(by written notice sent to the Master Servicer and the Trustee) to purchase for
its own account from the Trust any Mortgage Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.02. The
Purchase Price for any Mortgage Loan purchased hereunder shall be deposited in
the Collection Account and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
Notwithstanding the foregoing, such Affiliate of the Seller may only
exercise its option pursuant to this Section with respect to the Mortgage Loan
or Mortgage Loans that have been delinquent for the longest period at the time
of such repurchase.
Section 3.18. SUPERIOR LIENS. The Master Servicer shall file (or cause
to be filed) of record a request for notice of any action by a superior
lienholder under a First Lien for the protection of the Trustee's interest,
where permitted by local law and whenever applicable state law does not require
that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of redemption.
If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Master Servicer shall take,
on behalf of the Trust, whatever actions are necessary to protect the interests
of the Certificateholders, and/or to preserve the security of the related
Mortgage Loan, subject to the application of the REMIC Provisions in accordance
with the terms of this Agreement. The Master Servicer shall immediately notify
the Trustee of any such action or circumstances. The Master Servicer shall
advance the necessary funds to cure the default or reinstate the superior lien,
if such advance is in the best interests of the Certificateholders. Any action
or inaction on the part of the Master Servicer in accordance with such written
instructions shall be deemed to be in the best interests of the
Certificateholders. The Master Servicer shall not make such an advance except to
the extent that it determines in its reasonable good faith judgment that the
advance would be recoverable from Liquidation Proceeds on the related Mortgage
Loan and in no event in an amount that is greater than the Principal Balance of
the related Mortgage Loan. The Master Servicer shall thereafter take such action
as is necessary to recover the amount so advanced.
Section 3.19. ASSUMPTION AGREEMENTS. When a Mortgaged 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 Mortgage
Note applicable thereto, unless: (i) the exercise of such rights is not
permitted by applicable law, (ii) would impair or threaten to impair any
recovery under any Primary Mortgage Insurance Policy, (iii) would materially
increase the risk of default or delinquency on, or materially decrease the
security for, such Mortgage Loan or (iv) the Master Servicer, in a manner
consistent with reasonable commercial practice, permits the purchaser of the
related Property to assume the Loan. If these conditions are not met or if the
Master Servicer reasonably believes it is unable under applicable law to enforce
such due-on-sale clause or if such Loan is a mortgage loan insured by the FHA,
the Master Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable law, the Mortgagor remains liable thereon. The Master
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which original shall be added by the
Trustee to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any assumption or
substitution agreement entered into pursuant to this Section 3.18, the Master
Servicer shall not change the Loan Rate or the Monthly Payment, defer or forgive
the payment of principal or interest, reduce the outstanding principal amount or
extend the final maturity date on such Mortgage Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach of
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Master Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 3.20. PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES. With
respect to each Mortgage Loan, the Master Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Master Servicer
maintains escrow accounts, the Master Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Master Servicer in amounts sufficient for such purposes,
as allowed under the terms of the Mortgage. To the extent that a Mortgage does
not provide for escrow payments, the Master Servicer shall, if it has received
notice of a default or deficiency, monitor such payments to determine if they
are made by the Mortgagor.
<PAGE>
ARTICLE IV
Spread Account [and Certificate Insurance Policy]
Section 4.01. ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD
ACCOUNT; PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT. (a) No later than the
Closing Date, the Trustee will establish and maintain for the benefit of the
Certificateholders an Eligible Account titled "Spread Account,
[_____________________], as trustee for the registered holders of Home Equity
Loan Asset-Backed Certificates, Series 199__-__." The Spread Account shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of the REMIC. The Spread Account (including any investment
earnings thereon) will be treated as owned by the Residual Certificateholders
and contributions from the REMIC to the Spread Account will be treated as
amounts distributed by the REMIC to the Residual Certificateholders and will be
taxable to such Holders. Except as set forth in clause (c) of this Section 4.01,
the Trustee shall, promptly upon receipt, deposit into the Spread Account and
retain therein:
(i) on each Distribution Date, the Monthly Excess Spread Amount
transferred by the Trustee pursuant to Section 5.01(a)(vi); and
(ii) upon receipt, amounts required to be deposited or to be paid
by the Master Servicer pursuant to Section 5.08(e) and (f) in
connection with losses and gains on investments of amounts in the
Spread Account.
(b) Amounts on deposit in the Spread Account shall be withdrawn on
each Distribution Date by the Trustee in the following order of priority:
(i) to deposit in the Distribution Account an amount equal to the
excess of the Class A Remittance Amount for such Distribution Date
over the Available Remittance Amount for such Distribution Date;
(ii) to the extent that the amount then on deposit in the Spread
Account exceeds the Base Spread Account Requirement as of such
Distribution Date (such excess, a "Spread Account Excess"), an amount
equal to such Spread Account Excess shall be paid to the Master
Servicer and/or the Seller to the extent of any Reimbursable Amounts
not previously reimbursed and the remainder to the Residual
Certificateholders;
and also, in no particular order of priority:
(iii) to invest amounts on deposit in the Spread Account in
Eligible Investments pursuant to Section 5.08(f);
(iv) to withdraw any amount not required to be deposited in the
Spread Account or deposited therein in error; and
(v) to clear and terminate the Spread Account upon the
termination of this Agreement and, upon such termination, to pay the
balance, if any, to the Residual Certificateholders.
(c) On the Distribution Date on which all amounts due have been paid to
the Class A Certificateholders, the Trustee, after making any withdrawals from
the Spread Account required pursuant to the preceding paragraph, shall:
(i) clear and terminate the Spread Account, liquidate any
investments therein and pay any uninvested funds therein or the
proceeds of such liquidation to the Master Servicer and/or the Seller
to the extent of any Reimbursable Amounts and the remainder to the
Residual Certificateholders; and
(ii) pay future receipts of the Excess Spread to the Master
Servicer and/or the Seller to the extent of any Reimbursable Amounts
and the remainder to the Residual Certificateholders.
(d) the Spread Account may be terminated and other assets substituted
therefor including mortgage loans such as the Mortgage Loans at any time with
the prior written approval of the Rating Agencies and written confirmation that
such termination and substitution will not result in a downgrade of the Class A
Certificates.
<PAGE>
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. DISTRIBUTIONS. (a) On each Distribution Date, the
Trustee shall distribute out of the Distribution Account to the extent of the
Amount Available, the following amounts and in the following order of priority:
(i) to the Class A Certificates, an amount allocable to interest
equal to the Class A Interest Remittance Amount;
(ii) to the Class A Certificates, an amount allocable to
principal equal to the lesser of (a) the Class A Principal Balance and
(b) the Class A Principal Remittance Amount;
(iii) [Reserved];
(iv) to the Master Servicer and/or Seller, Reimbursable Amounts
not previously reimbursed;
(v) to the Master Servicer, Nonrecoverable Advances not
previously reimbursed;
(vi) to the Spread Account, the Monthly Excess Spread Amount; and
(vii) to the Residual Certificateholders, the balance, if any.
(b) [Reserved]
(c) METHOD OF DISTRIBUTION. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution) by check or money order mailed to such Certificateholder at
the address appearing in the Certificate Register, or upon written request by a
Certificateholder delivered to the Trustee at least five Business Days prior to
such Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Certificates of
a Class aggregating at least $[______________] Original Class A Certificate
Principal Balance). Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders.
(d) DISTRIBUTIONS ON BOOK-ENTRY CERTIFICATES. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which
shall credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Master Servicer or the Seller shall have any responsibility
therefor except as otherwise provided by applicable law.
Section 5.02. CALCULATION OF THE CERTIFICATE RATE. On the second LIBOR
Business Day immediately preceding each Distribution Date (referred to in this
sentence as the "current Distribution Date") the Trustee shall determine LIBOR
and the Certificate Rate for the Distribution Date next succeeding such current
Distribution Date and inform the Master Servicer (at the facsimile number given
to the Trustee in writing) of such rate.
Section 5.03. [Reserved]
Section 5.04. COMPENSATING INTEREST. Not later than the close of
business on each Determination Date, the Master Servicer shall remit to the
Trustee for deposit to the Collection Account an amount equal to the lesser of
(A) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting from Principal Prepayments during the related Due
Period and (B) its aggregate Servicing Fees received in the related Due Period.
The Master Servicer shall not have the right to reimbursement for any amounts
deposited to the Collection Account pursuant to this Section.
Section 5.05. STATEMENTS. (a) Not later than 12:00 noon [________]
time on the fourth Business Day following the last day of a Due Period, the
Master Servicer shall deliver to the Trustee a computer tape containing the
information set forth on Exhibit D as to each Mortgage Loan as of such Due
Period and such other information as the Trustee shall reasonably require. Not
later than 12:00 noon California time on the Determination Date, the Trustee
shall deliver to the Master Servicer and the Depositor, by telecopy, with a hard
copy thereof to be delivered on the succeeding Distribution Date, a statement
(the "Trustee's Remittance Report") containing the information set forth below
with respect to such Distribution Date:
(i) The Available Remittance Amount and the Certificate Rate for
the related Distribution Date;
(ii) The Class A Principal Balance and the Pool Balance as
reported in the prior Trustee's Remittance Report pursuant to
subclause (xii) below, or, in the case of the first Determination
Date, the Original Class A Certificate Principal Balance and the
Cut-Off Date Pool Principal Balance;
(iii) The number and Principal Balances of all Mortgage Loans
that were the subject of Principal Prepayments during the Due Period;
(iv) The amount of all Curtailments that were received during the
Due Period;
(v) The principal portion of all Monthly Payments received during
the Due Period;
(vi) The amount of interest received on the Mortgage Loans;
(vii) The amount of the Monthly Advances and the Compensating
Interest payment to be made on the Determination Date;
(viii) The delinquency and foreclosure information set forth in
the form attached hereto as Exhibit L;
(ix) The Class A Principal Remittance Amount for the Distribution
Date with the components thereof stated separately and the Class A
Interest Remittance Amount for the Distribution Date, stating
separately the components of any Mortgage Loan Interest Shortfall;
(x) [The amount of the Insured Payments, if any, to be made on
the Distribution Date;]
(xi) The amount to be distributed to the Residual
Certificateholders for the Distribution Date;
(xii) The Class A Certificate Principal Balance and the Pool
Principal Balance after giving effect to the distribution to be made
on the Distribution Date;
(xiii) The weighted average remaining term to maturity of the
Mortgage Loans and the weighted average Loan Rate;
(xiv) The Servicing Fee pursuant to Section 5.01;
(xv) The amount of all payments or reimbursements to the Master
Servicer pursuant to Section 3.03;
(xvi) The Pool Factor determined using the balances in subclause
(xii) above, computed to six (6) decimal places;
(xvii) The percentage of the Excess Spread used to determine the
Monthly Excess Spread Amount, the Excess Spread, the Monthly Excess
Spread Amount, the Spread Account Excess and the allocation of the
Spread Account Excess to Reimbursable Amounts, Monthly Advances and
Residual Certificateholders pursuant to Section 4.01;
(xviii) The amounts which are reimbursable to the Master Servicer
or the Seller, as appropriate, pursuant to Sections 5.01(a)(iv) and
(v) and the amount paid to Residual Certificateholders pursuant to
Section 5.01(a)(vii);
(xix) The number of Mortgage Loans outstanding at the beginning
and at the end of the related Due Period; and
(xx) the amount on deposit in the Spread Account after the
Distribution Date.
The Trustee shall forward such report to the Master Servicer, the
Depositor, the Certificateholders and the Rating Agencies on the Distribution
Date. The Trustee may fully rely upon and shall have no liability with respect
to information provided by the Master Servicer.
To the extent that there are inconsistencies between the telecopy of
the Trustee's Remittance Report and the hard copy thereof, the Master Servicer
may rely upon the latter.
In the case of information furnished pursuant to subclauses (ii), (xi)
and (xvi) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $[_________] original dollar
amount as of the Cut-Off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Class A Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (ix) and (xiv)
above, aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be prepared and furnished by the Trustee to Certificateholders
pursuant to any requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the
Residual Certificateholders a copy of the reports forwarded to the Class A
Certificateholders in respect of such Distribution Date and a statement setting
forth the amounts actually distributed to the Residual Certificateholders on
such Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Residual Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Residual Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
(e) The Master Servicer and the Trustee shall furnish to each
Certificateholder (if requested in writing), during the term of this Agreement,
such periodic, special, or other reports or information, whether or not provided
for herein, as shall be necessary, reasonable, or appropriate with respect to
the Certificateholder, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions (if requested in writing) as
the Certificateholder may reasonably require; PROVIDED, that the Master Servicer
and the Trustee shall be entitled to be reimbursed by such Certificateholder for
their respective fees and actual expenses associated with providing such
reports, if such reports are not generally produced in the ordinary course of
their respective businesses or readily obtainable.
(f) Reports and computer tapes furnished by the Master Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies, the Depositor. No Person entitled to receive
copies of such reports or tapes or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.06. [Intentionally Omitted]
Section 5.07. DISTRIBUTION ACCOUNT. The Trustee shall establish with
[_________________________], a separate trust account (the "Distribution
Account") titled "[_________________________], as Trustee, in trust for the
registered holders of Home Equity Loan Asset-Backed Certificates, Series
199__-__." The Distribution Account shall be an Eligible Account. The Trustee
shall deposit any amounts representing payments on and any collections in
respect of the Mortgage Loans received by it immediately following receipt
thereof, including, without limitation, all amounts withdrawn by the Master
Servicer from the Collection Account pursuant to Section 3.03 for deposit to the
Distribution Account. Amounts on deposit in the Distribution Account may be
invested in Eligible Investments pursuant to Section 5.08.
Section 5.08. INVESTMENT OF ACCOUNTS. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
shall be invested and reinvested by the Trustee, as directed in writing by the
Master Servicer, in one or more Eligible Investments bearing interest or sold at
a discount. If an Event of Default shall have occurred and be continuing or if
the Master Servicer does not provide investment directions, the Trustee shall
invest all Accounts in Eligible Investments described in paragraph (vi) of the
definition of Eligible Investments. Except as provided in Section 5.08(f), no
such investment in any Account shall mature no later than the Business Day
immediately preceding the next Distribution Date (except that (i) if such
Eligible Investment is an obligation of the Trustee, then such Eligible
Investment shall mature not later than such Distribution Date and (ii) any other
date as may be approved by the Rating Agencies).
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.08 is the cause
of such loss or charge.
(c) Subject to Section 9.01 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 investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.08).
(d) The Trustee shall invest and reinvest funds in the Accounts held
by the Trustee, to the fullest extent practicable, in such manner as the Master
Servicer shall from time to time direct as set forth in Section 5.08(a), but
only in one or more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account and the Distribution
Account shall be for the benefit of the Master Servicer as servicing
compensation (in addition to the Servicing Fee), and otherwise shall be
deposited in the Spread Account, and shall be subject to withdrawal on or before
the first Business Day of the month following the month in which such income or
gain is received. The Master Servicer shall deposit in the Collection Account,
the Distribution Account or the Spread Account, as the case may be, the amount
of any loss incurred in respect of any Eligible Investment held therein which is
in excess of the income and gain thereon immediately upon realization of such
loss, without any right to reimbursement therefore from its own funds. Income or
gain from Eligible Investments held in the Spread Account shall be deposited
into the Spread Account.
(f) Amounts on deposit in the Spread Account may be invested in
accordance with the following guidelines:
(1) as of any date of determination, no less than the greater of
(i) an amount equal to [__]% times the Base Spread Account Requirement
and (ii) an amount equal to the sum of the aggregate Principal
Balances of Mortgage Loans that have converted to REO Properties and
Mortgage Loans in foreclosure, but, in the case of both clauses (i)
and (ii) hereof, in no event more than the Base Spread Account
Requirement, shall mature no later than the Business Day immediately
preceding the next Distribution Date; and
(2) as of any date of determination, no more than the greater of
(i) an amount equal to [__]% times the Base Spread Account Requirement
and (ii) an amount equal to the sum of the aggregate Principal
Balances of Mortgage Loans that have converted to REO Properties and
an amount equal to [__]% times the aggregate Principal Balances of
Mortgage Loans that are 90 or more days delinquent (including Mortgage
Loans in foreclosure), but, in the case of both clauses (i) and (ii)
hereof, in no event more than the Base Spread Account Requirement, may
mature no later than the Business Day immediately preceding the second
succeeding Distribution Date; and
(3) as of any date of determination, the excess of the amounts on
deposit in the Spread Account over the amounts described in Section
5.08(f)(1) and (2) may mature no later than the Business Day next
preceding the third succeeding Distribution Date;
PROVIDED, HOWEVER, that amounts on deposit in the Spread Account may mature at a
later date than that set forth in clauses (1), (2) and (3) above, upon receipt
by the Trustee of the confirmation in writing from each Rating Agency that such
investment's maturity shall not result in a downgrade of the Class A
Certificates.
<PAGE>
ARTICLE VI
The Certificates
Section 6.01. THE CERTIFICATES. The Class A Certificates and Residual
Certificates shall be substantially in the forms set forth in Exhibits A and B,
respectively, and shall, on original issue, be executed, authenticated and
delivered by the Trustee to or upon the order of the Depositor concurrently with
the sale and assignment to the Trustee of the Trust. The Class A Certificates
shall be initially evidenced by one or more certificates representing the entire
Original Class A Certificate Principal Balance and shall be held in minimum
dollar denominations of $[_____] and integral dollar multiples in excess
thereof, except that one Class A Certificate may be in a different denomination
so that the sum of the denominations of all outstanding Class A Certificates
shall equal the Original Class A Certificate Principal Balance.
The Residual Certificates (except for the Tax Matters Person Residual
Interest) shall each be offered in fully registered form in minimum Percentage
Interests of [___]% and integral multiples of [___]% in excess thereof (except
one Residual Certificate which may be offered in a Percentage Interest which is
not an integral multiple of [___]%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Class A Certificates shall be Book-Entry Certificates. The Residual
Certificates shall not be Book-Entry Certificates.
Section 6.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: registration of such Certificates may not be
transferred by the Trustee except to another Depository; the Depository shall
maintain book-entry records with respect to the Certificate Owners and with
respect to ownership and transfers of such Certificates; ownership and transfers
of registration of such Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; the Depository may
collect its usual and customary fees, charges and expenses from its Depository
Participants; the Trustee shall deal with the Depository as representative of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are hereby authorized to execute a Letter of Representations with the Depository
or take such other action as may be necessary or desirable to register a
Book-Entry Certificate to the Depository. In the event of any conflict between
the terms of any such Letter of Representation and this Agreement the terms of
this Agreement shall control.
(c) If (x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository, and (y) the Trustee or the Depositor is
unable to locate a qualified successor, the Depositor, at its sole option, with
the consent of the Trustee, elects to terminate the book-entry system through
the Depository or after the occurrence of an Event of Default, the Certificate
Owners representing Percentage Interests aggregating not less than 51% advises
the Trustee and Depository through the Financial Intermediaries and the DTC
participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Class A Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall at the
Depositor's expense, in the case of (i) and (ii) above, or the Seller's expense,
in the case of (iii) above, execute and authenticate the Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Master Servicer, any
Paying Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) No transfer of a Residual Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event of any such transfer, other than
the transfer of the Tax Matters Person Residual Interest to the Trustee (i)
unless such transfer is made in reliance upon Rule 144A under the 1933 Act, the
Trustee and the Depositor shall require a written Opinion of Counsel (which may
be in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Depositor that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
and (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit K) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Residual
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Residual Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Depositor, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA, nor a person acting on behalf of
any such plan, which representation letter shall not be an expense of the
Trustee or the Depositor, or (ii) in the case of a Residual Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, and Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel satisfactory
to the Trustee and the Depositor to the effect that the purchase or holding of
such Certificate will not result in the assets of the Trust being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Depositor to any obligation in
addition to those undertaken in this Agreement, which opinion of counsel shall
not be an expense of the Trustee or the Depositor. Notwithstanding anything else
to the contrary herein, in the event any purported transfer of any Residual
Certificate is made without delivery of the representation letter referred to
above, such representation shall be deemed to have been made by the Transferee
by its acceptance of such Certificate. In addition, any purported transfer of a
Residual Certificate to or on behalf of an employee benefit plan subject to
ERISA or to the Code without the delivery to the Trustee of an Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a PRO RATA undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition
to such consent, require delivery to it, in form and substance
satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit G hereto from
the proposed transferee to the effect that such transferee is
a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be
bound by and to abide by the transfer restrictions
applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section 6.02, become a Holder
of a Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of the Agreement so long as the transfer was not registered
upon the express written consent of the Trustee. The Trustee shall be
entitled to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time such distributions were
made all distributions made on such Residual Certificate. Any such
distributions so recovered by the Trustee shall be distributed and
delivered by the Trustee to the prior Holder of such Residual
Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Depositor to arrange for the sale of such
Residual Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if
any, will be remitted by the Trustee to the previous Holder of such
Residual Certificate that is a Permitted Transferee, except that in
the event that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Depositor will provide to
the Internal Revenue Service, and to the persons specified in Section
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause the Trust to fail to
qualify as a REMIC.
The Tax Matters Person Residual Interest shall at all times be
registered in the name of the Trustee.
(e) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 6.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and there is delivered to the Trustee, the
Depositor and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar, any Paying Agent and any agent of the
Master Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate
Registrar may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Trustee, the Certificate
Registrar nor any agent of any of them shall be affected by notice to the
contrary.
Section 6.05. APPOINTMENT OF PAYING AGENT. (a) The Paying Agent shall
make distributions to Certificateholders from the Distribution Account pursuant
to Section 5.01 and shall report the amounts of such distributions to the
Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly incorporated
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a successor
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
<PAGE>
ARTICLE VII
The Seller, the Master Servicer and the Depositor
Section 7.01. LIABILITY OF THE SELLER, THE MASTER SERVICER AND THE
DEPOSITOR. The Seller and the Master Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or Master Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
Section 7.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER, THE MASTER SERVICER OR THE Depositor. Any
corporation into which the Seller, the Master Servicer or Depositor may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Seller, the Master Servicer or the Depositor shall
be a party, or any corporation succeeding to the business of the Seller, the
Master Servicer or the Depositor, shall be the successor of the Seller, the
Master Servicer or the Depositor, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 7.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
Others. Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or gross negligence in the performance of duties of the Master Servicer or by
reason of its reckless disregard of its obligations and duties of the Master
Servicer hereunder and, provided, further, that this provision shall not be
construed to entitle the Master Servicer to indemnity in the event that amounts
advanced by the Master Servicer to retire any senior lien exceed Net Liquidation
Proceeds realized with respect to the related Mortgage Loan. The preceding
sentence shall not limit the obligations of the Master Servicer pursuant to
Section 9.05. The Master Servicer and any director or officer or employee or
agent of the Master Servicer may rely in good faith on any document of any kind
PRIMA FACIE properly executed and submitted by any Person respecting any matters
arising hereunder. The Master Servicer and any director or officer or employee
or agent of the Master Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Master Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust and the Master Servicer
shall be entitled to be reimbursed therefor pursuant to Section 3.03(ix). The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
7.03 shall survive any resignation or termination of the Master Servicer
pursuant to Section 7.04 or 8.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 7.04. MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 7.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Trustee in writing and such proposed successor servicer is reasonably acceptable
to the Trustee; and (b) each Rating Agency shall have delivered a letter to the
Trustee prior to the appointment of the successor servicer stating that the
proposed appointment of such successor servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of the
Class A Certificates; PROVIDED, HOWEVER, that no such resignation by the Master
Servicer shall become effective until such successor servicer or, in the case of
(i) above, the Trustee shall have assumed the Master Servicer's responsibilities
and obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 8.02. Any such resignation shall not relieve
the Master Servicer of responsibility for any of the obligations specified in
Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Master Servicer. Any such determination permitting the
resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee. The
Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against any Certificateholder for any amounts paid by the Master
Servicer pursuant to any provision of this Agreement. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee.
Section 7.05. DELEGATION OF DUTIES. In the ordinary course of
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to conduct
such duties in accordance with standards comparable to those set forth in
Section 3.01. Such delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 7.04. The Master Servicer
shall provide the Trustee with written notice prior to the delegation of any of
its duties to any Person other than any of the Master Servicer's Affiliates or
their respective successors and assigns.
Section 7.06. INDEMNIFICATION OF THE TRUSTEE AND THE DEPOSITOR BY THE
MASTER SERVICER. The Master Servicer shall indemnify and hold harmless the
Trustee and the Depositor and any director, officer or agent thereof against any
loss, liability or expense, including reasonable attorney's fees, arising out
of, in connection with or incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer under this
Agreement or by reason of reckless disregard of its obligations and duties under
this Agreement. Any payment pursuant to this Section made by the Master Servicer
to the Trustee or the Depositor shall be from such entity's own funds, without
reimbursement therefor. The provisions of this Section 7.06 shall survive the
termination of this Agreement.
<PAGE>
ARTICLE VII
Default
Section 8.01. EVENTS OF DEFAULT. (a) If any one of the following
events ("Events of Default") shall occur and be continuing:
(i) The failure by the Master Servicer to make any Monthly
Advance to the extent of the full amount of the Class A Interest
Remittance Amount; or (B) any other failure by the Master Servicer to
deposit in the Collection Account any deposit required to be made
under the terms of this Agreement which continues unremedied for a
period of five Business Days after the date upon which written notice
of such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and
the Trustee by Holders of Certificates of any Class evidencing not
less than 25% of the aggregate Percentage Interest constituting such
Class; or
(ii) The failure by the Master Servicer to make any required
Servicing Advance or the failure by the Master Servicer duly to
observe or perform, in any material respect, any other covenants,
obligations or agreements of the Master Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days,
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by
the Trustee or the Depositor, or to the Master Servicer, the Depositor
and the Trustee by the Certificateholders of any Class evidencing not
less than 25% of the aggregate Percentage Interest constituting such
Class; or
(iii) The entry against the Master Servicer of a decree or order
by a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to all or substantially all of its
property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Master Servicer and such decree or
order shall have remained in force undischarged, unbonded or unstayed
for a period of 60 days; or the Master Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, (x) with respect solely to clause (i)(A)
above, if such Monthly Advance is not made by 12:00 Noon New York time on the
second Business Day prior to the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Master Servicer and to the Trustee shall terminate all of the rights and
obligations of the Master Servicer under this Agreement and the Trustee, or a
successor servicer appointed in accordance with Section 8.02, shall immediately
make such Monthly Advance and assume, pursuant to Section 8.02 hereof, the
duties of a successor Master Servicer and (y) in the case of (i)(B), (ii), (iii)
and (iv), the Trustee may, and at the direction of the Holders of Class A
Certificates evidencing Percentage Interests aggregating not less than 25%, by
notice then given in writing to the Master Servicer (and to the Trustee if given
by Holders of Certificates), the Trustee shall, terminate all of the rights and
obligations of the Master Servicer as servicer under this Agreement. Any such
notice to the Master Servicer shall also be given to each Rating Agency and the
Depositor. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section
8.01; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of each
Mortgage Loan and related documents, or otherwise. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the responsibilities
and rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Trustee for the administration by it of all cash amounts that
shall at the time be held by the Master Servicer and to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or thereafter received by the Master Servicer with
respect to the Mortgage Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 8.01 shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 8.01(i) for a period of ten Business Days or under Section
8.01(ii) for a period of 60 Business Days, shall not constitute an Event of
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Master Servicer and such delay or failure was caused
by an act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Master Servicer from using its best efforts to perform its
respective obligations in a timely manner in accordance with the terms of this
Agreement and the Master Servicer shall provide the Trustee, and the
Certificateholders with an Officers' Certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts to so perform
its obligations. The Master Servicer shall immediately notify the Trustee in
writing of any Events of Default.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On and
after the time the Master Servicer receives a notice of termination pursuant to
Section 8.01 or 7.04, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof arising on and after its succession.
As compensation therefor, the Trustee shall be entitled to such compensation as
the Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, (i) if the Trustee is
unwilling to act as successor Master Servicer, or (ii) if the Trustee is legally
unable so to act, the Trustee may (in the situation described in clause (i)) or
shall (in the situation described in clause (ii)) appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $10,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder; PROVIDED that the appointment
of any such successor Master Servicer will not result in the qualification,
reduction or withdrawal of the ratings assigned to the Certificates by the
Rating Agencies. Pending appointment of a successor to the Master Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant to
Section 3.09 (or such lesser compensation as the Trustee and such successor
shall agree). The appointment of a successor Master Servicer shall not affect
any liability of the predecessor Master Servicer which may have arisen under
this Agreement prior to its termination as Master Servicer to pay any deductible
under an insurance policy pursuant to Section 3.05 or to indemnify the Trustee
pursuant to Section 7.06), nor shall any successor Master Servicer be liable for
any acts or omissions of the predecessor Master Servicer or for any breach by
such Master Servicer of any of its representations or warranties contained
herein or in any related document or agreement. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Master Servicer hereunder and
a fidelity bond in respect of its officers, employees and agents to the same
extent as the Master Servicer is so required pursuant to Section 3.06.
Section 8.03. WAIVER OF DEFAULTS. The Majority Certificateholders may,
on behalf of all Certificateholders, waive any events permitting removal of the
Master Servicer as servicer pursuant to this Article VIII, provided, however,
that the Majority Certificateholders may not waive a default in making a
required distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
the Certificateholders at their respective addresses appearing in the
Certificate Register and each Rating Agency.
<PAGE>
ARTICLE IX
The Trustee
Section 9.01. DUTIES OF TRUSTEE. The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default has occurred
(which has not been cured) of which a Responsible Officer has knowledge, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Certificates
evidencing Percentage Interests aggregating not less than 51% relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising or omitting to exercise
any trust or power conferred upon the Trustee, under this Agreement;
and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 8.01
unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Master Servicer or
the Holders of Certificates evidencing Percentage Interests
aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be protected
in acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) the Trustee may consult with counsel and any written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; the right of the Trustee to
perform any discretionary act enumerated in this Agreement shall not
be construed as a duty, and the Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of
any such act; nothing contained herein shall, however, relieve the
Trustee of the obligations, upon the occurrence of an Event of Default
(which has not been cured) of which a Responsible Officer has
knowledge, to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or documents, unless requested in writing to do so by Holders of
Certificates evidencing Percentage Interests aggregating not less than
51%; PROVIDED, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer, or for the use or application of any
funds paid to the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Master Servicer. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 8.02); the validity of the assignment of
any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02); the compliance by the Depositor, the Seller
or the Master Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non- compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Master Servicer (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 8.02), any Subservicer or any Mortgagor;
any action of the Master Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 8.02), or any Subservicer
taken in the name of the Trustee; the failure of the Master Servicer or any
Subservicer to act or perform any duties required of it as agent of the Trustee
hereunder; or any action by the Trustee taken at the instruction of the Master
Servicer (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02); PROVIDED, HOWEVER, that the foregoing shall
not relieve the Trustee of its obligation to perform its duties under this
Agreement, including, without limitation, the Trustee's duty to review the
Mortgage Files pursuant to Section 2.01(f). The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder (unless the Trustee shall have
become the successor Master Servicer).
Section 9.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller, the Master Servicer or the
Depositor.
Section 9.05. MASTER SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES. The
Master Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Master Servicer will pay or reimburse,
except as provided in Section 2.13(g), the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders hereunder. In addition, except as provided
in Section 2.13(g), the Master Servicer covenants and agrees to indemnify the
Trustee and its officers, directors, employees and agents from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
(i) incurred in connection with any legal action relating to this Agreement or
the Certificates, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of the Trustee's reckless
disregard of obligations and duties hereunder or (ii) resulting from any error
in any tax or information return prepared by the Master Servicer. This section
shall survive termination of this Agreement or the resignation or removal of any
Trustee hereunder.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and a minimum long-term debt rating
of [______], and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.06, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 9.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 9.07.
Section 9.07. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Depositor, the Master Servicer and each Rating
Agency. Upon receiving such notice of resignation, the Depositor shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee; PROVIDED, HOWEVER, that any such successor Trustee shall be
subject to the prior written approval of the Master Servicer. If no successor
Trustee shall have been so appointed and having accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor or the Master Servicer may remove the Trustee. If the Depositor or the
Master Servicer removes the Trustee under the authority of the immediately
preceding sentence, the Depositor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
The Holders of Certificates evidencing Percentage Interests
aggregating over 50% of all Certificates may at any time remove the Trustee by
written instrument or instruments delivered to the Master Servicer, the
Depositor and the Trustee; shall thereupon use its best efforts to appoint a
successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. SUCCESSOR TRUSTEE. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as Trustee. The Depositor, the Master
Servicer and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Section 9.09. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 9.06, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 9.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Depositor
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Master Servicer and the Trustee may consider necessary
or desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Master Servicer. 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 an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Master Servicer shall be responsible
for the fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of an Event of
Default, the Trustee acting alone may accept the resignation or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. LIMITATION OF LIABILITY. The Certificates are executed
by the Trustee, not in its individual capacity but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred and vested in it by
the Trust Agreement. Each of the undertakings and agreements made on the part of
the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the purpose
of binding only the Trust.
Section 9.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered.
Section 9.13. SUITS FOR ENFORCEMENT. In case an Event of Default or
other default by the Master Servicer or the Depositor hereunder shall occur and
be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its rights and the rights of the Certificateholders under this Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this Agreement or
for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee and the Certificateholders.
<PAGE>
ARTICLE X
Termination
Section 10.01. TERMINATION. (a) The respective obligations and
responsibilities of the Seller, the Master Servicer, the Depositor, and the
Trustee created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Distribution Date and the
obligation of the Master Servicer to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the final Distribution Date pursuant to this Article X following the earliest
of the day following the Distribution Date on which the distribution made to
Class A Certificateholders has reduced the Class A Principal Balance to zero,
the final payment or other liquidation of the last Mortgage Loan remaining in
the Trust (including without limitation the disposition of the Mortgage Loans
pursuant to Section 10.02) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (iii) the
Distribution Date in ________ 20__; PROVIDED, HOWEVER, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the last surviving descendant of Joseph P. Kennedy, the late ambassador
of the United States to the Court of St. James, living on the date hereof.
In addition, subject to Section 10.02, the Seller or the Depositor
may, at its option, terminate this Agreement on any date on which the Pool
Principal Balance is less than [___]% of the Cut-Off Date Pool Principal Balance
by purchasing, on the next succeeding Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the sum of (x) the greater
of (i) 100% of the Principal Balance of each outstanding Mortgage Loan and each
REO Property, and (ii) the fair market value (disregarding accrued interest) of
the Mortgage Loans and REO Properties, determined as the average of three
written bids (copies of which shall be delivered to the Trustee by the Master
Servicer) made by nationally recognized dealers and based on a valuation process
which would be used to value comparable mortgage loans and REO Property, and (y)
the greater of (a) the aggregate amount of accrued and unpaid interest on the
Mortgage Loans through the related Due Period and (b) 30 days' interest thereon
at a rate equal to the Net Loan Rate (the "Termination Price").
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Class A Certificateholders mailed not earlier than the
[__]th day and not later than the [__]th day of the month next preceding the
month of such final distribution specifying the Distribution Date upon which
final distribution of the Class A Certificates will be made upon presentation
and surrender of Class A Certificates at the office or agency of the Trustee
therein designated, the amount of any such final distribution and that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the Class A
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Class A Certificates, the
Trustee shall cause to be distributed to the holders of Class A Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class A Certificates and to the extent
that funds are available for such purpose, an amount equal to the amount
required to be distributed to Class A Certificateholders pursuant to Section
5.01 for such Distribution Date.
(d) In the event that all of the Class A Certificateholders shall not
surrender their Class A Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall promptly following such
date cause all funds in the Distribution Account not distributed in final
distribution to Class A Certificateholders to be withdrawn therefrom and
credited to the remaining Class A Certificateholders by depositing such funds in
a separate escrow account for the benefit of such Class A Certificateholders and
the Master Servicer (if the Master Servicer has exercised its right to purchase
the Mortgage Loans) or the Trustee (in any other case) shall give a second
written notice to the remaining Class A Certificateholders to surrender their
Class A Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Class A
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Class A Certificateholders concerning surrender of their
Class A Certificates, and the cost thereof shall be paid out of the funds on
deposit in such escrow account.
Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS. (a) In the event
that the Master Servicer exercises its purchase option as provided in Section
10.01, the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee has been furnished with an Opinion of Counsel
to the effect that the failure of the Trust Fund to comply with the requirements
of this Section 10.02 will not (i) result in the imposition of taxes on
"prohibited transactions" of the Trust as defined in Section 860F of the Code,
or (ii) cause the Trust to fail to qualify as a REMIC at any time that any Class
A Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation of the Trust meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust Fund to the
Master Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Class A Certificateholders the
Class A Principal Balance, plus one month's interest thereon at the
Certificate Rate and (B) to the Class R Certificateholders, all cash
on hand after such payment to the Class A Certificateholders (other
than cash retained to meet claims) and the Trust shall terminate at
such time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby agree to appoint the Trustee as their attorney in fact to: (i) adopt such
a plan of complete liquidation (and the Certificateholders hereby appoint the
Trustee as their attorney in fact to sign such plan) as appropriate, and (ii) to
take such other action in connection therewith as may be reasonably required to
carry out such plan of complete liquidation all in accordance with the terms
hereof.
<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. AMENDMENT. This Agreement may be amended from time to
time by the Seller, the Master Servicer, the Depositor and the Trustee, in each
case without the consent of any of the Certificateholders, (i) to cure any
ambiguity, (ii) to correct any defective provisions or to correct or supplement
any provisions herein that may be inconsistent with any other provisions herein,
(iii) to add to the duties of the Master Servicer, (iv) to add any other
provisions with respect to matters or questions arising under this Agreement,
which shall not be inconsistent with the provisions of this Agreement, (v) to
add or amend any provisions of this Agreement as required by any Rating Agency
or any other nationally recognized statistical rating agency in order to
maintain or improve any rating of the Class A Certificates (it being understood
that, after obtaining the ratings in effect on the Closing Date, neither the
Trustee, the Seller, the Depositor nor the Master Servicer is obligated to
obtain, maintain or improve any such rating) or (vi) to add or amend any
provisions of this Agreement to such extent as shall be necessary to maintain
the qualification of the Trust as a REMIC; PROVIDED, HOWEVER, that (x) as
evidenced by an Opinion of Counsel (at the expense of the requesting party) in
each case such action shall not, adversely affect in any material respect the
interest of any Certificateholder, (y) in each case, such action is necessary or
desirable to maintain the qualification of the Trust as a REMIC or shall not
adversely affect such qualification and (z) if the opinion called for in clause
(x) cannot be delivered with regard to an amendment pursuant to clause (vi)
above, such amendment is necessary to maintain the qualification of the Trust as
a REMIC; and PROVIDED, FURTHER, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
and no Opinion of Counsel to that effect shall be required if the Person
requesting the amendment obtains a letter from the Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Class A Certificates.
This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Depositor and the Trustee, without the consent of any of
the Certificateholders, to provide for termination of the Spread Account or the
substitution of assets in the Spread Account as contemplated in Section 4.01(d).
This Agreement also may be amended from time to time by the Seller,
the Master Servicer, the Depositor and the Trustee, and the Master Servicer with
the consent of the Holders of each Class of Certificates which is affected by
such amendment, evidencing Percentage Interests aggregating not less than 66%,
and in the case of an amendment to this Agreement, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall reduce in
any manner the amount of, or delay the timing of, payments on the Certificates
or distributions which are required to be made on any Certificate without the
consent of the Holder of such Certificate or reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of either the Trust as a REMIC and
notice of the conclusion expressed in such Opinion of Counsel shall be included
with any such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section 11.01 shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust as a REMIC.
Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Section 11.02. RECORDATION OF AGREEMENT. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of Certificateholders. The Certificateholders requesting
such recordation shall bear all costs and expenses of such recordation. The
Trustee shall have no obligation to ascertain whether such recordation so
affects the interests of the Certificateholders.
Section 11.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing Percentage Interests aggregating not
less than 25% shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 11.05. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to in the case of the Depositor, [______________], Attention:
[___________________], (b) in the case of the Master Servicer,
[_________________], Attention: [___________], (c) in the case of the Trustee,
at the Corporate Trust Office, (d) in the case of [__________], [___________],
and (f) in the case of [__________], [___________], or, as to each party, at
such other address as shall be designated by such party in a written notice to
each other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice. Any notice or other document required to be delivered or mailed by
the Trustee to any Rating Agency shall be given on a best efforts basis and only
as a matter of courtesy and accommodation and the Trustee shall have no
liability for failure to delivery such notice or document to any Rating Agency.
Section 11.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Depositor or the Master Servicer
without the prior written consent of the Holders of the Certificates evidencing
Percentage Interests aggregating not less than 66b%.
Section 11.08. CERTIFICATES NONASSESSABLE AND FULLY PAID. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
Section 11.09. THIRD-PARTY BENEFICIARIES. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners and their respective successors and permitted assigns.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
Section 11.10. COUNTERPARTS. This 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 11.11. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Master Servicer and
the Trustee have caused this Agreement to be duly executed by their respective
officers all as of the day and year first above written.
DIRECTORS ASSET CONDUIT
CORPORATION, as Depositor
By-----------------------------------
Title:
NORWEST MORTGAGE, INC.,
as Seller
By----------------------------------
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By-----------------------------------
Title:
[________________________]
as Trustee
By-----------------------------------
Title:
<PAGE>
State of New York )
) ss.:
County of New York )
On the ___ day of _________, 199__ before me, a notary public in and
for the State of New York, personally appeared ______________, known to me who,
being by me duly sworn, did depose and say that he resides at
__________________, ________ _____; that he is the ____________________ of
[Name], a [______________] corporation, one of the parties that executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and that he signed his name
thereto by like order.
-----------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the ___ day of _________, 199__ before me, a notary public in and
for the State of New York, personally appeared ______________, known to me who,
being by me duly sworn, did depose and say that he resides at
__________________, ________ _____; that he is the ____________________ of
[Name], a [______________] corporation, one of the parties that executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and that he signed his name
thereto by like order.
-------------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the _____ day of ___________, 199__ before me, a notary public in
and for the State of [_______________], personally appeared
_____________________, known to me who, being by me duly sworn, did depose and
say that he resides at _________________, ____________, ________ _____; that he
is the ______________ of [____________________], a [________________], one of
the parties that executed the foregoing instrument; that he knows the seal of
said company; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said company; and
that he signed his name thereto by like order.
-------------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the ____ day of __________, 19__ before me, a notary public in and
for the State of ________, personally appeared _________________, known to me
who, being by me duly sworn, did depose and say that she resides at
___________________________, ____________________; that she is the
______________________ of [_________________________], a
[_________________________], one of the parties that executed the foregoing
instrument; and that she signed her name thereto by order of the Board of
Directors of said association.
-------------------------------
Notary Public
[Notarial Seal]
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-X
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS AND UNDERTAKING
A. Name of Issuer or Person filing ("Filer"):
B. This is [check one]:
[x] an original filing for the Filer
[ ] an amended filing for the Filer
C. Identify the filing in conjunction with which this Form is
being filed:
Name of registrant:
Form type: Form F-10
File Number (if known):
Filed by:
Date filed: Concurrently herewith.
D. The Filer is incorporated under the laws of
[___________]and has its principal place of business at
[-----------------------] [----------].
E. The Filer designates and appoints CT Corporation System ("Agent")
located at 1633 Broadway, New York, New York 10019, (212) 664-1666, as
the agent of the Filer upon whom may be served any process, pleadings,
subpoenas, or other papers in
(a) any investigation or administrative proceeding
conducted by the Commission; and
(b) any civil suit or action brought against the Filer or
to which the Filer has been joined as defendant or
respondent, in any appropriate court in any place
subject to the jurisdiction of any state or of the
United States or of any of its territories or
possessions or of the District of Columbia, where the
investigation, proceeding or cause of action arises
out of or relates to or concerns (i) any offering made
of purported to be made in connection with the
securities registered or qualified by the Filer on
Form F-10 on August __, 1997, or any purchases or
sales of any security in connection therewith; (ii)
the securities in relation to which the obligation to
file an annual report on Form 40-F arises, or any
purchases or sales of such securities; (iii) any
tender offer for the securities of a Canadian issuer
with respect to which filings are made by the Filer
with the Commission on Schedule 13E-4F, 14D-1F or
14D-9F; or (iv) the securities in relation to which the
Filer acts as trustee pursuant to an exemption under
Rule 10a-5 under the Trust Indenture Act of 1939, as
amended. The Filer stipulates and agrees that any
such civil suit or action or administrative
proceeding shall be effected by service of process
upon, and that service of an administrative subpoena
shall be effected by service upon such agent for
service of process, and that service as aforesaid
shall be taken and held in all courts and
administrative tribunals to be valid and binding as
if personal service thereof had been made.
F. Each person filing this Form in connection with:
(a) the use of Form F-9, F-10, 40-F or SB-2 or Schedule
13K-4F, 14D-1F or 14D-9F stipulates and agrees to
appoint a successor agent for service of process and
file an amended Form F-X if the Filer discharges the
Agent or the Agent is unwilling or unable to accept
service on behalf of the Filer at any time until six
years have elapsed from the date the issuer of the
securities to which such Forms and Schedules relate
has ceased reporting under the Exchange Act;
(b) the use of Form F-8 or Form F-80 stipulates and agrees
to appoint a successor agent for service of process
and file an amended Form F-X if the Filer discharges
the Agent or the Agent is unwilling or unable to
accept service on behalf of the Filer at any time
until six years have elapsed following the effective
date of the latest amendment to such Form F-8 or Form
F-80;
(c) its status as trustee with respect to securities
registered on Form F-7, F-8, F-9, F- 10, F-80 or SB-2
stipulates and agrees to appoint a successor agent for
service of process and file an amended Form F-X if
the Filer discharges the Agent or the Agent is
unwilling or unable to accept service on behalf of the
Filer at any time during which any of the securities
subject to the indenture remain outstanding; and
(d) the use of Form 1-A or other Commission form for an
offering pursuant to Regulation A stipulates and
agrees to appoint a successor agent for service of
process and file an amended Form F-X if the Filer
discharges the Agent or the Agent is unwilling or
unable to accept service on behalf of the Filer at any
time until six years have elapsed from the date of
the last sale of securities in reliance upon the
Regulation A exemption.
Each filer further undertakes to advise the Commission promptly of any change to
the Agent's name and address during the applicable period by amendment of this
Form, referencing the file number of the relevant form in conjunction with which
the amendment is being filed.
G. Each person filing this Form, other than a trustee filing
in accordance with General Instruction I.(e) of this Form,
undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the
Commission staff, and to furnish promptly, when requested
to do so by the Commission staff, information relating to:
the Forms, Schedules and offering statements described in
General Instructions I.(a), I.(b), I.(c), I.(d) and I.(f)
of this Form, as applicable; the securities to which such
Forms, Schedules and offering statements relate; and the
transactions in such securities.
<PAGE>
The Filer certifies that it has duly caused this power of attorney,
consent, stipulation and agreement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of [__________] this ____
day of [________], 1997.
By
Name:-------------------------
Title:-------------------------
<PAGE>
This statement has been signed by the following persons in the
capacities and on the dates indicated.
CT Corporation System
Registered Agent
EXHIBIT 4.3
NORWEST MORTGAGE, INC.
Seller of the Mortgage Loans,
and
[-------------]
Purchaser of the Mortgage Loans
LOAN PURCHASE AGREEMENT
Dated as of ___________, 199_
<PAGE>
LOAN PURCHASE AGREEMENT
Loan Purchase Agreement (the "Agreement") dated as of __________, 199_
between Norwest Mortgage, Inc. (the "Seller") and Directors Asset Conduit
Corporation (the "Purchaser").
BACKGROUND
The following statements are the mutual representations of the parties
with respect to certain factual matters forming the basis for this Agreement and
are an integral part of this Agreement.
A. MORTGAGE LOANS. The Seller possesses (i) the notes or other
evidence of indebtedness (the "Mortgage Notes") under the home equity lines of
credit so indicated on Schedule I hereto referred to below (the "Mortgage
Loans"), (ii) the mortgages (the "Mortgages") on the properties (the "Mortgaged
Properties") securing such Mortgage Loans, including rights to (a) any property
acquired by foreclosure or deed in lieu of foreclosure or otherwise, and (b) the
proceeds of any insurance policies covering the Mortgage Loans or the Mortgaged
Properties or the obligors on the Mortgage Loans.
B. SALE OF MORTGAGE LOANS. The parties desire that the Seller sell the
Mortgage Loans ([inclusive][exclusive] of the obligation to fund future advances
under each Loan Agreement after the Closing Date) to the Purchaser pursuant to
the terms of this Agreement. Pursuant to the terms of a [__________] Agreement
dated as of ________, 199_ (the "[_________] Agreement") among the Purchaser, as
depositor, [________], as servicer, and [__________], as trustee (the
"Trustee"), the Purchaser will convey the Mortgage Loans ([inclusive][exclusive]
of the obligation to fund future advances under each Loan Agreement after the
Closing Date) to [____________] Home Equity Loan Trust 199__-__ (the "Trust").
C. DEFINITIONS. Capitalized terms not specifically defined in this
Agreement which are defined in the [_____________ _____] Agreement shall have
the same meaning when used herein as when used in the [____________________].
STATEMENT OF AGREEMENT
The parties, each in consideration of the promises of the other and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
Section 1. SALE OF MORTGAGE LOANS. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby sell, assign, set over,
and otherwise convey to the Purchaser, without recourse, all of its right, title
and interest in, to and under the following, whether now existing or hereafter
acquired and wherever located: (i) the Mortgage Loans, including the Asset
Balance (including all Additional Balances) and all collections of interest and
principal in respect thereof received on or after the Cut-off Date (except
collections in respect of interest for the period from [_____________] to
[_____________]); (ii) property which secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) the interest of
the Seller in any insurance policies in respect of the Mortgage Loans; (iv) the
Seller's rights under the [_________ _________]; and (v) all proceeds of the
foregoing[; provided, however, that the Purchaser does not assume the obligation
under each Loan Agreement (including, without limitation, such obligation under
the Loan Agreement for each Mortgage Loan after the Closing Date) to fund future
advances to the Mortgagor thereunder, and the Purchaser shall not be obligated
to fund any such future advances]. [Future advances made to a Mortgagor under a
Loan Agreement (each an "Additional Balance") shall be part of the related Asset
Balance. The Seller shall give the Purchaser monthly notice of such advances on
or prior to each Determination Date.]
In connection with such conveyance, the Seller further agrees, at its
own expense, on or prior to the date of this Agreement (a) to indicate in its
books and records that the Mortgage Loans have been sold to the Purchaser
pursuant to this Agreement and (b) to deliver to the Purchaser a computer file
or microfiche list containing a true and complete list of all such Mortgage
Loans specifying for each such Mortgage Loan, as of the Cut-off Date, (i) its
account number, (ii) its delinquency status, and (iii) the aggregate amount
outstanding under the Mortgage Loan as of the Cut-off Date. Such file, which
forms a part of Exhibit __ to the [_________] Agreement, shall also be marked as
Schedule I to this Agreement and is hereby incorporated into and made a part of
this Agreement.
In connection with such sale and assignment by the Seller to the
Purchaser, the Seller on or prior to the Closing Date shall deliver to the
Purchaser the following documents or instruments with respect to each Mortgage
Loan so transferred and assigned:
(i) The original Mortgage Note endorsed without recourse to
[____________________];
(ii) the original recorded Assignment of Mortgage from
[____________________] in recordable form[, which, in the case of any
Mortgage Loan secured by Mortgaged Property located in the State of
New York, shall state that such Assignment of Mortgage is not subject
to the requirements of Section 275 of the Real Property Law because it
is an assignment within the secondary mortgage market];
(iii) the original recorded Mortgage with an evidence of a
recording indicated thereon or, if, in connection with any Mortgage
Loan, the Seller cannot deliver the original Mortgage with evidence of
recording thereon on or prior to the Closing Date because such
original Mortgage has been lost, the Seller shall deliver or cause to
be delivered to the Purchaser a true and correct copy of such
Mortgage, together with a certificate by the appropriate county
recording office where such Mortgage is recorded;
(iv) the title search, and either a full appraisal or a
drive-by inspection, obtained by the originator at the time the
Mortgagor applied for the Mortgage Loan;
(v) with respect to each Mortgage Loan listed on Schedule
II, a title policy;
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan; and
(viii) any security agreement, chattel mortgage or
equivalent instrument executed in connection with the Mortgage.
The Seller further hereby confirms to the Purchaser that it has caused
the portions of the Electronic Ledger relating to the Mortgage Loans maintained
by the Servicer to be clearly and unambiguously marked to indicate that the
Mortgage Loans have been sold to the Purchaser.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the property, now existing and hereafter created, conveyed to it
pursuant to this Section 1.
The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Purchaser of all the Seller's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Seller
hereby grants to the Purchaser a security interest in all of the Seller's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.
In connection with such sale, assignment, and conveyance, the Seller
has filed, in the appropriate office in the State of [______], a UCC-1 financing
statement executed by the Seller as seller, naming the Purchaser as purchaser
and listing the Mortgage Loans and the other property described above as
collateral. In connection with such filing, the Seller agrees that it shall
cause to be filed all necessary continuation statements thereof and to take or
cause to be taken such actions and execute such documents as are necessary to
perfect and protect the Purchaser's interest in the Mortgage Loans and the other
property described above.
(b) [No assignment from the Seller of any Mortgage Loan shall be
required to be recorded in any public real property or other records so long as
no Assignment Event shall have occurred. Upon the occurrence of an Assignment
Event, at the request of the Purchaser, the Seller shall as promptly as
practicable, (a) endorse, or cause to be endorsed, each Mortgage Note without
recourse to the order of the Trustee, on behalf of the Certificateholders, and
(b) prepare and execute, or cause to be prepared and executed, an assignment to
the Trustee in recordable form for each Mortgage Loan sold by the Seller
hereunder and deliver such endorsed Mortgage Notes and assignments to the
Purchaser.]
Section 2. PAYMENT OF PURCHASE PRICE FOR CUT-OFF DATE ASSET BALANCES
[AND ADDITIONAL BALANCES].
(a) [The purchase price ("Purchase Price") for each Mortgage Loan, and
for each Additional Balance, shall be the Cut-off Date Asset Balance thereof (or
the principal amount of the draw under the Credit Line Agreement, in the case of
an Additional Balance) on the due date for payment for such Mortgage Loan, in
the case of a Mortgage Loan, or the date of the creation of the Additional
Balance, in the case of an Additional Balance. In consideration of the sale of
the Mortgage Loans (including Additional Balances) from the Seller to the
Purchaser on the Closing Date, the Purchaser agrees to pay to the Seller on the
date of this Agreement, by book-entry transfer or otherwise on the books and
records of the Purchaser and the Seller, an amount equal to $[_____________].
The remainder of the Purchase Price of the Mortgage Loans sold to the Purchaser
as of the Closing Date shall be contributed as capital by the Seller to the
Purchaser.
(b) The Purchase Price for Mortgage Loans and Additional Balances
shall be paid or provided for on the Closing Date and each subsequent date on
which Additional Balances are drawn on the Credit Line Agreements in either of
the following ways: (i) by payment in cash of immediately available funds; or
(ii) in the event that the total Purchase Price is not paid in full in cash by
the Purchaser on the date of purchase, the Seller shall convey the amount of
such cash shortfall as a capital contribution to the Purchaser. The monthly
notice delivered by the Seller to the Purchaser pursuant to Section 1 of this
Agreement shall indicate the amount of the Purchase Price for Additional
Balances paid by the Purchaser during the prior month in cash and the amount of
capital contributions by the Seller to the Purchaser.]
Section 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby makes to and for the benefit of the Purchaser each of the following
representations and warranties:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
[______________] and has the power to own its property and to conduct
its business as it is presently owned and as such business is
presently conducted;
(ii) The Seller is neither required to qualify nor to
register as a foreign corporation in any state in order to conduct its
business, and is not required under federal or state law to obtain any
licenses or approvals with respect to such business except such as
have been obtained prior to the Closing Date;
(iii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Agreement and
all of the transactions contemplated under this Agreement, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement;
(iv) 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, except such
as have been obtained or filed, as the case may be, prior to the
Closing Date;
(a) The execution, delivery and performance of this
Agreement by the Seller will not violate or conflict with any
provision of any existing law or regulation or any order or decree of
any court applicable to the Seller or any provision of the
[Certificate of Incorporation] [Articles of Incorporation] [Articles
of Association] or By-laws 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;
(v) There are no proceedings or investigations pending or,
to the best knowledge of the Seller, threatened, before any court,
regulatory body, administrative agency, arbitrator or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that, in the reasonable judgment of the
Seller, would materially and adversely affect the transactions
contemplated by this Agreement or the performance by the Seller of its
obligations under this Agreement, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability of this Agreement, (v) seeking to affect adversely the
Federal income tax attributes of the Trust, or (vi) seeking to impose
any tax upon the Seller as a result of the sale of the Mortgage Loans
pursuant to this Agreement; and
(vi) The Seller is not insolvent and will not be insolvent
following the consummation on the Closing Date of the transactions
contemplated by this Agreement and has not entered into such
transactions, including the transfer by the Seller to the Purchaser of
the property specified in Section 1, in contemplation of insolvency or
with a view to hindering its creditors.
The representations and warranties set forth in this Section 3 shall
survive the sale of the Mortgage Loans to the Purchaser and the transfer of the
Mortgage Loans by the Purchaser to the Trust and the delivery of the Mortgage
Files to the Trustee. Upon discovery by the Seller or the Purchaser of a breach
of any of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice thereof to the other party.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THIS
AGREEMENT AND THE MORTGAGE LOANS: REPURCHASE OF CERTAIN MORTGAGE LOANS. The
Seller represents and warrants to the Purchaser as of the Transfer Date with
respect to each Mortgage Loan sold to the Purchaser (except as otherwise
expressly stated) that, as to each Mortgage Loan or its related Asset Balance:
(a) this Agreement constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(ii) this Agreement constitutes a valid sale and assignment
to the Purchaser of all right, title and interest of the Seller in and
to the Mortgage Loans, all monies due or to become due with respect
thereto, and all proceeds of such Mortgage Loans;
(iii) the information set forth with respect to each
Mortgage Loan on Schedule I hereto was true and correct in all
material respects as of the date or dates respecting which such
information is furnished;
(iv) immediately prior to the sale of the Mortgage Loans to
the Purchaser, the Seller was the sole owner and holder of the
Mortgage Loans, free and clear of any and all liens, pledges,
participations, charges or security interests of any nature
whatsoever, and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and
assign the same;
(a) each Mortgage evidences a valid, subsisting and
enforceable first or second lien on the Mortgaged Property therein
described, which lien secures the indebtedness outstanding under the
Mortgage Loan as of the Cut-off Date and the indebtedness thereafter
incurred as a result of any Additional Balances created under such
Mortgage Loan subsequent to the Cut-off Date; such Mortgaged Property
is free and clear of all encumbrances and liens having priority over
the lien of the related Mortgage except for (A) if such lien is a
second lien, the first lien on such Mortgaged Property and (B) such
other encumbrances and liens to which like properties are commonly
subject and that are commonly acceptable to home equity mortgage
lenders in the jurisdiction where the related Mortgaged Property is
located that do not individually or in the aggregate materially affect
the benefits of the security intended to be provided by the Mortgage;
[with respect to each Mortgage Loan secured by Mortgaged Property
located in the State of Connecticut, subsequent to the recording of
the related original Mortgage, the Seller has not received written
notice of any mortgage, lien, attachment, lis pendens, legal
proceedings or adjudication against such Mortgaged Property; with
respect to each Mortgage Loan secured by Mortgaged Property located in
the State of New York, subsequent to the recording of the related
original Mortgage, the Seller has not received written notice of any
mechanic's lien filed against the property pursuant to the New York
Lien Law;] any security agreement, chattel mortgage or equivalent
document related to, and delivered to the Purchaser in connection
with, such Mortgage Loan establishes a valid and subsisting first or
second lien on the property described therein; and the terms of the
Mortgage, and any security agreement, chattel mortgage or equivalent
document relating to such Mortgage, may be enforced by the Purchaser
and its successors and assigns;
(v) the Seller has not impaired, waived, altered or modified
the related Mortgage or Mortgage Note in any material respect, except
by a written instrument that has been recorded, or satisfied, canceled
or subordinated such Mortgage in whole or in part, released the
Mortgaged Property in whole or in part from the lien of such Mortgage,
or executed any instrument of release, cancellation, modification or
satisfaction with respect to such Mortgage;
(vi) there are no defaults in complying with the terms of
any Mortgage, and all taxes, governmental assessments, insurance
premiums, and water, sewer and municipal charges, if applicable, that
previously became due and owing have been paid; the Seller has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage;
(vii) there is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property; each
Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to have a
material adverse effect on the value of the related Mortgaged Property
as security for the related Mortgage Loan or the use for which the
premises were intended; and no Mortgaged Property is located on a
hazardous or toxic waste site;
(viii) each Mortgaged Property is free and clear of all
mechanics' and materialmen's liens, or other similar liens, that are
prior to or equal to the lien of the related Mortgage; and there are
no rights outstanding that could result in any such prior or equal
mechanics' or materialmen's lien or similar lien being imposed on a
Mortgaged Property;
(a) each Mortgaged Property consists of a fee simple estate
in real property; all of the improvements that are included for the
purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property (and, if the related Mortgaged Property is a condominium
unit, such improvements lie wholly within the project); and, [based
upon a "drive-by" inspection, with respect to Credit Limits of up to
and including $___, or an appraisal, with respect to Credit Limits of
over $___, made in connection with the application for the related
Mortgage Loan,] no improvements on adjoining property that encroach on
the Mortgaged Property have been revealed by such "drive-by"
inspection or appraisal, unless Federal Housing Administration or
Veterans' Administration regulations, or FNMA or FHLMC guidelines,
permit such an encroachment;
(ix) each Mortgage Loan meets, or is exempt from, applicable
state or federal laws, regulations or other requirements pertaining to
usury, and no Mortgage Loan is usurious;
(x) no improvement located on or being part of a 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;
(xi) the Seller and every other holder of each Mortgage, if
any, were authorized to transact business in the jurisdiction in which
the related Mortgaged Property is located at all times when such party
held such Mortgage;
(xii) no payment required to be made on any Mortgage Loan
under the terms of the related Mortgage Note is more than 90 days
delinquent;
(xiii) each Mortgage Note and the related Mortgage are
genuine and each is the valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law); all
parties to each Mortgage Note and the related Mortgage had legal
capacity to execute such Mortgage Note and such Mortgage, and each
Mortgage Note and Mortgage has been duly and properly executed by the
Mortgagor;
(xiv) any and all requirements of any federal, state or
local law, including, without limitation, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the Mortgage Loan have
been complied with;
(xv) all improvements securing each Mortgage Loan are
insured, by a generally acceptable insurance company licensed to do
business in the jurisdiction where the Mortgaged Property is located,
against loss by fire and such hazards as are customarily covered under
a standard extended coverage endorsement in the area where the related
Mortgaged Property is located, in an amount that is not less than the
amount required pursuant to the [____________________] Agreement. If
the Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the project to the extent
not covered by an individual unit insurance policy consistent with the
immediately preceding sentence. If, upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available), a
flood insurance policy meeting the requirements of the guidelines of
the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier, in an amount that is not less than the
amount required pursuant to the [_________ _________] Agreement. Each
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense; and each of the
foregoing insurance policies contains a standard mortgagee clause that
names the originator and its successors and assigns as first or second
mortgagee, as the case may be. Each of the hazard insurance policies
is the valid and binding obligation of the related insurer, is in full
force and effect, and will be in full force and effect and insure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Seller has not engaged in, and has
no knowledge of the Mortgagor's having engaged in, any act or omission
that would impair the coverage of any such policy, the benefits of the
endorsement provided for herein, or the validity and binding effect of
either;
(xvi) there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note
and no event that, 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.
(xvii) no Mortgage Note is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any Mortgage
Note, or the exercise of any right thereunder, render such Mortgage
Note unenforceable, in whole or in part, or subject it to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto;
(xviii) each Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement, chattel
mortgage or equivalent document referred to in subparagraph (v) above;
(xix) each Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, without
limitation, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (ii) otherwise by judicial foreclosure;
and there is no exemption available to the Mortgagor that would
interfere with such right to foreclose or sell the Mortgaged Property
at a trustee's sale;
(xx) no Mortgagor is a debtor in any state or federal
bankruptcy or insolvency proceeding;
(xxi) the Mortgaged Properties are located in the States of
[____________________]; each Mortgaged Property consists of a single
parcel of real property with a one-to-four-family residence erected
thereon, a townhouse, an individual condominium unit, or an individual
unit in a planned unit development, provided, however, that any such
condominium unit or planned unit development is either (i) located in
a project that has been approved by, or would otherwise be acceptable
to, FNMA or FHLMC or (ii) the Combined Loan-to-Value Ratio of the
Mortgage Loan secured by such condominium unit or unit in a planned
unit development is [____]% or less as of the Cut-off Date; and no
such parcel has erected thereon a mobile home or manufactured
dwelling;
(xxii) as of the Closing Date, each Mortgage Loan meets the
requirements set by the OTS for investment by a federal savings and
loan association, subject to such association's charter and bylaws and
applicable governmental regulation regarding percentage of assets
limitations;
(xxiii) the Seller maintains either a blanket hazard
insurance policy or a mortgage impairment insurance policy providing
coverage for, among other things, fire and the extended coverage
hazards, with respect to the Mortgage Loans and, as of the Closing
Date, any such policy is in full force and effect;
(xxiv) each Mortgaged Property is either an owner-occupied
primary residence, a second home or a residential investor property;
(xxv) with respect to each Mortgage Loan, the Loan Rate as
of the Cut-off Date, net of the premium payable on any related credit
life insurance policy, was either [____]%, [____]%, or [____]% per
annum and the weighted average of the Loan Rates as of the Cut-off
Date was [____]% per annum;
(xxvi) each Mortgage Loan contains a "due-on-sale" clause
permitting the mortgagee to accelerate the payment of the indebtedness
evidenced thereby upon the sale of the related Mortgaged Property;
(xxvii) no Mortgage Loan had a Combined Loan-to-Value Ratio in
excess of [___]%;
(xxviii) upon the Seller's transfer of the Mortgage Loans to
the Purchaser in accordance with the terms hereof, the Purchaser
became the sole owner of all the right, title and interest in, to and
under the Mortgage Loans, including all principal amounts thereof
outstanding as of the Cut-off Date and all principal amounts that may
hereafter be outstanding thereunder as a result of future Draws or the
capitalization of interest due and unpaid thereon, free and clear of
all liens, pledges, charges and encumbrances whatsoever;
(xxix) no Mortgage Note has been prepared on a form other
than the forms of Mortgage Notes attached hereto as Exhibit A, no
Mortgage has been prepared on a form other than the forms of Mortgages
attached hereto as Exhibit B and no riders were appended to any
Mortgage at the time of execution thereof;
(xxx) each Mortgage Loan was originated by a savings and
loan association, savings bank, commercial bank, credit union,
insurance company, or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to sections
203 and 211 of the National Housing Act;
(xxxi) the Mortgage Note for each Mortgage Loan provides
that the Loan Rate is [fixed][adjusted monthly on each Interest Rate
Adjustment Date to equal the sum of the Index and the Gross Margin,
subject to any Rate Cap]; the Mortgage Note is payable monthly on each
Due Date in amounts calculated in the manner set forth therein, with
interest calculated and payable in arrears; no Mortgage Note contains
provisions permitting negative amortization (other than the provision
for Capitalized Interest); and the average Cut-off Date Asset Balance
was approximately $[---------------];
(xxxii) the Mortgaged Property is lawfully occupied under
applicable law; and 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;
(xxxiii) in the event the Mortgage constitutes a deed for
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated, currently so serves and is named
in the Mortgage, and no fees or expenses are or will become payable by
the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor; and
(xxxiv) the Mortgage Note, the Mortgage, and any other
documents required to be delivered under the Pooling and Servicing
Agreement with respect to the Mortgage Loans have been delivered to
the Trustee or the Custodian; and the Trustee or the Custodian is in
possession of a complete, true and accurate Mortgage File.
The representations and warranties set forth in this Section 4 shall
survive the sale of the Mortgage Loans to the Purchaser and the transfer of the
Mortgage Loans by the Purchaser to the Trust and the delivery of the Mortgage
Files to the Trustee. Upon discovery by the Seller or the Purchaser of a breach
of any of the representations and warranties set forth in this Section 4, the
party discovering such breach shall give prompt written notice thereof to the
other party. Within 60 days of its discovery or its receipt of notice of breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects or shall, not later than the Business Day immediately preceding the
Distribution Date in the month following the Collection Period in which any such
cure period expired, repurchase such Mortgage Loan from the Purchaser in the
same manner and subject to the same conditions as set forth in Section 5, other
than with respect to breaches solely related to the representations and
warranties set forth in clause (i) or (ii) of this Section 4. Upon making such
repurchase and sending any required payment to the Purchaser, the Seller shall
be entitled to receive an instrument of assignment or transfer, without
recourse, representation or warranty, from the Purchaser to the same extent as
set forth in Section 5 with respect to the repurchase of the Mortgage Loans
under that Section. It is understood and agreed that the obligation of the
Seller to repurchase a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required payment to the Purchaser shall constitute
the sole remedy respecting such breach available to the Purchaser against the
Seller; PROVIDED, HOWEVER, that the Seller shall defend and indemnify the
Purchaser against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
or incurred by the Purchaser as a result of any breach of any such
representation or warranty. Notwithstanding the foregoing, with regard to any
breach of the representation and warranty set forth in clause (iv) of this
Section 4, the sale and assignment of the affected Mortgage Loans shall be
deemed void and the Seller shall pay to the Purchaser the sum of (i) the amount
of the related Asset Balances and (ii) the amount of any losses suffered with
respect to the affected Mortgage Loans.
In the event of a breach of any of the representations and warranties
in clause (i) or clause (ii) of this Section 4 that materially and adversely
affects the interests of the Purchaser, the Purchaser by written notice to the
Seller, may direct the Seller to repurchase all of the Mortgage Loans within 60
days of such notice. The Seller shall repurchase such Mortgage Loans on the
Distribution Date immediately succeeding the expiration of such applicable
period; provided that such repurchase will not be required to be made if on the
Business Day prior to such Distribution Date, such representation and warranty
shall then be true and correct in all material respects or the breach of such
representations and warranties no longer materially and adversely affects the
interests of the Purchaser. The Seller shall pay to the Purchaser an amount
equal to the aggregate Asset Balances of the Mortgage Loans on the Distribution
Date on which the repurchase is scheduled to be made plus an amount equal to all
interest accrued but unpaid on such Mortgage Loans through the end of the
related Collection Period. If the Purchaser gives a notice as provided above,
the obligation of the Seller to make any such deposit will constitute the sole
remedy respecting a breach of the representations and warranties available to
the Purchaser against the Seller.
Section 5. ACCEPTANCE BY THE PURCHASER: REPURCHASE OF MORTGAGE LOANS.
The Purchaser hereby acknowledges its acceptance of the sale and assignment of
the Mortgage Notes and the Mortgages, and its receipt of the Mortgage Files
delivered pursuant to Section 1. If the time to cure any defect in respect of
any Mortgage Loan of which the Purchaser has notified the Seller following the
Purchaser's review of the Mortgage Files has expired or if at any time any loss
is suffered by the Purchaser in respect of any Mortgage Loan as a result of (i)
a defect in any document constituting a part of its Mortgage File, (ii) an
assignment of the related Mortgage not having been recorded as required by
Section 1(a), or (iii) the failure by the Seller to satisfy its obligation under
Section 1(b), then on the next succeeding Business Day, the Seller shall be
obligated to repurchase all right, title and interest of the Purchaser in and to
such Mortgage Loan, without recourse, representation or warranty, on such
Business Day; PROVIDED, HOWEVER, that interest accrued on the Asset Balance of
such Mortgage Loan to the end of the Collection Period during which the date of
repurchase occurs shall be the property of the Purchaser. Within two Business
Days after the Business Day on which such repurchase arises the Seller shall pay
to the Purchaser an amount in immediately available funds equal to the Asset
Balance of such Mortgage Loan (the "Repurchase Price"). Upon receipt of the
Repurchase Price for such Mortgage Loan, the Purchaser shall execute such
documents and instruments of transfer presented by the Seller, and take such
other actions as shall reasonably be requested by the Seller to effect the
repurchase by the Seller of such Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Seller to repurchase such a
Mortgage Loan shall constitute the sole remedy respecting such defect available
to the Purchaser against the Seller.
Section 6. COVENANTS OF THE SELLER. The Seller hereby covenants that:
(a) SECURITY INTERESTS. Except for the conveyances hereunder and the
[____________________] Agreement, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan or the related Mortgaged Property, whether now
existing or hereafter created, or any interest therein; and the Seller will
defend the right, title and interest of the Purchaser in, to and under the
Mortgage Loans and the related Mortgaged Property, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Seller; PROVIDED, HOWEVER, that nothing in this Section 6(a) shall prevent
or be deemed to prohibit the Seller from suffering to exist upon any Mortgage
Loans or the related Mortgaged Property any Liens for municipal or other local
taxes and other governmental charges if such taxes or governmental charges shall
not at the time be due and payable or if the Seller shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(b) NOTICE OF LIENS. The Seller shall notify the Purchaser promptly
after becoming aware of the existence of any Lien on any Mortgage Loans or the
related Mortgaged Property other than the conveyances hereunder and the
[____________________] Agreement.
(c) DELIVERY OF COLLECTIONS. In the event that the Seller receives
payments or other proceeds with respect to the Mortgage Loans conveyed
hereunder, the Seller agrees to remit to the Purchaser or its designee all such
payments or other proceeds as soon as practicable after receipt thereof by the
Transferor, but in no event later than [__] Business Days after the receipt by
the Seller thereof.
Section 7. TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate,
except for the Seller's indemnity obligations as provided herein, upon the
termination of the Trust as provided in Article [__] of the
[____________________] Agreement.
Section 8. AMENDMENT. (a) This Agreement may be amended from time to
time by the Purchaser and the Seller, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, or
to add any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or the [____________________] Agreement; PROVIDED, HOWEVER, that such
action shall not, (i) as evidenced by a letter from each Rating Agency rating
the Investor Certificates delivered to the Trustee, adversely affect the rating
on the Investor Certificates, or (ii) as evidenced by an opinion of counsel
satisfactory to the Trustee, cause the Trust to be characterized for federal
income tax purposes as an association taxable as a corporation or a taxable
mortgage pool or adversely affect the treatment of the Certificates as debt for
federal income tax purposes.
(b) This Agreement may also be amended from time to time by the
Purchaser and the Seller with the consent of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51%, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or modifying in any manner the rights of
the Certificateholders hereunder; PROVIDED, HOWEVER, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Mortgage Loans or distributions which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of Holders of all Certificates then outstanding.
(c) Promptly after the execution of any such amendment made with the
consent of the Investor Certificateholders, the Purchaser shall furnish, or
cause to be furnished, written notification of the substance of such amendment
to each Investor Certificateholder. The Purchaser shall give, or cause to be
given, to each Rating Agency ten Business Days' notice of any proposed amendment
pursuant to this Section 8, and the Purchaser shall give, or cause to be given,
to each Rating Agency notice of any amendment adopted pursuant to this Section.
(d) Not less than 10 days prior to the execution of any amendment to
this Agreement under subsection 8(b), the Purchaser shall furnish written notice
of such amendment including a copy of the text of the proposed amendment to each
Investor Certificateholder and to the Rating Agencies. Promptly after the
execution of any amendment the Purchaser shall furnish, or cause to be
furnished, written notification of the substance of such amendment to each
Investor Certificateholder and to the Rating Agencies.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 8 to approve the particular form of any
proposed amendment, but it shall be sufficient if such Certificateholders shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
Section 9. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, this Agreement may not be assigned by the Purchaser or the
Seller except as contemplated by this Section 9; PROVIDED, HOWEVER, that
simultaneously with the execution and delivery of this Agreement, the Purchaser
shall assign all of its right, title and interest herein to the Trustee for the
benefit of the Certificateholders as provided in the [____________________]
Agreement, to which the Seller hereby expressly consents. The Seller agrees to
perform its obligations hereunder for the benefit of the Trust and that the
Trustee may enforce the provisions of this Agreement, exercise the rights of the
Purchaser and enforce the obligations of the Seller hereunder without the
consent of the Purchaser and to the same effect as if the Trustee was a party
hereto.
Section 10. THIRD-PARTY BENEFICIARIES. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Trustee, and the
Certificateholders, which shall be considered to be third-party beneficiaries
hereof. Except as otherwise provided in this Agreement, no other person will
have any right or obligation hereunder.
Section 11. PURCHASER INDEMNIFICATION. The Seller shall pay, indemnify
and hold harmless the Purchaser, the Trust, the Trustee and each Investor
Certificateholder from and against any loss, liability, expense, damage or
injury (except, in the case of indemnification of any Certificateholder, to the
extent that they arise from any action by such Investor Certificateholder)
suffered or sustained pursuant to this Agreement, including, but not limited to,
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; PROVIDED, HOWEVER, that the Seller shall not
indemnify the Purchaser, the Trust, the Trustee or the Investor
Certificateholders if such loss, liability, expense, damage or injury is due to
the gross negligence or willful misconduct of the Purchaser or the Trustee and
provided further that the Seller shall not indemnify the Trust or the Investor
Certificateholders for any liabilities, costs or expenses of the Trust or the
Investor Certificateholders arising under any tax law, including, without
limitation, Federal, State or local or franchise taxes. The provisions of this
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof.
Section 12. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER. (a) The Seller shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) The corporation formed by such consolidation or into
which the Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Seller substantially as
an entirety shall be organized and existing under the laws of the
United States of America or any State or the District of Columbia,
and, if the Seller is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Purchaser and the Trustee, in form satisfactory to the Purchaser
and the Trustee, the performance of every covenant and obligation of
the Seller, as applicable hereunder and shall benefit from all the
rights granted to the Seller, as applicable hereunder; and
(ii) The Seller shall have delivered to the Purchaser and
the Trustee an Officer's Certificate signed by a Vice President (or
any more senior officer) of the Seller and an Opinion of Counsel each
stating that such consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section 12 and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
(b) The obligations of the Seller hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Seller
hereunder except in each case in accordance with the provisions of the foregoing
paragraph and of Section 9.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 14. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and amends, restates and supersedes any prior agreement between the
parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties relating to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first set forth above.
NORWEST MORTGAGE, INC.
as Seller
Name:
Title:
DIRECTORS ASSET CONDUIT CORPORATION
as Purchaser
Name:
Title:
<PAGE>
SCHEDULE I
Mortgage Loan Information
<PAGE>
SCHEDULE II
<PAGE>
EXHIBIT A
Forms of Mortgage Note
<PAGE>
EXHIBIT B
Forms of Mortgage
EXHIBIT 4.4
TRUST AGREEMENT
among
DIRECTORS ASSET CONDUIT CORPORATION
as Depositor,
[--------------------]
and
[--------------------],
as Owner Trustee
Dated as of ___________, 199_
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms............................................1
SECTION 1.02. Other Definitional Provisions................................4
ARTICLE II
ORGANIZATION
SECTION 2.01. Name.........................................................5
SECTION 2.02. Office.......................................................5
SECTION 2.03. Purposes and Powers..........................................5
SECTION 2.04. Appointment of Owner Trustee.................................6
SECTION 2.05. Initial Capital Contribution of Owner Trust
Estate.....................................................................6
SECTION 2.06. Declaration of Trust.........................................6
SECTION 2.07. Liability of the Owners......................................6
SECTION 2.08. Title to Trust Property......................................7
SECTION 2.09. Situs of Trust...............................................7
SECTION 2.10. Representations and Warranties of the Depositor
and the Company.............................................7
SECTION 2.11. Federal Income Tax Allocns...................................9
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. Initial Ownership...........................................10
SECTION 3.02. The Trust Certificates......................................10
SECTION 3.03. Authentication of Trust Certificates........................10
SECTION 3.04. Registration of Transfer and Exchange of Trust
Certificates...............................................10
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates...............................................11
SECTION 3.06. Persons Deemed Owners.......................................11
SECTION 3.07. Access to List of Certificateholders' Names and
Addresses...................................................12
SECTION 3.08. Maintenance of Office or Agency.............................12
SECTION 3.09. Appointment of Paying Agent.................................12
SECTION 3.10. Ownership by Company of Trust Certificates..................13
SECTION 3.11. Book-Entry Trust Certificates...............................13
SECTION 3.12. Notices to Clearing Agency..................................14
SECTION 3.13. Definitive Trust Certificates...............................14
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owners with Respect to Certain
Matters....................................................14
SECTION 4.02. Action by Owners with Respect to Certain Matters............15
SECTION 4.03. Action by Owners with Respect to Bankruptcy.................15
SECTION 4.04. Restrictions on Owners' Power...............................15
SECTION 4.05. Majority Control............................................15
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. Establishment of Trust Account..............................16
SECTION 5.02. Application of Trust Funds..................................16
SECTION 5.03. Method of Payment...........................................17
SECTION 5.04. No Segregation of Moneys; No Interest.......................17
SECTION 5.05. Accounting and Reports to the Noteholders,
Owners, the Internal Revenue Service and Others...........17
SECTION 5.06. Signature on Returns; Tax Matters Partner...................17
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority...........................................17
SECTION 6.02. General Duties..............................................18
SECTION 6.03. Action upon Instruction.....................................18
SECTION 6.04. No Duties Except as Specified in this Agreement
or in Instructions..........................................19
SECTION 6.05. No Action Except Under Specified Documents or
Instructions...............................................19
SECTION 6.06. Restrictions................................................19
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties.............................19
SECTION 7.02. Furnishing of Documents.....................................21
SECTION 7.03. Representations and Warranties..............................21
SECTION 7.04. Reliance; Advice of Counsel................................21
SECTION 7.05. Not Acting in Individual Capacity...........................22
SECTION 7.06. Owner Trustee Not Liable for Trust Certificates
or Mortgage Loans..........................................22
SECTION 7.07. Owner Trustee May Own Trust Certificates and
Notes......................................................22
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees and Expenses...........................22
SECTION 8.02. Indemnification.............................................23
SECTION 8.03. Payments to the Owner Trustee...............................23
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination of Trust Agreement..............................23
SECTION 9.02. Dissolution upon Bankruptcy of the Company..................24
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements for Owner Trustee.................25
SECTION 10.02. Resignation or Removal of Owner Trustee....................25
SECTION 10.03. Successor Owner Trustee....................................26
SECTION 10.04. Merger or Consolidation of Owner Trustee...................26
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee..............26
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments.................................28
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners.............29
SECTION 11.03. Limitations on Rights of Others............................29
SECTION 11.04. Notices....................................................29
SECTION 11.05. Severability...............................................29
SECTION 11.06. Separate Counterparts......................................29
SECTION 11.07. Successors and Assigns.....................................29
SECTION 11.08. Covenants of the Company...................................30
SECTION 11.09. No Petition................................................30
SECTION 11.10. No Recourse................................................30
SECTION 11.11. Headings...................................................30
SECTION 11.12. Governing Law..............................................30
SECTION 11.13. Depositor Payment Obligation...............................30
<PAGE>
EXHIBIT A FORM OF TRUST CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE OF TRUST
EXHIBIT C FORM OF CERTIFICATE DEPOSITORY AGREEMENT
<PAGE>
TRUST AGREEMENT (the "Trust Agreement") dated as of
________1, 199_, among DIRECTORS ASSET CONDUIT CORPORATION, a direct
wholly owned subsidiary of Norwest Mortgage, Inc. as depositor (the
"Depositor"), [_______________________], a [_______] corporation (the
"Company"), and [____________], a [__________________], as owner
trustee (the "Owner Trustee"). WHEREAS, the Company has agreed to
assign to the Depositor any and all of the Company's rights and
interests with respect to the Mortgage Loans; and
WHEREAS, in connection therewith, the Company is willing to assume
certain obligations pursuant hereto;
NOW, THEREFORE, the Depositor, the Company and the Owner Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"ADMINISTRATION AGREEMENT" shall mean the Administration Agreement
dated as of ________1, 199_, among the Trust, the Indenture Trustee and
[_________________________], as Administrator.
"AGREEMENT" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"ASSIGNMENT" shall mean the assignment of right, title and interest of
the Depositor in the Mortgage Loans to the Trust.
"BASIC DOCUMENTS" shall mean the Master Servicing Agreement, the
Indenture, the Administration Agreement and the other documents and certificates
delivered in connection therewith.
"BENEFIT PLAN" shall have the meaning assigned to such term in Section
11.13.
"BOOK-ENTRY TRUST CERTIFICATE" shall mean a beneficial interest in the
Trust Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 DEL. CODE ss.3801 ET SEQ., as the same may be amended from
time to time.
"CERTIFICATE" shall mean any of the Book-Entry Trust Certificates or
Definitive Trust Certificates.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning assigned to
such term in Section 5.01.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the form
of Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"CERTIFICATE OWNER" shall mean, with respect to a Book-Entry Trust
Certificate, a Person who is the beneficial owner of such Book-Entry Trust
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" shall mean the
register mentioned in and the registrar appointed pursuant to Section 3.04.
"CERTIFICATEHOLDER" or "HOLDER" shall mean a Person in whose name a
Trust Certificate is registered.
"CLEARING AGENCY" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"CORPORATE TRUST OFFICE" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
[____________________________], or at such other address as the Owner Trustee
may designate by notice to the Owners, the Depositor and the Company, or the
principal corporate trust office of any successor Owner Trustee at the address
designated by such successor Owner Trustee by notice to the Owners, the
Depositor and the Company.
"DEFINITIVE TRUST CERTIFICATES" shall have the meaning set forth in
Section 3.11.
"DEPOSITOR" shall mean Directors Asset Conduit Corporation in its
capacity as depositor hereunder.
"ELIGIBLE DISTRIBUTION ACCOUNT" shall mean an account that is (i)
maintained with a depository institution whose debt obligations at the time of
any deposit therein have the highest short-term debt rating by the Rating
Agencies, (ii) one or more accounts with a depository institution which accounts
are fully insured by either the Savings Association Insurance Fund or the Bank
Insurance Fund of the Federal Deposit Insurance Corporation established by such
fund, (iii) a segregated trust account maintained with the Owner Trustee or an
affiliate of the Owner Trustee in its fiduciary capacity or (iv) otherwise
acceptable to each Rating Agency as evidenced by a letter from each Rating
Agency to the Owner Trustee, without reduction or withdrawal of their then
currently ratings of the Certificates.
"ERISA" shall have the meaning assigned thereto in Section 11.13.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in Section
8.02.
"INDEMNIFIED PARTIES" shall have the meaning assigned to such term in
Section 8.02.
"INDENTURE" shall mean the Indenture dated as of ________, 199_ between
the Trust and [_____________________________], as Indenture Trustee.
"INITIAL CERTIFICATE BALANCE" shall mean $__________.
"MASTER SERVICING AGREEMENT" shall mean the Master Servicing Agreement
dated as of ________1, 199_, among the Trust, as issuer and [Norwest Bank
Minnesota, National Association,] as master servicer, as the same may be amended
or supplemented from time to time.
"MORTGAGE LOANS" shall mean a pool of [adjustable rate] home equity
revolving credit line loans made or to be made in the future under certain home
quity revolving credit line loan agreements.
"OWNER" shall mean each Holder of a Trust Certificate.
"OWNER TRUST ESTATE" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to the
Assignment, all funds on deposit from time to time in the Trust Accounts and the
Certificate Distribution Account and all other property of the Trust from time
to time, including any rights of the Owner Trustee and the Trust pursuant to the
Master Servicing Agreement and the Administration Agreement.
"OWNER TRUSTEE" shall mean [____________________], a [_________]
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"PAYING AGENT" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.09 and shall initially be [-------------].
"RATING AGENCY" shall mean any nationally recognized statistical
rating organization asked to rate the Certificates.
"RECORD DATE" shall mean, with respect to any Distribution Date, the
close of business on the day prior to such Distribution Date occurs or, if
Definitive Trust Certificates are issued pursuant to Section 3.14, the last day
of the month preceding such Distribution Date.
"SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the trust established by this Agreement.
"TRUST ACCOUNT" shall mean any account set up by the Owner Trustee
pursuant to the provisions of Section 5.01.
"TRUST CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto as
Exhibit A.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used and not otherwise defined herein have the meanings assigned to them in the
Master Servicing Agreement or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.01. NAME. The Trust created hereby shall be known as
"[______________] Home Equity Loan Trust 19 - ," in which name the Owner Trustee
may conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners, the
Depositor and the Company.
SECTION 2.03. PURPOSES AND POWERS. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Trust Certificates pursuant to this Agreement and to sell the Notes
and the Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the
Trust Certificates, to purchase the Mortgage Loans, and to pay the
organizational, start-up and transactional expenses of the Trust and
to pay the balance to the Depositor pursuant to the Master Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and to hold, manage
and distribute to the Owners pursuant to the terms of the Master
Servicing Agreement any portion of the Trust Estate released from the
Lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.04. APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.05. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $[_____________]. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.06. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Owners, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership,
with the assets of the partnership being the Mortgage Loans and other assets
held by the Trust, the partners of the partnership being the Certificateholders,
and the Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.
SECTION 2.07. LIABILITY OF THE OWNERS. (a) The Company shall be liable
directly to and will indemnify any injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Owner Trust Estate) to the extent that the Company
would be liable if the Trust were a partnership under the Delaware Revised
Uniform Limited Partnership Act in which the Company were a general partner;
PROVIDED, HOWEVER, that the Company shall not be liable for any losses incurred
by a Certificateholder in the capacity of an investor in the Trust Certificates,
or a Noteholder in the capacity of an investor in the Notes. In addition, any
third party creditors of the Trust (other than in connection with the
obligations described in the preceding sentence for which the Company shall not
be liable) shall be deemed third party beneficiaries of this paragraph and
paragraph (c) below. The obligations of the Company under this paragraph shall
be evidenced by the Trust Certificates described in Section 3.10, which for
purposes of the Business Trust Statute shall be deemed to be a separate class of
Trust Certificates from all other Trust Certificates issued by the Trust;
PROVIDED that the rights and obligations evidenced by all Trust Certificates,
regardless of class, shall, except as provided in this Section, be identical.
(b) No Owner, other than to the extent set forth in paragraph (a),
shall have any personal liability for any liability or obligation of the Trust.
SECTION 2.08. TITLE TO TRUST PROPERTY. Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
SECTION 2.09. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of [_______]. The Trust shall not have any employees in any state other
than Delaware; PROVIDED, HOWEVER, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or ________, and
payments will be made by the Trust only from Delaware or ________. The only
office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND THE
COMPANY. (a) The Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Depositor is duly organized and validly existing as
a corporation in good standing under the laws of the State of
[Delaware], with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted.
(ii) The Depositor is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of its property or the conduct of its business shall require
such qualifications.
(iii) The Depositor has the power and authority to execute
and deliver this Agreement and to carry out its terms; the Depositor
has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trust and the Depositor
has duly authorized such sale and assignment and deposit to the Trust
by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the
Depositor by all necessary corporate action.
(iv) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of the Depositor's knowledge, any order, rule or regulation applicable
to the Depositor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties.
(v) To the Depositor's best knowledge, there are no
proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
(vi) The representations and warranties of the Depositor in
Sections [___________] of the [________________________] are true and
correct.
(b) The Company hereby represents and warrants to the Owner
Trustee that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of [_________], with the power and authority to own its properties and
to conduct its business as such properties are currently owned and
such business is presently conducted.
(ii) The Company is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of its property or the conduct of its business shall require
such qualifications.
(iii) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Company has
full power and authority to purchase the Trust Certificates that the
Company has agreed to purchase pursuant to Section 3.10; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the [articles of incorporation] [certificate of incorporation] or
bylaws of the Company, or any indenture, agreement or other instrument
to which the Company is a party or by which it is bound; nor result in
the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate
any law or, to the best of the Company's knowledge, any order, rule or
regulation applicable to the Company of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its
properties.
(v) There are no proceedings or investigations pending or,
to the Company's best knowledge, threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its
properties: (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Company of its obligations under, or the validity or
enforceability of, this Agreement.
(vi) The representatives and warranties of the Company in
Sections [_______] of the [____________________] are true and correct.
SECTION 2.11. FEDERAL INCOME TAX ALLOCATIONS. Net income of the Trust
for any month as determined for federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated:
(a) among the Certificate Owners as of the first Record Date following
the end of such month, in proportion to their ownership of principal amount of
Trust Certificates on such date, net income in an amount up to the sum of the
Certificateholders' Monthly Interest Distributable Amount for such month,
interest on the excess, if any, of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date over the amount in
respect of interest that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, to the extent permitted by law, at
the Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date, the portion of the market discount on the Mortgage Loans
accrued during such month that is allocable to the excess, if any, of the
initial aggregate principal amount of the Trust Certificates over their initial
aggregate issue price, any amount expected to be distributed to the
Certificateholders pursuant to the Master Servicing Agreement (to the extent not
previously allocated pursuant to this clause), any Certificateholders'
Prepayment Premium distributable to the Certificateholders with respect to such
month and any other amounts of income payable to the Certificateholders for such
month; such sum to be reduced by any amortization by the Trust of premium on
Mortgage Loans that corresponds to any excess of the issue price of Certificates
over their principal amount; and
(b) to the Company, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to the Company to the
extent the Company is reasonably expected to bear the economic burden of such
net losses, and any remaining net losses shall be allocated among the
Certificate Owners as of the first Record Date following the end of such month
in proportion to their ownership of principal amount of Trust Certificates on
such Record Date. The Company is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Company
or to the Certificate Owners, or as otherwise required by the Code.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. INITIAL OWNERSHIP. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Depositor shall be the sole beneficiary
of the Trust.
SECTION 3.02. THE TRUST CERTIFICATES. The Trust Certificates shall be
issued in minimum denominations of $[_______] and in integral multiples of
$1,000 in excess thereof; PROVIDED, HOWEVER, that the Trust Certificates issued
to the Company pursuant to Section 3.10 may be issued in such denomination as
required to include any residual amount. The Trust Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee. Trust Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Trust Certificates
or did not hold such offices at the date of authentication and delivery of such
Trust Certificates.
A transferee of a Trust Certificate shall become a Certificateholder
and shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section 3.04.
SECTION 3.03. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently with
the initial sale of the Mortgage Loans to the Trust pursuant to the Master
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the Initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president, any vice president, secretary or any assistant treasurer, without
further corporate action by the Depositor, in authorized denominations. No Trust
Certificate shall entitle its Holder to any benefit under this Agreement or be
valid for any purpose unless there shall appear on such Trust Certificate a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Owner Trustee or [____________], as the Owner Trustee's
authenticating agent, by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication.
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. [___________]
shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause [ ] as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Trust Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder, Trust
Certificates may be exchanged for other Trust Certificates of authorized
denominations of a like aggregate amount upon surrender of the Trust
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Trust Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Owner Trustee in
accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.
If any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Trust Certificate has been acquired by a
bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and
the Owner Trustee or [], as the Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.06. PERSONS DEEMED OWNERS. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Paying Agent may treat the Person in whose name any
Trust Certificate is registered in the Certificate Register as the owner of such
Trust Certificate for the purpose of receiving distributions pursuant to Section
5.02 and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar or any Paying Agent shall be bound by any notice to the
contrary.
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Master Servicer and the Depositor, within 15 days after receipt by the Owner
Trustee of a written request therefor from the Master Servicer or the Depositor,
a list, in such form as the Master Servicer or the Depositor may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Certificateholders or one or more Holders
of Trust Certificates evidencing not less than 25% of the Certificate Balance
apply in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Trust Certificates and such
application is accompanied by a copy of the communication that such applicants
propose to transmit, then the Owner Trustee shall, within five Business Days
after the receipt of such application, afford such applicants access during
normal business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not to
hold any of the Depositor, the Company, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates
[_______________________________] as its office for such purposes. The Owner
Trustee shall give prompt written notice to the Company and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.09. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent initially shall be
[___________], and any co-paying agent chosen by [___________] and acceptable to
the Owner Trustee. [ ] shall be permitted to resign as Paying Agent upon 30
days' written notice to the Owner Trustee. In the event that [___________] shall
no longer be the Paying Agent, the Owner Trustee shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company). The Owner Trustee
shall cause such successor Paying Agent or any additional Paying Agent appointed
by the Owner Trustee to execute and deliver to the Owner Trustee an instrument
in which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that, as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and
8.01 shall apply to the Owner Trustee also in its role as Paying Agent, for so
long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
[SECTION 3.10. OWNERSHIP BY COMPANY OF TRUST Certificates. The Company
shall on the Closing Date purchase Trust Certificates representing at least __%
of the Initial Certificate Balance and shall thereafter retain beneficial and
record ownership of Trust Certificates representing at least __% of the
Certificate Balance. Any attempted transfer of any Trust Certificate that would
reduce such interest of the Company below __% of the Certificate Balance shall
be void. The Owner Trustee shall cause any Trust Certificate issued to the
Company to contain a legend stating "THIS CERTIFICATE IS NON-TRANSFERABLE".]
SECTION 3.11. BOOK-ENTRY TRUST CERTIFICATES. The Trust Certificates,
upon original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book-Entry Trust Certificates, to
be delivered to The Depository Trust Company, the initial Clearing Agency, by,
or on behalf of, the Trust; PROVIDED, HOWEVER, that one Definitive Trust
Certificate may be issued to the Company pursuant to Section 3.10. Such Trust
Certificate or Trust Certificates shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Certificate Owner will receive a definitive Trust
Certificate representing such Certificate Owner's interest in such Trust
Certificate, except as provided in Section 3.13. Unless and until definitive,
fully registered Trust Certificates (the "Definitive Trust Certificates") have
been issued to Certificate Owners pursuant to Section 3.13:
(a) The provisions of this Section shall be in full force and effect;
(b) The Certificate Registrar and the Owner Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Agreement (including
the payment of principal of and interest on the Trust Certificates and the
giving of instructions or directions hereunder) as the sole Holder of the Trust
Certificates and shall have no obligation to the Certificate Owners;
(c)To the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control;
(d) The rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Certificate Depository Agreement,
unless and until Definitive Trust Certificates are issued pursuant to Section
3.13, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of principal of
and interest on the Trust Certificates to such Clearing Agency Participants; and
(e) Whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Trust Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Certificate Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Trust Certificates and has
delivered such instructions to the Owner Trustee.
SECTION 3.12. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Trust Certificates shall have been issued to Certificate
Owners pursuant to Section 3.13, the Owner Trustee shall give all such notices
and communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.13. DEFINITIVE TRUST CERTIFICATES. If the Administrator
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Trust Certificates and the Administrator is unable to locate a qualified
successor, the Administrator at its option advises the Owner Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency or
after the occurrence of an Event of Default or a Master Servicer Default,
Certificate Owners representing beneficial interests aggregating at least a
majority of the Certificate Balance advise the Clearing Agency in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interest of the Certificate Owners, then the Clearing Agency shall
notify all Certificate Owners and the Owner Trustee of the occurrence of any
such event and of the availability of the Definitive Trust Certificates to
Certificate Owners requesting the same. Upon surrender to the Owner Trustee of
the typewritten Trust Certificate or Trust Certificates representing the Book-
Entry Trust Certificates by the Clearing Agency, accompanied by registration
instructions, the Owner Trustee shall execute and authenticate the Definitive
Trust Certificates in accordance with the instructions of the Clearing Agency.
Neither the Certificate Registrar nor the Owner Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Trust Certificates, the Owner Trustee shall recognize the Holders of the
Definitive Trust Certificates as Certificateholders. The Definitive Trust
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Owner Trustee, as evidenced
by its execution thereof.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Owners shall not have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Owners have withheld consent or
provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Mortgage Loans) and
the compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Mortgage Loans;
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.
SECTION 4.02. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS. The
Owner Trustee shall not have the power, except upon the direction of the Owners,
to remove the Administrator under the Administration Agreement pursuant to
Section [ ] thereof, appoint a successor Administrator pursuant to Section [] of
the Administration Agreement, remove the Master Servicer under the Master
Servicing Agreement pursuant to Section [] thereof or except as expressly
provided in the Basic Documents, sell the Mortgage Loans after the termination
of the Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the Owners.
SECTION 4.03. ACTION BY OWNERS WITH RESPECT TO Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Owners and the delivery to the Owner Trustee by each such Owner of a certificate
certifying that such Owner reasonably believes that the Trust is insolvent.
SECTION 4.04. RESTRICTIONS ON OWNERS' POWER. The Owners shall not
direct the Owner Trustee to take or to refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Basic Documents or would be contrary
to Section 2.03, nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.05. MAJORITY CONTROL. Except as expressly provided herein,
any action that may be taken by the Owners under this Agreement may be taken by
the Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective if signed by
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee, for
the benefit of the Certificateholders, shall establish and maintain in the name
of the Trust an Eligible Deposit Account (the "Certificate Distribution
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control of
the Owner Trustee for the benefit of the Certificateholders. If, at any time,
the Certificate Distribution Account ceases to be an Eligible Deposit Account,
the Owner Trustee (or the Depositor on behalf of the Owner Trustee, if the
Certificate Distribution Account is not then held by the Owner Trustee or an
affiliate thereof) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate Distribution Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments to such new Certificate Distribution
Account.
SECTION 5.02. APPLICATION OF TRUST FUNDS. (a) On each Distribution
Date, the Owner Trustee will distribute to Certificateholders, on a pro rata
basis, amounts deposited in the Certificate Distribution Account.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Master Servicer pursuant to Section [____] of the Master Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-U.S. Owner), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c).
SECTION 5.03. METHOD OF PAYMENT. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Trust Certificates in the aggregate evidence a denomination of
not less than $[____________], or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need not
be segregated in any manner except to the extent required by law or the Master
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 5.05. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS, OWNERS, THE
INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee shall maintain (or cause
to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, deliver to each Owner, as may be required by the
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable each Owner to prepare its federal and state
income tax returns, file such tax returns relating to the Trust (including a
partnership information return, IRS Form 1065) and make such elections as from
time to time may be required or appropriate under any applicable state or
federal statute or any rule or regulation thereunder so as to maintain the
Trust's characterization as a partnership for federal income tax purposes, cause
such tax returns to be signed in the manner required by law and collect or cause
to be collected any withholding tax as described in and in accordance with
Section 5.02(c) with respect to income or distributions to Owners. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Mortgage Loans.
The Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a) The Owner
Trustee shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires an Owner to sign such documents, in which case such
documents shall be signed by the Company.
(b) The Company shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument, in each case, in such form as the
Company shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Administrator recommends with
respect to the Basic Documents.
SECTION 6.02. GENERAL DUTIES. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the Basic Documents to which the
Trust is a party and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
SECTION 6.03. ACTION UPON INSTRUCTION. (a) Subject to Article IV and
in accordance with the terms of the Basic Documents, the Owners may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the Owners
pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, in accordance with the Basic Documents and in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.
SECTION 6.06. RESTRICTIONS. The Owner Trustee shall not take any
action that is inconsistent with the purposes of the Trust set forth in Section
2.03 or that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for federal income tax purposes. The
Owners shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
[malfeasance, bad faith or gross] negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03 expressly
made by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) The Owner Trustee shall not be liable for any error of judgment
made by a Trust Officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or any Owner;
(c) No provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or the Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate, or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein or
expressly agreed to in the Basic Documents;
(f) The Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Seller or Depositor, the Company, the
Indenture Trustee or the Master Servicer under any of the Basic Documents or
otherwise and the Owner Trustee shall have no obligation or liability to perform
the obligations of the Trust under this Agreement or the Basic Documents that
are required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Master Servicer or
the Seller or Depositor under the Master Servicing Agreement; and
(g) The Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its [willful malfeasance, bad faith or gross
negligence] in the performance of any such act.
SECTION 7.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. The Owner Trustee hereby
represents and warrants to the Company, for the benefit of the Owners, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of [Delaware]. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware law, governmental rule or regulation governing the banking
or trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee may act directly or through its agents or attorneys
pursuant to agreements entered into with any of them, and the Owner Trustee
shall not be liable for the conduct or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the Owner Trustee with
reasonable care, and may consult with counsel, accountants and other skilled
Persons to be selected with reasonable care and employed by it. The Owner
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the written opinion or advice of any such counsel,
accountants or other such Persons and not contrary to this Agreement or any
Basic Document.
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article VII, in accepting the trusts hereby created [_____________________]
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES OR
MORTGAGE LOANS. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor and the Company,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Basic Document or of the Trust Certificates (other than the
signature and countersignature of the Owner Trustee on the Trust Certificates)
or the Notes, or of any Mortgage Loan or related documents. The Owner Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage Loan, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any property securing a Mortgage Loan; the existence
and enforceability of any insurance thereon; the validity of the assignment of
any Mortgage Loan to the Trust or of any intervening assignment; the performance
or enforcement of any Mortgage Loan; the compliance by the Depositor, the
Company or the Master Servicer with any warranty or representation made under
any Basic Document or in any related document or the accuracy of any such
warranty or representation, or any action of the Administrator, the Indenture
Trustee or the Master Servicer or any subservicer taken in the name of the Owner
Trustee.
SECTION 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Company, the Administrator, the Indenture Trustee and the Master Servicer in
banking transactions with the same rights as it would have if it were not Owner
Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.02. INDEMNIFICATION. The Depositor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Depositor shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's choice of
legal counsel shall be subject to the approval of the Depositor, which approval
shall not be unreasonably withheld.
SECTION 8.03. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT. (a) This Agreement
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect upon the final distribution by the Owner Trustee of all moneys
or other property or proceeds of the Owner Trust Estate in accordance with the
terms of the Indenture, the Master Servicing Agreement and Article V or at the
time provided in Section 9.02. The bankruptcy, liquidation, dissolution, death
or incapacity of any Owner, other than the Company as described in Section 9.02,
shall not (x) operate to terminate this Agreement or the Trust or (y) entitle
such Owner's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of all or
any part of the Trust or Owner Trust Estate or (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), none of the Depositor, the
Company or any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Master Servicer stating the Distribution Date upon or with
respect to which final payment of the Trust Certificates shall be made upon
presentation and surrender of the Trust Certificates at the office of the Paying
Agent therein designated, the amount of any such final payment and that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Owner
Trustee to the Company.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. DISSOLUTION UPON BANKRUPTCY OF THE COMPANY. In the event
that an Insolvency Event shall occur with respect to the Company, this Agreement
shall be terminated in accordance with Section 9.01 90 days after the date of
such Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Holders of Certificates
(other than the Company) representing more than 50% of the Certificate Balance
(not including the Certificate Balance of the Trust Certificates held by the
Company), to the effect that each such party disapproves of the liquidation of
the Mortgage Loans and of the Trust. Promptly after the occurrence of any
Insolvency Event with respect to the Company, (A) the Company shall give the
Indenture Trustee and the Owner Trustee written notice of such Insolvency Event,
(B) the Owner Trustee shall, upon the receipt of such written notice from the
Company, give prompt written notice to the Certificateholders and the Indenture
Trustee, of the occurrence of such event and (C) the Indenture Trustee shall,
upon receipt of written notice of such Insolvency Event from the Owner Trustee
or the Company, give prompt written notice to the Noteholders of the occurrence
of such event; PROVIDED, HOWEVER, that any failure to give a notice required by
this sentence shall not prevent or delay, in any manner, a termination of the
Trust pursuant to the first sentence of this Section 9.02. Upon a termination
pursuant to this Section, the Owner Trustee shall direct the Indenture Trustee
promptly to sell the assets of the Trust (other than the Trust Accounts and the
Certificate Distribution Account) and, on behalf of the Company, in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds of such a sale of the assets of the Trust shall be treated as
collections under the Master Servicing Agreement.
<PAGE>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least [____] by
[__________]. If such corporation shall publish reports of condition at least
annually pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.02.
SECTION 10.02. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee, and shall pay all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.03. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, that such corporation shall be eligible pursuant to
Section 10.01 and, PROVIDED, FURTHER, that the Owner Trustee shall mail notice
of such merger or consolidation to the Rating Agencies.
SECTION 10.05. 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 Owner Trust Estate may at the time be located, the Administrator and the
Owner Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Administrator and
Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or as
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust or
any part thereof and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Administrator and the
Owner Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor Owner Trustee pursuant
to Section 10.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner 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, the Owner 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 Owner 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 Owner Trustee;
(b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) The Administrator and the Owner Trustee acting jointly 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 Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as 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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS. This Agreement may be
amended by the Depositor, the Company and the Owner Trustee, with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders or
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the Principal Balance of the Notes and
the consent of the Holders of Certificates evidencing not less than a majority
of the Certificate Balance, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Mortgage Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Principal Balance of the Notes and
the Certificate Balance required to consent to any such amendment, without the
consent of the holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders,
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment that affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02. NO LEGAL TITLE TO OWNER TRUST ESTATE IN OWNERS. The
Owners shall not have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title or interest
of the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Company, the Owners, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.04. NOTICES. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to Directors Asset Conduit Corporation, c/o Norwest
Mortgage, Inc. 343 Thornall Street, 5th Floor, Edison, New Jersey 08837,
Attention: [______________]; if to the Company, addressed to
[_____________________________], Attention: [____________]; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.05. SEVERABILITY. Any provision of this Agreement that is
prohibited 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 shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.06. SEPARATE COUNTERPARTS. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.07. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Company, the Owner Trustee and its successors and each Owner and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an Owner
shall bind the successors and assigns of such Owner.
SECTION 11.08. COVENANTS OF THE COMPANY. The Company will not at any
time institute against the Trust any bankruptcy proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust Agreement
or any of the Basic Documents.
SECTION 11.09. NO PETITION. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Company or the Trust, or join in any institution against the Company
or the Trust of, any bankruptcy proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.10. NO RECOURSE. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Master Servicer, the Company, the
Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Agreement, the Trust Certificates
or the Basic Documents.
SECTION 11.11. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. DEPOSITOR PAYMENT OBLIGATION. The Depositor shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and liabilities
of the Administrator incurred thereunder.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
DIRECTORS ASSET
CONDUIT CORPORATION,
as Depositor,
by:
Name:
Title:
[------------------------------],
by:
Name:
Title:
[------------------------------],
not in its individual capacity
but solely as Owner Trustee,
by:
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF TRUST CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NUMBER $_________
R-___________ CUSIP NO. _________
[_______________] HOME EQUITY LOAN TRUST 199__-__
[_____]% HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 199__-__
evidencing a fractional undivided beneficial ownership interest in the Trust, as
defined below, the property of which includes a pool of [fixed-rate] [adjustable
rate] home equity revolving credit line loans caused to be sold to the Trust by
[---------------].
(This Trust Certificate does not represent an interest in or obligation of
DIRECTORS ASSET CONDUIT CORPORATION or any of its respective affiliates, except
to the extent described below.)
THIS CERTIFIES THAT [________________________] is the registered owner
of [____________________] DOLLARS nonassessable, fully paid, fractional
undivided interest in [ ] HOME EQUITY LOAN TRUST 199__-__ (the "Trust") formed
by Directors Asset Conduit Corporation, Inc., a direct, wholly owned subsidiary
of Norwest Mortgage, Inc. (the "Depositor"), and [_______________], a
[__________] corporation (the "Company").
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
[-------------------], [-------------------],
as Owner Trustee or as Owner Trustee
by: by: [ ],
Authorized Signatory as Authenticating Agent
by:
Authorized Signatory
<PAGE>
The Trust was created pursuant to a Trust Agreement, dated as of ,
199__ (the "Trust Agreement"), among the Depositor, the Company and
[____________], as owner trustee (the "Owner Trustee"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement or the Master Servicing Agreement dated
as of ___________, 199__ (as amended and supplemented from time to time, the
"Master Servicing Agreement"), among the Trust, the Depositor and
[_______________], as servicer (the "Master Servicer"), as applicable.
This Certificate is one of a duly authorized issue of Home Equity Loan
Asset-Backed Certificates, Series 199__-__ (herein called the "Trust
Certificates"). Also issued under the Indenture dated as of ___________, 199__
between the Trust and [________________], as indenture trustee, are the
[_______] classes of Notes designated as [_________________________]
(collectively, the "Notes"). This Trust Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to which
Trust Agreement the Holder of this Trust Certificate by virtue of its acceptance
hereof assents and by which such Holder is bound. The property of the Trust
consists of a pool of [adjustable rate] home equity loan revolving credit line
loans made or to be made int he future (the "Mortgage Loans"), under certain
home equity revolving credit line loan agreements and secured primarily by
second [deeds of trust] [mortgages] on residential properties that are primarily
one- to four-family properties (the "Mortgaged Properties"); the collections in
respect of the Mortgage Loans received after the Cut-off Date; property that
secured a Mortgage Loan which has been acquired by foreclosure or deed in lieu
of foreclosure; [a surety bond] [a letter of credit]; an assignment of the
Depositor's rights under the [________________]; rights under certain hazard
insurance policies covering the Mortgaged Properties; and certain other
property. [The rights of the Holders of the Trust Certificates are subordinated
to the rights of the Holders of the Notes, as set forth in the Master Servicing
Agreement.]
Under the Trust Agreement, there will be distributed on the [_______]
day of each month or, if such [_______] day is not a Business Day, the next
Business Day (each, a "Distribution Date"), commencing on ___________, 199__, to
the Person in whose name this Trust Certificates is registered at the close of
business on the first day of the month or, if Definitive Certificates are
issued, the [_______] day of the prior month (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date. No distributions of
principal will be made on any Certificate until all of the Notes have been paid
in full.
[The Holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Master
Servicing Agreement and the Indenture.]
It is the intent of the Depositor, the Company, the Master Servicer
and the Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will be
treated as a partnership and the Certificateholders (including the Company) will
be treated as partners in that partnership. The Company and the other
Certificateholders, by acceptance of a Trust Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Trust Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial interest
in a Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Company, or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon,
except that with respect to Trust Certificates registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as otherwise provided in
the Trust Agreement and notwithstanding the above, the final distribution on
this Trust Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Trust Certificate at the office or agency maintained for that purpose by the
Owner Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the Holder hereof to any benefit under
the Trust Agreement or the Master Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
[----------------------]
by: [_____________________], not
in its individual capacity
but solely as Owner Trustee
Dated: by:
Authorized Signatory
<PAGE>
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Master Servicer, the Company, the Owner Trustee
or any affiliates of any of them and no recourse may be had against such parties
or their assets, except as expressly set forth or contemplated herein or in the
Trust Agreement or the Basic Documents. In addition, this Trust Certificate is
not guaranteed by any governmental agency or instrumentality and is limited in
right of payment to certain collections and recoveries with respect to the
Mortgage Loans (and certain other amounts), all as more specifically set forth
herein and in the Master Servicing Agreement. A copy of each of the Master
Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any, designated
by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the Company and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor, the Company and the Owner Trustee
with the consent of the Holders of the Trust Certificates and the Notes, each
voting as a class, evidencing not less than a majority of the Certificate
Balance and the outstanding principal balance of the Notes of each such class.
Any such consent by the Holder of this Trust Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Trust Certificate and
of any Trust Certificate issued upon the transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent is made upon this
Trust Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is
[_________________], New York, New York.
Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates without coupons in denominations
of $[__________] and in integral multiples of $[_______] in excess thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Trust Certificates are exchangeable for new Trust Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Owner Trustee, the Certificate Registrar or any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Master Servicing Agreement and the disposition of all
property held as part of the Owner Trust Estate. The Master Servicer of the
Mortgage Loans may at its option purchase the Owner Trust Estate at a price
specified in the Master Servicing Agreement, and such purchase of the Mortgage
Loans and other property of the Trust will effect early retirement of the Trust
Certificates; HOWEVER, such right of purchase is exercisable only as of the last
day of any Collection Period as of which the Pool Balance is less than or equal
to [____]% of the Original Pool Balance.
The Trust Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip
code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
-------------------------------*/
Signature Guaranteed:
-----------------------------*/
- -----------------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
[__________] HOME EQUITY LOAN TRUST 199___
THIS Certificate of Trust of [_____________] HOME EQUITY LOAN TRUST
199__- __ (the "Trust"), dated, 199__, is being duly executed and filed by
[_____________________], a [___________________________], as trustee, to form a
business trust under the [Delaware Business Trust Act (12 DEL. CODE, ' 3801 ET
SEQ.).]
1. NAME. The name of the business trust formed hereby is
[_____________] HOME EQUITY LOAN TRUST 199__-__.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is [______________], Delaware [____],
Attention: [_______________________________].
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
[--------------],
not in its individual capacity but
solely as owner trustee under a Trust
Agreement
dated __________________, 199___
By:
Name:
Title:
<PAGE>
EXHIBIT C
[Form of Certificate Depository Agreement]
EXHIBIT 5.1
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
October 20, 1997
Directors Asset Conduit Corporation
c/o Norwest Mortgage, Inc.
343 Thornall Street, 5th Fl.
Edison, New Jersey 078837
Re: DIRECTORS ASSET CONDUIT CORPORATION REGISTRATION STATEMENT
ON FORM S-3 (NO. 333-32577)
Ladies and Gentlemen:
We have acted as counsel for Directors Asset Conduit Corporation, a Delaware
corporation (the "Company"), in connection with the authorization and issuance
from time to time in one or more series of Asset Backed Certificates
(collectively, the "Certificates") and Asset Backed Notes (collectively, the
"Notes", and together with the Certificates, the "Securities"). A Registration
Statement on Form S-3 (No. 333-32577), as amended, relating to the Securities
and the Guaranty referred to below (the "Registration Statement") is being filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. As set forth in the Registration Statement, separate Trusts (each, a
"Trust") will be established either pursuant to the conditions of a separate
pooling and servicing agreement (each, a "Pooling and Servicing Agreement") or
pursuant to the conditions of a separate Trust Agreement (each, a "Trust
Agreement"), and each Trust will issue Certificates pursuant to the respective
Pooling and Servicing Agreement and/or Notes pursuant to an Indenture (each, an
"Indenture").
We have examined original or reproduced or certified copies of the Certificate
of Incorporation and By-laws of the Company, each as amended to date, records of
actions taken by the Company's Board of Directors, a form of Pooling and
Servicing Agreement, a form of Trust Agreement, a form of Indenture, forms of
Securities, the prospectus and form of prospectus supplement relating to Home
Equity Asset-Backed Securities. We also have examined such other documents,
papers, statutes and authorities as we deem necessary as a basis for the
opinions hereinafter set forth. In our examination of such material, we have
assumed the genuineness of all signatures and the conformity to original
documents of all copies submitted to us as certified or reproduced copies. As to
various matters material to such opinions, we have relied upon the
representations and warranties in the form of Pooling and Servicing Agreement
and statements and certificates of officers and representatives of the Company
and others.
Based upon the foregoing, we are of the opinion that:
1. When a Pooling and Servicing Agreement or master servicing
agreement (each, a "Master Servicing Agreement"), loan purchase agreement (each
"Loan Purchase Agreement"), Trust Agreement and Indenture have been duly and
validly authorized, executed and delivered by the Company, the Originators and
the independent trustee or trustees that are party thereto, it will constitute a
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
2. When a series of Notes or a series Certificates, as applicable,
have been duly and validly authorized by all necessary action on the part of the
Company (subject to the terms thereof being otherwise in compliance with
applicable law at such time) and when executed as specified in, and delivered
pursuant to, a Pooling and Servicing Agreement or Master Servicing Agreement,
Trust Agreement and Indenture, and when sold as described in the Registration
Statement, they will be validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement or Master Servicing Agreement,
Trust Agreement and Indenture, and will evidence the entire beneficial ownership
of the applicable Trust.
3. The information in the Prospectus under the caption "Federal Income
Tax Consequences," and in the form of prospectus supplement forming a part of
the Prospectus under the caption " Federal Income Tax Consequences," to the
extent that it constitutes matters of law or legal conclusions, sets forth our
opinion with respect to the material Federal income tax consequences of an
investment in the Securities.
In rendering the foregoing opinions, we express no opinion as to laws of any
jurisdiction other than the State of New York and the Federal law of the United
States of America. Our opinions expressed in paragraphs 1 and 2 are subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the references to us in each Prospectus and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Securities
under the securities or blue sky laws of any state or jurisdiction. In giving
such permission, we do not admit hereby that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the General Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN LLP
EXHIBIT 10.1
MASTER SERVICING AGREEMENT
Dated as of [ ]
among
Home Equity Loan Trust 199_, Issuer,
NORWEST MORTGAGE, INC., Seller
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, Master Servicer
and
[ ], Trustee
Relating to the Mortgage Loans
Pledged as Collateral for the Issuer's
Asset Backed Notes and Asset Backed Certificates,
Series 199_,
in the Aggregate Initial
Principal Amount of $[ ]
<PAGE>
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT.........................................................1
1. Defined Terms..............................................................1
Advance ............................................................1
Administration Agreement.............................................2
Administrator........................................................2
Agreement............................................................2
Appraised Value......................................................2
Asset Balance........................................................2
Assignment of Mortgage...............................................2
Bankruptcy Code......................................................2
Basic Documents......................................................2
Billing Cycle........................................................3
Business Day.........................................................3
Capitalized Interest Account.........................................3
Certificateholder....................................................3
Certificates.........................................................3
Class................................................................3
Closing Date.........................................................3
Code.................................................................3
Collateral...........................................................3
Collection Account...................................................3
Collection Period....................................................3
Combined Loan-to-Value Ratio.........................................3
Corporate Trust Office...............................................4
Custodial Agreement..................................................4
Custodian............................................................4
Cut-Off Date.........................................................4
DCR..................................................................4
Deleted Mortgage Loan................................................4
Deposit Date.........................................................4
Deposit Date Asset Balance...........................................4
Depositor............................................................4
Determination Date...................................................4
Distribution Date....................................................5
Draw.................................................................5
Due Date ............................................................5
Eligible Account.....................................................5
Eligible Substitute Mortgage Loan....................................5
Escrow Account.......................................................6
Excess Proceeds......................................................6
FDIC.................................................................6
FHLMC................................................................6
FIRREA...............................................................6
Fitch................................................................6
FNMA.................................................................6
Gross Margin.........................................................6
Holder...............................................................6
Increased Senior Lien Limitation.....................................6
Indenture............................................................6
[Insurance Agreement.................................................7
Insurance Policy.....................................................7
Insurance Proceeds...................................................7
Interest Period......................................................7
Issuer...............................................................7
Issuer Request.......................................................7
Lien.................................................................7
Lifetime Rate Cap....................................................7
Liquidated Mortgage Loan.............................................7
Liquidation Expenses.................................................8
Liquidation Loss Amounts.............................................8
Liquidation Proceeds.................................................8
Liquidation Proceeds.................................................8
Loan Agreement.......................................................8
Loan Purchase Agreement..............................................8
Loan Rate............................................................8
Loan-to-Value Ratio..................................................8
Margin...............................................................8
Master Servicer......................................................8
Master Servicer Advance Date.........................................8
Master Servicing Fee.................................................8
Master Servicing Fee Rate............................................9
Moody's..............................................................9
Mortgage.............................................................9
Mortgage File........................................................9
Mortgage Loan Schedule...............................................9
Mortgage.............................................................9
Mortgage Loans.......................................................9
Mortgage Note........................................................9
Mortgaged Property...................................................9
Mortgagor...........................................................10
Net Liquidation Proceeds............................................10
Net Loan Rate.......................................................10
Nonrecoverable Advance..............................................10
Notes...............................................................10
Noteholder or Holder................................................10
Officer's Certificate...............................................10
Opinion of Counsel..................................................10
Outstanding.........................................................10
Owner Trust Estate..................................................10
Owner Trustee.......................................................11
Paying Agent........................................................11
Payment Account.....................................................11
Payment Account.....................................................11
Payment Account Deposit Date........................................11
Payment Date........................................................11
Percentage Interest.................................................11
Permitted Investments...............................................11
Person..............................................................12
Policy..............................................................12
Pool Balance........................................................13
Pre-Funding Account.................................................13
Prepayment Period...................................................13
Primary Insurance Policy............................................13
Principal Balance...................................................14
Principal Prepayment................................................14
Principal Prepayment in Full........................................14
Prospectus Supplement...............................................14
Purchase Price......................................................14
Qualified Insurer...................................................14
Rating Agency.......................................................14
Realized Loss.......................................................14
Relief Act..........................................................14
Relief Act Reductions...............................................14
REO Property........................................................14
Repurchase Price....................................................14
Request for Release.................................................15
Required Insurance Policy...........................................15
SAIF................................................................15
S&P.................................................................15
Securities Act......................................................15
Security ...........................................................15
Securityholder or Holder............................................15
Seller..............................................................15
Servicer Advance....................................................15
Servicing Account...................................................15
Servicing Advances..................................................15
Servicing Default...................................................15
Servicing Fee.......................................................15
Servicing Fee Rate..................................................16
Servicing Officer...................................................16
Subservicer.........................................................16
Subservicing Agreement..............................................16
Subservicing Fee....................................................16
Substitute Mortgage Loan............................................16
Substitution Adjustment Amount......................................16
Trust Agreement.....................................................16
Trustee.............................................................16
Trustees............................................................16
Trust Estate........................................................16
UCC.................................................................16
Withdrawal Date.....................................................17
2. Conveyance of Mortgage Loans; Representations and
Warranties..........................................................18
(a) Conveyance of Mortgage Loans; Retention of
Obligation to Fund Advances Under Credit Line
Agreements.................................................18
(b) Acceptance by Trustee; Retransfer of Mortgage
Loans......................................................22
(c) Documents, Records and Funds in Possession of
Master Servicer to be Held for Trustee....................23
(d) Representations, Warranties and Covenants of the
Seller.....................................................24
(e) Representations, Warranties and Covenants of the
Master Servicer............................................26
(f) Covenants of the Depositor.....................................27
3. Administration and Servicing of Mortgage Loans...........................27
(a) Master Servicer to Service Mortgage Loans......................27
(b) Subservicing; Enforcement of the Obligations of
Servicers..................................................29
(c) Successor Servicers............................................30
(d) Liability of the Master Servicer...............................30
(e) No Contractual Relationship Between Subservicers
and the Trustees...........................................30
(f) Rights of the Depositor and the Trustees in
Respect of the Master Servicer............................31
(g) Trustee to Act as Master Servicer..............................31
(h) Collection of Mortgage Loan Payments; Collection
Accounts; Payment Account.................................31
(i) Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.....................................34
(j) Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................35
(k) Permitted Withdrawals from the Note Account....................35
(l) Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies................................37
(m) Enforcement of Due-On-Sale Clauses; Assumption
Agreements.................................................38
(n) Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans......................40
(o) Access to Certain Documentation................................42
(p) Annual Statement as to Compliance..............................42
(q) Annual Independent Public Accountants' Servicing
Statement; Financial Statements...........................43
(r) Errors and Omissions Insurance; Fidelity Bonds.................43
(s) Master Servicer Monthly Data...................................43
4. Advances.................................................................44
5. Servicing Compensation...................................................44
6. The Master Servicer......................................................44
(a) Respective Liabilities of the Depositor and the
Master Servicer............................................44
(b) Merger or Consolidation of the Depositor or the
Master Servicer............................................45
(c) Limitation on Liability of the Depositor, the
Seller, Master Servicer and Others........................45
(d) Limitation on Resignation of the Master Servicer...............46
7. Default..................................................................46
(a) Events of Default..............................................46
(b) Trustee to Act; Appointment of Successor.......................48
(c) Notification to Securityholders................................49
8. Miscellaneous............................................................49
(a) Term of Master Servicing Agreement.............................49
(b) Assignment.....................................................50
(c) Notices........................................................50
(d) Inspection and Audit Rights....................................51
(e) Governing Law..................................................51
(f) Amendment......................................................51
(g) Severability of Provisions.....................................53
(h) No Joint Venture...............................................53
(i) Recordation of Agreement; Counterparts.........................53
(j) Limitation of Liability of [Owner Trustee].....................53
(k) Nonpetition Covenants..........................................54
SCHEDULE I.........Mortgage Loan ScheduleS-I-1............................S-I-1
SCHEDULE II........Representations and Warranties of
..........the Master Servicer...................................S-II-1
SCHEDULE III.......Representations and Warranties as
..........to the Mortgage Loans................................S-III-1
SCHEDULE IV........Representations and Warranties of
..........the Issuer............................................S-IV-1
EXHIBITS
EXHIBIT A FORM OF INITIAL CERTIFICATION OF TRUSTEE.................A-1
EXHIBIT B FORM OF FINAL CERTIFICATION OF TRUSTEE...................B-1
EXHIBIT C REQUEST FOR RELEASE (for Trustee)........................C-1
EXHIBIT D REQUEST FOR RELEASE (Mortgage Loan
Paid in Full, Repurchased and Released)..................D-1
<PAGE>
MASTER SERVICING AGREEMENT
THIS MASTER SERVICING AGREEMENT is made and entered into as of [ ], by
and among [ ] Home Equity Loan Trust 199_, a statutory business trust formed
under the laws of the State of [Delaware] (the "Issuer"), Norwest Bank
Minnesota, National Association, a national banking association, (the "Master
Servicer") and [ ], a [ ] corporation (in its capacity as trustee under the
Indenture referred to below, the "Trustee").
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing asset backed notes
and asset backed certificates secured by mortgage collateral. The Issuer has
entered into a trust indenture, dated as of [ ] (the "Indenture"), between the
Issuer and the Trustee, pursuant to which the Issuer intends to issue its Home
Equity Loan Asset Backed Notes and Home Equity Loan Asset Backed Certificates,
Series 199_, in the aggregate initial principal amount of $[ ] (the
"Securities"). Pursuant to the Indenture, as security for the indebtedness
represented by such Securities, the Issuer is and will be pledging to the
Trustee, or granting the Trustee a security interest in, among other things,
certain Mortgage Loans and Additional Balances, its rights under this Agreement,
the Payment Account, the Collection Account [and certain Insurance Policies] (as
each such term is defined herein).
The parties desire to enter into this Agreement to provide, among
other things, for the servicing of the Mortgage Loans by the Master Servicer.
The Master Servicer acknowledges that, in order further to secure the
Securities, the Issuer is and will be granting to the Trustee a security
interest in, among other things, its rights under this Agreement, and the Master
Servicer agrees that all covenants and agreements made by the Master Servicer
herein with respect to the Mortgage Loans shall also be for the benefit and
security of the Trustee and Holders of the Securities. For its services
hereunder, the Master Servicer will receive a Master Servicing Fee (as defined
herein) with respect to each Mortgage Loan serviced hereunder.
2. DEFINED TERMS.
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Agreement, and the definitions of such terms are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms:
ADVANCE: The payment required to be made by the Master Servicer
with respect to any Distribution Date pursuant to Section 4, the amount of any
such payment being equal to the aggregate of payments of principal and interest
(net of the Master Servicing Fee and net of any net income in the case of any
REO Property) on the Mortgage Loans that were due on the related Due Date and
not received as of the close of business on the related Determination Date, less
the aggregate amount of any such delinquent payments that the Master Servicer
has determined would constitute a Nonrecoverable Advance if advanced.
ADMINISTRATION AGREEMENT: The Administration Agreement dated as
of ___________, 199_ among the Issuer, the Trustee and [______________], as
Administrator, as it may be amended from time to time.
ADMINISTRATOR: [______________], as administrator under the
Administration Agreement or any successor Administrator appointed pursuant to
the terms of the Administration Agreement.
AGREEMENT: Means this Master Servicing Agreement, as the same may
be amended or supplemented from time to time.
APPRAISED VALUE: With respect to any Mortgaged Property, either
(x) the value set forth in an appraisal of such Mortgaged Property made to
establish compliance with the underwriting criteria then in effect in connection
with the later of the application for the Mortgage Loan secured by such
Mortgaged Property or any subsequent increase or decrease in the related Credit
Limit or to reduce or eliminate the amount of any primary insurance, or (y) if
the sales price of the Mortgaged Property is considered in accordance with the
underwriting criteria applicable to the Mortgage Loan, the lesser of (i) the
appraised value referred to in (x) above and (ii) the sales price of such
Mortgaged Property.
ASSET BALANCE: With respect to any Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any day, the related Cut-off Date Asset
Balance or Deposit Date Asset Balance, [plus (i) any Additional Balances in
respect of such Mortgage Loan conveyed to the Issuer,] minus [(ii)] all
collections credited as principal in respect of any such Mortgage Loan in
accordance with the related Loan Agreement (except for any such collections that
are allocable to the Excluded Amount) and applied in reduction of the Asset
Balance thereof. For purposes of this definition, a Liquidated Mortgage Loan
shall be deemed to have an Asset Balance equal to the Asset Balance of the
related Mortgage Loan immediately prior to the final recovery of all related
Liquidation Proceeds and an Asset Balance of zero thereafter.
ASSIGNMENT OF MORTGAGE: With respect to any Mortgage, an
assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the conveyance of the Mortgage, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
BANKRUPTCY CODE: Means the United States Bankruptcy Reform Act of
1978, as amended.
BASIC DOCUMENTS: The Trust Agreement, the Certificate of Trust,
the Indenture, the Loan Purchase Agreement, the Insurance Agreement, the
Administration Agreement, the Master Servicing Agreement, the Custodial
Agreement and the other documents and certificates delivered in connection with
any of the above.
BILLING CYCLE: With respect to any Mortgage Loan and Due Date,
the calendar month preceding such Due Date.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York,
[_______________] or [_____________] are required or authorized by law to be
closed.
CAPITALIZED INTEREST ACCOUNT: Means the Eligible Account or
Accounts established and maintained by the Master Servicer in accordance with
Section [_____].
CERTIFICATEHOLDER: The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate registered
in the name of the Issuer, the Owner Trustee or the Trustee or any Affiliate of
any of them shall be deemed not to be outstanding and the registered holder will
not be considered a Certificateholder or a holder for purposes of giving any
request, demand, authorization, direction, notice, consent or waiver under the
Indenture or the Trust Agreement provided that, in determining whether the
Trustee or the Owner Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates that the Trustee or the Owner Trustee knows to be so owned shall be
so disregarded. Owners of Certificates that have been pledged in good faith may
be regarded as Holders if the pledgee establishes to the satisfaction of the
Trustee or the Owner Trustee, as the case may be, the pledgee's right so to act
with respect to such Certificates and that the pledgee is not the Issuer, any
other obligor upon the Certificates or any Affiliate of any of the foregoing
Persons.
CERTIFICATES: The Home Equity Loan Asset Backed Certificates,
Series 199_-_, each evidencing undivided beneficial interests in the Issuer and
executed by the Owner Trustee in substantially the form set forth in Exhibit A
to the Trust Agreement. CLASS: The Notes or the Certificates, as the case may
be. CLOSING DATE: ___________, 199_. CODE: The Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder. COLLATERAL: The
meaning specified in the Granting Clause of the Indenture. COLLECTION ACCOUNT:
Means the Eligible Account or Accounts established and maintained by the Master
Servicer in accordance with Section 3(h)(iii).
COLLECTION PERIOD: With respect to any Mortgage Loan and Payment
Date other than the first Payment Date, the calendar month preceding any such
Payment Date and with respect to the first Payment Date, the period from
_____________ through [-----------].
COMBINED LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan
and any date, the percentage equivalent of a fraction, the numerator of which is
the sum of (i) the greater of (x) the Credit Limit and (y) the Cut-off Date
Asset Balance of such Mortgage Loan and (ii) the outstanding principal balance
as of the date of the origination of such Mortgage Loan (or any subsequent date
as of which such outstanding principal balance may be determined in connection
with an increase or decrease in the Credit Limit or to reduce the amount of
primary insurance for such Mortgage Loan) of any mortgage loan or mortgage loans
that are secured by liens on the Mortgaged Property that are senior or
subordinate to the Mortgage and the denominator of which is the Appraised Value
of the related Mortgaged Property.
CORPORATE TRUST OFFICE: The designated office of the Trustee in
the State of ________ at which at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at
__________________________________ (Attn: ____________________________________,
facsimile no. ________________, and which is the address to which notices to and
correspondence with the Trustee should be directed.
CUSTODIAL AGREEMENT: Any Custodial Agreement between the
Custodian, the Trustee, the Issuer and the Master Servicer relating to the
custody of the Mortgage Loans and the Related Documents.
CUSTODIAN: With respect to the Mortgage Loans, [______________],
a [_______________], and its successors and assigns.
CUT-OFF DATE: With respect to the Initial Loans ________, 199_.
DCR: Means Duff & Phelps Credit Rating Company, or any successor
thereto. If DCR is designated as a Rating Agency in the Indenture, for purposes
of Section 8(c) the address for notices to DCR shall be Duff & Phelps Credit
Rating Company, 55 E. Monroe Street, 35th Floor, Chicago, Illinois 60603,
Attention: MBS Monitoring, or such other address as DCR may hereafter furnish to
the Issuer and the Master Servicer.
DELETED MORTGAGE LOAN: Has the meaning ascribed thereto in
Section 5.
[DEPOSIT DATE: The applicable date as of which any Additional
Loan is sold to the Issuer pursuant to the Loan Purchase Agreement.
DEPOSIT DATE ASSET BALANCE: With respect to any Additional Loan,
the Asset Balance thereof as of the Deposit Date.]
DEPOSITOR: Directors Asset Conduit Corporation, a Delaware
corporation, or its successor in interest.
DETERMINATION DATE: As to any Distribution Date, the ____ day of
each month or if such ____ day is not a Business Day the next preceding Business
Day; provided, however, that if such ____ day or such Business Day, whichever is
applicable, is less than two Business Days prior to the related Distribution
Date, the Determination Date shall be the first Business Day which is two
Business Days preceding such Distribution Date.
DISTRIBUTION DATE: The ____ day of each calendar month after the
initial issuance of the Certificates, or if such ____ day is not a Business Day,
the next succeeding Business Day, commencing in ____________, 199_.
DRAW: With respect to any Mortgage Loan, a borrowing by the
Mortgagor under the related Loan Agreement.
DUE DATE: With respect to the Mortgage Loans, the [__]th day of
the month.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Securityholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, accounts
maintained with the Trustee.
ELIGIBLE SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted by
the Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee,
(i) have an outstanding principal balance, after deduction of the principal
portion of the monthly payment due in the month of substitution (or in the case
of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of
the outstanding principal balance of the Deleted Mortgage Loan (the amount of
any shortfall to be deposited by the Seller in the Collection Account in the
month of substitution); (ii) have a Loan Rate not less than the Loan Rate of the
Deleted Mortgage Loan and not more than __% in excess of the Loan Rate of such
Deleted Mortgage Loan; (iii) have a Loan Rate based on the same index with
adjustments to such Loan Rate made on the same interest rate adjustment date as
that of the Deleted Mortgage Loan; (iv) have a Margin that is not less than the
Margin of the Deleted Mortgage Loan and not more than _____ basis points higher
than the Margin for the Deleted Mortgage Loan; (v) have a mortgage of the same
or higher level of priority as the mortgage relating to the Deleted Mortgage
Loan; (vi) have a remaining term to maturity not more than ____ months earlier
and not more than ____ months later than the remaining term to maturity of the
Deleted Mortgage Loan; (vii) comply with each representation and warranty as to
the Mortgage Loans set forth in the Loan Purchase Agreement (deemed to be made
as of the date of substitution); (viii) in general, have an original Combined
Loan-to-Value Ratio not greater than that of the Deleted Mortgage Loans; and
(ix) satisfy certain other conditions specified in the Purchase Agreement. To
the extent the Principal Balance of an Eligible Substitute Mortgage Loan is less
than the Principal Balance of the related Deleted Mortgage Loan, the Seller will
be required to make a deposit tot he Collection Account equal to such
difference; and (x) not be __ days or more delinquent.
ESCROW ACCOUNT: Means the Eligible Account or Accounts
established and maintained pursuant to Section 3(i) hereof.
EXCESS PROCEEDS: With respect to any Liquidated Mortgage Loan,
the amount, if any, by which the sum of any Liquidation Proceeds of such
Mortgage Loan received in the calendar month in which such Mortgage Loan became
a Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3(k)(i)(C), exceeds (i) the unpaid principal balance of such
Liquidated Mortgage Loan as of the Due Date in the month in which such Mortgage
Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to Securityholders up to the Due Date applicable to the
Distribution Date immediately following the calendar month during which such
liquidation occurred.
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 and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
FITCH: Fitch Investors Service, L.P., or any successor thereto.
If Fitch is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 8(c) the address for notices to Fitch shall be Fitch
Investors Service, L.P., One State Street Plaza, New York, New York 10004,
Attention: _______________________________________, or such other address as
Fitch may hereafter furnish to the Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
GROSS MARGIN: With respect to any Mortgage Loan, the percentage
set forth as the "Gross Margin" for such Mortgage Loan on the Mortgage Loan
Schedule, as adjusted from time to time with respect to any [______________]
Loan in accordance with the terms of this Agreement.
HOLDER: Any of the Noteholders or Securityholders.
INCREASED SENIOR LIEN LIMITATION: shall have the meaning set
forth in Section 3(a).
INDENTURE: Means the trust indenture, dated as of the date
hereof, between the Issuer and the Trustee, as such Indenture may be amended or
supplemented from time to time in accordance with its terms.
[INSURANCE AGREEMENT: The insurance and reimbursement agreement
dated as of ______________, 199_ among the Master Servicer, the Seller, the
Depositor, the Issuer and the Credit Enhancer, including any amendments and
supplements thereto.]
INSURANCE POLICY: Means, with respect to any Mortgage Loan, any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan which are required to be remitted to
the Master Servicer, or amounts required to be paid by the Master Servicer
pursuant to the last sentence of Section [ ] of the Master Servicing Agreement,
net of any component thereof (i) covering any expenses incurred by or on behalf
of the Master Servicer in connection with obtaining such proceeds, (ii) that is
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.
INTEREST PERIOD: With respect to any Payment Date other than the
first Payment Date, the period beginning on the preceding Payment Date and
ending on the day preceding such Payment Date, and in the case of the first
Payment Date, the period beginning on the Closing Date and ending on the day
preceding the first Payment Date.
ISSUER: [ ] Home Equity Loan Trust 199_-_, a Delaware business
trust, or its successor in interest.
ISSUER REQUEST: A written order or request signed in the name of
the Issuer by any one of its Authorized Officers and delivered to the Trustee.
LIEN: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment pursuant to Section [ ] of the Master
Servicing Agreement shall not be deemed to constitute a Lien.
LIFETIME RATE CAP: With respect to each Mortgage Loan with
respect to which the related Mortgage Note provides for a lifetime rate cap, the
maximum Loan Rate permitted over the life of such Mortgage Loan under the terms
of such Mortgage Note, as set forth on the Mortgage Loan Schedule and initially
as set forth on Exhibit A to the Master Servicing Agreement.
LIQUIDATED MORTGAGE LOAN: With respect to any Payment Date, any
Mortgage Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified in the Master Servicing
Agreement, as of the end of the related Collection Period that substantially all
Liquidation Proceeds which it reasonably expects to recover with respect to the
disposition of the related REO have been recovered.
LIQUIDATION EXPENSES: Out-of-pocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Master Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy, such expenses including, without limitation, legal fees and
expenses, any unreimbursed amount expended (including, without limitation,
amounts advanced to correct defaults on any mortgage loan which is senior to
such Mortgage Loan and amounts advanced to keep current or pay off a mortgage
loan that is senior to such Mortgage Loan) respecting the related Mortgage Loan
and any related and unreimbursed expenditures for real estate property taxes or
for property restoration, preservation or insurance against casualty loss or
damage.
LIQUIDATION LOSS AMOUNTS: With respect to any Payment Date and
any Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered portion of the related Asset Balance thereof
at the end of such Collection Period, after giving effect to the Net Liquidation
Proceeds applied in reduction of the Asset Balance.
LIQUIDATION PROCEEDS: Proceeds (including Insurance Proceeds [but
not including amounts drawn under the Credit Enhancement Instrument]) received
in connection with the liquidation of any Mortgage Loan or related REO, whether
through trustee's sale, foreclosure sale or otherwise.
LOAN AGREEMENT: With respect to any Mortgage Loan, the credit
line account agreement executed by the related Mortgagor and any amendment or
modification thereof.
LOAN PURCHASE AGREEMENT: The Loan Purchase Agreement, dated as of
the Cut-off Date, between the Seller, as seller, and the Depositor, as
purchaser, with respect to the Mortgage Loans.
LOAN RATE: With respect to any Mortgage Loan and any day, the sum
of the Index Rate and the Margin.
LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan and as to
any date of determination, (i) the principal balance of such Mortgage Loan
divided by (ii) the Collateral Value of the related Mortgaged Property.
MARGIN: The [spread].
MASTER SERVICER: Means Norwest Bank Minnesota, National
Association, a national banking association, and its successors and assigns, in
its capacity as master servicer hereunder.
MASTER SERVICER ADVANCE DATE: Means as to any Distribution Date,
12:30 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.
MASTER SERVICING FEE: As to each Mortgage Loan and any
Distribution Date, an amount payable out of each full payment of interest
received on such Mortgage Loan and equal to one-twelfth of the Master Servicing
Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of
the Due Date in the month of such Distribution Date (prior to giving effect to
any Scheduled Payments due on such Mortgage Loan on such Due Date), subject to
reduction as provided in Section 5.
MASTER SERVICING FEE RATE: Means with respect to each Mortgage
Loan, [ ]% per annum.
MOODY'S: Moody's Investors Service, Inc., or any successor
thereto. If Moody's is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 8(c) the address for notices to Moody's shall
be Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: ___________________________________, or such other address as Moody's
may hereafter furnish to the Depositor or the Master Servicer.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Mortgage Loan.
MORTGAGE FILE: The file containing the Related Documents
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to the Loan Purchase Agreement or the
Master Servicing Agreement.
MORTGAGE LOAN SCHEDULE: With respect to any date, the schedule of
Mortgage Loans included in the Trust Estate on such date. The initial schedule
of Mortgage Loans as of the Cut-Off Date is the schedule set forth in Exhibit A
of the Master Servicing Agreement, which schedule sets forth as to each Mortgage
Loan (i) the Cut-Off Date Trust Balance, (ii) the Gross Margin, (iii) the name
of the Mortgagor, (iv) the Lifetime Rate Cap, if any, (v) the loan number, (vi)
an indication as to the applicable Mortgage Loan Group, and (vii) the lien
position of the related Mortgage. The Mortgage Loan Schedule will be amended
from time to time by annex to reflect Additional Loans.
MORTGAGE: Means the mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
MORTGAGE LOANS: At any time, collectively, all Initial Loans [and
Additional Loans, if any, that have been sold to the Depositor under the Loan
Purchase Agreement,] in each case together with the Related Documents, and that
remain subject to the terms thereof. Such schedule shall also set forth the
total of the amounts described under (iv) and (v) above for all of the Mortgage
Loans.
MORTGAGE NOTE: With respect to a Mortgage Loan, the Loan
Agreement pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced thereby and secured by the related Mortgage as modified or amended.
MORTGAGED PROPERTY: The underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
MORTGAGOR: The obligor or obligors under a Loan Agreement.
NET LIQUIDATION PROCEEDS: With respect to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses.
NET LOAN RATE: With respect to any Mortgage Loan and any day, the
related Loan Rate less the related Servicing Fee Rate.
NONRECOVERABLE ADVANCE: Any portion of an Advance previously made
or proposed to be made by the Master Servicer that, in the good faith judgment
of the Master Servicer, will not be ultimately recoverable by the Master
Servicer from the related Mortgagor, related Liquidation Proceeds or otherwise.
NOTES: The Notes designated as the "Notes" in the Indenture.
NOTEHOLDER OR HOLDER: Means the Person in whose name a Note is
registered in the Note Register (as defined in the Indenture).
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master Servicer, or (ii), if provided for in
this Agreement, signed by a Servicing Officer, as the case may be, and delivered
to the Depositor and the Trustee, as the case may be, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, including, in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect to
the interpretation or application of the REMIC Provisions, such counsel must (i)
in fact be independent of the Depositor and the Master Servicer, (ii) not have
any direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the-Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
OWNER TRUST ESTATE: The corpus of the Issuer created by the Trust
Agreement which consists of the Mortgage Loans, such assets as shall from time
to time be deposited in the Collection Account and/or the Payment Account
allocable to the Mortgage Loans in accordance with the Trust Agreement, property
that secured a Mortgage Loan and that has become REO, certain hazard insurance
policies maintained by the Mortgagors or by or on behalf of the Master Servicer
in respect of the Mortgage Loans, [the Credit Enhancement Instrument,] an
assignment of the Depositor's rights under the Loan Purchase Agreement and the
obligation of the Depositor to purchase Additional Balances under the Loan
Purchase Agreement and all proceeds of each of the foregoing.
OWNER TRUSTEE: [______________], and its successors and assigns
or any successor owner trustee appointed pursuant to the terms of the Trust
Agreement.
PAYING AGENT: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall be
[______________].
PAYMENT ACCOUNT: The account established by the Trustee pursuant
to Section 8.02 of the Indenture and Section [] of the Master Servicing
Agreement. The Payment Account shall be an Eligible Account.
PAYMENT ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3(h) in the name of the Trustee
for the benefit of the Securityholders and designated "_________________________
in trust for registered holders of Home Equity Loan Trust Asset Backed
Certificates, Series 199_-_." Funds in the Payment Account shall be held in
trust for the Securityholders for the uses and purposes set forth in this
Agreement.
PAYMENT ACCOUNT DEPOSIT DATE: As to any Distribution Date, 12:30
p.m. Eastern time on the Business Day immediately preceding such Distribution
Date.
PAYMENT DATE: The [___] day of each month, or if such day is not
a Business Day, then the next Business Day.
PERCENTAGE INTEREST: With respect to any Note, the percentage
obtained by dividing the Security Balance of such Note by the aggregate of the
Security Balances of all Notes of the same Class. With respect to any
Certificate, the percentage obtained by dividing the denomination specified on
such Certificate by the Initial Principal Balance of the Certificates.
PERMITTED INVESTMENTS: At any time, any one or more of the
following obligations and securities Permitted Investments may include: (i)
obligations of the United States or any agency thereof, provided such
obligations are backed by the full faith and credit of the United States; (ii)
general obligations of or obligations guaranteed by any state of the United
States or the District of Columbia receiving the highest long-term debt rating
of each Rating Agency rating the related Series of Securities, or such lower
rating as will not result in the downgrading or withdrawal of the ratings then
assigned to such Securities by each such Rating Agency; (iii) commercial paper
issued by Norwest Bank Minnesota, National Association or any of its affiliates;
PROVIDED that such commercial paper is rated no lower than the rating specified
in the related Prospectus Supplement; (iv) commercial or finance company paper
which is then receiving the highest commercial or finance company paper rating
of each such Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to such Securities by
each such Rating Agency; (v) certificates of deposit, demand or time deposits,
or bankers" acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long term unsecured debt
obligations of such depository institution or trust company (or in the case of
the principal depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company, but only
if Moody's Investors Service, Inc. ("Moody's") is not a Rating Agency) are then
rated one of the two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to such
Securities by any such Rating Agency; (vi) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank, insurance company
or other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to such Securities by any such Rating Agency; (viii)
repurchase obligations with respect to any security described in clauses (i) and
(ii) above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (v) above; (ix) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the downgrading
or withdrawal of the rating then assigned to such Securities by any such Rating
Agency, as evidenced by a signed writing delivered by each such Rating Agency;
(x) interests in any money market fund which at the date of acquisition of the
interests in such fund and throughout the time such interests are held in such
fund has the highest applicable rating by each such Rating Agency or such lower
rating as will not result in the downgrading or withdrawal of the ratings then
assigned to such Securities by each such Rating Agency; (xi) short term
investment funds sponsored by any trust company or national banking association
incorporated under the laws of the United States or any state thereof which on
the date of acquisition has been rated by each such Rating Agency in their
respective highest applicable rating category or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to such
Securities by each such Rating Agency; and (xii) such other investments having a
specified stated maturity and bearing interest or sold at a discount acceptable
to each Rating Agency as will not result in the downgrading or withdrawal of the
rating then assigned to such Securities by any such Rating Agency, as evidenced
by a signed writing delivered by each such Rating Agency; PROVIDED that no such
instrument shall be a Permitted Investment if such instrument evidences the
right to receive interest only payments with respect to the obligations
underlying such instrument; and PROVIDED, FURTHER, that no investment specified
in clause (x) or clause (xi) above shall be a Permitted Investment for any
Pre-Funding Account or any related Capitalized Interest Account. If a letter of
credit is deposited with the Trustee, such letter of credit will be irrevocable.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
[POLICY: The irrevocable and unconditional limited financial
guaranty insurance policy number [__________], dated as of the Closing Date,
issued by the Credit Enhancer to the Trustee for the benefit of the Noteholders
and to the Certificate Paying Agent as agent for the Issuer for the benefit of
the Securityholders.]
POOL BALANCE: With respect to any date, the aggregate of the
Asset Balances of all Mortgage Loans as of such date.
PRE-FUNDING ACCOUNT: means the Eligible account or Accounts
established and maintained by the Master Servicer in accordance with Section
[______].
PREPAYMENT PERIOD: As to any Distribution Date, the period from
the __th day of the calendar month preceding the month of such Distribution Date
(or, in the case of the first Distribution Date, from the Cut-off Date) through
the __th of the month of such Distribution Date.
PRIMARY INSURANCE POLICY:
PRINCIPAL BALANCE: With respect to any Payment Date, the Initial
Principal Balance thereof, reduced by all distributions of principal thereon
prior to such Payment Date.
PRINCIPAL PREPAYMENT: Any payment of principal by a Mortgagor on
a Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in accordance with
the terms of the related Mortgage Note.
PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
PROSPECTUS SUPPLEMENT: Means the Prospectus Supplement dated [ ]
relating to the Notes.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
purchased by the Seller pursuant to Section 2(a)(ii) or 2(d)(iv) hereof or
purchased at the option of the Master Servicer pursuant to Section 3(n), an
amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at
the applicable Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x)
the purchaser is the Master Servicer or (y) if the purchaser is the Seller and
the Seller is the Master Servicer) from the date through which interest was last
paid by the Mortgagor to the Due Date in the month in which the Purchase Price
is to be distributed to Securityholders.
QUALIFIED INSURER: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying ability rating as the insurer it replaces had
on the Closing Date.
RATING AGENCY: Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities. Initially,
[________] or [__________]. If such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
the highest short term unsecured rating category of a Rating Agency shall mean
[___] or better in the case of [__________]and [___] or better in the case of
[_____] and in the case of any other Rating Agency shall mean such equivalent
ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "[___]" in the case of [__________] and [_____] in the case of
[________] and in the case of any other Rating Agency, such equivalent rating.
REALIZED LOSS: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to which interest was last paid or advanced (and not reimbursed) to
Securityholders up to the Due Date in the month in which Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation occurred,
to the extent applied as recoveries of interest at the Adjusted Net Mortgage
Rate and to principal of the Liquidated Mortgage Loan. With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan which has become the subject of a Debt Service Reduction and any
Distribution Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
RELIEF ACT REDUCTIONS: With respect to any Distribution Date and
any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended calendar month as a
result of the application of the Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
REO PROPERTY: A Mortgaged Property acquired by the Issuer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan required to
be repurchased on any date pursuant to the Loan Purchase Agreement or purchased
by the Master Servicer pursuant to the Master Servicing Agreement, an amount
equal to the sum of (i) 100% of the Asset Balance thereof (without reduction for
any amounts charged off) and (ii) unpaid accrued interest at the Loan Rate on
the outstanding principal balance thereof from the Due Date to which interest
was last paid by the Mortgagor to the first day of the month following the month
of purchase. No portion of any Repurchase Price shall be included in the
Excluded Amount for any Payment Date.
REQUEST FOR RELEASE: The Request for Release submitted by the
Master Servicer to the Trustee, substantially in the form of Exhibits C and D,
as appropriate.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
SAIF: Means the Savings Association Insurance Fund, or any
successor thereto.
S&P: Means Standard & Poor's Ratings Group, a division of
McGraw-Hill Inc. If S&P is designated as a Rating Agency in the Indenture, for
purposes of Section 8(c) the address for notices to S&P shall be Standard &
Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Mortgage Surveillance Monitoring, or such other address as S&P may
hereafter furnish to the Issuer and the Master Servicer.
SECURITIES ACT: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
SECURITY: Any of the Certificates or Notes.
SECURITYHOLDER OR HOLDER: Any Noteholder or any
Certificateholder.
SELLER: Norwest Mortgage, Inc., and its successors and assigns.
SERVICER ADVANCE: Means the meaning ascribed to such term in
Section 3(h)(iv).
SERVICING ACCOUNT: Means the separate Eligible Account or
Accounts created and maintained pursuant to Section 3(h)(ii).
SERVICING ADVANCES: All customary, reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3(n) and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3(l).
SERVICING DEFAULT: Means a servicing default as described under
Section 7(a) of this Agreement.
SERVICING FEE: Means, as to each Mortgage Loan and any
Distribution Date, an amount equal to one month's interest at the applicable
Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan.
SERVICING FEE RATE: Means, with respect to any Mortgage Loan, the
per annum rate set forth in the Mortgage Loan Schedule for such Mortgage Loan.
SERVICING OFFICER: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant to
this Agreement, as such list may from time to time be amended.
SUBSERVICER: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement as a Subservicer by the Master Servicer pursuant
to Section 3(b).
SUBSERVICING AGREEMENT: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section [] of the Master Servicing Agreement.
SUBSERVICING FEE: With respect to any Mortgage Loan and any
Collection Period, the fee retained monthly by the Subservicer (or, in the case
of a nonsubserviced Mortgage Loan, by the Master Servicer) equal to the product
of (i) the Subservicing Fee Rate divided by 12 and (ii) the aggregate Asset
Balance of the Mortgage Loans as of the first day of such Collection Period.
SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted by the
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit C,
(i) have a Stated Principal Balance, after deduction of the principal portion of
the Scheduled Payment due in the month of substitution, not in excess of, and
not more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining
term to maturity no greater than (and not more than one year less than that of)
the Deleted Mortgage Loan; and (v) comply with each representation and warranty
set forth in Section 2(d) hereof.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2(d)(iv).
TRUST AGREEMENT: Means the Trust Agreement, dated as of [ ],
between the Depositor and the Owner Trustee, as such Trust Agreement may be
amended or supplemented from time to time.
TRUSTEE: Shall mean [______________], and its successors and
assigns or any successor trustee appointed pursuant to the terms of the
Indenture.
TRUSTEES: Shall mean the Trustee and the Owner Trustee.
TRUST ESTATE: Shall have the meaning ascribed to such term in the
Indenture.
UCC: The Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
WITHDRAWAL DATE: Means the ____ day of each month, or if such day
is not a Business Day, the next preceding Business Day.
2. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of Mortgage Loans; Retention of
Obligation to Fund Advances Under Credit Line
Agreements.
The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Trust without recourse (subject to Sections 2(b)and 2(d) all of its right, title
and interest in and to (i) each Mortgage Loan, including its Asset Balance
(including all Additional Balances) and all collections in respect thereof
received on or after the Cut-off Date (excluding payments in respect of accrued
interest due prior to the Cut-off Date or due in the month of ____________);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Depositor's rights under the Loan
Purchase Agreement; (iv) [the Depositor's rights under the hazard insurance
policies,] (v) the Collection Account (excluding net earnings thereon); (vi) the
Policy, (vii) the Payment Account and (viii) all other assets included or to be
included in the Trust for the benefit of Securityholders; provided, however,
neither the Trust nor the Trustee shall be obligated or permitted to fund any
such future advances. Additional Balances shall be part of the related Asset
Balance and are hereby transferred to the Trust on the Closing Date pursuant to
this Section 2(a), and therefore part of the Trust property. In addition, on or
prior to the Closing Date, the Depositor shall cause the Credit Enhancer to
deliver the Policy to the Trustee for the benefit of the Securityholders. The
foregoing transfer, assignment, set- over and conveyance to the Trust shall be
made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
The Depositor agrees to take or cause to be taken such actions and
execute such documents (including without limitation the filing of all necessary
continuation statements for the UCC-1 financing statements filed in the State of
__________ (which shall have been filed within 90 days of the Closing Date)
describing the Cut-off Date Asset Balances and Additional Balances and naming
the Depositor as debtor and the Trustee as secured party and any amendments to
UCC-1 financing statements required to reflect a change in the name or corporate
structure of the Depositor or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Depositor (within 90
days of any event necessitating such filing) as are necessary to perfect and
protect the Securityholders' and Credit Enhancer's interests in each Cut-off
Date Asset Balance and Additional Balances and the proceeds thereof (other than
maintaining possession by the Trustee of the Mortgage Loans and the Mortgage
Files, which possession will, subject to the terms hereof, be maintained by the
Master Servicer as custodian and bailee of the Trustee).
In connection with such transfer and assignment by the Depositor, the
Master Servicer acknowledges that it is holding as custodian and bailee for the
Trustee the following documents or instruments (the "Related Documents") with
respect to each Mortgage Loan:
(A) the original Mortgage Note endorsed in blank;
(B) an original Assignment of Mortgage in blank in recordable
form;
(C) the original recorded Mortgage or, if, in connection
with any Mortgage Loan, the original recorded Mortgage with evidence
of recording thereon cannot be delivered on or prior to the Closing
Date because of a delay caused by the public recording office where
such original Mortgage has been delivered for recordation or because
such original Mortgage has been lost, the Seller, at the direction of
the Depositor, shall deliver or cause to be delivered to the
Custodian, as agent for the Trustee, a true and correct copy of such
Mortgage, together with (i) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Depositor
stating that such original Mortgage has been dispatched to the
appropriate public recording official or (ii) in the case of an
original Mortgage that has been lost, a certificate by the appropriate
county recording office where such Mortgage is recorded;
(D) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon,
showing a complete chain of title to the Mortgage from the originator
to the Depositor or, if any such original Intervening Assignment has
not been returned from the applicable recording office or has been
lost, a true and correct copy thereof, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Seller stating that such original Intervening
Assignment has been dispatched to the appropriate public recording
official for recordation or (ii) in the case of an original
Intervening Assignment that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;
(E) a title policy, a title search or guaranty of title with
respect to the related Mortgaged Property;
(F) the original of any guaranty executed in connection with
the Mortgage Note;
(G) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan; and
(H) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage;
provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the related documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer its interest in such
Mortgage Loan, and (b) the retention of such documents in such format will not
result in a reduction in the then current rating of the Notes or Certificates,
without regard to the Policy, such optical image or other representation may be
held by the Master Servicer, as custodian for the Trustee or assignee in lieu of
the physical documents specified above.
The Seller hereby confirms to the Trustee that it has caused the
portions of its electronic ledgers relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trust at the direction of the Depositor. The Master Servicer hereby
confirms to the Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.
The parties hereto intend that the transaction set forth herein be a
sale by the Depositor to the Trust of all the Depositor's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Depositor
hereby grants to the Trust a security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.
Except as hereinafter provided, the Master Servicer shall be entitled
to maintain possession of all of the foregoing documents and instruments and
shall not be required to deliver any of them to the Trustee or the Owner
Trustee. In the event, however, that possession of any of such documents or
instruments is required by any Person (including any such Trustee) acting as
successor servicer pursuant to Section 6(d) or 7(b) in order to carry out the
duties of Master Servicer hereunder, then such successor shall be entitled to
request delivery, at the expense of the Master Servicer, of such documents or
instruments by the Master Servicer and to retain such documents or instruments
for servicing purposes; provided that the Trustee or such servicers shall
maintain such documents at such offices as may be required by any regulatory
body having jurisdiction over such Mortgage Loans.
The Master Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of [the
Master Servicer] is assigned ratings of at least "____" by __________________
and "____" by _______________. At such time as the condition specified in the
preceding sentence is not satisfied, as promptly as practicable but in no event
more than __ days in the case of clause (i) below and __ days in the case of
clause (ii) below following the occurrence of such event (a "Delivery Event"),
the Master Servicer shall, at its expense, (i) either (x) record an assignment
of Mortgage in favor of the Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other records
or (y) deliver to the Trustee the assignment of such Mortgage in favor of the
Trustee in form for recordation, together with an Opinion of Counsel addressed
to the Trustee and the Credit Enhancer to the effect that recording is not
required to protect the Trustee's right, title and interest in and to the
related Mortgage Loan or, in case a court should recharacterize the sale of the
Mortgage Loans as a financing, to perfect a first priority security interest in
favor of the Trustee in the related Mortgage Loan, which Opinion of Counsel also
shall be reasonably acceptable to each of the Rating Agencies (as evidenced in
writing) and the Credit Enhancer, and (ii) unless an Opinion of Counsel,
reasonably acceptable to the Trustee, the Rating Agencies (as evidenced in
writing) and the Credit Enhancer, is delivered to the Trustee and the Credit
Enhancer to the effect that delivery of the Mortgage Files is not necessary to
protect the Trustee's right, title and interest in the related Mortgage Loans;
provided that the lack of delivery will not result in a reduction in the then
current rating of the "Notes or Certificates", without regard to the Policy,
deliver the related Mortgage Files to the Trustee or to a custodian located in
the State of [Minnesota] appointed by the Trustee and acceptable to the Rating
Agencies and the Credit Enhancer to be held by the Custodian on behalf of the
Trustees in trust, upon the terms herein set forth, for the use and benefit of
all present and future Securityholders and the Custodian on behalf of the
Trustee shall retain possession thereof except to the extent the Master Servicer
requires any Mortgage Files for normal servicing as contemplated by Section
_____. The Trustee is hereby appointed as the attorney- in-fact of the Master
Servicer with the power to prepare, execute and record Assignments of Mortgages
in the event that the Master Servicer fails to do so on a timely basis as
provided in this paragraph.
Within 90 days following delivery, if any, of the Mortgage Files to
the Trustee pursuant to the preceding paragraph, the Trustee shall review each
such Mortgage File to ascertain that all required documents set forth in this
Section 2(a) have been executed and received, and that such documents relate to
the Mortgage Loans identified on the Mortgage Loan Schedule and in so doing the
Trustee may rely on the purported due execution and genuineness of any signature
thereon. If within such 90- day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Issuer and the Credit Enhancer, and
the Seller shall have a period of 90 days after such notice within which to
correct or cure any such defect.
The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2(a). In reviewing any
Mortgage File pursuant to this Section, the Trustee shall have no responsibility
for determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, but shall only be required
to determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
(b) ACCEPTANCE BY TRUSTEE; RETRANSFER OF MORTGAGE LOANS.
The Trustee hereby acknowledges its receipt of the Policy and the
Mortgage Loans, and declares that the Trustee holds and will hold such
instrument, and to the extent that any documents are delivered to it pursuant to
Section 2(a), will hold such documents, and all amounts received by it
thereunder and hereunder, in trust, upon the terms herein set forth, for the use
and benefit of all present and future Securityholders and the Credit Enhancer.
If the time to cure any defect in respect of any Mortgage Loan of which the
Trustee has notified the Issuer and the Depositor following the review pursuant
to Section 2(a) has expired or if at any time any loss is suffered by the
Trustee on behalf of the Securityholders or the Credit Enhancer, in respect of
any Mortgage Loan as a result of (i) a defect in any document constituting a
part of its Mortgage File or (ii) an Assignment of Mortgage to the Trustee not
having been recorded as required by Section 2(a),then on the next succeeding
Business Day upon satisfaction of the applicable conditions described herein,
all right, title and interest of the Trust in and to such Mortgage Loan shall be
deemed to be retransferred, reassigned and otherwise reconveyed, without
recourse, representation or warranty, to the Depositor on such Business Day and
the Asset Balance of such Mortgage Loan shall be deducted from the Pool Balance;
provided, however, that interest accrued on the Asset Balance of such Mortgage
Loan to the end of the related Collection Period shall be the property of the
Trust. Upon receipt of any Eligible Substitute Mortgage Loan or as promptly as
practicable following such deemed transfer, the Trustee shall execute such
documents and instruments of transfer presented by the Seller, in each case
without recourse, representation or warranty, and take such other actions as
shall reasonably be requested by the Seller to effect such transfer by the Trust
of such Defective Mortgage Loan pursuant to this Section.
The Master Servicer, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall amend the
Mortgage Loan Schedule and make appropriate entries in its general account
records to reflect such transfer. The Master Servicer shall, following such
retransfer, appropriately mark its records to indicate that it is no longer
servicing such Mortgage Loan on behalf of the Trust. The Seller, promptly
following such transfer, shall appropriately mark its electronic ledger and make
appropriate entries in its general account records to reflect such transfer.
As to any Eligible Substitute Mortgage Loan or Loans, the Seller
shall, if a Delivery Event has occurred, deliver to the Trustee with respect to
such Eligible Substitute Mortgage Loan or Loans such documents and agreements as
are required to be held by the Trustee in accordance with Section 2(a). For any
Collection Period during which the Seller substitutes one or more Eligible
Substitute Mortgage Loans, the Master Servicer shall determine the Substitution
Adjustment Deposit Amount which amount shall be deposited by the Seller in the
Collection Account at the time of substitution. All amounts received in respect
of the Eligible Substitute Mortgage Loan or Loans during the Collection Period
in which the circumstances giving rise to such substitution occur shall not be a
part of the Issuer and shall not be deposited by the Master Servicer in the
Collection Account. All amounts received by the Master Servicer during the
Collection Period in which the circumstances giving rise to such substitution
occur in respect of any Defective Mortgage Loan so removed by the Issuer shall
be deposited by the Master Servicer in the Collection Account. Upon such
substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller shall be deemed to
have made with respect to such Eligible Substitute Mortgage Loan or Loans, as of
the date of substitution, the covenants, representations and warranties set
forth in Section 2(d). The procedures applied by the Seller in selecting each
Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Trustees, the Securityholders and the Credit Enhancer.
(c) DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER SERVICER
TO BE HELD FOR TRUSTEE.
(i) Notwithstanding any other provisions of this Agreement,
the Master Servicer shall transmit to the Trustee as required by this
Agreement all documents and instruments in respect of a Mortgage Loan
coming into the possession of the Master Servicer from time to time
and shall account fully to the Trustees for any funds received by the
Master Servicer or which otherwise are collected by the Master
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of
any Mortgage Loan. All Mortgage Files and funds collected or held by,
or under the control of, the Master Servicer in respect of any
Mortgage Loans, whether from the collection of principal and interest
payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in the Collection Account, shall be held by the
Master Servicer for and on behalf of the Trustees and shall be and
remain the sole and exclusive property of the Trustees, subject to the
applicable provisions of this Agreement. The Master Servicer also
agrees that it shall not create, incur or subject any Mortgage File or
any funds that are deposited in the Collection Account, Payment
Account or any Escrow Account, or any funds that otherwise are or may
become due or payable to the Trustee for the benefit of the
Securityholders, to any claim, lien, security interest, judgment,
levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of setoff against any Mortgage
File or any funds collected on, or in connection with, a Mortgage
Loan, except, however, that the Master Servicer shall be entitled to
set off against and deduct from any such funds any amounts that are
properly due and payable to the Master Servicer under this Agreement.
(ii) The Master Servicer hereby acknowledges that
concurrently with the execution of this Agreement, the Trustee has
acquired and holds a security interest in the Trustee Mortgage Files
and in all Mortgage Loans represented by such Mortgage Files and in
all funds now or hereafter held by, or under the control of, the
Master Servicer that are collected by the Master Servicer in
connection with the Mortgage Loans, whether as Scheduled Payments, as
Principal Prepayments, or as Liquidation Proceeds or Insurance
Proceeds, and in all proceeds of the foregoing and proceeds of
proceeds (but excluding any Master Servicing Fees, Servicing Fees,
Trustee Fees and any other amounts or reimbursements to which the
Master Servicer is entitled under this Agreement). The Master Servicer
agrees that so long as the Mortgage Loans are assigned to the Trustee,
all Master Servicer Mortgage Files and Trustee Mortgage Files (and any
documents or instruments constituting a part of such files), and such
funds which come into the possession or custody of, or which are
subject to the control of, the Master Servicer shall be held by the
Master Servicer for and on behalf of the Trustee as the Trustee's
agent and bailee for purposes of perfecting the Trustee's security
interest therein, as provided by Section 9-305 of the Uniform
Commercial Code of the state in which such property is located, or by
other laws, as specified in Section _____ of the Indenture. The Master
Servicer hereby accepts such agency and acknowledges that the Trustee,
as secured party, will be deemed to have possession at all times of
all Mortgage Files and any other documents or instruments constituting
a part of such files, such funds and other items for purposes of
Section 9-305 of the Uniform Commercial Code of the state in which
such property is held by the Master Servicer.
(d) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER.
(i) The Seller hereby makes the representations and
warranties set forth in Schedule II A and hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of
the Closing Date, or if so specified therein, as of the Cut-off Date.
(ii) The Seller, hereby makes the representations and
warranties set forth in Schedule III hereto, and by this reference
incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(iii) Upon discovery by any of the parties hereto of a
breach of a representation or warranty made pursuant to Section
2(d)(ii) that materially and adversely affects the interests of the
Securityholders in any Mortgage Loan, the party discovering such
breach shall give prompt notice thereof to the other parties. The
Seller hereby covenants that within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a breach
of any representation or warranty made pursuant to Section 2(d)(ii)
which materially and adversely affects the interests of the
Securityholders in any Mortgage Loan, it shall cure such breach in all
material respects, and if such breach is not so cured, shall, (i) if
such 90-day period expires prior to the second anniversary of the
Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan")
from the Issuer and substitute in its place a Substitute Mortgage
Loan, in the manner and subject to the conditions set forth in this
Section; or (ii) repurchase the affected Mortgage Loan or Mortgage
Loans from the Trustee at the Purchase Price in the manner set forth
below; provided, however, that any such substitution pursuant to (i)
above shall not be effected prior to the delivery to the Trustees of
the Opinion of Counsel required by [Section ____ {delivery of
opinion}] hereof, if any, and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit
D and the Mortgage File for any such Substitute Mortgage Loan. The
Seller shall promptly reimburse the Master Servicer and the Trustee
for any expenses reasonably incurred by the Master Servicer or any
Trustee in respect of enforcing the remedies for such breach. With
respect to the representations and warranties described in this
Section which are made to the best of the Seller's knowledge, if it is
discovered by either the Depositor, the Seller or any Trustee that the
substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related
Mortgage Loan or the interests of the Securityholders therein,
notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation or warranty, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
With respect to any Substitute Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Securityholders the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and such other
documents and agreements as are required by Section 2(a), with the Mortgage Note
endorsed and the Mortgage assigned as required by Section 2(a). No substittution
is permitted to be made in any calendar month after the Determination Date for
such month. Scheduled Payments due with respect to Substitute Mortgage Loans in
the month of substitution shall not be part of the Issuer and will be retained
by the Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Securityholders will include the monthly payment
due on any Deleted Mortgage Loan for such month and thereafter the Seller shall
be entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master Servicer shall amend the Mortgage Loan Schedule for the benefit
of the Securityholders to reflect the removal of such Deleted Mortgage Loan and
the substitution of the Substitute Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustees. Upon
such substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2(d)(ii) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Collection Account of the amount required to be deposited therein
in connection with such substitution as described in the following paragraph,
the Trustee shall release the Mortgage File held for the benefit of the
Securityholders relating to such Deleted Mortgage Loan to the Seller and shall
execute and deliver at the Seller's direction such instruments of transfer or
assignment prepared by the Seller, in each case without recourse, as shall be
necessary to vest title in the Seller, or its designee, the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2(d).
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly payments due in
the month of substitution). The amount of such shortage (the "Substitution
Adjustment Amount") plus an amount equal to the aggregate of any unreimbursed
Advances with respect to such Deleted Mortgage Loans shall be deposited in the
Collection Account by the Seller on or before the Payment Account Deposit Date
for the Distribution Date in the month succeeding the calendar month during
which the related Mortgage Loan became required to be purchased or replaced
hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Collection Account
pursuant to Section 3(h) on or before the Payment Account Deposit Date for the
Distribution Date in the month following the month during which the Seller
became obligated hereunder to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of the Opinion of Counsel
required by Section 2(d) and receipt of a Request for Release in the form of
Exhibit D hereto, the Trustee shall release the related Mortgage File held for
the benefit of the Securityholders to such Person, and the Trustee shall execute
and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Person to cure, repurchase or replace
any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against such Persons respecting such breach available
to Securityholders, the Depositor or the Trustees on their behalf.
The representations and warranties made pursuant to this Section 2(d)
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Securityholders.
(e) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER.
(i) the Master Servicer hereby makes the representations and
warranties set forth in Schedule IIB hereto, and by this reference
incorporated herein, to the Depositor and the Trustee, as of the closing
Date, or if so specified therein, as of the Cut-Off Date.
(ii) The Master Servicer hereby covenants to the Depositor
and the Trustees as follows:
(x) the Master Servicer shall comply in the perfor-
mance of ts obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(y) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor or any Trustee and prepared by
the Master Servicer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact necessary to
make such information, certificate, statement or report not misleading.
(f) COVENANTS OF THE DEPOSITOR.
The Depositor hereby covenants that, except for the transfer under the
Indenture, the Depositor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Mortgage Loan, whether now existing or hereafter created, or any interest
therein; the Depositor will notify the Trustee of the existence of any Lien on
any Mortgage Loan immediately upon discovery thereof; and the Depositor will
defend the right, title and interest of the Trust in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Depositor; PROVIDED, HOWEVER, that nothing
in this Section 2(f) shall prevent or be deemed to prohibit the Depositor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
3. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.
The parties agree that, subject to the provisions of Section 7 hereof,
the Master Servicer shall service the Mortgage Loans in the manner and on the
terms and conditions set forth below:
(a) MASTER SERVICER TO SERVICE MORTGAGE LOANS.
(i) The Master Servicer shall service and administer the
Mortgage Loans in a manner consistent with the terms of this Agreement
and with general industry practice and shall have full power and
authority, acting alone or through a subservicer, to do any and all
things in connec- tion with such servicing and administration which it
may deem necessary or desirable, t being understood, however, that the
Master Servicer shall at all times remain responsible to the Trustees,
the Securityholders and the Credit Enhancer for the performance of its
duties and obligations hereunder in accordance with the terms hereof.
Any amounts received by any subservicer in respect of a Mortgage Loan
shall be deemed to have been received by the Master Servicer whether
or not actually received by it. Without limiting the generality of the
foregoing, the Master Servicer shall continue, and is hereby
authorized and empowered by the Trustee, to execute and deliver, on
behalf of itself, the Securityholders and the Trustee, or any of them,
any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties. The Trustee shall, upon the written request of a Servicing
Officer, furnish the Master Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Master Servicer
to carry out its servicing and administrative duties hereunder. The
Master Servicer in such capacity may also consent to the placing of a
lien senior to that of any Mortgage on the related Mortgaged Property,
provided that
(x) such Mortgage succeeded to a first lien position
after the related Mortgage Loan was conveyed to the Trust and,
immediately following the placement of such senior lien, such Mortgage
is in a second lien position and the outstanding principal amount of
the mortgage loan secured by such subsequent senior lien is no greater
than the outstanding principal amount of the senior mortgage loan
secured by the Mortgaged Property as of the date the related Mortgage
Loan was originated; or
(y) the Mortgage relating to such Mortgage Loan was in
a second lien position as of the Cut-off Date and the new senior lien
secures a mortgage loan that refinances an existing first mortgage
loan and the outstanding principal amount of the replacement first
mortgage loan immediately following such refinancing is not greater
than the outstanding principal amount of such existing first mortgage
loan at the date of origination of such Mortgage Loan;
provided, further, that such senior lien does not secure a note that provides
for negative amortization. Notwithstanding the foregoing, the Master Servicer
can consent to the placing of liens senior to that of a Mortgage on the related
Mortgaged Property which have a principal balance in excess of the principal
balance of the senior lien it replaces on Mortgage Loans having in the aggregate
Asset Balances not in excess of ___% of the Cut-off Date Pool Balance; provided,
however, that, with respect to Mortgage Loans which as of the Cut-off Date had
Combined Loan-to-Value Ratios in excess of ___%, the aggregate Asset Balance of
such Mortgage Loans with respect to which the senior lien may be so modified
shall not exceed _____% of the Cut-off Date Pool Balance (such ___% and _____%
herein referred to as the "Increased Senior Lien Limitation"). Any such increase
to the principal balance of the senior lien shall not exceed the greater of
$_______ and _____% of the principal balance of the senior lien prior to such
increase.
The Master Servicer may agree to changes in the terms of a Mortgage
Loan at the request of the Mortgagor provided that such changes (i) do not
materially and adversely affect the interests of Securityholders or the Credit
Enhancer and (ii) are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Trustee and the Credit Enhancer.
In addition to the foregoing, the Master Servicer may solicit
Mortgagors to change any other terms of the related Mortgage Loans, provided
that such changes (i) do not materially and adversely affect the interest of
Securityholders or the Credit Enhancer and (ii) are consistent with prudent and
customary business practice as evidenced by a certificate signed by a Servicing
Officer delivered to the Trustee and the Credit Enhancer. Nothing herein shall
limit the right of the Master Servicer to solicit Mortgagors with respect to new
loans (including mortgage loans) that are not Mortgage Loans.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(ii) In the event that the rights, duties and obligations of
the Master Servicer are terminated hereunder, any successor to the
Master Servicer in its sole discretion may, to the extent permitted by
applicable law, terminate the existing subservicer arrangements with
any subservicer or assume the terminated Master Servicer's rights
under such subservicing arrangements which termination or assumption
will not violate the terms of such arrangements.
(b) SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS OF SERVICERS.
(i) The Master Servicer may arrange for the subservicing of
any Mortgage Loan by a Subservicer pursuant to a subservicing
agreement; provided, however, that such subservicing arrangement and
the terms of the related subservicing agreement must provide for the
servicing of such Mortgage Loans in a manner consistent with the
servicing arrangements contemplated hereunder. Unless the context
otherwise requires, references in this Agreement to actions taken or
to be taken by the Master Servicer in servicing the Mortgage Loans
include actions taken or to be taken by a Subservicer on behalf of the
Master Servicer. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to
the Depositor, the Trustees and the Securityholders for the servicing
and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or
by virtue of indemnification from the Subservicer and to the same
extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans.
All actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Master
Servicer with the same force and effect as if performed directly by
the Master Servicer.
(ii) For purposes of this Agreement, the Master Servicer
shall be deemed to have received any collections, recoveries or
payments with respect to the Mortgage Loans that are received by a
Subservicer regardless of whether such payments are remitted by the
Subservicer to the Master Servicer.
(iii) As part of its servicing activities hereunder, the
Master Servicer, for the benefit of the Trustees and the
Securityholders, shall use its best reasonable efforts to enforce the
obligations of each Subservicer under the related Subservicing
Agreement, to the extent that the non-performance of any such
obligation would have material and adverse effect on a Mortgage Loan.
Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Subservicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Master Servicer, in its good
faith business judgment, would require were it the owner of the
related Mortgage Loans. The Master Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement to
the extent, if any, that such recovery exceeds all amounts due in
respect of the related Mortgage Loan or (ii) from a specific recovery
of costs, expenses or attorneys fees against the party against whom
such enforcement is directed.
(c) SUCCESSOR SERVICERS.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any affiliate of the
Master Servicer acts as Subservicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such assumption by the successor Subservicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
(d) LIABILITY OF THE MASTER SERVICER.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or references to actions taken through a Subservicer
or otherwise, the Master Servicer shall remain obligated and liable to the
Trustees and Securityholders for the servicing and administering of the Pledged
Mortgages in accordance with the provisions of Section 3(a) without diminution
of such obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(e) NO CONTRACTUAL RELATIONSHIP BETWEEN SUBSERVICERS AND THE
TRUSTEES.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone and the Trustees and
Securityholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3(g).
(f) RIGHTS OF THE DEPOSITOR AND THE TRUSTEES IN RESPECT OF THE
MASTER SERVICER.
The Depositor may, but is not obligated to, enforce the obligations of
the Master Servicer hereunder and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its obligations hereunder by virtue of
such performance by the Depositor or its designee. Neither the Trustees nor the
Depositor shall have any responsibility or liability for any action or failure
to act by the Master Servicer nor shall the Trustees or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
(g) TRUSTEE TO ACT AS MASTER SERVICER.
In the event that the Master Servicer shall for any reason no longer
be the Master Servicer hereunder (including by reason of an Event of Default),
the Trustee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Master Servicer pursuant to
Section 3(l) hereof or any acts or omissions of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not limited to, repurchases or
substitutions of Mortgage Loans pursuant to Section 2(c)(ii) or 2(d) hereof,
(iv) responsible for expenses of the Master Servicer pursuant to Section 2(d) or
(v) deemed to have made any representations and warranties of the Master
Servicer hereunder). Any such assumption shall be subject to Section 7(b)
hereof. If the Master Servicer shall for any reason no longer be the Master
Servicer (including by reason of any Event of Default), the Trustee or its
successor shall succeed to any rights and obligations of the Master Servicer
under each subservicing agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each subservicing agreement or substitute subservicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of the substitute subservicing
agreement to the assuming party.
(h) COLLECTION OF MORTGAGE LOAN PAYMENTS; COLLECTION ACCOUNTS;
PAYMENT ACCOUNT.
(i) The Master Servicer shall make reasonable efforts in
accordance with the customary and usual standards of practice of
prudent mortgage servicers to collect all payments called for
under the terms and provisions of the Mortgage Loans to the
extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Required Insurance
Policy. Consistent with the foregoing, the Master Servicer may in
its discretion (i) waive any late payment charge or any
prepayment charge or penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180
days; provided, however, that the Master Servicer cannot extend
the maturity of any such Mortgage Loan past the date on which the
final payment is due on the latest maturing Mortgage Loan as of
the Cut-off Date. In the event of any such arrangement, the
Master Servicer shall make Advances on the related Mortgage Loan
in accordance with the provisions of Section 4 during the
scheduled period in accordance with the amortization schedule of
such Mortgage Loan without modification thereof by reason of such
arrangements. The Master Servicer shall not be required to
institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or
against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(ii) The Master Servicer shall establish and maintain a
Collection Account into which the Master Servicer shall deposit
or cause to be deposited on a daily basis within one Business Day
of receipt, except as otherwise specifically provided herein, the
following payments and collections remitted by Subservicers or
received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due
on the Mortgage Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(A) all collections on account of principal on the
Mortgage Loans;
(B) all collections on account of interest on the Mortgage
Loans, net of the related Master Servicing Fee;
(C) all Insurance Proceeds and Liquidation Proceeds, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures;
(D) any amount required to be deposited by the Master
Servicer pursuant to Section 3(h)(v) in connection with any
losses on Permitted Investments;
(E) any amounts required to be deposited by the Master
Servicer pursuant to Section 3(l)(ii), 3(l)(iv), and in respect
of net monthly rental income from REO Property pursuant to
Section 3(n) hereof;
(F) all Substitution Adjustment Amounts;
(G) all Advances made by the Master Servicer pursuant to
Section 4; and
(H) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted, it may at any time withdraw or direct the
institution maintaining the Collection Account to withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding. Such
withdrawal or direction may be accomplished by delivering written notice thereof
to the Trustee or such other institution maintaining the Collection Account
which describes the amounts deposited in error in the Collection Account. The
Master Servicer shall maintain adequate records with respect to all withdrawals
made pursuant to this Section. All funds deposited in the Collection Account
shall be held in trust for the Securityholders until withdrawn in accordance
with Section 3(k).
(iii) The Trustee shall establish and maintain, on behalf
of the Securityholders, the Payment Account. The Trustee shall,
promptly upon receipt, deposit in the Payment Account and retain
therein the following:
(A) the aggregate amount remitted by the Master Servicer
to the Trustee pursuant to Section 3(k)(i)(I);
(B) any amount deposited by the Master Servicer pursuant
to Section 3(h)(iv) in connection with any losses on Permitted
Investments; and
(C) any other amounts deposited hereunder which are
required to be deposited in the Payment Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Payment Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Payment Account. All funds deposited in the Payment Account shall be held by the
Trustee in trust for the Securityholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3(k). In no event shall the
Trustee incur liability for withdrawals from the Payment Account at the
direction of the Master Servicer.
(iv) Each institution at which the Collection Account or
the Payment Account is maintained shall invest the funds therein
as directed in writing by the Master Servicer in Permitted
Investments, which shall mature not later than (i) in the case of
the Collection Account, the second Business Day next preceding
the related Payment Account Deposit Date (except that if such
Permitted Investment is an obligation of the institution that
maintains such account, then such Permitted Investment shall
mature not later than the Business Day next preceding such
Payment Account Deposit Date) and (ii) in the case of the Payment
Account, the Business Day next preceding the Distribution Date
(except that if such Permitted Investment is an obligation of the
institution that maintains such fund or account, then such
Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Trustee, for the benefit of the
Securityholders. All income and gain net of any losses realized
from any such investment of funds on deposit in the Collection
Account or the Payment Account shall be for the benefit of the
Master Servicer as servicing compensation and shall be remitted
to it monthly as provided herein. The amount of any realized
losses in the Collection Account or the Payment Account incurred
in any such account in respect of any such investments shall
promptly be deposited by the Master Servicer in the Collection
Account or paid to the Trustee for deposit into the Payment
Account, as applicable. The Trustee in its fiduciary capacity
shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in
the Collection Account or the Payment Account and made in
accordance with this Section 3(h).
(v) The Master Servicer shall give notice to the Trustee,
the Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Collection Account prior to any
change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Payment Account prior to
any change thereof.
(i) COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS; ESCROW
ACCOUNTS.
(i) To the extent required by the related Mortgage Note and
not violative of current law, the Master Servicer shall establish and
maintain one or more accounts (each, an "Escrow Account") and deposit
and retain therein all collections from the Mortgagors (or advances by
the Master Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master Servicer to compel
a Mortgagor to establish an Escrow Account in violation of applicable
law.
(ii) Withdrawals of amounts so collected from the Escrow
Accounts may be made only to effect timely payment of taxes,
assessments, hazard insurance premiums, condominium or PUD association
dues, or comparable items, to reimburse the Master Servicer out of
related collections for any payments made pursuant to Sections 3(a)
hereof (with respect to taxes and assessments and insurance premiums)
and 3(l) hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note,
to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in
accordance with Section 8(a) hereof. The Escrow Accounts shall not be
a part of the Issuer.
(iii) The Master Servicer shall advance any payments
referred to in Section 3(i)(i) that are not timely paid by the
Mortgagors on the date when the tax, premium or other cost for which
such payment is intended is due, but the Master Servicer shall be
required so to advance only to the extent that such advances, in the
good faith judgment of the Master Servicer, will be recoverable by the
Master Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise.
(j) ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the Master
Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Securityholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Securityholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Securityholder for actual expenses incurred by the Master Servicer in providing
such reports and access.
(k) PERMITTED WITHDRAWALS FROM THE NOTE ACCOUNT.
(i) The Master Servicer may from time to time make
withdrawals from the Collection Account for the following purposes:
(A) to pay to the Master Servicer (to the extent not
previously retained by the Master Servicer) the servicing compensation
to which it is entitled pursuant to Section 5, and to pay to the
Master Servicer, as additional servicing compensation, earnings on or
investment income with respect to funds in or credited to the
Collection Account;
(B) to reimburse the Master Servicer for unreimbursed
Advances made by it, such right of reimbursement pursuant to this
subclause (ii) being limited to amounts received on the Mortgage
Loan(s) in respect of which any such Advance was made;
(C) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(D) to reimburse the Master Servicer for Insured Expenses
from the related Insurance Proceeds;
(E) to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement
pursuant to this clause (a) with respect to any Mortgage Loan being
limited to amounts received on such Mortgage Loan(s) which represent
late recoveries of the payments for which such advances were made
pursuant to Section 3(a) or Section 3(i) and (b) for unpaid Master
Servicing Fees as provided in Section 3(n) hereof;
(F) to pay to the purchaser, with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased
pursuant to Section 2(c)(ii), 2(d) or 3(n), all amounts received
thereon after the date of such purchase;
(G) to reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them and reimbursable
pursuant to Section 6(c) hereof;
(H) to withdraw any amount deposited in the Collection
Account and not required to be deposited therein;
(I) on or prior to the Payment Account Deposit Date, to
withdraw an amount equal to the related Available Funds and the
Trustees Fees for such Distribution Date and remit such amount to the
Trustee for deposit in the Payment Account; and
(J) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 8 (a) hereof.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such subclauses (A), (B),
(D), (E) and (F). Prior to making any withdrawal from the Collection Account
pursuant to subclause (C), the Master Servicer shall deliver to the Trustee an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
(ii) The Trustee shall withdraw funds from the Payment
Account for distributions to Securityholders in the manner specified
in this Agreement (and to withhold from the amounts so withdrawn, the
amount of any taxes that it is authorized to withhold pursuant to
Section 3(i)). In addition, the Trustee may from time to time make
withdrawals from the Payment Account for the following purposes:
(A) to pay to itself the Trustee Fee for the related
Distribution Date;
(B) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in
the Payment Account;
(C) to withdraw and return to the Master Servicer any amount
deposited in the Payment Account and not required to be deposited
therein; and
(D) to clear and terminate the Payment Account upon
termination of the Agreement pursuant to 8(a) hereof.
(l) MAINTENANCE OF HAZARD INSURANCE; MAINTENANCE OF PRIMARY
INSURANCE POLICIES.
(i) The Master Servicer shall cause to be maintained, for
each Mortgage Loan, hazard insurance with extended coverage in an
amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan or
(ii) the greater of (y) the outstanding principal balance of the
Mortgage Loan and (z) an amount such that the proceeds of such policy
shall be sufficient to prevent the Mortgagor and/or the mortgagee from
becoming a co-insurer. Each such policy of standard hazard insurance
shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. Any amounts collected by the Master
Servicer under any such policies (other than the amounts to be applied
to the restoration or repair of the related Mortgaged Property or
amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the
Collection Account. Any cost incurred by the Master Servicer in
maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Securityholders or
remittances to the Trustee for their benefit, be added to the
principal balance of the Mortgage Loan, notwithstanding that the terms
of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out
of Liquidation Proceeds to the extent permitted by Section 3(k)
hereof. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained
on property acquired in respect of a Mortgage other than pursuant to
such applicable laws and regulations as shall at any time be in force
and as shall require such additional insurance. If the Mortgaged
Property is located at the time of origination of the Mortgage Loan in
a federally designated special flood hazard area and such area is
participating in the national flood insurance program, the Master
Servicer shall cause flood insurance to be maintained with respect to
such Mortgage Loan. Such flood insurance shall be in an amount equal
to the least of (i) the original principal balance of the related
Mortgage Loan, (ii) the replacement value of the improvements which
are part of such Mortgaged Property, and (iii) the maximum amount of
such insurance available for the related Mortgaged Property under the
national flood insurance program.
(ii) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section, it
being understood and agreed that such policy may contain a deductible
clause on terms substantially equivalent to those commercially
available and maintained by comparable servicers. If such policy
contains a deductible clause, the Master Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section,
and there shall have been a loss that would have been covered by such
policy, deposit in the Collection Account the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as Master Servicer of the Mortgage
Loans, the Master Servicer agrees to present, on behalf of itself, the
Depositor, and the Trustee for the benefit of the Securityholders,
claims under any such blanket policy.
(iii) The Master Servicer shall not take any action which
would result in non-coverage under any applicable Primary Insurance
Policy of any loss which, but for the actions of the Master Servicer,
would have been covered thereunder. The Master Servicer shall not
cancel or refuse to renew any such Primary Insurance Policy that is in
effect at the date of the initial issuance of the Notes and the
Certificates and is required to be kept in force hereunder unless the
replacement Primary Insurance Policy for such canceled or non-renewed
policy is maintained with a Qualified Insurer. The Master Servicer
shall not be required to maintain any Primary Insurance Policy with
respect to any Mortgage Loan with a Loan-to-Value Ratio less than or
equal to 80% as of any date of determination or, based on a new
appraisal, the principal balance of such Mortgage Loan represents 80%
or less of the new appraised value. The Master Servicer agrees to
effect the timely payment of the premiums on each Primary Insurance
Policy, and such costs not otherwise recoverable shall be recoverable
by the Master Servicer from the related liquidation proceeds.
(iv) In connection with its activities as Master Servicer of
the Mortgage Loans, the Master Servicer agrees to present on behalf of
itself, the Trustee and Securityholders, claims to the insurer under
any Primary Insurance Policies and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any
Primary Insurance Policies respecting defaulted Mortgage Loans. Any
amounts collected by the Master Servicer under any Primary Insurance
Policies shall be deposited in the Collection Account.
(m) ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(i) Except as otherwise provided in this Section, when any
property subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement
will not adversely affect or jeopardize coverage under any Required
Insurance Policy. Notwithstanding the foregoing, the Master Servicer
is not required to exercise such rights with respect to a Mortgage
Loan if the Person to whom the related Mortgaged Property has been
conveyed or is proposed to be conveyed satisfies the terms and
conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage
is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Master Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if
coverage under any Required Insurance Policy would be adversely
affected, or if nonenforcement is otherwise permitted hereunder, the
Master Servicer is authorized, subject to Section 3(m)(ii), to take or
enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note
and, unless prohibited by applicable state law, the Mortgagor remains
liable thereon, provided that the Mortgage Loan shall continue to be
covered (if-so covered before the Master Servicer enters such
agreement) by the applicable Required Insurance Policies. The Master
Servicer, subject to Section 3(m)(ii), is also authorized with the
prior approval of the insurers under any Required Insurance Policies
to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability
and such Person is substituted as Mortgagor and becomes liable under
the Mortgage Note. Notwithstanding the foregoing, the Master Servicer
shall not be deemed to be in default under this Section by reason of
any transfer or assumption which the Master Servicer reasonably
believes it is restricted by law from preventing, for any reason
whatsoever.
(ii) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3(m)(i) hereof,
in any case in which a Mortgaged Property has been conveyed to a
Person by a Mortgagor, and such Person is to enter into an assumption
agreement or modification agreement or supplement to the Mortgage Note
or Mortgage that requires the signature of the Trustee, or if an
instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Master Servicer
shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to
execute the assumption agreement with the Person to whom the Mortgaged
Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as
are reasonable or necessary to carry out the terms of the Mortgage
Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to
such Person. In connection with any such assumption, no material term
of the Mortgage Note may be changed. In addition, the substitute
Mortgagor and the Mortgaged Property must be acceptable to the Master
Servicer in accordance with its underwriting standards as then in
effect. Together with each such substitution, assumption or other
agreement or instrument delivered to the Trustee for execution by it,
the Master Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer stating that the requirements of this subsection
have been met in connection therewith. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement
has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the
original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by
the Master Servicer as additional servicing compensation.
(m) REALIZATION UPON DEFAULTED MORTGAGE LOANS; REPURCHASE OF
CERTAIN MORTGAGE LOANS.
The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
meet the requirements of the insurer under any Required Insurance Policy;
provided, however, that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the liquidation proceeds with respect to the related
Mortgaged Property, as provided in the definition of Liquidation Proceeds. If
the Master Servicer has knowledge that a Mortgaged Property which the Master
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one mile radius of any site listed in the
Expenditure Plan for the Hazardous Substance Clean Up Bond Act of 1984 or other
site with environmental or hazardous waste risks known to the Master Servicer,
the Master Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with its established environmental
review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Securityholders, or its nominee, on behalf of the Securityholders. The Trustee's
name shall be placed on the title to such REO Property solely as the Trustee
under the Indenture and not in its individual capacity. The Master Servicer
shall ensure that the title to such REO Property references the Indenture and
the Trustee's capacity thereunder. 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 Securityholders, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Securityholders for the period prior to
the sale of such REO Property. The Master Servicer shall prepare for and deliver
to the Trustee a statement with respect to each REO Property that has been
rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. [The Master Servicer
shall perform the tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be
required, in the form required, and delivering the same to the Trustee for
filing.]
In the event that the Issuer acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Issuer unless the Trustee shall
have been supplied with an Opinion of Counsel to the effect that the holding by
the Issuer of such Mortgaged Property subsequent to such two-year period will
not result in the imposition of taxes on "prohibited transactions" of the REMIC
defined in Section 860F of the Code or cause the REMIC to fail to qualify as a
REMIC at any time that any Notes or Certificates are outstanding, in which case
the Issuer may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel). Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Issuer shall
be rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Issuer in such a manner or pursuant
to any terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject the REMIC to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property under Section 860G(c) of
the Code or otherwise, unless the Master Servicer has agreed to indemnify and
hold harmless the Issuer with respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any REO Properties,
net of reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Collection Account. To the extent
the net income received during any calendar month is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Master Servicing Fees; second, to reimburse the Master Servicer for
any unreimbursed Advances; third, to reimburse the Collection Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3(k)(i)(C) that related to such Mortgage
Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been
made for such amount or any such Advance has been reimbursed) on the Mortgage
Loan or related REO Property, at the Adjusted Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fifth, as a recovery of principal of the Mortgage Loan. Excess Proceeds, if any,
from the liquidation of a Liquidated Mortgage Loan will be retained by the
Master Servicer as additional servicing compensation pursuant to Section 5.
Any of the Master Servicer, the Seller or the Depositor, in its sole
discretion, shall have the right to purchase for its own account from the Issuer
any Mortgage Loan which is 91 days or more delinquent at a price equal to the
Purchase Price. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Collection Account and the Trustee, upon receipt of a
certificate from the Master Servicer in the form of Exhibit D hereto, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Securityholders with respect thereto.
(o) ACCESS TO CERTAIN DOCUMENTATION.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of subordinated Notes or
Certificates and the examiners and supervisory agents of the OTS, the FDIC and
such other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices designated by the Master Servicer.
Nothing in this Section shall limit the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section.
(p) ANNUAL STATEMENT AS TO COMPLIANCE.
The Master Servicer shall deliver to the Depositor and the Trustees on
or before 120 days after the end of the Master Servicer's fiscal year,
commencing with its 199_ fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year and of the performance of the Master Servicer
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 throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall forward a copy of each such statement to each Rating
Agency.
(q) ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
STATEMENT; FINANCIAL STATEMENTS.
On or before 120 days after the end of the Master Servicer's fiscal
year, commencing with its 199_ fiscal year, the Master Servicer at its expense
shall cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustees and the
Depositor to the effect that-such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC
(rendered within one year of such statement) of independent public accountants
with respect to the related Subservicer. Copies of such statement shall be
provided by the Trustee to any Securityholder upon request at the Master
Servicer's expense, provided such statement is delivered by the Master Servicer
to the Trustee.
(r) ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.
The Master Servicer shall for so long as it acts as master servicer
under this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Master Servicer hereunder and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the event
that any such policy or bond ceases to be in effect, the Master Servicer shall
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
(s) MASTER SERVICER MONTHLY DATA.
On or before noon Minnesota time on the Determination Date, the Master
Servicer shall provide by modem to the Trustee with respect to the Mortgage
Loans, an electronic data file (accompanied by a hardcopy report) in a format
which is mutually agreed upon by the Master Servicer and the Trustee. The
Trustee shall be under no duty to recalculate, verify or recompute the
information provided to it by the Master Servicer hereunder.
4. ADVANCES.
The Master Servicer shall determine on or before each Master Servicer
Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, deposit into
the Collection Account an amount equal to the Advance. The Master Servicer shall
be entitled to be reimbursed from the Collection Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3(k). The
obligation to make Advances with respect to any Mortgage Loan shall continue if
such Mortgage Loan has been foreclosed or otherwise terminated and the related
Mortgaged Property has not been liquidated.
5. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Collection Account an amount
equal to the Master Servicing Fee for each Mortgage Loan, provided that the
aggregate Master Servicing Fee with respect to any Distribution Date shall be
reduced (i) by an amount equal to the aggregate of the Prepayment Interest
Shortfalls, if any, with respect to such Distribution Date, but not below an
amount equal to one-half of the aggregate Master Servicing Fee for such
Distribution Date before reduction thereof in respect of such Prepayment
Interest Shortfalls, and (ii) with respect to the first Distribution Date, an
amount equal to any amount to be deposited into the Payment Account by the
Depositor pursuant to Section 2(a)(i) and not so deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments shall be retained by the Master Servicer to the extent not required
to be deposited in the Collection Account pursuant to Section 3(h) hereof. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its master servicing activities hereunder (including payment of
any premiums for hazard insurance and any Primary Insurance Policy and
maintenance of the other forms of insurance coverage required by this Agreement)
and shall not be entitled to reimbursement therefor except as specifically
provided in this Agreement.
6. THE MASTER SERVICER.
(a) RESPECTIVE LIABILITIES OF THE DEPOSITOR AND THE
MASTER SERVICER.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.
(b) MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE
MASTER SERVICER.
The Depositor and the Master Servicer will each keep in full effect
its existence, rights and franchises as a corporation under the laws of the
United States or under the laws of one of the states thereof and will each
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged or consolidated, or any Person resulting from any merger or consolidation
to which the Depositor or the Master Servicer shall be a party, or any person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, FNMA or FHLMC.
(c) LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
SELLER, MASTER SERVICER AND OTHERS.
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Securityholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Seller, the Master Servicer or any such
Person from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Seller, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Seller or the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer shall be indemnified by the Issuer and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement, the Notes or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the Seller
or the Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Seller or the Master Servicer
may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustees and the Securityholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Issuer, and the
Depositor, the Seller and the Master Servicer shall be entitled to be reimbursed
therefor out of the Collection Account.
(d) LIMITATION ON RESIGNATION OF THE MASTER SERVICER.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of
any of the Certificates, or (b) upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination under clause
(b) permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a successor master servicer shall
have assumed the Master Servicer's responsibilities, duties, liabilities and
obligations hereunder.
7. DEFAULT.
(a) EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the
Collection Account or remit to the Trustee any payment (other than a
payment required to be made under Section 4 hereof) required to be
made with respect to any Class of Certificates under the terms of this
Agreement, which failure shall continue unremedied for five days after
the date upon which written notice of such failure shall have been
given to the Master Servicer by the Trustee or the Depositor or to the
Master Servicer, the Depositor and the Trustee by the Holders of Notes
or Certificates of such Class evidencing not less than 25% of the
total distributions allocated to such Class; or
(ii) any failure by the Master Servicer duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement, which failure shall continue unremedied for a period of
thirty days after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee or the
Depositor, or to the Master Servicer, the Depositor and the Trustee by
the Holders of Notes or Certificates of any Class evidencing not less
than 25% of the total distributions allocated to such Class; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) [so long as the Master Servicer is the Seller, any failure
by the Seller to observe or perform in any material respect any other
of the covenants or agreements on the part of the Seller contained in
this Agreement, which failure shall continue unremedied for a period
of 60 days after the date on which written notice of such failure
shall have been given to the Seller by the Trustee or the Depositor,
or to the Seller and the Trustee by the Holders of Notes or
Certificates of any Class evidencing not less than 25% of the total
distributions allocated to such Class; or]
(vii) any failure of the Master Servicer to make any Advance in
the manner and at the time required to be made pursuant to Section 4
which continues unremedied for a period of one Business Day after the
date of such failure.
If an Event of Default described in clauses (i) to (vii) of this
Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, or at the
direction of the Holders of Notes or Certificates of any Class evidencing not
less than 25% of the total distributions allocated to such Class, the Trustee
shall by notice in writing to the Master Servicer (with a copy to each Rating
Agency), terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Securityholder. If an Event of Default described in
clause (vii) hereof shall occur, the Trustee shall, by notice in writing to the
Master Servicer and the Depositor, terminate all of the rights and obligations
of the Master Servicer under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, other than its rights as a Securityholder. On and after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer hereunder, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee. [The Trustee
shall thereupon make any Advance described in clause (vii) hereof subject to
Section 3(g) hereof.] The Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article VIII. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Collection Account, or thereafter be received with
respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a Scheduled Payment on a Mortgage Loan which was due prior to
the notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
such Master Servicer would have been entitled pursuant to Sections 3(k)(i)(A)
through (H),and any other amounts payable to such Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
(b) TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7(a) hereof, the Trustee shall, subject to and
to the extent provided in Section 3(g), be the successor to the Master Servicer
in its capacity as master servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to make
Advances pursuant to Section 4. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans that the Master Servicer
would have been entitled to charge to the Collection Account or Payment Account
if the Master Servicer had continued to act hereunder. Notwithstanding the
foregoing, if the Trustee has become the successor to the Master Servicer in
accordance with Section 7(a) hereof, the Trustee may, if it shall be unwilling
to so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4 hereof or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect
the then current rating of the Securities by each Rating Agency 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. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $10,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustees an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section
6(c) hereof incurred prior to termination of the Master Servicer under Section
7(a)), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Securities in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation.
Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3(g) hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of the Master Servicing Fee permitted the Master
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor master servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the term
of its service as master servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to 3(r).
(c) NOTIFICATION TO SECURITYHOLDERS.
(i) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice
thereof to Securityholders and to each Rating Agency.
(ii) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Securityholders
notice of each such Event of Default hereunder known to the Trustee,
unless such Event of Default shall have been cured or waived.
8. MISCELLANEOUS.
(a) TERM OF MASTER SERVICING AGREEMENT.
The obligations to be performed by the Master Servicer under this
Agreement shall commence on and as of the date on which the Issuer issues the
Securities and shall terminate as to each Mortgage Loan upon (i) the payment in
full of all principal and interest due under such Mortgage Loan or other
liquidation of such Mortgage Loan as contemplated by this Agreement, (ii) the
termination of the Master Servicer's rights and powers under this Agreement by
the Trustee as provided in Section 7(a) of this Agreement, or (iii) the release
by the Trustee of its security interest in any Mortgage Loan.
(b) ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6(b), this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and Depositor.
(c) NOTICES.
(i) The Trustee shall use its best efforts to promptly
provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this
Agreement;
2. The occurrence of any Event of Default that has
not been cured;
3. The resignation or termination of the Master
Servicer or the Trustee and the appointment of any
successor;
4. The repurchase or substitution of Mortgage Loans
pursuant to Section 2(d); and
5. The final payment to Securityholders.
In addition, the Trustee shall promptly furnish to each Rating Agency copies of
the following:
1. Each report to Securityholders described in the Indenture;
2. Each annual statement as to compliance described in Section 3(p);
3. Each annual independent public accountants' servicing report
described in Section 3(q); and
4. Any notice of a purchase of a Mortgage Loan pursuant to Section
2(c)(ii), 2(d) or 3(n).
(ii) All directions, demands and notices hereunder shall be
in writing and shall be deemed to have been duly given when delivered
to (a) in the case of the Depositor, Directors Asset Conduit
Corporation, c/o Norwest Mortgage, Inc. 343 Thornall Street, 5th
Floor, Edison, New Jersey 08837, Attention: _______________, (b) in
the case of the Master Servicer, Norwest Bank Minnesota, National
Associates, 100 Broker Land Parkway, Columbia Maryland, Attention:
_________________ or such other address as may be hereafter furnished
to the Depositor and the Trustees by the Master Servicer in writing,
(c) in the case of the Trustees,
-------------------------------------------------------, Attention:
__________________________________________________, or such other
address as the Trustee may hereafter furnish to the Depositor or
Master Servicer and (d) in the case of the Rating Agencies, the
address specified therefor in the definition corresponding to the name
of such Rating Agency. Notices to Securityholders shall be deemed
given when mailed, first class postage prepaid, to their respective
addresses appearing in the Certificate Register.
(d) INSPECTION AND AUDIT RIGHTS.
The Master Servicer agrees that, on reasonable prior notice, it will
permit and will cause each Subservicer to permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes said accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of- pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 8(d)
shall be borne by the party requesting such inspection; all other such expenses
shall be borne by the Master Servicer or the related Subservicer.
(e) GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE SECURITYHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
(f) AMENDMENT.
This Agreement may be amended from time to time by the Issuer, the
Master Servicer and the Trustee without the consent of any of the
Securityholders to cure any ambiguity, or to correct or supplement any
provisions herein, or to make such other provisions with respect to matters or
questions arising under this Agreement as shall not be inconsistent with any
other provisions herein; provided that such action shall not, as evidenced by an
Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Issuer), adversely affect in any material respect the interests
of any Securityholder; provided, however, that the amendment shall not be deemed
to adversely affect in any material respect the interests of the Securityholders
if the Person requesting the amendment obtains a letter from each Rating Agency
stating that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Securities; it being understood and
agreed that any such letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating. The Trustee, the
Depositor and the Master Servicer also may at any time and from time to time
amend this Agreement without the consent of the Securityholders to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or helpful to maintain the qualification of the Issuer as a REMIC under the Code
or to avoid or minimize the risk of the imposition of any tax on the REMIC
pursuant to the Code that would be a claim at any time prior to the final
redemption of the Securities, provided that the Trustee has been provided an
Opinion of Counsel, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the
Issuer, to the effect that such action is necessary or helpful to maintain such
qualification or to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of a
Majority in Interest of each Class of Notes or Certificates affected thereby for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Holders of Notes or Certificates; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments required to be distributed on any Certificate without the consent of
the Holder of such Note or Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Notes or Certificates in a
manner other than as described in (i), without the consent of the Holders of
Notes or Certificates of such Class evidencing, as to such Class, Percentage
Interests aggregating 66%, or (iii) reduce the aforesaid percentages of Notes or
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such Notes or Certificates then
outstanding.
[Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Issuer, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Securityholders or cause the Issuer to
fail to qualify as a REMIC at any time that any Certificates are outstanding.]
Promptly after the execution of any amendment to this Agreement
requiring the consent of Securityholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each Securityholder
and each Rating Agency.
It shall not be necessary for the consent of Securityholders 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. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Securityholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Issuer, satisfactory to the Trustee that (i) such
amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Securityholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 8(f).
(g) SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
(h) NO JOINT VENTURE.
The Master Servicer and the Issuer are not partners or joint venturers
with each other and nothing herein shall be construed to make them such partners
or joint venturers or impose any liability as such of either of them.
(i) RECORDATION OF AGREEMENT; COUNTERPARTS.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at its expense, but only
upon direction by the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Securityholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
(j) LIMITATION OF LIABILITY OF [OWNER TRUSTEE].
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by [Owner Trustee], not individually or
personally but solely as owner trustee of [ ]Home Equity Loan Trust 199_ under
the Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by [Owner Trustee] but is made and
intended for the purpose for binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on [Owner Trustee], other
than any liability arising out of its gross negligence, bad faith or willful
misconduct, and (d) under no circumstances shall [Owner Trustee] be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or the other
Operative Documents.
(k) NONPETITION COVENANTS.
Notwithstanding any prior termination of this Agreement, the Master
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer or the Depositor (or
any assignee) to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer or the Depositor
under any federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Issuer
or the Depositor.
<PAGE>
IN WITNESS WHEREOF, each party has caused this Master
Servicing Agreement to be executed by its duly authorized officer or officers as
of the day and year first above written.
_______________ Home Equity Loan Trust 199_,
as Issuer
By: [owner trustee]
not in its individual capacity but
solely as Owner Trustee
By:------------------------------------------
Its:------------------------------------------
NORWEST MORTGAGE, INC.,
as Seller
By:------------------------------------------
Its:------------------------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By:------------------------------------------
Its:------------------------------------------
[
]
as Trustee
By:------------------------------------------
Its:------------------------------------------
<PAGE>
SCHEDULE I
Mortgage Loan Schedule
<PAGE>
SCHEDULE II A
_______________ Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Norwest Mortgage, Inc. ("Seller") hereby makes the representations and
warranties set forth in this Schedule II to the Issuer, the Depositor and the
Trustees, as of the Closing Date, or if so specified herein, as of the Cut-off
Date. Capitalized terms used but not otherwise defined in this Schedule II shall
have the meanings ascribed thereto in the Indenture (the "Indenture") relating
to the above-referenced Series, among Norwest Mortgage, Inc., as Seller,
Directors Asset Conduit Corporation, as depositor, and _____________________, as
trustee.
(i) The Seller is a [ ] corporation, [validly existing and in
good standing under the laws of the United States, 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 any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the Seller;]
(ii) The Seller has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under the Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute 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,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
(iii) 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, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been obtained or
filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
the Seller will not violate any provision of any existing law or regulation or
any order or decree of any court applicable to the Seller or any provision of
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; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Seller threatened, against the Seller or any of its properties or with
respect to this Agreement or the Certificates which in the opinion of the Seller
has a reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
<PAGE>
SCHEDULE II B
_______________ Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER
Norwest Bank Minnesota, National Association ("Master Servicer") hereby makes
the representations and warranties set forth in this Schedule II to the Issuer,
the Depositor and the Trustees, as of the Closing Date, or if so specified
herein, as of the Cut-off Date. Capitalized terms used but not otherwise defined
in this Schedule II shall have the meanings ascribed thereto in the Indenture
(the "Indenture") relating to the above-referenced Series, among Norwest
Mortgage, Inc., as seller, the Master Servicer, Directors Asset Conduit
Corporation, as depositor, and _____________________, as trustee.
(i) The Master Servicer is a national banking association,
[validly existing and in good standing under the laws of the United States, and
has the corporate power to own its assets and to transact the business in which
it is currently engaged. The Master Servicer is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or any properties owned or leased by
it requires such qualification and in which the failure so to qualify would have
a material adverse effect on the business, properties, assets, or condition
(financial or other) of the Master Servicer;]
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Master Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the consent
of any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been obtained or
filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
the Master Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Master Servicer
or any provision of the Certificate of Incorporation or Bylaws of the Master
Servicer, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Master Servicer threatened, against the Master Servicer or any of its
properties or with respect to this Agreement or the Certificates which in the
opinion of the Master Servicer has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this Agreement.
<PAGE>
SCHEDULE III
__________________ Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
REPRESENTATIONS AND WARRANTIES AS TO THE MORTGAGE LOANS
Norwest Mortgage, Inc. ("Seller") hereby makes the
representations and warranties set forth in this Schedule III to the Depositor
and the Trustee, as of the Closing Date, or if so specified herein, as of the
Cut-off Date. Capitalized terms used but not otherwise defined in this Schedule
III shall have the meanings ascribed thereto in the Indenture (the "Indenture")
relating to the above- referenced Series, among Seller, as seller [Norwest Bank
Minnesota, National Association, as master servicer,] Directors Asset Conduit
Corporation, as depositor, and ________________________, as trustee.
(i) As of the Closing Date, this Agreement constitutes a
legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights generally and by the availability
of equitable remedies;
(ii) As of the Closing Date with respect to the Mortgage
Loans and as of the applicable Transfer Date with respect to any
Eligible Substitute Mortgage Loan, either (A) the Purchase Agreement
constitutes a valid transfer and assignment to the Depositor of all
right, title and interest of the Seller in and to the Cut-off Date
Asset Balances with respect to the applicable Mortgage Loans, all
monies due or to become due with respect thereto (excluding payments
in respect of accrued interest due prior to the Cut-off Date or due in
the month of _________), and all proceeds of such Cut-off Date Asset
Balances with respect to the Mortgage Loans and such funds as are from
time to time deposited in the Collection Account (excluding any
investment earnings thereon) and all other property specified in the
definition of "Asset" as being part of the corpus of the Trust
conveyed to the Trust by the Seller, and upon payment for the
Additional Balances, will constitute a valid transfer and assignment
to the Trustee of all right, title and interest of the Seller in and
to the Additional Balances, all monies due or to become due with
respect thereto, and all proceeds of such Additional Balances and all
other property specified in the definition of "Asset" relating to the
Additional Balances or (B) the Purchase Agreement or this Agreement,
as appropriate, constitutes a grant of a security interest (as defined
in the UCC as in effect in Minnesota) in such property to the Trustee
on behalf of the Trust. If this Agreement constitutes the grant of a
security interest to the Trust in such property, and if the Trustee
obtains and maintains possession of the Mortgage File for each
Mortgage Loan, the Trust shall have a first priority perfected
security interest in such property, subject to the effect of Section
9-306 of the UCC with respect to collections on the Mortgage Loans
that are deposited in the Collection Account in accordance with the
next to last paragraph of Section _______; provided, however, that
nothing in this clause (ii) shall be construed to obligate the Master
Servicer to deliver any Mortgage Files other than as set forth in
Section 2(a) hereof;
(iii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan and as of the date any Additional Balance is
created, the information set forth in the Mortgage Loan Schedule for
such Mortgage Loans is true and correct in all material respects;
(iv) The applicable Cut-off Date Asset Balance has not been
assigned or pledged, and the Seller is the sole owner and holder of
such Cut-off Date Asset Balance free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature, and has full right and
authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Mortgage Loan, to
sell, assign or transfer the same pursuant to the Purchase Agreement;
(v) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, the related Mortgage Note and the Mortgage
with respect to each Mortgage Loan have not been assigned or pledged,
and the Seller is the sole owner and holder of the Mortgage Loan free
and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any
nature, and has full right and authority, under all governmental and
regulatory bodies having jurisdiction over the ownership of the
applicable Mortgage Loans, to sell and assign the same pursuant to the
Purchase Agreement;
(vi) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, the related Mortgage is a valid and
subsisting first or second lien, as set forth on the Mortgage Loan
Schedule with respect to each related Mortgage Loan, on the property
therein described, and as of the applicable Cut-off Date the related
Mortgaged Property is free and clear of all encumbrances and liens
having priority over the first or second lien, as applicable, of such
Mortgage except for liens for (i) real estate taxes and special
assessments not yet delinquent; (ii) any first mortgage loan secured
by such Mortgaged Property and specified on the Mortgage Loan
Schedule; (iii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording that are acceptable to mortgage lending institutions
generally; and (iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits
of the security intended to be provided by such Mortgage;
(vii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, there is no valid offset, defense or
counterclaim of any obligor under any Mortgage;
(viii) To the best knowledge of the Seller, as of the
Closing Date with respect to the Mortgage Loans and the applicable
Transfer Date with respect to any Eligible Substitute Mortgage Loan,
there is no delinquent recording or other tax or fee or assessment
lien against any related Mortgaged Property;
(ix) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, there is no proceeding pending or, to the
best knowledge of the Seller, threatened for the total or partial
condemnation of the related Mortgaged Property, and such property is
free of material damage;
(x) To the best knowledge of the Seller, as of the Closing
Date with respect to the Mortgage Loans and the applicable Transfer
Date with respect to any Eligible Substitute Mortgage Loan, there are
no mechanics' or similar liens or claims which have been filed for
work, labor or material affecting the related Mortgaged Property which
are, or may be, liens prior or equal to the lien of the related
Mortgage, except liens which are fully insured against by the title
insurance policy referred to in clause (xiv);
(xi) No Minimum Monthly Payment is more than 89 days
delinquent (measured on a contractual basis); and with respect to the
Mortgage Loans no more than _____% (by Cut-off Date Pool Balance) were
30-59 days delinquent (measured on a contractual basis) and no more
than _____% (by Cut-off Date Pool Balance) were 60-89 days delinquent
(measured on a contractual basis);
(xii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, for each Mortgage Loan, the related Mortgage
File contains each of the documents and instruments specified to be
included therein;
(xiii) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state
and federal laws, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to
the Mortgage Loan;
(xiv) Either a lender's title insurance policy or binder was
issued on the date of origination of the Mortgage Loan and each such
policy is valid and remains in full force and effect, or a title
search or guaranty of title customary in the relevant jurisdiction was
obtained with respect to a Mortgage Loan as to which no title
insurance policy or binder was issued;
(xv) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, none of the Mortgaged Properties is a mobile
home or a manufactured housing unit that is not considered or
classified as part of the real estate under the laws of the
jurisdiction in which it is located;
(xvi) As of the Cut-off Date for the Mortgage Loans no more
than _____% of such Mortgage Loans, by aggregate principal balance,
are secured by Mortgaged Properties located in one United States
postal zip code;
(xvii) The Combined Loan-to-Value Ratio for each Mortgage
Loan was not in excess of 100%;
(xviii) No selection procedure reasonably believed by the
Seller to be adverse to the interests of the Securityholders or the
Credit Enhancer was utilized in selecting the Mortgage Loans;
(xix) The Seller has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay or defraud any of its
creditors;
(xx) The Minimum Monthly Payment with respect to any
Mortgage Loan is not less than the interest accrued at the applicable
Loan Rate on the average daily Asset Balance during the interest
period relating to the date on which such Minimum Monthly Payment is
due;
(xxi) Within 90 days of the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing
with respect to the Mortgage Loans, the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, the Seller will file
UCC-1 financing statements with respect to the Mortgage Loans;
(xxii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, each Credit Line Agreement and each Mortgage
Loan is an enforceable obligation of the related Mortgagor, except as
the enforceability thereof may be limited by the bankruptcy,
insolvency or similar laws affecting creditors' rights generally;
(xxiii) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, the Seller has not received a notice of
default of any senior mortgage loan related to a Mortgaged Property
that has not been cured by a party other than the Master Servicer;
(xxiv) The weighted average remaining term to maturity of
the Mortgage Loans on a contractual basis as of the Cut-off Date for
the Mortgage Loans is approximately ___ months. On each date that the
Loan Rates have been adjusted, interest rate adjustments on the
Mortgage Loans were made in compliance with the related Mortgage and
Mortgage Note and applicable law. Over the term of each Mortgage Loan,
the Loan Rate may not exceed the related Loan Rate Cap, if any. The
Loan Rate Caps range between ____% and ____%.The Margins range between
____% and ____% and the weighted average Margin is approximately ____%
as of the Cut-off Date for the Mortgage Loans. The Loan Rates on such
Mortgage Loans range between ____% and _____% and the weighted average
Loan Rate is approximately _____%.
(xxv) As of the Closing Date with respect to the Mortgage
Loans and the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, each Mortgaged Property consists of a single
parcel of real property with a one-to-four unit single family
residence erected thereon, or an individual condominium unit, planned
unit development unit or townhouse;
(xxvi) No more than _____% (by Cut-off Date Pool Balance) of
the Mortgage Loans are secured by real property improved by individual
condominium units, planned development units, townhouses or
two-to-four family residences erected thereon, and at least _____% (by
Cut-off Date Pool Balance) of the Mortgage Loans are secured by real
property with a detached one-family residence erected thereon;
(xxvii) As of the Cut-off Date for the Mortgage Loans, no
Mortgage Loan had a principal balance in excess of approximately
$__________ and the average principal balance of the Mortgage Loans is
equal to approximately $_________; and
(xxviii) Approximately ____% and _____% of the Mortgage
Loans, by aggregate principal balance as of the Cut-off Date for the
Mortgage Loans, are first and second liens, respectively.
<PAGE>
SCHEDULE IV
________________ Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
[ ] Home Equity Loan Trust 199_ (the "Issuer") hereby makes the
representations and warranties set forth in this Schedule IV to the Master
Servicer and the Trustee, as of the Closing Date. Capitalized terms used but not
otherwise defined in this Schedule IV shall have the meanings ascribed thereto
in the Master Servicing Agreement (the "Master Servicing Agreement") relating to
the above- referenced Series, among Norwest Bank Minnesota, National
Association, as Master Servicer, [ ] Home Equity Loan Trust 199_, as Issuer, and
[ ], as Trustee.
(1) The Issuer is a statutory business trust duly organized,
validly existing and in good standing under the laws of the State of
[Delaware], and possesses all requisite authority, power, licenses,
permits and franchises to conduct any and all business contemplated by
the Master Servicing Agreement and to comply with its obligations
under the terms of this Agreement, the performance of which have been
duly authorized by all necessary action.
(2) Neither the execution and delivery of the Master
Servicing Agreement by the Issuer, nor the performance and compliance
with the terms thereof by the Issuer will (A) result in a material
breach of any term or provision of the instruments creating the Issuer
or governing its operations, or (B) materially conflict with, result
in a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Issuer is a party or by which it may be bound,
or (C) constitute a material violation of any statute, order or
regulation applicable to the Issuer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
the Issuer; and the Issuer is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Issuer's
ability to perform or meet any of its obligations under the Master
Servicing Agreement.
(3) This Agreement, and all documents and instruments
contemplated hereby, which are executed and delivered by the Issuer,
will, assuming due authorization, execution by and delivery to the
other parties hereto and thereto, constitute valid, legal and binding
obligations of the Issuer, enforceable in accordance with their
respective terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(4) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that would materially and
adversely affect the execution, delivery or enforceability of the
Master Servicing Agreement or the ability of the Issuer to perform its
obligations thereunder.
(5) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Issuer had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any liens,
charges or encumbrances or any ownership or participation interests in
favor of any other Person.
<PAGE>
EXHIBIT A
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
- ------------------------
- ------------------------
[Issuer]
- ------------------------
- ------------------------
Re: Master Servicing Agreement among
[____________] Home Equity Loan Trust
199_, as Issuer, [____________________
_________], as Master Servicer, and [
], As Trustee, Asset Backed Notes And
Asset Backed Certificates, Series 199
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master Servicing
Agreement (the "Master Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan listed in the attached schedule), it has
received:
(i) the original Mortgage Note, endorsed as provided in
the following form: "Pay to the order of ________, without
recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be included
in a blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Master Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the correctness
of any information set forth in the Mortgage Loan Schedule, other than the
information specified in items (i) through (iv) and (vi) thereof.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
[ ]
as Trustee
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
<PAGE>
EXHIBIT B
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Master Servicer]
- ------------------------
- ------------------------
[Issuer]
- ------------------------
- ------------------------
Re: Master Servicing Agreement among
[____________] Home Equity Loan Trust
199_, as Issuer, Norwest Bank
Minnesota, National Association, as
Master Servicer, and
[_________________ ], as Trustee, Asset
Backed Notes And Asset Backed
Certificates, Series 199_
Gentlemen:
In accordance with Section 2(b) of the above-captioned Master Servicing
Agreement (the "Master Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or listed on the attached
Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2(a) of the Master Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator to the
Issuer.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form provided
in Section 2(a) of the Master Servicing Agreement, or, if the Master Servicer
has certified or the Trustee otherwise knows that the related Mortgage has not
been returned from the applicable recording office, a copy of the assignment of
the Mortgage (excluding information to be provided by the recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from the
originator to the Issuer.
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (i), (ii), (iii),
(iv), (vi) and (xi) of the definition of the "Mortgage Loan Schedule" in Section
1 of the Master Servicing Agreement accurately reflects information set forth in
the Trustee Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Master Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the Trustee has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Master Servicing Agreement.
[ ],
as Trustee
By:--------------------------------------
Name:--------------------------------------
Title:--------------------------------------
<PAGE>
EXHIBIT C
REQUEST FOR RELEASE
(for Trustee)
[ ] Home Equity Loan Trust 199_
Asset Backed Notes and Asset Backed Certificates
Series 199_
LOAN INFORMATION
Name of Mortgagor:
Servicer
Loan No.:
TRUSTEE
Name:
Address:
Trustee
Mortgage File No.:
The undersigned Master Servicer hereby acknowledges that it has
received from [ ], as Trustee for the Holders of Notes of the above-referenced
Series, the documents referred to below (the "Documents"). All capitalized terms
not otherwise defined in this Request for Release shall have the meanings given
them in the Master Servicing Agreement (the "Master Servicing Agreement")
relating to the above-referenced Series among the Trustee, [Norwest Bank
Minnesota, National Association,] as Master Servicer, and [ ] Home Equity Loan
Trust 199_, as Issuer.
( ) Mortgage Note dated [ ], 19__, in the original principal
sum of $[ ], made by [ ] payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on as instrument no. [ ] in the County
Recorder's Office of the County of , State of in
book/reel/docket of official records at page/image [ ].
( ) Deed of Trust recorded on [ ] as instrument no. in the
County Recorder's Office of the County of [ ], State of
[ ] in book/reel/docket [ ] of official records at
page/image [ ] .
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on as instrument no. [ ] in the County Recorder's
Office of the County of [ ], State of in book/reel/docket
[ ] of official records at page/image [ ].
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.
( )
( )
( )
( )
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit
the Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the Master
Servicer assert or seek to assert any claims or rights of setoff to or against
the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the Documents
has been liquidated and the proceeds thereof have been remitted to the Note
Account and except as expressly provided in the Master Servicing Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trustee, and the
Master Servicer shall keep the Documents and any proceeds separate and distinct
from all other property in the Master Servicer's possession, custody or control.
[NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION]
By-----------------------------------
Its-----------------------------------
Date:------------------------, 19---
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee] Attn: Mortgage Custody Services
Re: The Master Servicing Agreement dated [ ] among [Norwest
Bank Minnesota, National Association ("Norwest Bank")], as
Master Servicer, _________________ Home Equity Loan Trust 199_,
as Issuer, and [ ], as Trustee
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Trustee for [ ] Home Equity Loan Trust 199_, as Issuer, we request the release
of the Mortgage File for the Mortgage Loan(s) described below, for the reason
indicated.
FT Account #: Pool #:
MORTGAGOR'S NAME, ADDRESS AND ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
_______1. Mortgage Loan paid in full [(Norwest Bank] hereby
certifies that all amounts have been received.)
_______2. Mortgage Loan Liquidated [(Norwest Bank] hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation have been finally
received.)
_______3. Mortgage Loan in Foreclosure.
_______4. Other (explain): ____________________________________
If item 1 or 2 above is checked, and if all or part of the Trustee Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as an additional documents in your possession relating to the
above-specified Mortgage Loan. If item 3 or 4 is checked, upon return of all of
the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
[NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION] [address]
By:-----------------------------
Name:---------------------------
Title:--------------------------
Date:---------------------------
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGMENT OF RECEIPT
By:-----------------------------
Name:---------------------------
Title:--------------------------
Date:---------------------------
