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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported):March 31, 1999
MERRILL LYNCH MORTGAGE INVESTORS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-39127 13-5674085
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
250 Vesey Street
World Financial Center, North Tower
New York, New York 10281
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 449-1000
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<PAGE>
Item 5. Other Events.
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On March 31, 1999, Merrill Lynch Mortgage Investors, Inc. (the
"Company") entered into a Pooling and Servicing Agreement dated as of March 1,
1999 (the "Pooling and Servicing Agreement"), by and among the Company, as
depositor, Banc One Financial Services, Inc., as seller (the "Seller"), Bank
One, Indiana, National Association, as master servicer (the "Master
Servicer"), and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"), providing for the issuance of the Banc One Home Equity Loan Asset
Certificates, Series 1999-1. The Pooling and Servicing Agreement is annexed
hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
- ------ Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of March 1,
1999, by and among the Company, the Seller, the Master
Servicer and the Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MERRILL LYNCH MORTGAGE INVESTORS,
INC.
By: /s/ Michael M. McGovern
---------------------
Name: Michael M. McGovern
Title: Director & Secretary
Dated: April 9, 1999
<PAGE>
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement,
dated as of March 1, 1999, by
and among, the Company, the Seller,
the Master Servicer and the Trustee. 6
<PAGE>
EXHIBIT 99.1
------------
<PAGE>
EXECUTION COPY
==============================================================================
BANC ONE FINANCIAL SERVICES, INC.,
as Seller,
BANK ONE, INDIANA, NATIONAL ASSOCIATION,
as Master Servicer,
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
as Depositor,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1999
----------------------
Home Equity Loan Asset-Backed Certificates
Series 1999-1
==============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Definitions
Section 1.01. Definitions...................................................1
Section 1.02. Interest Calculations........................................22
ARTICLE II
Conveyance of Home Equity Loans;
Original Issuance of Certificates; Tax Treatment
Section 2.01. Conveyance of Home Equity Loans..............................23
Section 2.02. Acceptance by Trustee........................................27
Section 2.03. Representations and Warranties of the Depositor..............27
Section 2.04. Representations and Warranties Regarding the
Seller and the Master Servicer...........................29
Section 2.05. Representations and Warranties of the Seller
Regarding the Home Equity Loans..........................31
Section 2.06. Substitution of Home Equity Loans............................37
Section 2.07. Execution and Authentication of Certificates.................38
Section 2.08. Designation of Interests in the REMIC........................38
Section 2.09. Designation of Start-up Day..................................38
Section 2.10. REMIC Certificate Maturity Date..............................38
Section 2.11. Tax Returns and Reports to Certificateholders................38
Section 2.12. Tax Matters Person...........................................39
Section 2.13. REMIC Related Covenants......................................39
ARTICLE III
Administration and Servicing of Home Equity Loans
Section 3.01. The Master Servicer..........................................42
Section 3.02. Collection of Certain Home Equity Loan Payments..............45
Section 3.03. Withdrawals from the Collection Account......................46
Section 3.04. Maintenance of Hazard Insurance;
Property Protection Expenses.............................47
Section 3.05. Maintenance of Mortgage Impairment Insurance.................48
Section 3.06. Fidelity Bond................................................48
Section 3.07. Management and Realization Upon Defaulted Home Equity Loans..48
Section 3.08. Trustee to Cooperate.........................................50
Section 3.09. Servicing Compensation; Payment of Certain Expenses
by Master Servicer.......................................51
Section 3.10. Annual Statement as to Compliance............................51
Section 3.11. Annual Servicing Report......................................51
Section 3.12. Access to Certain Documentation and Information
Regarding the Home Equity Loans..........................51
Section 3.13. Reports of Foreclosures and Abandonments of
Mortgaged Properties, Returns Relating to Mortgage
Interest Received from Individuals and Returns
Relating to Cancellation of Indebtedness.................52
Section 3.14. Advances by the Master Servicer .............................52
Section 3.15. Superior Liens...............................................52
Section 3.16. Assumption Agreements........................................53
Section 3.17. Payment of Taxes, Insurance and Other Charges................54
Section 3.18. Compensating Interest........................................54
ARTICLE IV
The Certificate Insurance Policy
Section 4.01. The Certificate Insurance Policy.............................55
Section 4.02. Claims Upon the Certificate Insurance Policy.................55
ARTICLE V
Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions................................................57
Section 5.02. Statements...................................................59
Section 5.03. Certificate Account..........................................63
Section 5.04. Investment of Accounts.......................................63
ARTICLE VI
The Certificates
Section 6.01. The Certificates.............................................65
Section 6.02. Registration of Transfer and Exchange of Certificates........65
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates............70
Section 6.04. Persons Deemed Owners........................................71
Section 6.05. Appointment of Paying Agent..................................71
ARTICLE VII
The Seller, the Master Servicer and the Depositor
Section 7.01. Liability of the Seller, the Master Servicer and the
Depositor................................................72
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Master Servicer,
or the Depositor.........................................72
Section 7.03. Limitation on Liability of the Master Servicer and Others....72
Section 7.04. Master Servicer Not to Resign................................73
Section 7.05. Delegation of Duties.........................................73
Section 7.06. Indemnification of the Trust by the Master Servicer..........74
Section 7.07. Inspection...................................................74
ARTICLE VIII
Default
Section 8.01. Servicer Default.............................................75
Section 8.02. Trustee to Act; Appointment of Successor.....................77
Section 8.03. Waiver of Defaults...........................................78
Section 8.04. Notification to Certificateholders...........................78
Section 8.05. Rights of the Certificate Insurer to Exercise
Rights of Class A Certificateholders.....................78
Section 8.06. Trustee to Act Solely with Consent of the
Certificate Insurer......................................79
Section 8.07. Home Equity Loans, Trust and Accounts Held for Benefit of
the Certificate Insurer..................................79
Section 8.08. Certificate Insurer Default..................................79
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee............................................81
Section 9.02. Certain Matters Affecting the Trustee........................82
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.....86
Section 9.04. Trustee May Own Certificates.................................87
Section 9.05. Trustee Fees and Expenses....................................87
Section 9.06. Eligibility Requirements for Trustee.........................87
Section 9.07. Resignation or Removal of Trustee............................87
Section 9.08. Successor Trustee............................................88
Section 9.09. Merger or Consolidation of Trustee...........................89
Section 9.10. Appointment of Co-Trustee or Separate Trustee................89
Section 9.11. Limitation of Liability......................................90
Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates; Inspection...................91
Section 9.13. Suits for Enforcement........................................91
Section 9.14. Reports to the Commission....................................91
ARTICLE X
Termination
Section 10.01. Termination.................................................93
Section 10.02. Additional Termination Requirements.........................94
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment...................................................96
Section 11.02. Recordation of Agreement....................................97
Section 11.03. Limitation on Rights of Certificateholders..................97
Section 11.04. Governing Law...............................................98
Section 11.05. Notices.....................................................98
Section 11.06. Severability of Provisions.................................100
Section 11.07. Assignment.................................................100
Section 11.08. Certificates Nonassessable and Fully Paid..................100
Section 11.09. Third-Party Beneficiaries..................................100
Section 11.10. Counterparts...............................................100
Section 11.11. Effect of Headings and Table of Contents...................100
EXHIBIT A - FORM OF REGULAR CERTIFICATE...................A-1
EXHIBIT B - FORM OF CLASS R CERTIFICATE...................B-1
EXHIBIT C - HOME EQUITY LOAN SCHEDULE.....................C-1
EXHIBIT D - MONTHLY INFORMATION DELIVERED TO TRUSTEE......D-1
EXHIBIT E - ERISA REPRESENTATION LETTER...................E-1
EXHIBIT F - LETTER OF REPRESENTATIONS.....................F-1
EXHIBIT G - FORM OF REQUEST FOR RELEASE...................G-1
EXHIBIT H - FORM OF INVESTMENT LETTER.....................H-1
EXHIBIT I - TRANSFER AFFIDAVIT............................I-1
EXHIBIT J - LIST OF SERVICING OFFICERS....................J-1
EXHIBIT K - CLOSING LETTER................................K-1
EXHIBIT L - FORM OF CERTIFICATE INSURANCE POLICY..........L-1
EXHIBIT M-1 FORM OF CERTIFICATION AS TO MORTGAGE NOTES..M-1-1
EXHIBIT M-2 FORM OF INITIAL CERTIFICATION OF TRUSTEE....M-2-1
EXHIBIT M-3 FORM OF FINAL CERTIFICATION OF TRUSTEE......M-3-1
<PAGE>
This Pooling and Servicing Agreement, dated as of March 1, 1999,
among MERRILL LYNCH MORTGAGE INVESTORS, INC., as Depositor (the "Depositor"),
BANC ONE FINANCIAL SERVICES, INC., as Seller (the "Seller"), BANK ONE,
INDIANA, NATIONAL ASSOCIATION, as Master Servicer (the "Master Servicer"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee").
WITNESSETH
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 and the Certificate
Account.
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 and exhibits hereto.
Appraised Value: The appraised value of the Mortgaged Property used
by the Seller or the originator to underwrite the Home Equity Loan
Assignment Event: The day following either (i) the occurrence and
continuance of a Servicer Default, (ii) a Rating Downgrade Event, (iii) 30
days after the request of the Certificate Insurer, if in the judgment of the
Certificate Insurer, it deems such action necessary to protect its interest,
or (iv) with respect to a particular Home Equity Loan, the occurrence of a
foreclosure proceeding or the insolvency of the related Mortgagor.
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 Home Equity Loans secured by Mortgaged
Properties located in the same jurisdiction.
Available Funds: As to any Distribution Date, the sum of:
(i) the sum of all amounts described in clauses (i) through (vi)
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 expressly required to be deposited in
the Collection Account pursuant to Section 3.02(b) and (b) any
amounts paid to the Master Servicer or withdrawn by the Trustee
pursuant to Sections 3.03(ii), (iii), (iv), (v), (vi), (vii) and
(viii) in respect of the Home Equity Loans) during the related
Collection Period and deposited into the Collection Account;
(ii) any Monthly Advance for such Distribution Date deposited in
the Certificate Account pursuant to Section 3.14; and
(iii) any Termination Price with respect to the Home Equity
Loans deposited to the Certificate Account pursuant to Section
10.01(a).
No amount included in this definition by virtue of being described by any
component of the definition thereof shall be included twice by virtue of also
being described by any other component or otherwise.
BANK ONE: BANK ONE CORPORATION, a Delaware corporation, or any
successor thereto.
BIF: The Bank Insurance Fund, as from time to time constituted,
created under the Financial Institutions Reform, Recovery and Enhancement Act
of 1989, or, if at any time after the execution of this Agreement the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Book-Entry Certificate: Any Class of Class A Certificates registered
in the name of the Depository or its nominee, ownership of which is reflected
on the books of the Depository or on the books of a Person maintaining an
account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the States of New York, Indiana, Maryland
or the state in which the Corporate Trust Office is located are required or
authorized by law or executive order to be closed.
Certificate: Any Class A or Class R Certificate.
Certificate Account: The account established by the Trustee pursuant
to Section 5.03. The Certificate Account shall be an Eligible Account.
Certificate Insurance Policy: The Certificate Guaranty Insurance
Policy (No. AB0250BE) with respect to the Class A Certificates and all
endorsements thereto dated the Closing Date, issued by the Certificate Insurer
to the Trustee for the benefit of the Holders of each Class of Class A
Certificates, a copy of which is attached hereto as Exhibit L.
Certificate Insurer: Ambac Assurance Corporation, or its successor in
interest.
Certificate Insurer Default: The existence and continuance of any of
the following: (a) a failure by the Certificate Insurer to make a payment
required under a Certificate Insurance Policy in accordance with its terms;
(b) the entry of a decree or order of a court or agency having jurisdiction in
respect of the Certificate Insurer in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law appointing a
conservator or receiver or liquidator or other similar official of the
Certificate Insurer or of any substantial part of its property, or the
entering of an order for the winding up or liquidation of the affairs of the
Certificate Insurer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90 consecutive days; (c)
the Certificate Insurer shall consent to the appointment of a conservator or
receiver or liquidator or other similar proceedings or of relating to the
Certificate Insurer or of or relating to all or substantially all of its
property; or (d) the Certificate Insurer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of or otherwise voluntarily commence a case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar statute,
make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Principal Balance: As to any Distribution Date, the sum
of the Class Principal Balances of each Class of Class A Certificates
immediately prior to such Distribution Date.
Certificate Rate: With respect to each Class of Class A Certificates,
the per annum rate set forth below:
CLASS CERTIFICATE RATE
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A-1 6.06%
A-2 6.30%
A-3 6.60%
A-4 6.47%
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 of Certificates registered in the name of the
Depositor, the Seller, the Master Servicer or any Person actually known to a
Responsible Officer of the Trustee to be an Affiliate of the Depositor, the
Seller or the Master Servicer and (y) any Class of Certificates for which the
Depositor, the Seller, the Master Servicer or any Person actually known to a
Responsible Officer of the Trustee to be an Affiliate of the Depositor, the
Seller or the Master Servicer is the Certificate Owner or Holder shall be
deemed not to be outstanding (unless to the actual knowledge of a Responsible
Officer of the Trustee (i) the Depositor, the Seller or the Master Servicer or
such Affiliate is acting as trustee or nominee for a Person who is not an
Affiliate of the Depositor, the Seller or the Master Servicer and who makes
the voting decision with respect to such Class of Certificates or (ii) the
Depositor, the Seller or the Master Servicer or such Affiliate is the
Certificate Owner or Holder of all the Certificates of a Class, but only with
respect to the Class as to which the Depositor, the Seller or the Master
Servicer or such Affiliate owns all the Certificates) and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent, direction, waiver or request has been obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Home Equity Loan as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Collection
Period as a result of the application of the Civil Relief Act, the amount by
which (i) interest collectible on such Home Equity Loan during such Collection
Period is less than (ii) one month's interest on the Principal Balance of such
Home Equity Loan at the Loan Rate net of the Master Servicing Fee Rate for
such Home Equity Loan before giving effect to the application of the Civil
Relief Act.
Class: With respect to each of Class A-1, Class A-2, Class A-3, Class
A-4 and Class R, all of the Certificates of such Class.
Class A Certificate: Any of the Class A-1, Class A-2, Class A-3 or
Class A-4 Certificates.
Class A Certificateholder: A Holder of a Class A Certificate.
Class A Interest Shortfall: With respect to any Distribution Date and
Class of Class A Certificates, the amount, if any, by which the amount
distributed to Holders of such Class on such Distribution Date pursuant to
Section 5.01(a)(iii) is less than such Class's Current Monthly Interest
Amount.
Class A-1 Certificate: Any Certificate executed and authenticated by
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-1 Certificate pursuant to Section 6.01.
Class A-2 Certificate: Any Certificate executed and authenticated by
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-2 Certificate pursuant to Section 6.01.
Class A-3 Certificate: Any Certificate executed and authenticated by
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-3 Certificate pursuant to Section 6.01.
Class A-4 Certificate: Any Certificate executed and authenticated by
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-4 Certificate pursuant to Section 6.01.
Class A-4 Pro Rata Principal Amount: For any Distribution Date, an
amount equal to the product of (x) a fraction, the numerator of which is the
Class Principal Balance of the Class A-4 Certificates immediately prior to
such Distribution Date and the denominator of which is the Certificate
Principal Balance immediately prior to such Distribution Date and (y) the
Formula Principal Distribution Amount for such Distribution Date.
Class Interest Distribution: With respect to any Distribution Date
and the distributions to each Class of Class A Certificates pursuant to
Section 5.01(a)(iii) and (iv), the sum of (i) the applicable Current Monthly
Interest Amount for such Class on such Distribution Date, (ii) the applicable
Unpaid Interest Shortfall for such Class on such Distribution Date and (iii)
the applicable Interest on Unpaid Interest Shortfalls for such Class on such
Distribution Date.
Class Principal Balance: As of any date of determination and Class of
Class A Certificates, the Original Class Principal Balance for such Class
reduced by the aggregate of all amounts previously distributed to the
Certificateholders of such Class in respect of principal from the Formula
Principal Distribution Amount or any Distributable Excess Spread on all
previous Distribution Dates. The Class R Certificate has no Class Principal
Balance.
Class R Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit B hereto.
Class R Certificateholder: The Holder of a Class R Certificate.
Closing Date: March 31, 1999.
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 pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
Collection Period: With respect to each Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
Combined Loan-to-Value Ratio or CLTV: With respect to any Home Equity
Loan, the ratio, expressed as a percentage, the numerator of which is the Home
Equity Loan's Principal Balance plus the principal balance of any related
senior mortgage loan as of the date of origination of such Home Equity Loan,
and the denominator of which is the lesser of (i) the Appraised Value and (ii)
the purchase price for the Mortgaged Property if the Mortgaged Property was
purchased within twelve months of the time of origination of the Home Equity
Loan.
Commission: The Securities and Exchange Commission.
Compensating Interest: With respect to any Distribution Date, for
those Home Equity Loans that were the subject during the related Collection
Period of a Principal Prepayment In Full, an amount equal to the lesser of (A)
the excess, if any, of (i) 30 days of interest on the Principal Balance of
each such Home Equity Loan at the Loan Rate (or at such lower rate as may be
in effect for such Home Equity Loan as reduced by any Debt Service Reduction),
minus the Master Servicing Fee for such Home Equity Loan over (ii) the amount
of interest actually remitted by the Mortgagor in connection with such
Principal Prepayment In Full, and (B) the aggregate Master Servicing Fee
received by the Master Servicer for the related Collection Period.
Corporate Trust Office: The office of the Trustee at which at any
particular time its corporate business shall be principally administered,
which office on the Closing Date is located at Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479-0113.
CPR: The Constant Prepayment Rate, which represents an assumed
constant rate of prepayment each month, expressed as a per annum percentage of
the principal balance of a pool of home equity loans for that month.
Current Monthly Interest Amount: As to any Distribution Date and
Class of Class A Certificates, interest accrued during the related Interest
Period at the applicable Certificate Rate on the related Class Principal
Balance immediately prior to such Distribution Date, less (A) such Class's pro
rata share of any Civil Relief Act Shortfall and less (B) such Class's pro
rata share of any Prepayment Interest Shortfall.
Curtailment: With respect to a Home Equity Loan, any payment of
principal received during a Collection Period as part of a payment that is in
excess of the amount of the Monthly Payment due for such Collection Period and
which is not intended to satisfy the Home Equity Loan in full, nor is intended
to cure a delinquency or to be applied for subsequent Monthly Payments as and
when the same come due pursuant to directions from the Mortgagor to such
effect.
Cut-Off Date: The commencement of business on March 1, 1999.
Cut-Off Date Pool Principal Balance: $281,179,521.43, which equals
the Pool Principal Balance as of the Cut-Off Date.
Cut-Off Date Principal Balance: With respect to any Home Equity 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 Home
Equity Loan pursuant to Section 2.02 or 2.05).
Debt Service Reduction: As to any Home Equity Loan and any
Determination Date, the excess of (i) the scheduled installment of principal
and interest due each month under the terms of such Home Equity Loan over (ii)
the amount of the monthly payment of principal and/or interest required to be
paid by the Mortgagor as established by a court of competent jurisdiction
(pursuant to an order which has become final and nonappealable) as a result of
a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.).
Defective Home Equity Loan: Any Home Equity Loan subject to
repurchase or substitution by the Seller pursuant to Section 2.02 or 2.05.
Deficiency Amount: As defined in the Certificate Insurance Policy.
Definitive Certificates: As defined in Section 6.02(c).
Deposit Event: The lowering of the Master Servicer's short-term debt
rating below "P-1" by Moody's or "A-1" by S&P.
Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation, or any successor thereto.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Class A-1, Class A-2, Class A-3 and Class A-4 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
eighteenth day of the month in which such Distribution Date occurs (or if such
day is not a Business Day, the Business Day immediately succeeding such
eighteenth day).
Distributable Excess Spread: As to any Distribution Date, the amount,
if any, of the Excess Spread necessary to be distributed on such Distribution
Date so that the Overcollateralization Amount equals the Required
Overcollateralization Amount (after giving effect to the distribution of the
Formula Principal Distribution Amount on such Distribution Date).
Distribution Date: The twenty-fifth day of each month or, if such day
is not a Business Day, then the next Business Day, beginning in April 1999.
Eligible Account: A segregated 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 and whose accounts are
insured to the fullest extent possible legally by either the SAIF or
the BIF of the Federal Deposit Insurance Corporation established by
such fund with a minimum long-term unsecured debt rating of "Aa2" by
Moody's and "AA" by S&P (except that such ratings shall be "A1" by
Moody's and "A" by S&P if such account is held at a BANK ONE banking
Affiliate), and which is any of (A) a federal savings and loan
association duly organized, validly existing and in good standing
under the federal banking laws, (B) an institution duly organized,
validly existing and in good standing under the applicable banking
laws of any state, and (C) a national banking association duly
organized, validly existing and good standing under the federal
banking laws;
(ii) a segregated trust account maintained with the corporate
trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less
than $100,000,000 (except that such capital and surplus requirement
shall not be less than $50,000,000 if such institution is a BANK ONE
banking Affiliate), acting in its fiduciary capacity; or
(iii) otherwise acceptable to each Rating Agency and the
Certificate Insurer as evidenced by a letter from each Rating Agency
and the Certificate Insurer to the Trustee, without reduction or
withdrawal of the then current ratings of the Certificates.
Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than 30 days from the date of acquisition
thereof, provided however, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause
(a) above and must (i) be valued daily at current market price plus
accrued interest, (ii) pursuant to such valuation, be equal, at all
times, to 105% of the cash transferred by the Trustee in exchange for
such collateral and (iii) be delivered to the Trustee or, if the
Trustee is supplying the collateral, an agent for the Trustee, in
such a manner as to accomplish perfection of a security interest in
the collateral by possession of certified securities;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances 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 S&P and Moody's in
their respective highest unsecured short-term debt rating category
and that each such investment has an original maturity of not more
than 365 days;
(iv) commercial paper (having original maturities of not more
than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition
have been rated by S&P and Moody's in their respective 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 S&P and Moody's in their respective
highest rating category;
(vi) interests in any money market fund (including any market
fund managed or advised by the Trustee or any Affiliate of the
Trustee) 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 by S&P and Moody's in their respective highest rating
category; and
(vii) other obligations or securities that are acceptable to
each Rating Agency and the Certificate Insurer as an Eligible
Investment hereunder and will not result in a reduction in the then
current rating of the Certificates, as evidenced by a letter to such
effect from such Rating Agency and the Certificate Insurer and with
respect to which the Master Servicer and the Trustee have received
confirmation that, for tax purposes, the investment complies with the
last clause of this definition;
provided, that no instrument described hereunder shall evidence either the
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provided a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying obligations.
Eligible Substitute Home Equity Loan: A Home Equity Loan substituted
by the Seller for a Defective Home Equity 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 Home Equity Loan for a Defective Home
Equity Loan, an aggregate Principal Balance), not in excess of and
not more than 5% less than the Principal Balance of the Defective
Home Equity Loan;
(ii) have a Loan Rate not less than the Loan Rate of the
Defective Home Equity Loan and not more than 1% in excess of the Loan
Rate of such Defective Home Equity Loan;
(iii) have a Mortgage of the same or higher level of priority as
the Mortgage relating to the Defective Home Equity Loan at the time
such Mortgage was transferred to the Trust;
(iv) comply with each representation and warranty set forth in
Section 2.05(a) (deemed to be made as of the date of substitution);
(v) have a Combined Loan-to-Value Ratio the same or lower than
the Combined Loan-to-Value Ratio of the Defective Home Equity Loan;
(vi) have a credit score the same or higher than the credit
score of the Defective Home Equity Loan; and
(vii) have a remaining term to maturity not later than the
remaining term to maturity of the Defective Home Equity Loan.
More than one Eligible Substitute Home Equity Loan may be substituted for a
Defective Home Equity Loan if such Eligible Substitute Home Equity Loans meet
the foregoing attributes in the aggregate.
ERISA-Restricted Certificate: As defined in Section 6.02.
Excess Spread: As to any Distribution Date, the excess, if any, of
(A) the Available Funds and the amount of any Insured Payment applied on such
Distribution Date pursuant to Section 5.01(a) or (d) over (B) the sum of the
amounts specified in clauses (i) through (vii) of Section 5.01(a) for such
Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fannie Mae: Fannie Mae, formerly known as The Federal National
Mortgage Association, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
First Lien: With respect to any Home Equity Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Foreclosure Profits: With respect to a Liquidated Home Equity 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 Home Equity Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Formula Principal Distribution Amount: With respect to any
Distribution Date, the sum of (i) the Principal Distributable Amount for such
Distribution Date and (ii) any Unpaid Principal Shortfall for such
Distribution Date.
Freddie Mac: Freddie Mac, formerly known as The Federal Home Loan
Mortgage Corporation, or any successor thereto.
Home Equity Loan Schedule: With respect to any date, the schedule of
Home Equity Loans constituting assets of the Trust. The Home Equity Loan
Schedule is the schedule set forth herein as Exhibit C, which schedule sets
forth as to each Home Equity Loan: (i) the Cut-Off Date Principal Balance,
(ii) the account number, (iii) the original principal amount, (iv) the name of
the borrower, (v) the interest rate, (vi) lien position, (vii) property state,
(viii) property zip code, (ix) property type and (x) Combined Loan-to-Value
Ratio. The Home Equity Loan Schedule will be amended from time to time to
reflect the substitution of an Eligible Substitute Home Equity Loan for a
Defective Home Equity Loan hereunder.
Home Equity Loans: The home equity loans that are transferred and
assigned to the Trustee on behalf of the Trust pursuant to Sections 2.01, 2.05
or 2.06, together with the Related Documents, exclusive of Home Equity Loans
that are transferred to the Seller, from time to time pursuant to Sections
2.02, 2.05 or 2.06, as from time to time are held as a part of the Trust, such
mortgage loans originally so held being identified in the Home Equity Loan
Schedule delivered on the Closing Date.
Home Equity Loan With Title Insurance: Each of the following Home
Equity Loans:
(i) Home Equity Loans for which the related Mortgages are first
liens on the related Mortgaged Properties;
(ii) Home Equity Loans for which the related Mortgages are
second liens on the related Mortgaged Properties and the original
Principal Balance of each such Home Equity Loan was in excess of
$50,000; and
(iii) Any other Home Equity Loan for which the originator
required title insurance to be obtained.
Insurance Agreement: The Insurance and Indemnity Agreement dated as
of March 31, 1999 among the Seller, the Master Servicer, the Depositor, the
Trustee, and the Certificate Insurer, including any amendments and supplements
thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Home Equity
Loan or Mortgaged Property or amounts required to be paid by the Master
Servicer pursuant to Sections 3.04 and 3.05, net of any component thereof (i)
covering any expenses incurred by or on behalf of the Master Servicer in
connection with obtaining such proceeds, (ii) applied to the restoration or
repair of the related Mortgaged Property, (iii) released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures or (iv)
required to be paid to any holder of a mortgage senior to such Home Equity
Loan.
Insured Amounts: As defined in the Certificate Insurance Policy.
Insured Payments: As defined in the Certificate Insurance Policy.
Interest on Unpaid Interest Shortfalls: With respect to any Class of
Class A Certificates and any Distribution Date, interest on the Unpaid
Interest Shortfall for such Class and Distribution Date (to the extent payment
thereof is legally permitted) at the applicable Certificate Rate that accrued
during the related Interest Period on the amount of such Unpaid Interest
Shortfall outstanding from Distribution Date to Distribution Date.
Interest Period: With respect to any Distribution Date, the period
from and including the first day of the calendar month preceding the month of
such Distribution Date through and including the last day of such calendar
month.
Junior Lien Ratio: With respect to any Home Equity Loan, the ratio,
expressed as a percentage, the numerator of which is the original principal
balance of such Home Equity Loan, and the denominator of which is the sum of
the original principal balance of such Home Equity Loan and the outstanding
principal balance of the First Lien, if any, as of the date of origination of
such Home Equity Loan.
Last Scheduled Distribution Date: With respect to each Class of Class
A Certificates, the Distribution Dates set forth below:
CLASS DISTRIBUTION DATE IN
--------------- --------------------------------
A-1 January 2012
A-2 May 2016
A-3 July 2026
A-4 May 2026
Late Payment Rate: As defined in the Insurance Agreement.
Liquidated Home Equity Loan: As to any Distribution Date, any Home
Equity Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of
the preceding Collection Period, that all Liquidation Proceeds which it
expects to recover with respect to the liquidation of the Home Equity Loan
have been recovered.
Liquidation Loan Losses: For each Liquidated Home Equity Loan, the
amount, if any, by which the Principal Balance thereof plus accrued and unpaid
interest thereon plus unreimbursed Monthly Advances and Servicing Advances is
in excess of the Net 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 Home Equity Loan, whether through
trustee's sale, foreclosure sale or otherwise (including rental income).
Loan Rate: With respect to any Home Equity 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.
Lost Note Affidavit: The lost note affidavit signed by the Seller.
Majority Certificateholder: The Holder or Holders of each Class of
Class A Certificates evidencing Percentage Interests in excess of 51% in the
aggregate with respect to such Class.
Master Servicer: Bank One, Indiana, National Association, a national
banking association, or any successor thereto or any successor hereunder.
Master Servicer Termination Delinquency Rate Trigger: As defined in
the Insurance Agreement.
Master Servicer Termination Loss Trigger: As defined in the Insurance
Agreement.
Master Servicing Fee: As to each Distribution Date, the annual fee
computed monthly and payable to the Master Servicer as provided herein, which
is calculated as an amount equal to the product of the Master Servicing Fee
Rate and the Pool Principal Balance as of the first day of the preceding
Collection Period.
Master Servicing Fee Rate: 0.50% per annum.
Monthly Advance: An advance made by the Master Servicer pursuant to
Section 3.14.
Monthly Loss Rate: As defined in the Insurance Agreement.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Home Equity Loan.
Monthly Report: As defined in Section 5.02.
Moody's: Moody's Investors Service, Inc., or its successors in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple interest in real
property securing a Home Equity Loan.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Note: With respect to a Home Equity Loan, the note or other
evidence of indebtedness 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 Home Equity Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Available Distribution Amount: As defined in the Certificate
Insurance Policy.
Net Liquidation Proceeds: With respect to any Liquidated Home Equity
Loan, Liquidation Proceeds net of unreimbursed Master Servicing Fees,
Servicing Advances and Monthly Advances with respect thereto.
Nonrecoverable Advances: With respect to any Home Equity 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 Home Equity Loan or REO Property which, in
the good faith business judgment of the Master Servicer, would not be
ultimately recoverable pursuant to Sections 3.03(ii).
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,
the Secretary, an Assistant Secretary, Comptroller or Assistant Comptroller or
any other authorized officer of the Master Servicer or the Seller, as the case
may be, 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, the Seller, their Affiliates 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 of the Rating Agencies and
the Certificate Insurer, is reasonably acceptable to each of them.
Original Class Principal Balance: With respect to each Class of Class
A Certificates, the amount set forth below:
CLASS ORIGINAL CLASS PRINCIPAL BALANCE
--------------- ----------------------------------------
A-1 $185,000,000
A-2 $30,500,000
A-3 $31,938,000
A-4 $28,118,000
Overcollateralization Amount: As to any Distribution Date, the
excess, if any, of (a) the Pool Principal Balance, as of the close of business
on the last day of the related Collection Period over (b) the Certificate
Principal Balance as of such Distribution Date (after giving effect to any
distributions of principal to be made on the Class A Certificates on such
Distribution Date).
Ownership Interest: As to any Certificate or security interest in
such Certificate, 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 of Class A Certificates, the
percentage obtained by dividing the principal denomination of such Certificate
as of the Closing Date by the aggregate of the principal denominations of all
Certificates of the same Class as of the Closing Date. As to any Class R
Certificate, the portion of the Class evidenced thereby as stated on the face
thereof, which shall be on the Closing Date either 99.999999% or, but only
with respect to the Tax Matters Person Residual Interest held by the Tax
Matters Person, 0.000001%.
Permitted Transferee: Any Person other than (i) the United States,
any State or any political subdivision thereof or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
international organization or any agency or instrumentality of either of the
foregoing, (iii) an organization which is exempt from tax imposed by Chapter 1
of the Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) (except certain farmers' cooperatives described in
Code section 521) on any excess inclusions (as defined in Section 860E(c)(1))
with respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code section 1381(a)(2)(C), (v) a Person that is not
a citizen or resident of the United States, a corporation or partnership
(including an entity treated as a corporation or partnership for U.S. federal
income tax purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia, or an estate whose
income from sources without the United States is includible in gross income
for United States federal income tax purposes regardless of its connection
with the conduct of a trade or business within the United States, or a trust
if a court within the United States is able to exercise primary supervision
over the administration of the trust and one or more United States Persons
have the authority to control all substantial decisions of the trust 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 Freddie Mac, 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, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Pool Principal Balance: With respect to any date, the aggregate of
the Principal Balances of all Home Equity Loans as of such date.
Preference Amount: As defined in the Certificate Insurance Policy.
Premium Amount: As to any Distribution Date, one-twelfth of the
product of the Premium Percentage and the Certificate Principal Balance as of
such Distribution Date (after giving effect to any distributions of principal
to be made on the Class A Certificates on such Distribution Date); provided,
however, that the Premium Amount shall be $0 for any Distribution Date on
which the Certificate Insurer has failed to make a required payment under the
Certificate Insurance Policy.
Premium Percentage: As defined in the Insurance Agreement.
Prepayment Assumption: The prepayment assumption described in the
Prospectus Supplement under "Prepayment and Yield Considerations."
Prepayment Interest Shortfall: With respect to any Distribution Date,
the amount (but not less than zero) equal to (a) the excess, if any, of (i) 30
days of interest on the Principal Balance of those Home Equity Loans that were
the subject during the related Collection Period of a Principal Prepayment In
Full at the Loan Rate (or at such lower rate as may be in effect for such Home
Equity Loan as reduced by any Debt Service Reduction), minus the Master
Servicing Fee for each such Home Equity Loan, over (ii) the amount of interest
actually received during the related Collection Period in connection with such
Principal Prepayments In Full, minus (b) the Compensating Interest received by
the Trustee from the Master Servicer for the related Collection Period.
Principal Balance: As to any Home Equity Loan and any day, other than
a Liquidated Home Equity Loan, the related Cut-Off Date Principal Balance,
less all collections credited against the principal balance of such Home
Equity Loan in accordance with the terms of the related Mortgage Note. For
purposes of this definition, a Liquidated Home Equity Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Home
Equity Loan as of the final recovery of related Liquidation Proceeds and a
Principal Balance of zero thereafter.
Principal Distributable Amount: With respect to any Distribution
Date, the amount equal to the sum of the following amounts (without
duplication) with respect to the immediately preceding Collection Period:
(i) that portion of all Monthly Payments allocable to principal
on Home Equity Loans and actually collected, including all
Curtailments and Principal Prepayments In Full received during the
related Collection Period,
(ii) the Principal Balance of each Home Equity Loan which became
a Liquidated Home Equity Loan for the first time during the related
Collection Period,
(iii) all Insurance Proceeds on a Home Equity Loan received by
the Master Servicer during the related Collection Period that are not
part of Liquidation Proceeds and were applied to principal of the
related Home Equity Loan,
(iv) the portion of the Purchase Price allocable to principal of
all Defective Home Equity Loans that were repurchased during the
related Collection Period and any Home Equity Loans that were
repurchased during the related Collection Period pursuant to Section
3.01(j), and
(v) the principal portion of any Substitution Adjustments for
Home Equity Loans that was deposited to the Certificate Account
pursuant to Section 2.06 on or prior to the related Determination
Date and not previously distributed.
Principal Prepayment In Full: Any payment or other recovery of
principal on a Home Equity Loan equal to the outstanding principal balance
thereof, received in advance of the final scheduled payment date for such Home
Equity Loan and which is intended to satisfy a Home Equity Loan in full.
Priority Amount: With respect to any Distribution Date, will be the
product of (i) the Priority Percentage for such Distribution Date and (ii) the
Class A-4 Pro Rata Principal Amount for such Distribution Date; provided that
the Priority Amount shall not exceed the Class Principal Balance of the Class
A-4 Certificates immediately prior to such Distribution Date.
Priority Percentage: For each Distribution Date shall be as follows:
PRIORITY
DISTRIBUTION DATES OCCURING IN PERCENTAGE
------------------------------ ------------
April 1999 through March 2002............................... 0%
April 2002 through March 2004............................... 45%
April 2004 through March 2005............................... 80%
April 2005 through March 2006............................... 100%
April 2006 and thereafter................................... 300%
Prospectus: The base prospectus of the Depositor dated March 23,
1999.
Prospectus Supplement: The prospectus supplement dated March 23,
1999, relating to the offering of the Class A Certificates.
Purchase Agreement: The Home Equity Loan Purchase Agreement, dated as
of March 1, 1999, among the Seller, as seller, and the Depositor, as
purchaser, with respect to the Home Equity Loans.
Purchase Price: As to any Home Equity Loan purchased from the Trust
on any date pursuant to Sections 2.02, 2.05 or 3.01(j) an amount equal to the
sum of (i) the unpaid Principal Balance thereof as of the date of purchase,
(ii) the greater of (a) all unpaid accrued interest thereon to the end of the
month preceding the Distribution Date on which such Purchase Price is included
in Available Funds and (b) 30 days' interest thereon, computed at the
applicable Loan Rate; provided, however, that if at the time of repurchase the
Seller is an affiliate of the Master Servicer, the amount described in clause
(ii) shall be computed at the Loan Rate net of the Master Servicing Fee Rate,
and (iii) (x) if the Master Servicer is not an Affiliate of the Seller, any
unreimbursed Servicing Advances with respect to such Home Equity Loan and (y)
expenses reasonably incurred or to be incurred by the Master Servicer or the
Trustee in respect of the breach or defect giving rise to the purchase
obligation.
Purchaser: The Depositor in its capacity as purchaser under the
Purchase Agreement.
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
and acceptable to the Certificate Insurer, notice of which designation shall
be given to the Trustee. References herein to the highest short term unsecured
rating category of a Rating Agency shall mean "A-1" or better in the case of
S&P and "P-1" or better in the case of Moody's and in the case of any other
Rating Agency shall mean such equivalent ratings. References herein to the
highest long-term rating category of a Rating Agency shall mean "AAA" in the
case of S&P and "Aaa" in the case of Moody's and in the case of any other
Rating Agency, such equivalent rating.
Rating Downgrade Event: The day on which the senior, unsecured
long-term debt rating of the Master Servicer is less than "Baa2" by Moody's or
"BBB" by S&P.
Record Date: With respect to each Distribution Date (other than the
first Distribution Date), the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs. With
respect to the first Distribution Date, the Closing Date.
Reimbursement Amount: As of any Distribution Date, the sum of (x)(i)
all Insured Payments paid by the Certificate Insurer, but for which the
Certificate Insurer has not been reimbursed prior to such Distribution Date
pursuant to Section 5.01(a)(vi), plus (ii) interest accrued on such Insured
Payments not previously repaid calculated at the Late Payment Rate from the
date the Trustee received the related Insured Payments, and (y) without
duplication (i) any amounts then due and owing to the Certificate Insurer
under the Insurance Agreement, as certified to the Trustee by the Certificate
Insurer, plus (ii) interest on such amounts at the Late Payment Rate.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Home Equity 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, mortgage servicing standards the Master Servicer would use in
servicing home equity loans for its own account and this Agreement.
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 Class A 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 Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations promulgated thereunder, as the foregoing may be in effect from
time to time.
REO Property: A Mortgaged Property that is acquired by the Master
Servicer on behalf of the Trustee in foreclosure or by deed in lieu of
foreclosure.
Required Overcollateralization Amount: An amount equal to the
"Overcollateralization Target Amount" (as defined in the Insurance Agreement).
Required Payments: As defined in the Certificate Insurance Policy.
Residential Dwelling: A one- to four-family dwelling, mobile home or
manufactured home, a unit in a planned unit development, a unit in a
condominium development or a townhouse.
Responsible Officer: When used with respect to the Trustee, any
officer of the Trustee within the Corporate Trust Office of the Trustee
including any vice president or assistant vice president, assistant treasurer,
assistant secretary, senior trust officer or trust officer or, with respect to
a particular corporate trust 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 the Master
Servicer, the President or any Vice President, Assistant Vice President,
Treasurer or Assistant Treasurer or any Secretary or Assistant Secretary or
any other authorized officer of the Seller or the Master Servicer.
Rolling Twelve Month Loss Rate: As defined in the Insurance Agreement.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989 or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or its successors in interest.
Seller: Banc One Financial Services, Inc., an Indiana corporation, or
any successor thereto, as seller under the Purchase Agreement.
Servicer: Any Person with whom the Master Servicer has entered into a
Servicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Servicer. Banc One Financial
Services, Inc. shall be the initial Servicer.
Servicer Default: As defined in Section 8.01.
Servicing Advances: All reasonable and customary "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 3.07 and (v) in connection with the liquidation
of a Home Equity Loan, expenditures relating to the purchase or maintenance of
the First Lien pursuant to Section 3.15, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to
the extent provided in Section 3.03(ii) and Section 3.07.
Servicing Agreement: Any agreement between the Master Servicer and
any Servicer relating to servicing and/or administration of certain Home
Equity Loans as provided in Section 3.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Master Servicer.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Trustee (with a copy to the Certificate Insurer) by the
Master Servicer, as such list may be amended from time to time, initially set
forth in Exhibit J hereto.
Simple Interest Loan: Any Home Equity Loan as to which, pursuant to
the Mortgage Note related thereto, interest is calculated on the basis of the
outstanding principal balance of the Home Equity Loan multiplied by the
applicable Loan Rate and further multiplied by a fraction, of which the
numerator is the number of days in the period elapsed since the date to which
interest was last paid and the denominator is the number of days in the annual
period for which interest accrues on such Home Equity Loan, and the Monthly
Payment received is applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance.
Start-up Day: The day designated as such pursuant to Section 2.09.
Substitution Adjustment: As to any Defective Home Equity Loan and the
date on which a substitution thereof occurs pursuant to Section 2.06, the sum
of:
(a) the excess, if any, of (i) the Principal Balance of such
Defective Home Equity Loan (after the application of any principal payments
received on such Defective Home Equity Loan on or before the date of the
substitution of the applicable Eligible Substitute Home Equity Loan or Loans)
over (ii) the aggregate Principal Balance of the applicable Eligible
Substitute Home Equity Loan or Loans, plus
(b) the greater of (x) accrued and unpaid interest (accruing at the
Loan Rate for such Defective Home Equity Loan) on such excess through the
Collection Period relating to the Distribution Date for which such
Substitution Adjustment will be included as part of Available Funds and (y) 30
days' interest on such excess calculated on a 360-day year in each case at the
Loan Rate (or Loan Rate net of the Master Servicing Fee Rate if the Seller is
an affiliate of the Master Servicer), plus
(c) if the Master Servicer is not an Affiliate of the Seller, the
amount of any unreimbursed Servicing Advances made by the Master Servicer with
respect to such Defective Home Equity Loan.
Supplemental Home Equity Loan Schedule: As defined in Section 2.06(b).
Tax Matters Person: As defined in Section 2.12.
Tax Matters Person Residual Interest: A 0.000001% interest in the
Class R Certificates, which shall be issued to and held by the Trustee.
Trust: The trust created by this Agreement which shall be entitled
"Banc One Financial Services Home Equity Loan Trust 1999-1," the corpus of
which consists of (i) the Home Equity Loans, (ii) such assets as shall from
time to time be deposited in the Collection Account and the Certificate
Account in accordance with this Agreement (excluding all net income and gain
thereon), (iii) property that secured a Home Equity Loan and that has become
REO Property, (iv) the Certificate Insurance Policy, (v) rights under certain
hazard insurance policies maintained by the Mortgagors or the Master Servicer
in respect of the Home Equity Loans, (vi) the assignment of the Depositor's
rights under the Purchase Agreement, and (vii) all proceeds of each of the
foregoing.
Trustee: Norwest Bank Minnesota, National Association, a national
banking association, or any successor thereto.
Trustee Fee: As to each Distribution Date, the fee computed monthly
and payable to the Trustee from the assets of the Trust pursuant to Section
5.01(a)(i), which is calculated as an amount equal to the product of the
Trustee Fee Rate and the Pool Principal Balance as of the first day of the
preceding Collection Period.
Trustee Fee Rate: 0.0135% per annum.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Unpaid Interest Shortfall: With respect to any Class of Class A
Certificates and any Distribution Date, the amount, if any, by which the
aggregate of the Class A Interest Shortfalls for prior Distribution Dates is
in excess of the aggregate of the amounts distributed on prior Distribution
Dates to Holders of such Class pursuant to Section 5.01(a)(iv) in payment
thereof.
Unpaid Principal Shortfall: With respect to any Distribution Date,
the amount, if any, by which the Certificate Principal Balance as of the
immediately preceding Distribution Date (after giving effect to the
distribution of the Formula Principal Distribution Amount, any Distributable
Excess Spread and any Insured Payments applied on such preceding Distribution
Date) exceeds the Pool Principal Balance at the end of the second preceding
Collection Period.
Voting Rights: The portion of the aggregate voting rights of all the
Certificates evidenced by a Certificate. At all times during the term of this
Agreement, the Voting Rights shall be allocated among Holders of the Class A
Certificates in proportion to the Original Class Principal Balances of their
respective Classes. Voting Rights allocated to a Class of Certificates shall
be allocated among the Certificates of each such Class in accordance with
their respective Percentage Interests. The Holders of the Class R Certificates
shall have no Voting Rights.
Widely-Held Certification: A certification delivered to the Trustee
by the underwriters of the Class A Certificates on the Closing Date to the
effect that one or more Classes of Class A Certificates will be owned on such
date by 100 or more investors independent of the Seller, the Trust, the
Depositor, and each other.
Section 1.02. Interest Calculations. All calculations of interest
that are made in respect of the Principal Balance of a Home Equity Loan shall
be made based on the number of days elapsed between the date through which
interest was last paid on the related Home Equity Loan and the date of receipt
of the related Mortgagor's most current payment. The Certificate Rate for the
Class A Certificates shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The calculation of the Master Servicing
Fee and the Trustee Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest penny with one-half of one penny being rounded
down.
ARTICLE II
Conveyance of Home Equity Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Home Equity Loans. The Depositor,
concurrently with the execution and delivery of this Agreement, does hereby
irrevocably transfer, assign, sell, set over and otherwise convey to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
without recourse (subject to Sections 2.02 and 2.05) (i) all of its right,
title and interest in and to each Home Equity Loan, including the Cut-Off Date
Principal Balance, and all collections in respect thereof received on or after
the Cut-Off Date; (ii) property which secured such Home Equity Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of the Home Equity Loans; (iv)
all proceeds of any of the foregoing; and (v) the Depositor's rights under the
Purchase Agreement with respect to the representations and warranties of the
Seller thereunder together with all rights of the Depositor to require the
Seller to cure any breach thereof or to repurchase or substitute for any
affected Home Equity Loan in accordance with the Purchase Agreement. In
addition, on or prior to the Closing Date, the Seller shall cause the
Certificate Insurer to deliver the Certificate Insurance Policy to the
Trustee.
On or prior to the Closing Date (with respect to items (i), (ii) and
(iii) below) and within 90 days of an Assignment Event (with respect to items
(iv), (v) and (vi) below), the Seller shall deliver to the Trustee, the
following documents or instruments with respect to each Home Equity Loan (the
"Related Documents") and on or prior to the Closing Date the Seller shall
deliver to the Trustee the Home Equity Loan Schedule in computer readable
format:
(i) the original Mortgage Note, endorsed in blank, with all
intervening endorsements showing a complete chain of title from the
originator of such Home Equity Loan to the Seller or a copy of such
original Mortgage Note with an accompanying Lost Note Affidavit;
(ii) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for
recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Trustee a copy of such original Mortgage,
together with a certificate of the Seller certifying that such
original Mortgage has been so delivered to such recording office; in
all such instances, the Seller shall deliver or cause to be delivered
the original recorded Mortgage to the Trustee promptly upon receipt
thereof;
(iii) the original Assignment of Mortgage, from the Seller in
blank or to "Norwest Bank Minnesota, National Association, as
Trustee", which assignment shall be in form and substance acceptable
for recording;
(iv) the original attorney's opinion of title or the original
policy of title insurance, provided that if any such original policy
of title insurance has not yet been received by the Seller, the
Seller shall deliver to the Trustee a copy of such policy or a title
insurance binder or commitment for the issuance of such policy;
(v) originals of all intervening assignments of Mortgage, with
evidence of recording thereon, showing a complete chain of title from
the originator to the Seller, provided that if any such original
intervening assignment of Mortgage has been delivered for recording
to the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located but has not yet been returned
to the Seller by such recording office, the Seller shall deliver to
the Trustee a copy of such original assignment of Mortgage, together
with a certificate of the Seller certifying that such original
assignment of Mortgage has been so delivered to such recording
office; in all such instances, the Seller shall deliver or cause to
be delivered any such original assignments to the Trustee promptly
upon receipt thereof; and
(vi) originals of all assumption and modification agreements, if
any, provided that if any such agreement has been delivered for
recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Trustee a copy of such original agreement,
together with a certificate of the Seller certifying that such
original agreement has been so delivered to such recording office; in
all such instances, the Seller shall deliver or cause to be delivered
any such original agreements to the Trustee promptly upon receipt
thereof.
On the Closing Date (i) no more than 5% of the Home Equity Loans (by
Cut-Off Date Principal Balance) shall have Lost Note Affidavits in lieu of
original Mortgage Notes and (ii) the Seller shall deliver to the Trustee a
copy of the original Mortgage Note for each Home Equity Loan with respect to
which a Lost Note Affidavit is delivered.
Except as herein provided, the Master Servicer shall, as custodian
and for the benefit of the Trustee, the Certificateholders and the Certificate
Insurer, be entitled to maintain possession of the foregoing documents and
instruments described in clauses (iv), (v) and (vi) above and shall not be
required to deliver any of them to the Trustee. In the event, however, that
possession of any such documents or instruments is required by any Person
(including the Trustee) acting as successor Master Servicer pursuant to
Section 8.02 in order to carry out the duties of the Master Servicer
hereunder, then such successor master servicer 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 successor master
servicers shall maintain such documents at such offices as may be required by
any regulatory body having jurisdiction over such Home Equity Loans.
The Seller hereby confirms to the Trustee that it has made the
appropriate entries in its general accounting records, to indicate that such
Home Equity Loans have been transferred to the Trustee and constitute part of
the Trust in accordance with the terms of the trust created hereunder.
The Trustee agrees, for the benefit of Certificateholders and the
Certificate Insurer, on or prior to the Closing Date to execute and deliver to
the Seller, the Depositor, the Certificate Insurer and the Master Servicer an
acknowledgment of receipt, with respect to each Home Equity Loan, of the
original Mortgage Note (with any exceptions noted), (in the form of Exhibit
M-1) and declares that it will hold such instruments and any amendments,
replacements or supplements thereto, as well as any other assets included in
the definition of Trust and delivered to the Trustee, as Trustee in trust upon
and subject to the conditions set forth herein for the benefit of the
Certificateholders and the Certificate Insurer.
The Trustee agrees, for the benefit of Certificateholders and the
Certificate Insurer, within forty-five (45) days following (a) the Closing
Date with respect to the Mortgages and Assignments of Mortgage and (b) the
receipt of the remainder of the Mortgage Files after an Assignment Event, to
review (or cause to be reviewed) each Mortgage File and to deliver to the
Seller, the Depositor, the Certificate Insurer and the Master Servicer a
certification (in the form of Exhibit M-2) to the effect that, as to each Home
Equity Loan listed in the Home Equity Loan Schedule (other than any Home
Equity Loan paid in full or any Home Equity Loan specifically identified in
the certification as not covered by such certification), (i) all documents
constituting part of such Mortgage File required to be delivered to it
pursuant to Section 2.01 are in its possession, (ii) such documents have been
reviewed by it, appear to be what they purport to be and relate to such Home
Equity Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Home Equity Loan Schedule which corresponds to
items (ii), (iii), (iv), (v), (vi), (vii) and (viii) of the definition of
"Home Equity Loan Schedule" accurately reflects information set forth in the
Mortgage File. If within such 45-day period, the Trustee finds any document
constituting a part of the Mortgage File not to have been executed or received
or to be unrelated to the Home Equity Loans identified in said Home Equity
Loan Schedule or, if in the course of its review, the Trustee determines that
such Mortgage File is otherwise defective in any material respect, the Trustee
shall notify the parties, and the Seller shall have a period of 135 days after
such notice (subject to Section 2.02) within which to correct or cure any such
defect or to purchase such Home Equity Loan at the related Purchase Price or
substitute an Eligible Substitute Home Equity Loan therefor pursuant to
Section 2.06.
On or prior to one hundred eighty (180) days following the Closing
Date (but no earlier than 135 days following the Closing Date), the Trustee
shall deliver (or cause to be delivered) to the Seller, the Depositor, the
Certificate Insurer and the Master Servicer a certification (in the form of
Exhibit M-3) to the effect that, as to each Home Equity Loan listed in the
Home Equity Loan Schedule (other than any Home Equity Loan paid in full or any
Home Equity Loan specifically identified in such certification as not covered
by such certification), and as to any document noted in an exception included
in the Trustee's initial certification, (i) all documents constituting part of
such Mortgage File required to be delivered to it pursuant to Section 2.01 are
in its possession, (ii) such documents have been reviewed by it, appear to be
what they purport to be and relate to such Home Equity Loan, (iii) based on
its examination and only as to the foregoing, the information set forth in the
Home Equity Loan Schedule which corresponds to items (ii), (iii), (iv), (v),
(vi), (vii) and (viii) of the definition of "Home Equity Loan Schedule"
accurately reflects information set forth in the Mortgage File.
Within 90 days of an Assignment Event, the Seller, at its own
expense, shall either (i) cause the Master Servicer to record the Assignments
of Mortgage in favor of the Trustee in the appropriate real property or other
records (which may be a blanket assignment if permitted by applicable law) or
(ii) deliver to the Trustee and the Certificate Insurer an Opinion of Counsel
reasonably acceptable to the Certificate Insurer to the effect that recording
is not required to protect the Trustee's right, title and interest in and to
the related Home Equity Loan or, in the event a court should recharacterize
the sale of the Home Equity Loans as a financing, to perfect a first priority
security interest in favor of the Trustee in the related Home Equity Loan.
With respect to any Assignment of Mortgage as to which the related
recording information is unavailable within 90 days of an Assignment Event,
such Assignment of Mortgage shall be submitted for recording within 60 days
after receipt of such information but in no event later than six months from
the occurrence of an Assignment Event. The Trustee shall 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, at its own expense, shall promptly prepare a substitute
Assignment of Mortgage or cure such defect, as the case may be, and thereafter
the Seller shall be required to submit each such Assignment of Mortgage for
recording.
The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2.01. 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.
The parties hereto intend that the transactions set forth herein
constitute a sale and not a pledge by the Depositor to the Trust of all the
Depositor's right, title and interest in and to the Home Equity Loans and
other property as and to the extent described above. In the event the
transactions set forth herein are characterized as a pledge and not 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 Home Equity Loans
and such other property, to secure all of the Depositor's obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law. The Depositor agrees to take or cause to be taken such actions
and to execute such documents, including the filing of any continuation
statements with respect to the UCC-1 financing statements filed with respect
to the Home Equity Loans by the Trust on the Closing Date, and any amendments
thereto 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, as are necessary to
perfect and protect the Trust's interests in each Home Equity Loan and in the
proceeds thereof.
Section 2.02. Acceptance by Trustee. The Trustee, on behalf of the
Trust, hereby acknowledges the sale and assignment of the Home Equity Loans.
The Trustee, on behalf of the Trust, hereby acknowledges its receipt of the
Certificate Insurance Policy. If the Seller is given notice of an omission or
defect under Section 2.01 and if the Seller does not correct or cure such
omission or defect within the 135-day cure period following such notice, the
Seller shall purchase the related Home Equity Loan from the Trust or
substitute an Eligible Substitute Home Equity Loan for such Home Equity Loan
on the Determination Date in the month following the month in which such
135-day cure period expired at the Purchase Price of such Home Equity Loan or
in accordance with Section 2.06, as applicable. The Purchase Price for the
purchased Home Equity Loan which is purchased as described in the preceding
sentence shall be deposited in the Collection Account no later than the
Business Day prior to the next succeeding Distribution Date after such
obligation arises; provided that, 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, prepared by
and at the expense of the Seller, in each case without recourse,
representation or warranty as shall be necessary to vest in the Seller or its
designee any Home Equity Loan released pursuant hereto. It is understood and
agreed that the obligation of the Seller to purchase any Home Equity Loan or
substitute an Eligible Substitute Home Equity Loan for such Home Equity Loan
as to which a material defect in or omission of a constituent document exists
shall constitute the sole remedy against the Seller respecting such defect or
omission available to the Certificate Insurer, the Certificateholders or the
Trustee on behalf of Certificateholders and the Certificate Insurer. An
Opinion of Counsel to the effect set forth in Section 2.06(d) shall be
delivered to the Trustee and the Certificate Insurer in connection with any
such repurchase.
The Master Servicer, promptly following the transfer of (i) a
Defective Home Equity Loan from or (ii) an Eligible Substitute Home Equity
Loan to the Trust pursuant to this Section 2.02 and Section 2.06, as the case
may be, shall amend the Home Equity Loan Schedule and deliver a copy of such
amended Schedule to the Trustee and make appropriate entries in its general
account records to reflect such transfer and the addition of any Eligible
Substitute Home Equity Loan, if applicable.
Section 2.03. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trust, the Trustee on behalf of the
Certificateholders and the Certificate Insurer as follows:
(i) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Delaware, with full corporate power and authority to own its assets
and conduct its business as presently being conducted;
(ii) The Depositor 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 action
to authorize the execution, delivery and performance of this
Agreement. Assuming due authorization, execution and delivery by the
other parties hereto, when executed and delivered, 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);
(iii) The Depositor is not required to obtain the consent of any
other party or any consent, approval or authorization from any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, approval or authorization as
shall have been obtained or filed, as the case may be, prior to the
Closing Date;
(iv) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Home Equity
Loan, the Depositor had good and equitable title to each Home Equity
Loan (insofar as such title was conveyed to it by the Seller) subject
to no prior lien, claim, participation interest, mortgage, security
interest, pledge, charge or other encumbrance or other interest of
any nature;
(v) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Home Equity Loans to the Trustee on
behalf of the Trust;
(vi) The Depositor has not transferred the Home Equity Loans to
the Trustee on behalf of the Trust with any intent to hinder, delay
or defraud any of its creditors;
(vii) The execution, delivery and performance of this Agreement
by the Depositor will not violate any provision of any existing
regulation of any governmental agency having jurisdiction, or any
order or decree of any court having jurisdiction, over the Depositor,
that would materially and adversely affect the performance of its
duties hereunder or any provision of the articles of incorporation or
bylaws of the Depositor, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the
Depositor is a party or by which it may be bound;
(viii) The Depositor is not insolvent, nor will the Depositor be
made insolvent by the transfer of the Home Equity Loans, nor is the
Depositor aware of any pending insolvency;
(ix) There are no actions or proceedings against, or
investigations of it, pending or, to its knowledge, threatened,
before any court, administrative agency or other tribunal (A) that,
if determined adversely, would prohibit the Depositor from entering
into this Agreement, (B) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely
affect the Depositor's performance of any of its obligations under,
or the validity or enforceability of, this Agreement; and
(x) The transfer of the Home Equity Loans to the Purchaser on
the Closing Date will be treated by the Seller for financial
accounting and reporting purposes as a sale of assets.
Section 2.04. Representations and Warranties Regarding the Seller and
the Master Servicer.
(a) The Seller and the Master Servicer each represents and warrants
to the Trust, the Trustee on behalf of the Certificateholders and the
Certificate Insurer that, as of the Closing Date:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana, and the
Master Servicer is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States, and each has full power and authority (A) to conduct its
business as presently conducted by it and (B) to execute and deliver
this Agreement and perform its obligations under this Agreement. Each
of the Seller and the Master Servicer is and will remain in
compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to perform its
obligations in respect of this Agreement;
(ii) The execution and delivery of this Agreement, the
performance by each of the Seller and the Master Servicer of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action
on the part of each of the Seller and the Master Servicer,
respectively. This Agreement has been duly executed and delivered by
each of the Seller and the Master Servicer and constitutes a legal,
valid and binding obligation of each of the Seller and the Master
Servicer, respectively, enforceable against each in accordance with
its terms subject to (A) bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally
and to general principles of equity and (B) public policy
considerations underlying the securities laws, to the extent that
such public policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide indemnification
from securities laws liabilities;
(iii) The execution, delivery and performance of this Agreement
by each of the Seller and the Master Servicer, and the consummation
of the transactions contemplated hereby, will not (A) violate or
conflict with any provision of the charter or bylaws of the Seller or
the Master Servicer or any law, rule, regulation, order, judgment,
award, administrative interpretation, injunction, writ, decree or the
like affecting the Seller or the Master Servicer or by which the
Seller or the Master Servicer is bound or (B) result in a breach of
or constitute a default under any indenture or other material
agreement to which the Seller or the Master Servicer is a party or by
which the Seller or the Master Servicer is bound, which in the case
of either clause (i) or (ii) will have a material adverse effect on
the Seller's or the Master Servicer's ability to perform its
respective obligations under this Agreement;
(iv) No authorization, consent, approval, license, exemption or
other action by or notice to or registration or filing with any
governmental authority or administrative or regulatory body is
required for either the execution, delivery or performance of this
Agreement by the Seller or the Master Servicer or the consummation of
the transactions contemplated hereby, except such as shall have been
made or obtained on or prior to the Closing Date;
(v) There are no pending or, to the best of the Seller's or the
Master Servicer's knowledge, threatened actions, proceedings or
investigations against the Seller or the Master Servicer,
respectively, before any court, governmental arbitrator or
instrumentality which (A) if determined adversely to the Seller or
the Master Servicer, as the case may be, may reasonably be expected,
individually or in the aggregate, to have a material effect on the
Seller's or the Master Servicer's ability to perform its obligations
under this Agreement or (B) affect the legality, validity or
enforceability of this Agreement;
(vi) Neither the Seller nor the Master Servicer is insolvent and
the sale of the Home Equity Loans will not cause the Seller to become
insolvent. The sale of the Home Equity Loans is not undertaken with
the intent to hinder, delay or defraud any of the Seller's creditors;
(vii) The transfer of the Home Equity Loans to the Purchaser on
the Closing Date will be treated by the Seller for financial
accounting and reporting purposes as a sale of assets;
(viii) Immediately prior to the transfer under the Purchase
Agreement, the Seller had good title to and was the sole owner and
holder of the Home Equity Loans;
(ix) The Seller is transferring the Home Equity Loans to the
Purchaser free and clear of any and all known liens, pledges, charges
or security interests of any nature encumbering the Home Equity
Loans, and the Seller had full right and authority to sell and assign
the Mortgage Notes and the Mortgages;
(x) The collection practices used by the Master Servicer with
respect to the Home Equity Loans has been, in all material respects,
legal, proper, prudent and customary in the non-conforming mortgage
servicing business;
(xi) The Home Equity Loans were selected from the outstanding
home equity loans in the Seller's portfolio underwritten to
substantially the same standards as the Home Equity Loans and
covering mortgaged properties similar to the Mortgaged Properties and
such selection was not, and will not be, made in a manner so as to
adversely affect the interests of the Depositor, the Trust or the
Certificate Insurer; and
(xii) The Seller has not dealt with any broker or agent or other
Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement, other
than the Depositor, BANK ONE and their respective Affiliates.
(b) The representations and warranties set forth in this Section
shall survive the sale and assignment of the Home Equity Loans to the Trust.
Upon discovery of a breach of any representations and warranties which
materially and adversely affects the interests of the Certificateholders or
the Certificate Insurer, the Person discovering such breach shall give prompt
written notice to the other parties and the Certificate Insurer. Within 90
days of its discovery or its receipt of notice of breach or, with the prior
written consent of a Responsible Officer of the Trustee, such longer period
specified in such consent, the Seller or the Master Servicer, as appropriate,
shall cure such breach in all material respects.
Section 2.05. Representations and Warranties of the Seller Regarding
the Home Equity Loans.
(a) The Seller represents and warrants to the Certificate Insurer and
the Trustee on behalf of the Certificateholders as follows as of the Closing
Date:
(i) The information set forth on the Home Equity Loan Schedule
attached hereto as Exhibit C is true and correct in all material
respects as of the Cut-off Date or such other date as may be
indicated in such schedule;
(ii) To the best of the Seller's knowledge, the related Mortgage
Note and Mortgage 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);
(iii) The related Mortgage is a valid and enforceable first or
second lien on the related Mortgaged Property, which Mortgaged
Property is free and clear of all encumbrances and liens (including
mechanics liens) having priority over the first or second lien of the
Mortgage except for: (A) liens for real estate 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, such exceptions appearing of
record being acceptable to mortgage lending institutions generally or
specifically reflected or considered in the lender's title insurance
policy and referred to in the appraisal made in connection with the
origination of the related Home Equity Loan; (C) in the case of
second lien Mortgages, the related first lien and second lien; and
(D) 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;
(iv) Any security agreement, chattel mortgage or equivalent
document related to such Home Equity Loan establishes and creates a
valid and enforceable lien on the property described herein;
(v) No Home Equity Loan has a Monthly Payment that is thirty or
more days delinquent as of the Cut-Off Date, and no Home Equity Loan
has been dishonored;
(vi) 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 under the Home Equity Loan;
(vii) Except by written instruments included in the related
Mortgage File, the Seller has not impaired, waived, altered or
modified the related Mortgage or Mortgage Note or satisfied,
canceled, rescinded or subordinated such Mortgage or Mortgage Note in
whole or in part or released all or any portion of the Mortgaged
Property from the lien of the Mortgage (except for a release which is
reflected in the Combined Loan-to-Value Ratio for the Home Equity
Loan as set forth in the Home Equity Loan Schedule), or executed any
instrument of release, cancellation, rescission or satisfaction of
the Mortgage Note or Mortgage;
(viii) To the best of the Seller's knowledge, no condition
exists which could give rise to any right of rescission, set off,
counterclaim, or defense including, without limitation, the defense
of usury, and no such right has been asserted;
(ix) To the best of the Seller's knowledge, there is no
proceeding pending for the total or partial condemnation and no
eminent domain proceedings pending affecting any Mortgaged Property;
(x) Each Home Equity Loan With Title Insurance is covered by
either (A) a mortgage title insurance policy or other generally
acceptable form of insurance policy customary in the jurisdiction
where the Mortgaged Property is located or (B) if generally
acceptable in the jurisdiction where the Mortgaged Property is
located, an attorney's opinion of title given by an attorney licensed
to practice law in the jurisdiction where the Mortgaged Property is
located. All of Seller's rights under such policies, opinions or
other instruments shall be deemed to be transferred and assigned to
Purchaser upon sale and assignment of such Home Equity Loans
hereunder. The title insurance policy insures the original lender,
its successor and assigns, as to the first or second, as applicable,
priority lien of the Mortgage in the original principal amount of the
Home Equity Loan With Title Insurance, subject to the exceptions
contained in such policy. The Seller is the sole insured of such
mortgage title insurance policy, and such mortgage title insurance
policy is in full force and effect and will be in force and effect
upon the consummation of the transactions contemplated by this
Agreement. Seller has not made and has no knowledge of any claims
made under such mortgagee title insurance policy. Seller is not aware
of any action by a prior holder and Seller has not done, by act or
omission, anything which could impair the coverage or enforceability
of such mortgagee title insurance policy or the accuracy of such
attorney's opinion of title;
(xi) To the best of the Seller's knowledge, there is no material
default, breach, violation or event of acceleration existing under
the related 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 material default, breach,
violation or event of acceleration. The Seller has not waived any
default, breach, violation or event of acceleration;
(xii) To the best of the Seller's knowledge, there are no
delinquent taxes, ground rents, water charges, sewer rents,
assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding
charges, affecting the related Mortgaged Property;
(xiii) To the best of the Seller's knowledge, no material
litigation or lawsuit relating to any Home Equity Loan is pending;
(xiv) The Home Equity Loan obligates the mortgagor thereunder to
maintain a hazard insurance policy ("Hazard Insurance") which
contains a standard mortgagee's clause and which insures against loss
by fire and by hazards included within the term "extended coverage."
At the time of origination of the Home Equity Loan, the Mortgaged
Property was covered by Hazard Insurance and, if the Mortgaged
Property was in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards,
a flood insurance policy was required;
(xv) The Mortgage Note is not and has not been secured by any
collateral except the lien on the corresponding Mortgage and the
security interest of any applicable security agreement or chattel
mortgage;
(xvi) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Home Equity Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder. The 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 (A) in
the case of a Mortgage designated as a deed of trust, by trustee's
sale or judicial foreclosure and (B) otherwise by judicial
foreclosure. As of the Cut-Off Date, to the best of the Seller's
knowledge, no Mortgaged Property is subject to any bankruptcy
proceeding or foreclosure proceeding. There is no homestead or other
exemption available to the Mortgagor that would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage. In the event the Mortgage constitutes a
deed of trust, a trustee, duly qualified under applicable law to
serve as such, as been properly designated and currently so serves
and is named in the Mortgage, and no fees or expenses are or will
become payable by Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
related Mortgagor. The Mortgagor has not notified the Seller and the
Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Civil Relief Act;
(xvii) To the best of the Seller's knowledge, each Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty (excluding casualty from
the presence of hazardous wastes or hazardous substances) so as to
affect materially and adversely the value of the Mortgaged Property
as security for the Home Equity Loan or the use for which the
premises were intended;
(xviii) As of the Closing Date, the Seller has no actual
knowledge that there exists on any Mortgaged Property any hazardous
substances, hazard wastes or solid wastes, as such terms are defined
in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or
other federal, state or local environmental legislation. For purposes
of this clause (xviii), actual knowledge of the Seller means actual
knowledge of an officer of the Seller involved in the servicing of
the relevant Home Equity Loan. Actual knowledge of the Seller 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;
(xix) There was no fraud involved in the origination of the Home
Equity Loan by the mortgagee or, to the best of the Seller's
knowledge, by the Mortgagor, any appraiser or any other party
involved in the origination of the Home Equity Loan;
(xx) Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value
identified for such Mortgaged Property on the Home Equity Loan
Schedule;
(xxi) Any and all requirements of any federal, state or local
law with respect to the origination of the Home Equity Loans
including, without limitation, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Home Equity Loans
have been complied with;
(xxii) No improvements on the related Mortgaged Property
encroach on adjoining properties (and in the case of a condominium
unit, such improvements are within the project with respect to that
unit), and no improvements on adjoining properties encroach upon the
Mortgaged Property unless there exists in the Mortgage File a title
policy with endorsements which insure against losses sustained by the
insured as a result of such encroachments;
(xxiii) Each Home Equity Loan was either originated or acquired
by the Seller;
(xxiv) Principal payments on the Home Equity Loan commenced no
more than sixty days after the proceeds of the Home Equity Loan were
disbursed;
(xxv) No Home Equity Loan by its terms provides for the payment
of a balloon payment by the Mortgagor;
(xxvi) The Home Equity Loan bears interest at the Loan Rate and
the Mortgage Note does not permit negative amortization;
(xxvii) No Home Equity Loan contains provisions pursuant to
which Monthly Payments are: (A) paid or partially paid with funds
deposited in any separate account established by the Seller, the
Mortgagor, or anyone on behalf of the Mortgagor; (B) paid by any
source other than the Mortgagor; or (C) contains any other similar
provisions which may constitute a "buydown" provision. The Home
Equity Loan is not a graduated payment mortgage loan and the Home
Equity Loan does not have a shared appreciation or other contingent
interest feature;
(xxviii) The Home Equity Loan has been underwritten or
re-underwritten in accordance with the underwriting guidelines of the
Seller in effect at the time the Home Equity Loan was originated or
purchased, as applicable, by the Seller;
(xxix) No law relating to servicing, collection or notification
practices and no law relating to origination practices, has been
violated in connection with any Home Equity Loan transferred to the
Purchaser pursuant to this Agreement, including, without limitation,
usury, truth in lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws. The
Home Equity Loan has been serviced in accordance with the terms of
the Mortgage Note;
(xxx) No Home Equity Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property;
(xxxi) The Seller hereby covenants that it will not directly
solicit any Mortgagor hereunder to refinance the related Home Equity
Loan except that the Seller may solicit a Mortgagor if the Seller
obtains knowledge of the impending payoff of the related Home Equity
Loan;
(xxxii) The proceeds of the Home Equity Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder,
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Home Equity Loan and the recording
of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to
the Mortgage Note or Mortgage;
(xxxiii) To the best of the Seller's knowledge, there are no
mechanics' or similar liens or claims that have been filed for work,
labor or material (and no rights are outstanding that under law could
give rise to such lien) affecting the related Mortgaged Property that
are or may be liens prior to, or equal or coordinate with, the lien
of the related Mortgage; 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;
(xxxiv) Interest is calculated on the Mortgage Note based on the
number of days elapsed between the date through which interest was
last paid on the related Home Equity Loan and the date of receipt of
the related Mortgagor's most current payment;
(xxxv) The Mortgaged Property consists of a parcel of real
property located in the United States with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an
individual condominium unit in a low-rise or high-rise condominium
project, or an individual unit in a planned unit development or a
townhouse provided, however, that no residence or dwelling is a
mobile home or a manufactured dwelling that is not treated as real
property under local law. To the best of the Seller's knowledge, no
Home Equity Loan is secured by a leasehold estate;
(xxxvi) Each Home Equity Loan conforms, and the Home Equity
Loans in the aggregate conform, in all material respects with the
descriptions thereof set forth in the Prospectus Supplement;
(xxxvii) Each Mortgage is a "qualified mortgage" under the REMIC
Provisions; and
(xxxviii) With respect to each Mortgage where a Lost Note
Affidavit has been delivered to the Trustee in place of the related
Mortgage Note, the related Mortgage Note is no longer in existence.
With respect to the representations and warranties set forth in this
Section (other than clause (xviii) above) 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, the Certificate
Insurer 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 Home Equity Loan or the interests of the Certificateholders or
the Certificate Insurer, then, notwithstanding the Seller's lack of knowledge
with respect to the substance of such representation and warranty being
inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty and the Seller shall cure such breach, repurchase the related Home
Equity Loan at the Purchase Price or substitute an Eligible Substitute Home
Equity Loan therefor pursuant to Section 2.06.
(b) It is understood and agreed that the representations and
warranties set forth in this Section shall survive the conveyance of the Home
Equity Loans and the 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, the Certificate Insurer or 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 value of the
related Home Equity Loan or the interests of the Trust, the Certificateholders
or the Certificate Insurer in such Home Equity Loan, the party discovering
such breach shall give prompt written notice to the other parties and the
Certificate Insurer. Within 90 days of its discovery or its receipt of notice
of breach, the Seller shall use all reasonable efforts to cure such breach in
all material respects or shall purchase such Home Equity Loan from the Trust
or substitute an Eligible Substitute Home Equity Loan as provided in Section
2.06 for such Home Equity Loan. Any such purchase by the Seller shall be at
the Purchase Price and in each case shall be accomplished in the manner set
forth in Section 2.02. It is understood and agreed that the obligation of the
Seller to cure, substitute or purchase any Home Equity 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 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 2.06. Substitution of Home Equity 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 Home Equity Loan under Section 2.02 or 2.05, the
Seller may deliver to the Trustee one or more Eligible Substitute Home Equity
Loans in substitution for any one or more of the Defective Home Equity Loans
which the Seller would otherwise be required to repurchase pursuant to
Sections 2.02 or 2.05. In connection with any such substitution, the Seller
shall calculate the Substitution Adjustment, if any, and shall deposit such
amount to the Collection Account on or before the Business Day prior to the
Distribution Date in the month succeeding the calendar month during which the
related Home Equity Loan became required to be purchased or replaced
hereunder.
(b) The Seller shall notify the Master Servicer, the Trustee and the
Certificate Insurer 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 Home Equity Loan pursuant to
Section 2.02 or 2.05 of its intention to effect a substitution under this
Section 2.06. On such Determination Date (the "Substitution Date"), the Seller
shall deliver to the Trustee (1) the Eligible Substitute Home Equity Loans to
be substituted for the Defective Home Equity Loans, (2) a list of the
Defective Home Equity Loans to be substituted for by such Eligible Substitute
Home Equity Loans, (3) an Officer's 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 Home Equity Loans (determined with respect to each Eligible
Substitute Home Equity Loan as of the Determination Date on which it was
substituted) including the principal balance of Eligible Substitute Home
Equity Loans being substituted on such Determination Date does not exceed an
amount equal to 5% of the Pool Principal Balance as of the Closing Date, (C)
stating that all conditions precedent to such substitution specified in
subsection (a) have been satisfied and attaching as an exhibit a supplemental
Home Equity Loan schedule (the "Supplemental Home Equity Loan Schedule")
setting forth the same type of information as appears on the Home Equity Loan
Schedule and representing as to the accuracy thereof and (D) confirming that
the representations and warranties contained in Section 2.05 are true and
correct in all material respects with respect to the Eligible Substitute Home
Equity 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, 2.05 and this Section 2.06, (4) an Opinion of Counsel (which shall also
be delivered to the Certificate Insurer) to the effect set forth in Clause (d)
below and (5) a certificate stating that cash in the amount of the related
Substitution Adjustment, if any, has been deposited to the Collection Account.
Upon receipt of the foregoing, the Trustee shall release such Defective Home
Equity Loans to the Seller without recourse, representation or warranty.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.06(a) and (b) above and the transfer of such Eligible Substitute
Home Equity Loans to the Trustee on behalf of the Trust pursuant to Section
2.06(a), the Seller shall deliver to the Trustee a revised Exhibit C to this
Agreement amended to exclude all Home Equity Loans being replaced by such
Eligible Substitute Home Equity Loans and to include the information set forth
on the Supplemental Home Equity Loan Schedule with respect to such Eligible
Substitute Home Equity Loans, and all references in this Agreement to Home
Equity Loans shall include such Eligible Substitute Home Equity Loans and be
deemed to be made on or after the related Substitution Date, as the case may
be, as to such Eligible Substitute Home Equity Loans.
(d) In connection with any Home Equity Loan that the Seller is
required to purchase or replace, the Seller shall deliver to the Trustee and
the Certificate Insurer 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) 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 Home
Equity 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 Home Equity 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 Home Equity Loans, concurrently with the sale, assignment and
conveyance to the Trustee of the Home Equity Loans, each Class of Class A
Certificates in authorized denominations and the Class R Certificates,
together evidencing the ownership of the entire Trust.
Section 2.08. Designation of Interests in the REMIC. Each Class of
Class A Certificates is hereby designated as a "regular interest" in the REMIC
and the Class R Certificates are hereby designated as the single "residual
interest" in the REMIC.
Section 2.09. Designation of Start-up Day. The Closing Date is hereby
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.10. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" of the REMIC is the Distribution Date in July
2026.
Section 2.11. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the Trust shall have a fiscal
year ending December 31 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 December 31, 1999, a REMIC election shall be made with
respect to the Trust for such taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to the Trust, including, but not limited to, the income, expenses,
assets and liabilities of the Trust, and such other information as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information.
(e) Each of the Master Servicer, the Seller and the Depositor, upon
request, shall promptly furnish the Trustee with all such information in its
control as may be required in connection with the Trustee's REMIC reporting
obligations pursuant to this Agreement.
Section 2.12. Tax Matters Person. The tax matters person with respect
to the REMIC shall be the Holder of the Tax Matters Person Residual Interest
(the "Tax Matters Person"). The Holder of the Tax Matters Person Residual
Interests shall have the same duties with respect to the Trust as those of a
"tax matters partner" under Subchapter C of Chapter 63 of Subtitle F of the
Code. Each holder of a Class R Certificate shall be deemed to have agreed, by
acceptance thereof, to be bound by this Section. The Trustee shall hold the
Tax Matters Person Residual Interest.
Section 2.13. REMIC Related Covenants. For as long as the REMIC 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" within the meaning of Code Section 860D(a)(2) other than the
interests represented by the Class A Certificates and the Class R
Certificates.
(b) Except as otherwise provided in the Code, neither the Depositor
nor the Seller shall grant and the Trustee shall not accept property unless
(i) substantially all of the property held in the REMIC 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 REMIC after the Start-up Day unless such grant would not subject the REMIC
to the 100% tax on contributions to the REMIC after the Start-up Day imposed
by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the REMIC any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the REMIC 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 Home Equity Loans (other than in accordance with Section 2.02,
2.05 or 3.01), unless such sale is pursuant to a "qualified liquidation" as
defined in Code Section 860F(a)(4)(A) and in accordance with Article X.
(e) The Trustee shall maintain books with respect to the REMIC on a
calendar year basis and report income on an accrual basis.
(f) The Master Servicer shall furnish to the Trustee the information
necessary for the Trustee to prepare and file with the Internal Revenue
Service Form 1066 for the REMIC and to prepare and furnish to the Holders of
the Class R Certificates Form 1066Q for the REMIC and, based on information
received from the Master Servicer, the Trustee will respond promptly to
written requests made not more frequently than quarterly by any Holder of a
Class R Certificate for the following information:
(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 Home Equity Loans, based on a 30% CPR
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 Home Equity
Loans, based on a 30% CPR Prepayment Assumption;
(iii) The CPR 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 Home
Equity 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 Home Equity Loans, together with each constant yield to
maturity used in computing the same;
(v) The treatment of losses realized with respect to the Home
Equity 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 Home Equity 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;
provided, that the information to be provided with respect to the foregoing
clauses (i) through (vi) shall be based on projections, assumptions and facts
as they shall have existed on the Closing Date.
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 REMIC after the Start-up Day pursuant to
Section 860G(d) of the Code, or any other tax is imposed, such tax shall be
paid by (i) the Trustee, if such tax arises out of or results from the willful
malfeasance, bad faith or negligence of the Trustee with respect to any of its
obligations under this Agreement, (ii) the Master Servicer, if such tax arises
out of or results from a breach by the Master Servicer of any of its
obligations under this Agreement or (iii) otherwise by the Holders of the
Class R Certificates in proportion to their Percentage Interests. To the
extent any tax is chargeable against the Holders of the Class R Certificates,
notwithstanding anything to the contrary contained herein, the Trustee is
hereby authorized to retain from amounts otherwise distributable to the
Holders of the Class R Certificates on any Distribution Date sufficient funds
to reimburse the Trustee for the payment of such tax (to the extent that the
Trustee has not been previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as
defined in Code Section 860F(a)(2)), except that, with the prior written
consent of the Seller, the Trustee may engage in the activities otherwise
prohibited by the foregoing clauses (b), (c) and (d), provided that the Seller
shall have delivered to the Trustee and the Certificate Insurer 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 REMIC from treatment as a REMIC; and provided that the Seller
shall have delivered to the Trustee an Officer's Certificate to the effect
that such action will not adversely affect the rights of the holders of the
Certificates or the Certificate Insurer 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 routine tax related expenses of the Trust
(including, but not limited to, tax return preparation and filing expenses),
other than the expense of obtaining any Opinion of Counsel required pursuant
to Sections 2.06(d), 2.13(f), 9.02(b) and 10.02 and other than taxes except as
specified herein. The Trustee not in its individual capacity but solely as
Trustee shall represent the Trust in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The expenses of any such contest, audit, controversy or
proceeding, including but not limited to the fees and expenses of the Trustee,
its attorneys, its accountants and its financial advisors, except any such
expenses caused by the Trustee's negligence or willful misconduct, shall be
the obligations of the Trust created hereunder.
ARTICLE III
Administration and Servicing
of Home Equity 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 the
Trust 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 status of the Trust as a REMIC.
(b) The Master Servicer, as independent contract servicer, shall
service and administer the Home Equity 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 Servicing Agreements for any servicing and administration of
Home Equity Loans with Banc One Financial Services, Inc., or any other
institution which (i) is in compliance with the laws of each state necessary
to enable it to perform its obligations under such Servicing Agreement and
(ii) (x) has been designated an approved Seller-Servicer by Freddie Mac or
Fannie Mae for first and second mortgage loans or (y) is an affiliate of the
Master Servicer or (z) is acceptable to the Certificate Insurer. As of the
Closing Date, the Master Servicer will enter into a Servicing Agreement with
Banc One Financial Services, Inc. Except in the case of the appointment of
Banc One Financial Services, Inc. as initial Servicer, the Master Servicer
shall give written notice to the Trustee of the appointment of any Servicer.
Any such Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Master Servicer shall be entitled to
terminate any Servicing Agreement in accordance with the terms and conditions
of such Servicing Agreement and either itself directly service the related
Home Equity Loans or enter into a Servicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Servicer or reference to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable for
the servicing and administering of the Home Equity Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such Servicing Agreements or arrangements or by virtue
of indemnification from the Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Home Equity Loans. For purposes of this Agreement, the
Master Servicer shall be deemed to have received payments on Home Equity Loans
when the Servicer has received such payments. The Master Servicer shall be
entitled to enter into any agreement with a Servicer for indemnification of
the Master Servicer by such Servicer, and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(d) Any Servicing Agreement that may be entered into and any
transactions or services relating to the Home Equity Loans involving a
Servicer in its capacity as such and not as an originator shall be deemed to
be between the Servicer 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
Servicer except as set forth in Section 3.01(e). The Master Servicer shall be
solely liable for all fees owed by it to any Servicer irrespective of whether
the Master Servicer's compensation pursuant to this Agreement is sufficient to
pay such fees. For purposes of this Agreement, as of the Closing Date, each of
the parties hereto acknowledge that Banc One Financial Services, Inc., shall
act initially as a Servicer.
(e) Except with respect to any merger, consolidation or other
transaction permitted under Section 7.02, in the event the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason of
a Servicer Default), the Trustee or its designee approved by the Certificate
Insurer shall, pursuant to the provisions of Section 8.02, assume all of the
rights and obligations of the Master Servicer under each Servicing Agreement
that the Master Servicer may have entered into, unless the Trustee or designee
approved by the Certificate Insurer elects to terminate any Servicing
Agreement. Any fee payable in connection with such a termination will be
payable by the outgoing Master Servicer. If the Trustee does not terminate a
Servicing Agreement, the Trustee, its designee or the successor servicer for
the Trustee shall, pursuant to the provisions of Section 8.02, 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 Servicing Agreement to the
same extent as if the Servicing 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 Servicing Agreements with regard to events
that occurred prior to the date the Master Servicer ceased to be the Master
Servicer hereunder. The Master Servicer shall, upon the request of the
Trustee, deliver to the assuming party all documents and records relating to
each Servicing Agreement and the Home Equity 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 Servicing
Agreements to the assuming party. The Trustee shall be entitled to be
reimbursed by the Master Servicer for all costs associated with the transfer
of servicing, including, without limitation, any costs or expenses associated
with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Home Equity Loans properly and
effectively.
(f) Consistent with the terms of this Agreement and except as
otherwise provided in the following sentence, upon the request of a Mortgagor
or at the Master Servicer's own initiative, the Master Servicer may waive,
modify or vary any term of any Home Equity 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 good faith determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders and the Certificate Insurer.
Notwithstanding the foregoing, unless (1) the Mortgagor is in default with
respect to the Home Equity Loan, or such default is, in the judgment of the
Master Servicer, imminent and (2) such waiver, modification, postponement or
indulgence would not cause the Trust to be disqualified as a REMIC or
otherwise cause a tax to be imposed on the Trust, the Master Servicer may not
permit any such waiver, modification, postponement or indulgence that would
constitute a significant modification of the Loan Rate (except as required by
law or as contemplated by the Mortgage Note), constitute a cancellation or
discharge of the Principal Balance (unless in connection with the liquidation
of the related Home Equity Loan), or constitute an extension of the scheduled
maturity date of the Home Equity Loan. No costs incurred by the Master
Servicer or any Servicer in respect of Servicing Advances shall, for the
purposes of distributions to Certificateholders, be added to the amount owing
under the related Home Equity 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 Home Equity Loans and with respect to the Mortgaged Properties.
If reasonably required by the Master Servicer, the Trustee shall execute any
powers of attorney prepared by the Master Servicer 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 Home Equity 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 home equity loans for its
own account, in accordance with accepted mortgage servicing practices of
prudent lending institutions servicing home equity loans similar to the Home
Equity Loans and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Master Servicer.
(g) On and after such time as the Trustee receives the written
resignation of, or notice of the removal of, the Master Servicer from its
rights and obligations under this Agreement, and with respect to resignation
pursuant to Section 7.04, after receipt by the Trustee and the Certificate
Insurer of the Opinion of Counsel required pursuant to Section 7.04, the
Trustee or its designee approved by the Certificate Insurer shall, pursuant to
the provisions of Section 8.02, assume all of the rights and obligations of
the Master Servicer, subject to Section 8.02. 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 Home Equity 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. The Trustee shall be entitled to
be reimbursed by the Master Servicer for all costs associated with the
transfer of servicing, including, without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Home Equity
Loans properly and effectively.
(h) The Master Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer on or before 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 Home Equity Loan immediately following the refinancing (based on the
outstanding principal balance of the Home Equity Loan and the original
principal balance of such refinanced mortgage loan) is not greater than the
Combined Loan-to-Value Ratio of such Home Equity Loan as of the Cut-Off Date.
(j) In the event that the Master Servicer desires to consent to any
waiver, modification, postponement, indulgence or placing of a senior lien
that would otherwise violate the requirements of Section 3.01(f) or (i), the
Master Servicer may take such actions only if it purchases the related Home
Equity Loan from the Trust. Any such purchase by the Master Servicer shall be
at the Purchase Price and in each case shall be accomplished in the manner set
forth in Section 2.02. 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
purchase.
Section 3.02. Collection of Certain Home Equity Loan Payments.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Home Equity Loans
and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures as it follows with respect to
home equity loans in its servicing portfolio comparable to the Home Equity
Loans. Consistent with the foregoing, and without limiting the generality of
the foregoing, the Master Servicer may in its discretion (i) waive any
prepayment penalty or late payment charge or any assumption fees or other fees
which may be collected in the ordinary course of servicing such Home Equity
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid; provided that such arrangement is consistent with the Master
Servicer's policies with respect to the home equity loans it owns or services;
provided, further, that notwithstanding such arrangement such Home Equity
Loans will be included in the monthly information delivered by the Master
Servicer to the Trustee pursuant to Section 5.02.
(b) The Master Servicer shall establish and maintain a separate trust
account (the "Collection Account") titled "Norwest Bank Minnesota, National
Association, as Trustee, of Banc One Financial Services Home Equity Loan Trust
1999-1, Collection Account." The Collection Account shall be an Eligible
Account and may be established with the Trustee. No later than 12:00 noon New
York time two Business Days prior to each Distribution Date (or, if a Deposit
Event has occurred, within two Business Days following receipt thereof), the
Master Servicer shall deposit or cause to be deposited into the Collection
Account the following payments and collections received or made by it with
respect to each Home Equity Loan (without duplication):
(i) all payments received on or after the Cut-Off Date on
account of principal and interest on the Home Equity Loans, and all
Principal Prepayments In Full and Curtailments collected on and after
the Cut-Off Date;
(ii) all Net Liquidation Proceeds net of related Foreclosure
Profits;
(iii) all Insurance Proceeds to the extent not included in Net
Liquidation Proceeds;
(iv) any amounts payable in connection with the repurchase of
any Home Equity Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.02, 2.05, 2.06 and 3.01;
(v) all Released Mortgaged Property Proceeds; and
(vi) any amount required to be deposited in the Collection
Account pursuant to Sections 3.07, 3.18 or 5.04(e);
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain (x) from payments in respect of interest
on the Home Equity Loans, the Master Servicing Fee for such Collection Period
and (y) from payments from Mortgagors, Liquidation Proceeds, Insurance
Proceeds and Released Mortgaged Property Proceeds, any unreimbursed Servicing
Advances, Monthly Advances and Nonrecoverable Advances related thereto in
accordance with Section 3.03 hereof. 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 or any Servicer for the accounts of
Mortgagors for application toward the payment of taxes, insurance premiums,
assessments and similar items.
(c) All funds in the Collection Account shall be invested as provided
in Section 5.04, including Eligible Investments which are obligations of the
Master Servicer or any of its Affiliates if such Eligible Investments
otherwise qualify as Eligible Investments.
Section 3.03. Withdrawals from the Collection Account. The Master
Servicer shall withdraw or cause to be withdrawn funds from the Collection
Account for the following purposes:
(i) no later than 2:00 p.m. New York time one Business Day prior
to each Distribution Date, to withdraw the portion of Available Funds
then in the Collection Account and remit such funds to the Trustee
for deposit into the Certificate Account;
(ii) to reimburse the Master Servicer for any accrued unpaid
Master Servicing Fees and for unreimbursed Monthly Advances and
Servicing Advances to the extent not otherwise retained. The Master
Servicer's right to reimbursement for unpaid Master Servicing Fees
and unreimbursed Servicing Advances shall be limited to late
collections on the related Home Equity Loan, including Liquidation
Proceeds, Insurance Proceeds, Released Mortgaged Property Proceeds
and such other amounts as may be collected by the Master Servicer
from the related Mortgagor or otherwise relating to the Home Equity
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 Home Equity
Loan and to Liquidation Proceeds, Insurance Proceeds and Released
Mortgaged Property Proceeds on related Home Equity Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code
in accordance with a final, nonappealable order of a court having
competent jurisdiction;
(iv) subject to Section 5.04 hereof, to make investments in
Eligible Investments and to pay to the Master Servicer interest
earned in respect of Eligible Investments or on funds deposited in
the Collection Account;
(v) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein or were deposited
therein in error and to pay such funds to the appropriate Person;
(vi) to pay the Master Servicer servicing compensation pursuant
to Section 3.09 to the extent not retained or paid pursuant to
Sections 3.02(b);
(vii) to reimburse the Master Servicer for Nonrecoverable
Advances and expenses incurred pursuant to Section 7.03(a);
(viii) to withdraw funds necessary for the conservation,
operation, management, maintenance and disposition of REO Property
pursuant to Section 3.07 to the extent not advanced by the Master
Servicer; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining
therein to the Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Master Servicer shall cause to be maintained a blanket policy
providing fire and hazard insurance (excluding flood insurance) naming the
Master Servicer and the Servicer as named insured parties and their designee
as loss payee thereunder, and providing coverage in an amount which is at
least equal to the unpaid principal balance owing on each Home Equity Loan
without coinsurance. The Master Servicer shall also maintain on property
acquired upon foreclosure, or by deed in lieu of foreclosure, hazard insurance
(excluding flood insurance) with extended coverage in an amount which is at
least equal to the unpaid principal balance owing on each Home Equity Loan
without coinsurance. Amounts collected by the Master Servicer under any such
policies in connection with the Home Equity Loans, together with the
deductible amounts which are applicable pursuant to the terms of such policy,
shall be deposited in the Collection Account to the extent called for by
Section 3.02. The Master Servicer shall (i) not monitor whether or not any
Mortgagor maintains hazard insurance, (ii) be under no obligation to require
that any Mortgagor maintain earthquake or other additional insurance and (iii)
be under no obligation itself to maintain any such additional insurance on
property acquired in respect of a Home Equity 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. In the
event that the Master Servicer shall obtain and maintain a blanket policy
consistent with prudent industry standards with an insurer either (A) having a
General Policy rating of A.VIII or better in Best's Key Rating Guide, or (B)
approved by the Certificate Insurer, such approval not to be unreasonably
withheld, insuring against fire and hazards of extended coverage on all of the
Home Equity Loans that 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. Upon
the request of the Certificate Insurer or the Trustee, the Master Servicer
shall cause to be delivered to the Certificate Insurer or the Trustee, as the
case may be, a certificate of insurance evidencing such policy. In connection
with its activities as administrator and servicer of the Home Equity Loans,
the Master Servicer agrees to prepare and present, on behalf of itself, the
Trustee, the Certificate Insurer and Certificateholders, claims under any such
policy in a timely fashion in accordance with the terms of such policy.
Section 3.06. Fidelity Bond. The Master Servicer shall maintain with
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
Fannie Mae or Freddie Mac 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 Home Equity Loans ("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, errors and omissions and negligent acts of such
Servicer Employees. Such fidelity bond shall also protect and insure the
Master Servicer against losses in connection with the release or satisfaction
of a Home Equity 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, the Certificate Insurer or any
Certificateholder, the Master Servicer shall cause to be delivered to the
Trustee, the Certificate Insurer and such Certificateholder a certificate of
insurance evidencing such fidelity bond and insurance policy.
Section 3.07. Management and Realization Upon Defaulted Home Equity
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 and the Certificate
Insurer.
If a Deposit Event has occurred, the Master Servicer shall cause to
be deposited, within two Business Days of receipt thereof or if a Deposit
Event has not occurred, the Master Servicer shall cause to be deposited two
Business Days prior to the related Distribution Date, 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 in accordance with Section 3.02, net of
Foreclosure Profits and of any related unreimbursed Servicing Advances,
accrued and unpaid Master Servicing Fees and unreimbursed Monthly Advances
payable to the Master Servicer in accordance with Section 3.03, for
distribution to the Certificateholders in accordance with Section 5.01.
The decision of the Master Servicer to foreclose on a defaulted Home
Equity 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 and if such determination cannot be made, the
Master Servicer shall deal with such Home Equity Loan in a manner consistent
with the servicing standard in Section 3.01 hereof.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or its nominee on behalf of Certificateholders
and the Certificate Insurer.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Home Equity
Loan, the Master Servicer shall (i) dispose of such Mortgaged Property within
three years after its acquisition or (ii) prior to the expiration of any
extension to such three-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 three-year grace period and granted by the Internal
Revenue Service, unless the Master Servicer shall have received an Opinion of
Counsel, with a copy to the Certificate Insurer, to the effect that the
holding of such Mortgaged Property subsequent to three 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 three
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 Certificate Insurer and shall report monthly to the Trustee as to the
progress being made in selling such REO Property.
If the Master Servicer has actual knowledge that a Mortgaged Property
which the Master Servicer is acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Master Servicer, the Master Servicer
will notify the Trustee and the Certificate Insurer prior to acquiring the
Mortgaged Property. Nothing in this Section 3.07 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 Home Equity 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, on behalf of the Trustee, to execute,
pursuant to the authorization contained in Section 3.01(e), 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 Home Equity Loan, the
Trustee shall, upon request of the Master Servicer and delivery to the Trustee
of two (2) copies of a Request for Release (in the form attached hereto as
Exhibit G) signed by a Servicing Officer, or as a substitute therefor, the
delivery to the Trustee of a request in a mutually agreeable electronic format
which will, in lieu of a signature on its face, be sent by a Servicing
Officer, release the related Mortgage File to the Master Servicer. The Trustee
shall execute such documents, in the forms provided by the Master Servicer, as
shall be necessary for the prosecution of any such proceedings or the taking
of other servicing actions. Such Request for Release shall obligate the Master
Servicer to return the Mortgage File to the Trustee when the need therefor by
the Master Servicer no longer exists unless the Home Equity 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
Home Equity 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 Home Equity 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 Home Equity 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 Home Equity Loan are paid by the
Mortgagor and any other defaults are cured then the assignee for collection
shall promptly reassign such Home Equity 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. The Master Servicer shall be entitled to retain the Master
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Home Equity Loans. Moreover, additional
servicing compensation in the form of prepayment penalties, late payment
charges, bad check charges or assumption fees or other receipts not required
to be deposited in the Collection Account, including, without limitation,
Foreclosure Profits and, subject to Section 5.04(e), investment income on the
Certificate Account and the Collection Account shall be retained by the Master
Servicer. The Master Servicer shall be required to pay all expenses incurred
by it in connection with its activities hereunder (including payment of all
other fees and expenses not expressly stated hereunder to be for the account
of the Trust or the Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.10. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Trustee, the Certificate
Insurer and the Rating Agencies, on or before May 31st of each year, beginning
in 2000 (for the fiscal year ending December 1999), an Officer's Certificate
stating that (i) 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 (ii) 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 Trustee, the Certificate Insurer and
the Rating Agencies upon any change in the basis on which its fiscal year is
determined.
(b) The Master Servicer shall deliver to the Trustee, the Depositor,
the Certificate Insurer 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 a
Servicer Default.
Section 3.11. Annual Servicing Report. On or before May 31st of each
year, beginning in 2000 (for the fiscal year ending December 1999), the Master
Servicer, at its expense, shall cause a firm of independent public accountants
to furnish a letter or letters to the Depositor, the Trustee, the Certificate
Insurer and the Rating Agencies to the effect that such firm has, with respect
to the Master Servicer's overall servicing operations, examined such
operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 3.12. Access to Certain Documentation and Information
Regarding the Home Equity Loans. The Master Servicer shall provide to the
Trustee, the Certificate Insurer and Certificateholders which are federally
insured savings and loan associations, the Office of Thrift Supervision, the
FDIC and the supervisory agents and examiners of the Office of Thrift
Supervision access to the documentation regarding the Home Equity Loans
required by applicable regulations of the Office of Thrift Supervision and the
FDIC (acting as operator of the SAIF or the BIF), such access being afforded
without charge but only upon reasonable request and during normal business
hours at the offices of the Master Servicer. Nothing in this Section shall
derogate from the obligation of the Master Servicer to observe any applicable
law prohibiting disclosure of information regarding the Mortgagors and the
failure of the Master Servicer to provide access as provided in this Section
as a result of such obligation shall not constitute a breach of this Section.
Section 3.13. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals
and Returns Relating to Cancellation of Indebtedness. The Master Servicer
shall make reports of foreclosures and abandonments of any Mortgaged Property
for each year beginning in 2000. 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 Trust acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full
or partial satisfaction of a Home Equity 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 3.14. Advances by the Master Servicer.
(a) Not later than the close of business on the second Business Day
prior to each Distribution Date, the Master Servicer shall remit to the
Trustee for deposit in the Certificate Account an amount to be distributed on
such Distribution Date pursuant to Section 5.01, equal to the sum of 30 days
of interest on each Home Equity Loan for which a monthly payment has not been
received by the Master Servicer with respect to the related Collection Period
(net of the Master Servicing Fee) by the close of business on the related
Determination Date; such amount being defined herein as the "Monthly Advance".
The Master Servicer may fund all or a portion of the Monthly Advance with
respect to the Home Equity Loans by instructing the Trustee on the related
Determination Date to use funds deposited in the Collection Account which are
not part of Available Funds for the related Distribution Date; provided that
if such funds are so used the Master Servicer on notice to the Trustee shall
replace such funds on or before any subsequent Determination Date on which
such funds are required to be part of the Available Funds.
(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 in its good faith business judgment that such
Servicing Advance or Monthly Advance would, if made, constitute a
Nonrecoverable Advance.
Section 3.15. Superior Liens. To the extent not previously filed by
the related original lenders, the Master Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a
First Lien for the protection of the Trustee's interest, where permitted by
local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceedings in order
to foreclose such junior lienholder's equity of redemption.
If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First
Lien, or has declared or intends to declare a default under the mortgage or
the promissory note secured thereby, or has filed or intends to file an
election to have the Mortgaged Property sold or foreclosed, the Master
Servicer shall take, on behalf of the Trust, whatever actions are necessary to
protect the interests of the Certificateholders and the Certificate Insurer,
and/or to preserve the security of the related Home Equity Loan, subject to
the application of the REMIC Provisions in accordance with the terms of this
Agreement. The Master Servicer shall immediately notify the Trustee and the
Certificate Insurer in writing 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. Such advance shall be a Servicing Advance. 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 Home
Equity Loan and in no event in an amount that is greater than the Principal
Balance of the related Home Equity Loan, except with consent of the
Certificate Insurer, which consent shall not be unreasonably withheld. The
Master Servicer shall thereafter take such action as is necessary to recover
the amount so advanced.
Notwithstanding the foregoing, the Master Servicer may change, modify
or amend any or all of the foregoing procedures if such change, modification
or amendment is applicable to the Home Equity Loans and all other home equity
loans serviced by the Master Servicer and is otherwise in accordance with
Section 3.01.
Section 3.16. 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 right to accelerate the maturity of the related Home Equity Loan
under any "due-on-sale" clause contained in the related Mortgage or Mortgage
Note; provided, however, that the Master Servicer shall not exercise any such
right if the "due-on-sale" clause, in the reasonable belief of the Master
Servicer, is not enforceable under applicable law or, in the commercially
reasonable judgment of the Master Servicer, such conveyance would not be
materially adverse to the interests of the Certificateholders or the
Certificate Insurer. The Master Servicer shall to the extent it has knowledge
of such conveyance or prospective conveyance, be authorized to enter into an
assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person shall
become liable under the Mortgage Note and, unless prohibited by applicable
law, the Mortgagor shall remain liable thereon. The Master Servicer, in
accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Home Equity Loans, is also authorized to enter into a
substitution of liability whereby such person is substituted as Mortgagor and
becomes liable under the Mortgage Note. The Master Servicer shall notify the
Trustee and the Certificate Insurer that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which original shall be added by the
Trustee to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. In connection with any
assumption or substitution agreement entered into pursuant to this Section,
the Master Servicer shall not change the Loan Rate or the Monthly Payment,
defer or forgive the payment of principal or interest, reduce the outstanding
principal amount or extend the final maturity date on such Home Equity Loan.
Any fee collected by the Master Servicer for consenting to such conveyance or
entering into such modification shall be retained by or paid to the Master
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Home Equity Loan by operation of law or any assumption which
the Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 3.17. Payment of Taxes, Insurance and Other Charges. With
respect to each Home Equity Loan, the Master Servicer shall not be required to
maintain records relating to payment of taxes or insurance (including hazard
insurance).
Section 3.18. Compensating Interest. Not later than the close of
business on the second Business Day prior to each Distribution Date, the
Master Servicer shall remit to the Collection Account an amount equal to the
Compensating Interest for such Distribution Date. Except for any distributions
to the Master Servicer pursuant to Section 5.01(a)(xi), the Master Servicer
shall not have the right to reimbursement for any amounts deposited to the
Collection Account pursuant to this Section.
ARTICLE IV
The Certificate Insurance Policy
Section 4.01. The Certificate Insurance Policy. As soon as possible,
and in no event later than 12:00 noon, New York time, on the second Business
Day immediately preceding each Distribution Date, the Trustee shall, based on
information provided to it by the Master Servicer, determine the amount of
Available Funds (net of any Insured Payments) for such Distribution Date minus
the amount of any Premium Amount and Trustee Fee to be paid on such
Distribution Date.
If for any Distribution Date an Insured Payment is due, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the
Certificate Insurer no later than 12:00 noon, New York time, on the second
Business Day immediately preceding such Distribution Date. The Notice shall
constitute a claim for an Insured Payment in an amount equal to the Insured
Payment due with respect to the Class A Certificates for and on such
Distribution Date. Upon receipt of the Insured Payments, at or prior to the
latest time payments of the Insured Payments are to be made by the Certificate
Insurer pursuant to the Certificate Insurance Policy, on behalf of the Class A
Certificateholders, the Trustee shall deposit such Insured Payments in the
Certificate Account in accordance with the Notice and the Certificate
Insurance Policy and shall distribute such Insured Payments only in accordance
with Section 5.01(a)(iii), (iv) and (v).
Insured Payments disbursed by the Trustee from proceeds of the
Certificate Insurance Policy shall not be considered payment by the Trust nor
shall such payments discharge the obligation of the Trust with respect to such
Class A Certificate, and the Certificate Insurer shall become the owner of
such unpaid amounts due from the Trust in respect of such Insured Payments as
the deemed assignee of such Holder and shall be entitled to be reimbursed
therefore in accordance with Section 5.01. The Trustee hereby agrees on behalf
of each Holder of a Class A Certificate for the benefit of the Certificate
Insurer that it and they recognize that to the extent the Certificate Insurer
makes Insured Payments, either directly or indirectly (as by paying through
the Trustee), to the Class A Certificateholders, the Certificate Insurer will
be entitled to be reimbursed therefore in accordance with Section 5.01.
Section 4.02. Claims Upon the Certificate Insurance Policy. The
Trustee shall comply with the provisions of the Certificate Insurance Policy
with respect to claims upon the Certificate Insurance Policy.
The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon two Business Day's prior written notice to
the Trustee.
In the event that the Trustee has received a certified copy of an
order of the appropriate court that any amount distributed on the Class A
Certificates, including any amounts represented by an Insured Payment, has
been voided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Certificate Insurer, shall
comply with the provisions of the Certificate Insurance Policy to obtain
payment by the Certificate Insurer of such voided amount distributed, and
shall, at the time it provides notice to the Certificate Insurer, notify, by
mail to Certificateholders of the affected Class A Certificates that, in the
event any such Certificateholder's amount distributed is so recovered, such
Certificateholder will be entitled to payment pursuant to the Certificate
Insurance Policy, a copy of which shall be made available through the Trustee
or the Certificate Insurer, and the Trustee shall furnish to the Certificate
Insurer its records evidencing the payments which have been made by the
Trustee and subsequently recovered from such Certificateholders, and dates on
which such payments were made.
The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law
(a "Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Certificateholder of Class A Certificates, by its purchase
of Class A Certificates, the Master Servicer, the Seller and the Trustee agree
that, the Certificate Insurer (so long as no Certificate Insurer Default
exists) may at any time during the continuation of any proceeding relating to
a Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be
subrogated to, and each Class A Certificateholder, the Master Servicer, the
Seller and the Trustee hereby delegate and assign to the Certificate Insurer,
to the fullest extent permitted by law, the rights of the Master Servicer, the
Seller, the Trustee and each Class A Certificateholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party
to any adversary proceeding or action with respect to any court order issued
in connection with any such Preference Claim.
ARTICLE V
Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions.
(a) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account the Available Funds, together with any Insured Payments
under the Certificate Insurance Policy, and make distributions thereof as
described below and to the extent of such amounts in the following order of
priority:
(i) to the Trustee, the Trustee Fee for such Distribution Date
and to the Certificate Insurer, the Premium Amount owing to the
Certificate Insurer under the Insurance Agreement;
(ii) to the Master Servicer, the amount of any accrued and
unpaid Master Servicing Fee for such Distribution Date;
(iii) concurrently to the holders of each Class of Class A
Certificates pro rata, the Current Monthly Interest Amount for such
Class for such Distribution Date;
(iv) concurrently to the holders of each Class of Class A
Certificates pro rata, any Unpaid Interest Shortfalls, together with
any Interest on Unpaid Interest Shortfalls, for such Class for such
Distribution Date;
(v) to the holders of the Class A Certificates in reduction of
their Class Principal Balances, an aggregate amount equal to the
Formula Principal Distribution Amount for such Distribution Date (but
not in excess of the Certificate Principal Balance or in excess of
the aggregate amount, if any, necessary to be distributed on such
Distribution Date so that the Overcollateralization Amount equals the
Required Overcollateralization Amount), such amount to be allocated
among the Class A Certificates as follows;
(a) to the Class A-4 Certificateholders, up to the Priority
Amount for such Distribution Date;
(b) sequentially, to the holders of the Class A-1, Class
A-2 and Class A-3 Certificates, in that order, until the Class
Principal Balance of each such Class has been reduced to zero;
and
(c) to the Class A-4 Certificateholders, without regard to
the Priority Amount for such Distribution Date, until the Class
Principal Balance of such Class has been reduced to zero;
(vi) to the Certificate Insurer, the Reimbursement Amount owing
to the Certificate Insurer hereunder;
(vii) to the Master Servicer, the amount of Nonrecoverable
Advances not previously reimbursed;
(viii) sequentially, to the holders of the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates, in that order, until the Class
Principal Balance of each such Class has been reduced to zero, an
amount equal to the Distributable Excess Spread for such Distribution
Date;
(ix) to the Certificate Insurer, any other amounts owing to the
Certificate Insurer under the Insurance Agreement;
(x) concurrently, to the holders of each Class of Class A
Certificates pro rata, any Prepayment Interest Shortfall for such
Distribution Date and any Prepayment Interest Shortfalls that were
not paid on prior Distribution Dates pursuant to this clause (x),
with interest thereon (to the extent permitted by applicable law) at
the applicable Certificate Rate that accrued during the related
Interest Period on the amount of any unpaid Prepayment Interest
Shortfalls from prior Distribution Dates;
(xi) to the Master Servicer, first to the reimbursement for any
Compensating Interest, second, to the reimbursement of any
unreimbursed Servicing Advances and third, to the reimbursement of
any unreimbursed Monthly Advances;
(xii) to the Trustee, (A) any fee payable in connection with a
termination of any Servicing Agreement pursuant to Section 3.01(e)
and (B) all costs or expenses associated with any transfer of
servicing pursuant to Section 3.01(e), 3.01(g) or 8.01(b).
(xiii) to the holder of the Class R Certificate, any remaining
balance (after deducting and paying to the Master Servicer the
amounts, if any, necessary to reimburse the Master Servicer pursuant
to Section 7.03(b)).
Notwithstanding the foregoing, on any Distribution Date during the
continuance of a Certificate Insurer Default, all distributions pursuant to
clauses (v) and (viii) above shall be made pro rata on such Classes of
Certificates, based on their respective Class Principal Balances on such
Distribution Date.
(b) 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 wire transfer to an account with a banking or financial
institution in the United States or check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
(c) 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, the Certificate Insurer or the
Seller shall have any responsibility therefor except as otherwise provided by
applicable law.
(d) Distribution of Insured Payments. With respect to any
Distribution Date, in the event of an Insured Payment, the Trustee shall make
such payments from the amount drawn under the Certificate Insurance Policy
pursuant to Section 4.01 for such Distribution Date in accordance with Section
5.01(a)(iii), (iv) and (v). The Certificate Insurer shall be deemed to be the
assignee of the Holders of the Class A Certificates to the extent of any
amount of Insured Payments disbursed by the Trustee from proceeds of the
Certificate Insurance Policy and to such extent, shall be the subrogee of each
such Holder of the Class A Certificates; provided, however, that any such
right of subrogation inuring to the Certificate Insurer hereunder or otherwise
shall be and is subordinated to the rights under this Agreement of the Holders
of the Class A Certificates and in accordance with Section 5.01(a).
Section 5.02. Statements.
(a) Not later than 12:00 noon, New York time, on each Determination
Date, the Master Servicer shall deliver to the Trustee a monthly report (the
"Monthly Report") in a form and format mutually agreeable to the Master
Servicer and the Trustee containing the information set forth in Exhibit D
hereto as to each Home Equity Loan as of the end of the preceding Collection
Period and such other information as the Trustee shall reasonably require,
including, without limitation, all information necessary to enable the Trustee
to make the payments required by Section 5.01(a). Each Monthly Report shall be
accompanied by an Officer's Certificate of the Master Servicer. On the
Business Day preceding the Distribution Date, the Trustee shall deliver to the
Master Servicer, the Certificate Insurer and the Depositor, by telecopy, with
a hard copy thereof to be delivered on such Distribution Date, a copy of the
Monthly Report containing the information set forth below with respect to such
Distribution Date:
(i) The Available Funds and the amount of the Insured Payment,
if any, for the related Distribution Date;
(ii) The Class Principal Balance of each Class, the Pool
Principal Balance as reported in the prior Monthly Report or, in the
case of the first Determination Date, the Class Principal Balance of
each Class and the Cut-Off Date Pool Principal Balance;
(iii) The aggregate amount of collections received on the Home
Equity Loans on or prior to such Determination Date in respect of the
preceding Collection Period, separately stating the amounts received
in respect of principal and interest;
(iv) The number and Principal Balances of all Home Equity Loans
that were the subject of Principal Prepayment In Full during the
related Collection Period;
(v) The amount of all Curtailments that were received during the
Collection Period;
(vi) The principal portion of all Monthly Payments received
during the Collection Period;
(vii) The interest portion of all Monthly Payments received on
the Home Equity Loans during the Collection Period;
(viii) The amount required to be paid by the Seller or the
Master Servicer (reported separately) pursuant to Sections 2.02,
2.05, 2.06 or 3.01(j);
(ix) The amount of the Monthly Advances and the Compensating
Interest payment to be made with respect to such Distribution Date;
(x) The Formula Principal Distribution Amount for the related
Distribution Date, the portion thereof to be distributed on each
Class of Certificates then entitled to distributions of principal;
(xi) The Class Interest Distribution for the related
Distribution Date to be distributed on each Class of Certificates;
(xii) The amount to be distributed to the Class R
Certificateholders for the related Distribution Date;
(xiii) The Certificate Principal Balance (after giving effect to
any distributions of principal to be made on the Class A Certificates
on the related Distribution Date);
(xiv) The weighted average remaining term to maturity of the
Home Equity Loans and the weighted average Loan Rate;
(xv) (a) The Master Servicing Fee to be retained by the Master
Servicer and (b) the amounts paid to the Certificate Insurer,
separately stated, and the Reimbursement Amount to be paid to the
Certificate Insurer pursuant to Section 5.01(a)(v) and other amounts
due and owing to the Certificate Insurer under the Insurance
Agreement and to be paid pursuant to Section 5.01(a)(ix);
(xvi) The amount of all payments or reimbursements to the Master
Servicer pursuant to Section 3.03;
(xvii) The Overcollateralization Amount, the Required
Overcollateralization Amount and the Distributable Excess Spread for
such Distribution Date;
(xviii) The number of Home Equity Loans outstanding at the
beginning and at the end of the related Collection Period;
(xix) The Pool Principal Balance and the aggregate Principal
Balance of the three (3) largest Home Equity Loans as of the end of
the Collection Period related to such Distribution Date;
(xx) The number and aggregate Principal Balances of Home Equity
Loans (w) as to which the Monthly Payment is delinquent for 30-59
days, 60-89 days and 90 or more days, respectively, (x) that have
become REO Properties, in each case as of the end of the preceding
Collection Period, (y) that are in foreclosure and (z) the Mortgagor
of which is the subject of any bankruptcy or insolvency proceeding;
(xxi) The unpaid principal amount of all Home Equity Loans that
became Liquidated Home Equity Loans during such Collection Period;
(xxii) The Net Liquidation Proceeds received during such
Collection Period;
(xxiii) The book value (within the meaning of 12 C.F.R. Section
571.13 or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xxiv) Whether a Servicer Default has occurred or is continuing;
(xxv) Such other information as is required by the Code and
regulations thereunder to be made available to Holders of the Class A
Certificates;
(xxvi) The aggregate Premium Amount to be paid to the
Certificate Insurer pursuant to Section 5.01(a)(i); and
(xxvii) The cumulative amount of Liquidation Loan Losses since
the Cut-Off Date.
(xxviii) The Monthly Loss Rate and the Rolling Twelve Month Loss
Rate for such Distribution Date.
The Trustee shall forward such report concurrently with each
distribution to the Certificateholders, the Rating Agencies, the Certificate
Insurer, Bloomberg (at 499 Park Avenue, New York, New York 10022, Attention:
Mike Geller) and Intex Solutions (at 35 Highland Circle, Needham,
Massachusetts 02144, Attention: Harold Brennman) on the related 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 Monthly Report and the hard copy thereof, the Master Servicer may rely
upon the latter.
The delivery of such Monthly Report to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Master
Servicer's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officer's Certificates).
In the case of information furnished pursuant to subclauses (x) and
(xi) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-Off Date.
(b) Within 60 days after the end of each calendar year, the Trustee
shall furnish to each Person who at any time during the calendar year was a
Certificateholder of a Class A Certificate, 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 (x) and (xi)
above, aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force
from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class
R Certificateholders a copy of the reports forwarded to the Class A
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person
a statement containing the information provided pursuant to the previous
paragraph aggregated for such calendar year or applicable portion thereof
during which such Person was a Class R Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
(e) The Master Servicer and the Trustee shall furnish to the
Certificate Insurer 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 Certificate
Insurer as the case may be, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions (if requested in writing) as
the Certificate Insurer as the case may be, may reasonably require; provided
that the Master Servicer and the Trustee shall be entitled to be reimbursed by
the Certificate Insurer, for their respective fees and actual expenses
associated with providing such reports, if such reports are not generally
produced in the ordinary course of their respective businesses or readily
obtainable.
(f) Reports and computer tapes furnished by the Master Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent provided
in this Agreement and to the extent required by law or to the Rating Agencies,
the Depositor, the Certificate Insurer, and to the extent the Seller instructs
the Trustee in writing to furnish information regarding the Trust or the Home
Equity Loans to third-party information providers. No Person entitled to
receive copies of such reports or tapes or lists of Certificateholders shall
use the information therein for the purpose of soliciting the customers of the
Seller or for any other purpose except as set forth in this Agreement.
Section 5.03. Certificate Account. The Trustee shall establish with
Norwest Bank Minnesota, National Association a separate trust account (the
"Certificate Account") titled "Norwest Bank Minnesota, National Association,
as Trustee, of Banc One Financial Services Home Equity Loan Trust 1999-1
Certificate Account." The Certificate Account shall be an Eligible Account.
The Trustee shall deposit amounts representing payments on and any collections
in respect of the Home Equity Loans received by it, if any, immediately
following receipt thereof, including, without limitation, all amounts
withdrawn from the Collection Account pursuant to Section 3.03 for deposit to
the Certificate Account. Amounts on deposit in the Certificate Account may be
invested in Eligible Investments pursuant to Section 5.04.
Section 5.04. Investment of Accounts.
(a) So long as no Servicer Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by or in the name of the Trustee shall be invested and
reinvested by the Trustee, as directed in writing by the Master Servicer, in
one or more Eligible Investments (including Eligible Investments which are
obligations of the Master Servicer or any of its Affiliates if such Eligible
Investments otherwise qualify as Eligible Investments) bearing interest or
sold at a discount; such direction to be signed by a Servicing Officer. If a
Servicer 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 paragraphs (v) or (vi) of the
definition of Eligible Investments. No such investment in any Account shall
mature later than the Business Day immediately preceding the next Distribution
Date.
(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. No liquidation of
amounts of investments in an Account will be required prior to maturity unless
the proceeds are needed for disbursements.
(c) The Trustee shall not in any way be held liable for the selection
of Eligible Investments to be purchased or sold pursuant to this Section or by
reason of any investment loss or charge or any insufficiency in any Account
held by or in the name of the Trustee resulting from any investment loss on
any Eligible Investment included therein unless the Trustee's failure to
perform in accordance with this Section is the cause of such loss or charge
except to the extent that the Trustee is the obligor and has defaulted
thereon. The Trustee shall have no liability in respect of losses incurred as
a result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Master Servicer to provide timely written
investment direction.
(d) The Trustee shall invest and reinvest funds in the Accounts held
by or in the name of 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 5.04(a), but only in one or more Eligible Investments.
(e) So long as no Servicer Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
realized earnings on, funds deposited in the Collection Account and the
Certificate Account shall be for the benefit of the Master Servicer as
servicing compensation (in addition to the Master Servicing Fee), and shall be
subject to withdrawal on or before the fourth Business Day of the month
following the month in which such income or gain is received. In the case of
investments in Eligible Investments made at the written direction of the
Master Servicer for which there is a loss in excess of the income and gain
thereon, the Master Servicer shall deposit in the Collection Account or the
Certificate Account, as applicable, the amount of such net loss immediately
upon realization from the Master Servicer's own funds, without any right to
reimbursement therefor.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Class A Certificates and
Class R Certificates shall be substantially in the forms set forth in Exhibits
A and B hereto, respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the
Depositor concurrently with the sale and assignment to the Trustee of the
Trust. Each Class of Class A Certificates shall be initially evidenced by one
or more certificates representing a fraction of the Original Class Principal
Balance and shall be held in minimum dollar denominations of $1,000 and dollar
multiples in excess thereof, except that one Class of each Class of the Class
A Certificate may be in a different denomination so that the sum of the
denominations of all outstanding Class A Certificates shall equal the Original
Class Principal Balance.
The Certificates shall be executed on behalf of the Trust 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 an authorized officer of
the Trustee substantially in the form provided for herein, and such
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Subject to Section 6.02(c), the Class A Certificates shall be Book-Entry
Certificates. The Class R Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(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 Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust 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 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: (i) registration of such
Certificates may not be transferred by the Trustee except to another
Depository or its nominee; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership
and transfers of such Certificates; (iii) ownership and transfers of
registration of such Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository as
representative of the Certificate Owners of the Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners;
and (vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners; and (vii) the
direct and indirect participants of the Depository shall have no rights under
this Agreement under or with respect to any of the Certificates held on their
behalf by the Depository, and the Depository may be treated by the Trustee and
its agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm 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 (i) (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, (ii) the Depositor, at its sole
option, with the consent of the Trustee, elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of a Servicer
Default, the Certificate Owners of each Class of Class A Certificates
representing Percentage Interests aggregating not less than 51% advises the
Trustee and Depository through the Financial Intermediaries and the Depository
Participants in writing that the continuation of a book-entry system through
the Depository to the exclusion of definitive, fully 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 each Class of 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 (ii) above, or the Seller's
expense, in the case of (i) and (iii) above, execute on behalf of the Trust
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) Except with respect to the initial transfer of the Class R
Certificates by the Depositor to or upon the order of the Seller or its
Affiliate, no transfer, sale, pledge or other disposition of any Class R
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee (i) unless
such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit H) 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 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 the 1933 Act or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an
expense of the Trustee or the Depositor or (ii) the Trustee shall require the
transferee to execute a certificate (in substantially the form attached hereto
as Exhibit E) and an investment letter (in substantially the form attached
hereto as Exhibit H) acceptable to and in form 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 Class R 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 Class R Certificate or a Class A Certificate of a
Class of Class A Certificates with respect to which a Widely-Held
Certification was not delivered (each, an "ERISA-Restricted Certificate")
shall be made unless the Trustee shall have received either (i) a
representation from the transferee of such Certificate, acceptable to and in
form satisfactory to the Trustee and the Depositor, (such requirement is
satisfied by the Trustee's receipt of a representation letter from the
transferee substantially in the form of Exhibit E hereto, as appropriate), to
the effect that such transferee is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code,
nor a person acting on behalf of any such plan or arrangement nor using the
assets of any such plan or arrangement to effect such transfer or (ii) in the
case of any such ERISA-Restricted Certificate presented for registration in
the name of an employee benefit plan subject to ERISA or a plan or arrangement
subject to Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement or using such plan's or
arrangement's assets, an Opinion of Counsel in form satisfactory to the
Trustee which Opinion of Counsel shall not be an expense of either the Trustee
or the Trust, addressed to the Trustee, to the effect that the purchase or
holding of such ERISA-Restricted Certificate will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee
to any obligation in addition to those expressly undertaken in this Agreement
or to any liability. For purposes of clause (i) of the preceding sentence,
such representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA-Restricted Certificate (or the acceptance
by a Certificate Owner of the beneficial interest in any such Class of
ERISA-Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to
the Depositor. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate to or on behalf of an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code without the delivery to the Trustee of an Opinion of
Counsel in form satisfactory to the Trustee as described above shall be void
and of no effect; provided, however, that the restriction set forth in this
sentence shall not be applicable if there has been delivered to the Trustee an
Opinion of Counsel in form satisfactory to the Trustee to the effect that the
purchase or holding of an ERISA-Restricted Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee to any obligation in addition to those expressly undertaken in
this Agreement. The Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 6.02(d) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any Holder of
any ERISA-Restricted Certificate that was in fact an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code
or a Person acting on behalf of any such plan at the time it became a Holder
or, at such subsequent time as it became such a plan or Person acting on
behalf of such a plan, all payments made on such ERISA-Restricted Certificate
at and after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding Holder of
such Certificate that is not such a plan or Person acting on behalf of a plan.
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the 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 Class R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition
to registration of the transfer, require delivery to it, in form
satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit I hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person
who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by
the transfer restrictions applicable to the Class R
Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee
shall, in violation of the provisions of this Section, become a
Holder of a Class R Certificate, then the prior Holder of such Class
R Certificate that is a Permitted Transferee shall, upon discovery
that the registration of transfer of such Class R Certificate was not
in fact permitted by this Section, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Class R Certificate
that is in fact not permitted by this Section or for making any
distributions due on such Class R Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to
recover from any Holder of a Class R Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Class R Certificate. Any such
distributions so recovered by the Trustee shall be distributed and
delivered by the Trustee to the prior Holder of such Class R
Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Class R
Certificate or any other Person having an Ownership Interest therein,
to notify the Depositor to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Class R
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section or
any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust to fail to qualify as a
REMIC. The Trustee shall be the initial holder of the Tax Matter Person
Residual Interest.
(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
(i) any mutilated Certificate is surrendered to the Certificate Registrar or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee 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 on behalf of the
Trust, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Certificate Registrar) in connection
therewith. Any duplicate Certificate issued pursuant to this Section, shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar, the Certificate Insurer, any Paying
Agent and any agent of the Master Servicer, the Depositor, the Certificate
Registrar, any Paying Agent, the Certificate Insurer or the Trustee may
(subject to Section 5.01(b)) 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 Trust, the
Trustee, the Certificate Insurer, the Depositor, the Certificate Registrar,
the Paying Agent 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 Certificate 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 Certificate Account
pursuant to Section 5.01 and for the purpose of making the distributions
referred to in Section 5.01 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 and the Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold
all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise
comply with the provisions of this Agreement applicable to it.
ARTICLE VII
The Seller, 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 the 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 herein 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 Person
into which the Seller, the Master Servicer or Depositor may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Seller, the Master Servicer or the Depositor shall
be a party, or any Person 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; provided,
however, that the successor Master Servicer shall satisfy all the requirements
of Section 8.02 with respect to the qualifications of a successor Master
Servicer.
Section 7.03. Limitation on Liability of the Master Servicer and
Others.
(a) 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 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; 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 Home
Equity 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 Home Equity Loan or Home Equity Loans (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of its
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of its reckless disregard of obligations and duties
hereunder; and such amounts shall be payable only pursuant to Section
3.03(vii).
(b) The Master Servicer may 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 only from amounts distributable pursuant to Section
5.01(a)(xii). The Master Servicer's right to indemnity or reimbursement
pursuant to this Section shall survive any resignation or termination of the
Master Servicer pursuant to Section 7.04 or 8.01 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination). This paragraph shall apply to the Master Servicer solely in its
capacity as Master Servicer hereunder and in no other capacities.
Section 7.04. Master Servicer Not to Resign. Subject to the
provisions of Section 7.02, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) upon determination that
the performance of its obligations or duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it or its subsidiaries
or Affiliates, the other activities of the Master Servicer so causing such a
conflict being of a type and nature carried on by the Master Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Master Servicer has proposed
a successor master servicer to the Trustee in writing and such proposed
successor master servicer is reasonably acceptable to the Trustee; (b) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor master servicer stating that the proposed
appointment of such successor master servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current ratings of
the Class A Certificates; and (c) such proposed successor master servicer is
reasonably acceptable to the Certificate Insurer, as evidenced by a letter to
the Trustee; provided, however, that no such resignation by the Master
Servicer shall become effective until such successor master servicer 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; and provided,
further, that any Affiliate of the Master Servicer whose senior, unsecured
long-term debt rating is at least "Baa2" by Moody's or "BBB" by S&P at the
time of appointment shall be deemed to be reasonably acceptable to the
Trustee. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02
as obligations that survive the resignation or termination of the Master
Servicer. Any such determination permitting the resignation of the Master
Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee and the Certificate Insurer.
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 and the Certificate Insurer with written
notice prior to the delegation of any of its duties to any Person other than
to Banc One Financial Services, Inc., or any of the Master Servicer's
Affiliates or their respective successors and assigns.
Section 7.06. Indemnification of the Trust by the Master Servicer.
The Master Servicer shall indemnify and hold harmless the Trust and the
Trustee and its officers, directors, agents and employees from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Master Servicer's willful misfeasance, bad faith or gross negligence in
the performance of its activities in servicing or administering the Home
Equity Loans pursuant to this Agreement, including, but not limited to, any
judgment, award, settlement, reasonable fees of counsel of its selection and
other costs or expenses incurred in connection with the defense of any actual
or threatened action, proceeding or claim related to the Master Servicer's
misfeasance, bad faith or gross negligence. Any such indemnification shall be
payable by the Master Servicer and shall not be payable from the assets of the
Trust. The provisions of this Section 7.06 shall survive termination of the
Agreement or the earlier of the resignation or removal of the Trustee.
Section 7.07. Inspection. The Master Servicer shall (and shall
require any Servicer in the related Servicing Agreement to) afford the
Certificate Insurer, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer in respect of its
rights and obligations hereunder and access to officers of the Master Servicer
and each Servicer responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Certificate Insurer the Master Servicer's most
recent publicly available financial statements and each Servicer's most recent
financial statements (annual or quarterly statements, as the case may be) and
such other information relating to their capacity to perform their obligations
under this Agreement as the Master Servicer or such Servicer possesses.
ARTICLE VIII
Default
Section 8.01. Servicer Default.
(a) If any one of the following events ("Servicer Default") shall
occur and be continuing:
(i) (A) The failure by the Master Servicer to make any Monthly
Advance (other than a Nonrecoverable Advance); or (B) any other
failure by the Master Servicer to deposit in the Collection Account
or the Certificate Account any deposit required to be made under the
terms of this Agreement which continues unremedied for a period of
two Business Days after the date upon which written notice of such
failure shall have been given to the Master Servicer by the Trustee
or to the Master Servicer and the Trustee by the Certificate Insurer
or holders of Class A Certificates evidencing a Percentage Interest
of at least 25%; or
(ii) The failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
30 days, or the failure by the Master Servicer duly to observe or
perform, in any material respect, any other covenants, obligations or
agreements of the Master Servicer as set forth in this Agreement,
which failure continues unremedied for a period of 30 days, after the
date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Master Servicer by the
Trustee or to the Master Servicer and the Trustee by the Certificate
Insurer or holders of Class A Certificates evidencing a Percentage
Interest of at least 25%; 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; provided, however,
that if the Master Servicer voluntarily elects not to contest or
challenge such decree or order, such 60 day period shall not apply,
and a Servicer Default shall be deemed to have occurred upon the
entry of such decree or order;
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Master Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(v) The occurrence of a Master Servicer Termination Delinquency
Rate Trigger or a Master Servicer Termination Loss Trigger.
(b) Then, and in each and every such case, so long as a Servicer
Default shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i) (A) above, if such Monthly Advance is not
made by 4:00 P.M., New York time, on the second Business Day following written
notice to the Master Servicer of such event given to the Master Servicer by
the Trustee, the Trustee shall terminate by written notice to the Master
Servicer all of the rights and obligations of the Master Servicer under this
Agreement and the Trustee, or a successor master servicer appointed in
accordance with the terms of Section 8.02, shall immediately make such Monthly
Advance and assume, pursuant to the terms of Section 8.02, the duties of a
successor Master Servicer and (y) in the case of (i) (B), (ii), (iii) and (iv)
above, the Trustee shall, at the direction of the Certificate Insurer or the
Holders of each Class of Class A Certificates evidencing Percentage Interests
aggregating not less than 51% (with the consent of the Certificate Insurer so
long as no Certificate Insurer Default exists), by notice then given in
writing to the Master Servicer, terminate all of the rights and obligations of
the Master Servicer as servicer under this Agreement. Upon the written notice
to the Master Servicer of the occurrence of clause (v) above, the Trustee at
the direction of the Certificate Insurer may declare a Servicer Default and
may terminate all of the rights and obligations of the Master Servicer
hereunder by giving written notice of such action to the Seller, the Master
Servicer, the Depositor and the Trustee. The Certificate Insurer agrees that,
in making its decision to remove the Master Servicer under clause (v) above,
it shall consider, among other factors, whether the Master Servicer's
servicing practices have been in compliance with the servicing standards set
forth herein. Any notice given pursuant to this Section 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 Home Equity Loans or otherwise, shall pass to and be
vested in the Trustee or a duly appointed successor master servicer pursuant
to and under this Section; and, without limitation, the Trustee or such
successor master servicer 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 Home
Equity 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 Home Equity Loans. The Trustee shall be
entitled to be reimbursed by the Master Servicer for all costs associated with
the transfer of servicing, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Home Equity
Loans properly and effectively.
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 on or after any resignation pursuant
to Section 7.04(i) provided, that in the case of Section 7.04(i) the Opinion
of Counsel required by that Section shall have been received, the Trustee
shall immediately make any Monthly Advances which are then due and, within 90
days of receipt of the notice of termination or resignation of the Master
Servicer, will become the successor in all respects to the Master Servicer in
its capacity as Master Servicer under this Agreement and the transactions set
forth or provided for herein and 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 shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan Master Servicer
having a net worth of not less than $50,000,000 as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided that any such successor Master Servicer shall be acceptable to the
Certificate Insurer, as evidenced by the Certificate Insurer's prior written
consent which consent shall not be unreasonably withheld; provided, further,
that any Affiliate of the Master Servicer whose senior, unsecured long-term
debt rating is at least "Baa2" by Moody's or "BBB" by S&P at the time of
appointment shall be deemed to be reasonably acceptable to the Trustee; and
provided, further, 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 Home Equity 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
Master Servicer shall during the term of its service as Master Servicer (i)
continue to service and administer the Home Equity Loans for the benefit of
Certificateholders and the Certificate Insurer, (ii) maintain in force a
policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity
bond in respect of its officers, employees and agents to the same extent as
the Master Servicer is so required pursuant to Section 3.06.
Section 8.03. Waiver of Defaults. The Majority Certificateholders
with the consent of the Certificate Insurer (a copy of which shall be
delivered to the Trustee) or the Certificate Insurer may, on behalf of all
Certificateholders, waive any events permitting removal of the Master Servicer
as Master 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 Servicer 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, the Certificate Insurer and each Rating
Agency.
Section 8.05. Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be subrogated to the rights of the
Certificateholders and shall be deemed to be the Certificateholders for all
purposes (other than with respect to payment on the Certificates) and shall
have the right to exercise all rights of the Class A Certificateholders under
this Agreement and under each Class of Class A Certificates without any
further consent of the Class A Certificateholders, including, without
limitation:
(i) the right to require the Seller to repurchase Home Equity
Loans pursuant to Section 2.02 or 2.05;
(ii) the right to give notices of breach or to terminate the
rights and obligations of the Master Servicer as servicer pursuant to
Section 8.01 and to consent to or direct waivers of Master Servicer
defaults pursuant to Section 8.03;
(iii) the right to direct actions of the Trustee pursuant to
Section 8.01;
(iv) the right to direct the Trustee to investigate certain
matters pursuant to Section 9.02;
(v) the right to remove the Trustee pursuant to Section 9.07;
(vi) the right to direct foreclosures upon the failure of the
Master Servicer to do so in accordance with this Agreement; and
(vii) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 8.06. Trustee to Act Solely with Consent of the Certificate
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
(i) terminate the rights and obligations of the Master Servicer
as Master Servicer pursuant to Section 8.01;
(ii) agree to any amendment pursuant to Article XI, provided,
however, that such consent shall not be unreasonably withheld; or
(iii) undertake any litigation.
The Certificate Insurer may, in writing delivered to the Trustee and
in its sole discretion renounce all or any of its rights under Section 8.05,
8.06 or 8.07 or any requirement for the Certificate Insurer's consent for any
period of time.
Section 8.07. Home Equity Loans, Trust and Accounts Held for Benefit
of the Certificate Insurer. The Trustee shall hold the Trust and the Mortgage
Files (as set forth in Section 2.01) for the benefit of the Certificateholders
and the Certificate Insurer and all references in this Agreement and in the
Certificates to the benefit of Holders of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates unless, as stated in an Opinion of Counsel
addressed to the Trustee and the Certificate Insurer, such action is adverse
to the interests of the Certificateholders or diminishes the rights of the
Certificateholders or imposes additional burdens or restrictions on the
Certificateholders.
The Master Servicer hereby acknowledges and agrees that it shall
service the Home Equity Loans for the benefit of the Certificateholders and
for the benefit of the Certificate Insurer, and all references in this
Agreement to the benefit of or actions on behalf of the Certificateholders
shall be deemed to include the Certificate Insurer.
Section 8.08. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions
of this Article VIII and all other provisions of this Agreement which (a)
permit the Certificate Insurer to exercise rights of the Certificateholders,
(b) restrict the ability of the Certificateholders, the Master Servicer or the
Trustee to act without the consent or approval of the Certificate Insurer, (c)
provide that a particular act or thing must be acceptable to the Certificate
Insurer, (d) permit the Certificate Insurer to direct (or otherwise to
require) the actions of the Trustee, the Master Servicer or the
Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect,
shall be of no further force and effect and the Trustee shall administer the
Trust and perform its obligations hereunder solely for the benefit of the
Holders of the Certificates. Nothing in the foregoing sentence, nor any action
taken pursuant thereto or in compliance therewith, shall be deemed to have
released the Certificate Insurer from any obligation or liability it may have
to any party or to the Certificateholders hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law. At such time as the
Class A Certificates are no longer outstanding hereunder and no amounts owed
to the Certificate Insurer hereunder remain unpaid, the Policy shall be
terminated and returned to the Certificate Insurer, whereupon the Certificate
Insurer's rights hereunder shall terminate.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
of a Servicer Default and after the curing or waiver of all Servicer Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. If a Servicer Default
has occurred (which has not been cured or waived) of which a Responsible
Officer of the Trustee at the Corporate Trust Office has actual knowledge, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs, unless it is acting as successor Master Servicer in
which case it shall use, when acting in such capacity, the same degree of care
and skill required of the Master Servicer hereunder.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument. If any such instrument is found not be in the form specified
in this Agreement, on its face, the Trustee shall take action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's reasonable satisfaction, the Trustee will provide
notice thereof to the Certificate Insurer and will, at the expense of the
Seller, which expense shall be reasonable given the scope and nature of the
action required, take such further action as directed by the Certificate
Insurer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and
after the curing or waiver of all such Servicer 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 Certificate Insurer or the
Holders of Class A Certificates evidencing Percentage Interests
aggregating not less than 51% (with the consent of the Certificate
Insurer, so long as no Certificate Insurer Default exists (a copy of
which consent shall be delivered to the Trustee)) 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(a) or of a Servicer Default under Sections 8.01(v) or (vi), of
an Assignment Event or of a Deposit Event unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or event or the Trustee receives written
notice of such failure or event from the Master Servicer, the
Certificate Insurer or the Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer
in accordance with the terms of this Agreement.
Subject to the other provisions of this Agreement and without
limiting the generality of this Section, the Trustee shall have no duty (A) to
see to the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed
or levied against, any part of the Trust from funds available in the
Collection Account or any other source or (B) to confirm or verify the
contents of any reports or certificates of the Master Servicer delivered to
the Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.
Section 9.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may request and conclusively rely upon, and
shall be fully 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 of its selection and
any written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and
in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders or the Certificate Insurer, pursuant to the
provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; the right of the Trustee to
perform any discretionary act enumerated in this Agreement shall not
be construed as a duty, and the Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of
any such act; nothing contained herein shall, however, relieve the
Trustee of the obligations, upon the occurrence of a Servicer Default
(which has not been cured or waived) of which a Responsible Officer
at the Corporate Trust Office has actual knowledge, to exercise such
of the rights and powers vested in it by this Agreement, and to use
the same degree of care and skill in their exercise (unless it is
acting as Master Servicer) as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of a Servicer Default and after the
curing or waiver of all Servicer Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or documents, unless requested in
writing to do so by the Certificate Insurer or Holders of
Certificates evidencing Percentage Interests aggregating not less
than 51% (with the consent of the Certificate Insurer, so long as no
Certificate Insurer Default exists (a copy of which consent shall be
delivered to the Trustee)); 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.
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, attorneys, nominees or a custodian;
(viii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted herein; and
(ix) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
(b) It is intended that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify the
Trust as a REMIC as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) and as Tax
Matters Person on behalf of the REMIC, and that in such capacities, it shall:
(i) prepare, sign and file, or cause to be prepared and filed,
in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Return (Form 1066) and any other Tax Return required to be
filed by the Trust, using a calendar year as the taxable year for the
Trust;
(ii) make, or cause to be made, an election, on behalf of the
Trust, to be treated as a REMIC on the federal tax return of the
REMIC for their first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Master Servicer, the Depositor, the
Certificateholders and the Internal Revenue Service and any other
relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance
with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust are within its
control, conduct such affairs of the Trust at all times that any
Certificates are outstanding so as to maintain the status of the
Trust as a REMIC under the REMIC Provisions and any other applicable
federal, state and local laws, including, without limitation,
information reports relating to "original issue discount," as defined
in the Code, based upon a 30% CPR Prepayment Assumption and
calculated by using the issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status
of the Trust;
(vi) pay the amount of any and all federal, state and local
taxes and prohibited transaction taxes as defined in Section 860F of
the Code, other than any amount due as a result of a transfer or
attempted or purported transfer in violation of Section 6.02, imposed
on the Trust when and as the same shall be due and payable (but such
obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings). The
Trustee shall be entitled to reimbursement in accordance with Section
9.05;
(vii) ensure that any such returns or reports filed on behalf of
the Trust by the Trustee are properly executed by the appropriate
person;
(viii) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any
taxable year of the Trust, enter into settlement agreements with any
government taxing agency, extend any statute of limitations relating
to any item of the Trust and otherwise act on behalf of the Trust in
relation to any tax matter involving the Trust;
(ix) as provided in Section 2.12, make available information
necessary for the computation of any tax imposed (1) on transferors
of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will cooperate with the Master Servicer
in the foregoing matters and that it will sign, as Trustee, any and
all Tax Returns required to be filed by the Trust. Notwithstanding
the foregoing, at such time as the Trustee becomes the successor
Master Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Master Servicer;
(x) upon receipt of written request and reasonable compensation,
make available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to
compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Class R Certificate to any Person who is not
a Permitted Transferee, including the information described in
Treasury regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with
respect to the "excess inclusions" of such Class R Certificate and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an
Ownership Interest in a Class R Certificate having as among its
record holders at any time any Person that is not a Permitted
Transferee;
(xi) Following the Closing Date, and except as otherwise
provided in this Agreement, the Trustee shall not knowingly accept
any contribution of assets to the Trust unless it shall have been
provided with an Opinion of Counsel at the expense of the party
delivering such assets acceptable to it and the Certificate Insurer
to the effect that the inclusion of such assets in the Trust will not
cause the Trust to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the Trust to any tax under
the REMIC Provisions or other applicable provisions of federal, state
and local law or ordinances; and
(xii) The Trustee agrees to indemnify the Trust, the Certificate
Insurer and the Master Servicer for any taxes and costs, including,
without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust, the Certificate Insurer or the Master
Servicer, as a result of a negligent or willful breach of the
Trustee's covenants set forth in this Section.
Section 9.03. Trustee Not Liable for Certificates or Home Equity
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 Depositor, 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 Home Equity 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 Home Equity 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 Home Equity Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than the Trustee acting as Master Servicer if
the Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02); the validity of the assignment of any Home Equity Loan to the Trustee
or of any intervening assignment; the completeness of any Home Equity Loan;
the performance or enforcement of any Home Equity Loan (other than the Trustee
acting as Master Servicer 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 the Trustee as Master
Servicer if the Trustee shall assume the duties of the Master Servicer
pursuant to Section 8.02), any Master Servicer 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 Master Servicer taken in the
name of the Trustee; the failure of the Master Servicer or any Master Servicer
to act or perform any duties required of it as a third-party independent
contractor 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 File pursuant to Section 2.01. The Trustee shall
have no responsibility for filing any financing or continuation statement in
any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder (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 Certificate
Insurer, the Master Servicer or the Depositor and their Affiliates.
Section 9.05. Trustee Fees and Expenses. The Trustee Fee shall be
payable to the Trustee pursuant to Section 5.01(a)(1). Without prejudice to
any other rights available to the Trustee under applicable law, when the
Trustee incurs expenses or renders services in connection with a Servicer
Default described in Sections 8.01(a)(iii) or 8.01(a)(iv) such expenses
(including the fees and expenses of its counsel) and the compensation for such
services are intended to constitute expenses of administration under any
bankruptcy law or law relating to creditors' rights generally. In addition,
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 claims, demands, losses, penalties, liabilities, damages, injuries
or expenses including, without limitation, reasonable attorney's fees and
expenses ("Losses") arising out of the acceptance or administration of its
trusts hereunder, including, without limitation, Losses resulting from any
error in any tax or information return prepared from information provided by
the Master Servicer. This Section shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
If and so long as the successor Master Servicer is the Trustee, all
references in this Section 9.05 to the Master Servicer shall be deemed to
refer to Bank One, Indiana, National Association or any successor Master
Servicer thereto other than the Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, have a combined
capital and surplus of at least $50,000,000 and a minimum long-term debt
rating of "Baa3" by Moody's and "BBB" by S&P, and be subject to supervision or
examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The principal office of the Trustee (other
than the initial Trustee) shall be in a state with respect to which an Opinion
of Counsel has been delivered to such Trustee at the time such Trustee is
appointed Trustee to the effect that the Trust will not be a taxable entity
under the laws of such state. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Depositor, the Master Servicer, the Certificate
Insurer and each Rating Agency. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Trustee (approved in writing by
the Certificate Insurer, so long as such approval shall not be unreasonably
withheld) by written instrument, copies of which instrument shall be delivered
to the resigning Trustee and 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 with the consent of the Certificate Insurer
(so long as no Certificate Insurer Default exists) or the Certificate Insurer,
or if at any time the Trustee shall be legally unable to act, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Depositor, the Master
Servicer or the Certificate Insurer may remove the Trustee. If the Depositor,
the Master Servicer or the Certificate Insurer removes the Trustee under the
authority of the immediately preceding sentence, the Depositor or the Master
Servicer shall promptly appoint a successor Trustee (approved in writing by
the Certificate Insurer, so long as such approval is not unreasonably
withheld) by written instrument, copies of which instrument shall be delivered
to the resigning Trustee and the successor Trustee. If the Master Servicer
fails to appoint a successor Trustee within 30 days after the giving of such
notice of removal to the Trustee, the Trustee being removed may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the Trustee may not be removed by the
Depositor or the Certificateholders without the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor Trustee and the
Certificate Insurer an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Depositor, the Master Servicer, the Certificate Insurer
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers,
duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register and to each Rating Agency. If the Master Servicer
fails to mail such notice within 30 days after acceptance of appointment by
the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Master Servicer.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor
Trustee pursuant to any provision of this Agreement will be subject to the
prior written consent of the Certificate Insurer, which consent shall not be
unreasonably withheld.
Section 9.09. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to substantially all of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 9.06, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
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 and the Certificate Insurer to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the 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 and
the Certificate Insurer. 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 a Servicer 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 with
the consent of the Certificate Insurer, so long as no Certificate
Insurer Default exists, may at any time accept the resignation of or
remove any separate trustee or co-trustee except that following the
occurrence of a Servicer 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, the Certificate Insurer and
the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed
by the Trustee, not in its individual capacity but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred and vested in it
by this Agreement. Each of the undertakings and agreements made on the part of
the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the
purpose of binding only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses and disbursements of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders and the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Master
Servicer, the Certificate Insurer and each Certificateholder upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the
Trustee responsible for performing such duties. Upon request, the Trustee
shall furnish the Depositor, the Master Servicer, the Certificate Insurer and
any requesting Certificateholder with its most recent financial statements.
The Trustee shall cooperate fully with the Seller, the Master Servicer, the
Depositor, the Certificate Insurer and such Certificateholder and shall make
available to the Seller, the Master Servicer, the Depositor, the Certificate
Insurer and such Certificateholder for review and copying, at such party's
sole cost and expense, such books, documents or records as may be requested
with respect to the Trustee's duties hereunder. The Seller, the Depositor, the
Master Servicer, the Certificate Insurer and the Certificateholders shall not
have any responsibility or liability for any action or failure to act by the
Trustee and are not obligated to supervise the performance of the Trustee
under this Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case a Servicer Default or
other default by the Master Servicer, the Certificate Insurer 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 or, if such default is not a Certificate Insurer Default,
the Certificate Insurer under this Agreement by a suit, action or proceeding
in equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Trustee, the Certificate Insurer and the Certificateholders.
Section 9.14. Reports to the Commission.
(a) The Master Servicer shall, on behalf of the Trust, cause to be
filed with the Commission any periodic reports required to be filed under the
provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Upon the request of the Master Servicer, each of the
Seller, the Trustee and the Depositor shall cooperate with the Master Servicer
in the preparation of any such report and shall provide to the Master Servicer
in a timely manner all such information or documentation as is in the
possession of such Person and that the Master Servicer may reasonably request
in connection with the performance of its duties and obligations under this
Section.
(b) The Master Servicer shall file with the Commission a Form 15 with
respect to the Trust as soon as practicable following the first date on which
the conditions to filing thereof have been satisfied. Following the filing of
such Form 15, the Master Servicer will submit a certificate addressed to an
officer of the Depositor certifying that all filings under the Exchange Act
have been made and shall attach a copy of acceptance slips for such filings.
On the Closing Date, the Depositor shall provide the Master Servicer with a
letter at closing, substantially in the form attached hereto as Exhibit K,
instructing the Master Servicer, as filing agent, to comply with the reporting
obligations for the Trust under the Exchange Act.
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 and all other obligations which
pursuant to this Agreement survive the termination hereof) shall terminate
upon notice to the Trustee by the Master Servicer of the later of (A) payment
in full of all amounts owing to the Certificate Insurer, unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the
Distribution Date on which the Certificate Principal Balance has been reduced
to zero, (ii) the final payment or other liquidation of the last Home Equity
Loan in the Trust, (iii) the optional purchase by the Class R
Certificateholder, the Master Servicer or the Certificate Insurer of the Home
Equity Loans as described below and (iv) the Distribution Date in July 2026.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
Subject to the consent of the Certificate Insurer if and only if the
termination would result in a draw on the Certificate Insurance Policy, the
Class R Certificateholder may, at its option, terminate this Agreement on any
date on which the Pool Principal Balance is 5% or less of the Cut-Off Date
Pool Principal Balance, by purchasing, on the next succeeding Distribution
Date, all of the outstanding Home Equity Loans and REO Properties at a price
equal to the sum of the outstanding Pool Principal Balance and accrued and
unpaid interest thereon at the weighted average of the Loan Rates through the
end of the Collection Period preceding the final Distribution Date together
with all amounts due and owing the Certificate Insurer and any amounts owed to
the Master Servicer (the "Termination Price"). If the Class R
Certificateholder opts not to exercise such right, the Master Servicer may
exercise the Class R Certificateholder's right to terminate the Agreement and
purchase the outstanding Home Equity Loans at the Termination Price. If the
Master Servicer opts not to exercise such right, the Certificate Insurer may
exercise the Class R Certificateholder's right to terminate the Agreement and
purchase the outstanding Home Equity Loans at the Termination Price.
In connection with any such purchase pursuant to the preceding
paragraph, the Class R Certificateholder or, if applicable, the Master
Servicer or the Certificate Insurer shall deposit in the Certificate Account
all amounts then on deposit in the Collection Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Certificate Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee to the Certificate Insurer and by letter to Class A
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying (i) the Distribution Date upon which final distribution of the
Class A Certificates will be made upon presentation and surrender of Class A
Certificates at the office or agency of the Trustee therein designated, (ii)
the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the Class A
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Class A Certificates, the
Trustee shall cause to be distributed to the holders of Class A Certificates
on the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class A Certificates and to the
extent that funds are available for such purpose, an amount equal to the
amount required to be distributed to holders of Class A Certificates pursuant
to Section 5.01 for such Distribution Date. On the final Distribution Date,
the Trustee will withdraw from the Certificate Account and remit to the
Certificate Insurer the lesser of (x) the amount available for distribution on
such final Distribution Date, net of any portion thereof necessary to pay
holders of Class A Certificates pursuant to Section 5.01(a) and any amounts
owing to the Trustee in respect of the Trustee Fee and due and unpaid Monthly
Advances and Master Servicing Fees, and (y) the unpaid amounts due and owing
to the Certificate Insurer pursuant to Section 5.01(a).
(d) In the event that all of the Class A Certificateholders shall not
surrender their Class A Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall promptly following such
date cause all funds in the Certificate 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 Home Equity 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 nine months
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Class R Certificateholder shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Trustee
upon transfer of such funds shall be discharged of any responsibility for such
funds and the Certificateholders shall look to the Class R Certificateholder
for payment.
Section 10.02. Additional Termination Requirements.
(a) In the event that the Class R Certificateholder 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
shall have been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section will not
(i) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (ii) cause the Trust to fail
to qualify as a REMIC at any time that any Class A Certificates are
outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation for the REMIC 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 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 to (A) the Trustee, as holder of the Regular
Interests, the unpaid principal balance thereof plus accrued interest
thereon, (B) each Class of Class A Certificates the related Class
Principal Balance, plus one month's interest thereon at the
applicable Certificate Rate, (C) to the Certificate Insurer, all
amounts owing to the Certificate Insurer under this Agreement or
under the Insurance Agreement and (D) to the Class R
Certificateholders, all cash on hand after such payment to the
Regular Interest Class A Certificateholders (other than cash retained
to meet claims) and the Trust shall terminate at such time.
(b) By their acceptance of the Class A Certificates, the Holders
thereof hereby agree to appoint the Trustee as their attorney in fact to: (i)
sign such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as
appropriate or upon the written request of the Certificate Insurer and (ii) to
take such other action in connection therewith as may be reasonably required
to carry out such plan of complete liquidation all in accordance with the
terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Seller, the Master Servicer, the Depositor and the Trustee, in
each case without the consent of any of the Certificateholders, but only with
the consent of the Certificate Insurer (a copy of which shall be delivered to
the Trustee), (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 Depositor, the Seller or the Master Servicer, (iv) to add any other
provisions with respect to matters or questions arising under this Agreement
or the Certificate Insurance Policy which shall not be inconsistent with the
provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating agency in order to maintain or improve any rating of each
Class of Class A Certificates (it being understood that, after obtaining the
ratings in effect on the Closing Date, neither the Trustee, the Seller, 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) in each case such action shall not, as
evidenced by an Opinion of Counsel (a copy of which shall be delivered to the
Trustee) (at the expense of the party requesting the amendment), adversely
affect in any material respect the interest of any Certificateholder, (y) in
each case such action is necessary or desirable, as evidenced by an Opinion of
Counsel (a copy of which shall be delivered to the Trustee) (at the expense of
the party requesting the amendment), 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 each Rating Agency (a copy of which shall be delivered to the
Certificate Insurer) 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 also may be amended from time to time by the Seller,
the Depositor, the Trustee and the Master Servicer and the Master Servicer and
the Certificate Insurer may from time to time consent to the amendment of the
Certificate Insurance Policy, in each case with the consent of the Holders of
each Class of Class A Certificates which is affected by such amendment,
evidencing Percentage Interests aggregating not less than 51% in Percentage
Interests of such Class or in the case of an amendment which affects all
classes, evidencing Percentage Interests aggregating not less than 51% of all
Classes, and in the case of an amendment to this Agreement, with the consent
of the Certificate Insurer, (a copy of which shall be delivered to the
Trustee) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments on the Certificates or distributions or payments under the
Certificate Insurance Policy which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust as a REMIC.
Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
the fully executed original counterparts of the instruments effecting such
amendment to the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement. The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
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 written direction of Holders of Certificates evidencing
Percentage Interests aggregating at least 51% or the Certificate Insurer
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of Certificateholders or the
Certificate Insurer. The Certificateholders or the Certificate Insurer
requesting such recordation shall bear all costs and expenses of such
recordation. The Trustee shall have no obligation to ascertain whether such
recordation so affects the interests of the Certificateholders.
Section 11.03. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 51% shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
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, 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 (WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES AND THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices.
(a) All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by certified mail, return receipt requested, to (a) in the case of
the Depositor, World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281, Attention: President, (b) in the case of the Seller,
8604 Allisonville Road, Indianapolis, Indiana 46250, Attention: Chief
Financial Officer, (c) in the case of the Master Servicer, 111 Monument
Circle, Indianapolis, IN 46277, Attention: Chief Operating Officer, with a
copy to BANK ONE CORPORATION Law Department, One First National Plaza,
Chicago, Illinois 60670, Attention: Corporate Securities, (d) in the case of
the Trustee, to the Corporate Trust Office, with a copy to 11000 Broken Land
Parkway, Columbia, Maryland 21044-3562, Attention: Trust Department, (e) in
the case of Moody's, ABS Monitoring Department, 4th Floor, 99 Church Street,
New York, New York 10007, (f) in the case of S&P, Debt Rating Division, 25
Broadway, 20th Floor, New York, New York 10004, Attention: Asset-Backed
Surveillance Group, and (g) in the case of the Certificate Insurer, One State
Street Plaza, New York, New York 10004, Attention: Structured Finance
Department, MBS Surveillance, 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 deliver such notice or document to any Rating Agency.
(b) Notice to the Rating Agencies. The Trustee and the Master
Servicer shall each be obligated to use its best efforts promptly to provide
notice, at the expense of the Master Servicer, to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or Master Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Servicer Default that has not been
cured or waived;
(iii) The resignation or termination of the Master Servicer or
the Trustee;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Master
Servicer to make Monthly Advances.
(c) In addition, (i) the Trustee shall promptly furnish to each
Rating Agency copies of the following:
(A) Each annual report to Certificateholders described in
Section 5.02; and
(B) Each Monthly Report described in Section 5.02; and
(ii) The Master Servicer shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual statement as to compliance described in
Section 3.10;
(B) Each annual independent public accountants' servicing
report described in Section 3.11; and
(C) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Master Servicer has not made a
Monthly Advance.
Any such notice pursuant to this Section shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
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 Certificate Insurer and
Holders of the Certificates evidencing Voting Rights aggregating not less than
66-2/3%. The Master Servicer may assign the right to reimbursement for
Servicing Advances and Monthly Advances without the consent of any Person but
with the prior written notice to the Certificate Insurer.
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 6.01
and 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, the Certificate Insurer and their
respective successors and permitted assigns. Except as otherwise provided in
this Agreement, no other person will have any right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
<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.
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
as Depositor
By /s/Peter Cerwin
-------------------------------
Name: Peter Cerwin
Title: Vice President
BANC ONE FINANCIAL SERVICES, INC.
as Seller
By /s/ J. David Freeman
-------------------------------
Name: J. David Freeman
Title: Chief Executive Officer
BANK ONE, INDIANA, NATIONAL ASSOCIATION
as Master Servicer
By /s/ Joseph D. Barnette, Jr.
-------------------------------
Name: Joseph D. Barnette, Jr.
Title: Chairman and Chief Executive
Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By /s/ Amy Wahl
-------------------------------
Name: Amy Wahl
Title: Assistant Vice President
<PAGE>
State of New York )
) ss.:
County of New York )
On the 31st day of March, 1999 before me, a notary public in
and for the State of New York, personally appeared Peter Cerwin, known to me
to be a Vice President of MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware
corporation, one of the parties that executed the foregoing instrument; and
also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the
foregoing instrument.
/s/ David S. Floyd
----------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of Indiana )
) ss.:
County of Hendricks )
On the 31st day of March, 1999 before me, a notary public in
and for the State of Indiana, personally appeared David Freeman, known to me
to be a President of BANC ONE FINANCIAL SERVICES, INC., an Indiana
corporation, one of the parties that executed the foregoing instrument; and
also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the
foregoing instrument.
/s/ Dina G. Browner
----------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of Indiana )
) ss.:
County of Marion )
On the 31st day of March, 1999 before me, a notary public in
and for the State of Indiana, personally appeared Joseph D. Barnette, Jr.,
known to me to be the Chairman and CEO of BANK ONE, INDIANA, NATIONAL
ASSOCIATION, a national banking association, one of the parties that executed
the foregoing instrument; and also known to me to be the person who executed
it on behalf of such corporation, and acknowledged to me that such corporation
executed the foregoing instrument.
/s/ Gail J. Rauck
----------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the 31st day of March, 1999 before me, a notary public in
and for the State of New York, personally appeared Amy Wahl, known to me to be
an Assistant Vice President of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, one of the parties that executed the foregoing
instrument; and also known to me to be the person who executed it on behalf of
such corporation, and acknowledged to me that such corporation executed the
foregoing instrument.
/s/ Ryan M. O'Connor
----------------------------
Notary Public
[Notarial Seal]
EXHIBIT A
FORM OF CLASS A 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. : R-A-___
Cut-Off Date : March 1, 1999
First Distribution Date : April 26, 1999
Class Principal
Balance of this Certificate
("Denomination") : $_________
Class Principal
Balance : $_________
Certificate Rate: : ____%
CUSIP : _____________
Class : A-__
<PAGE>
Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class A-___
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust consisting of closed-end fixed rate home equity loans (the
"Home Equity Loans")
MERRILL LYNCH MORTGAGE INVESTORS, INC., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Class Principal Balance of this Class A-___
Certificate at any time may be less than the Class Principal Balance set forth
on the face hereof, as described herein. This Class A-___ Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below or
any of their respective affiliates. Neither this Class A-___ Certificate nor
the Home Equity Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-___ Certificate (obtained by
dividing the Denomination of this Class A-___ Certificate by the Class
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Home Equity Loans deposited by Merrill Lynch
Mortgage Investors, Inc. (the "Depositor"). The Trust was created pursuant to
a Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among the Depositor, Banc One Financial Services, Inc., as
Seller (the "Seller"), Bank One, Indiana, National Association, as Master
Servicer (the "Master Servicer"), and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Class A-___ Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class A-___ Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class
A-___ 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.
This Class A-___ Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose unless manually countersigned
by an authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: March 31, 1999
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: _________________________________
Name:
Title:
This is one of the Class A-___ Certificates
referenced in the within-mentioned Agreement
By: __________________________________
Authorized Officer of Norwest Bank
Minnesota, National Association,
as Trustee
<PAGE>
[Reverse of Class A-___ Certificate]
Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Banc One Financial Services Home Equity Loan Trust 1999-1, Home
Equity Loan Asset-Backed Certificates, Series 1999-1 (herein collectively
called the "Certificates"), and representing a beneficial ownership interest
in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by Ambac Assurance
Corporation (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day then
the first Business Day following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face
hereof, to the Person in whose name this Certificate is registered at the
close of business on the applicable Record Date in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to Holders of Certificates of the Class to
which this Certificate belongs on such Distribution Date pursuant to the
Agreement. The Record Date applicable to each Distribution Date is the last
Business Day of the month preceding the month of such Distribution Date.
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 below respecting the final distribution) by wire transfer to
an account with a banking or financial institution in the United States or
check or money order mailed to such Certificateholder at the address appearing
in the Certificate Register. Distributions among Certificateholders shall be
made in proportion to the Percentage Interests evidenced by the Certificates
held by such Certificateholders. The final distribution on each Certificate
will be made in like manner, but only upon presentment and surrender of such
Certificate at the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor and the Trustee with the consent of the Certificate
Insurer and of Holders of the requisite percentage of the Percentage Interests
of each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee
accompanied by a written instrument of transfer in form satisfactory to the
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 Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee nor any such agent shall be affected by any notice to the
contrary.
Subject to provisions in the Agreement concerning adopting a plan of
complete liquidation and to the consent of the Certificate Insurer if the
termination would result in any draw under the Policy, the Holder of the Class
R Certificate (other than the Tax Matters Person Residual Interest) may, at
its option, terminate the Agreement on any date on which the aggregate
Principal Balance of the Home Equity Loans is 5% or less of the Cut-Off Date
Pool Principal Balance by purchasing, on the next succeeding Distribution
Date, all of the outstanding Home Equity Loans at a price equal to the
outstanding aggregate Principal Balance of the Home Equity Loans (subject to
reduction as provided in the Agreement if the purchase price is based in part
on the appraised value of any REO Property included in the Trust and such
appraised value is less than the Principal Balance of the related Home Equity
Loan) and accrued and unpaid interest thereon at the weighted average of the
Loan Rates through the end of the Collection Period preceding the final
Distribution Date together with all amounts due and owing to the Certificate
Insurer and any amounts owed to the Master Servicer.
The obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee by the Master Servicer of the later of
(A) payment in full of all amounts owing to the Certificate Insurer, unless
the Certificate Insurer shall otherwise consent and (B) the earliest of (i)
the Distribution Date on which the Certificate Principal Balance has been
reduced to zero, (ii) the final payment or other liquidation of the last Home
Equity Loan in the Trust, (iii) the optional purchase by the Class R
Certificateholder, the Master Servicer or the Certificate Insurer of the Home
Equity Loans as described above and (iv) the Distribution Date in July 2026.
Notwithstanding the foregoing, in no event shall the Trust continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late ambassador of the United States to the Court of
St. James's, living on the date of the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address: _______________________________________
_____________________________________________________________________________.
Dated: _____________
_____________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _____________________________________________
for the account of__________________________________________________________,
account number _________, or, if mailed by check, to________________________
____________________________________________________________________________
Applicable statements should be mailed to___________________________________
____________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or _______________________________________________,
as its agent.
<PAGE>
EXHIBIT B
FORM OF CLASS R CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
SUCH TRANSFER IS MADE IN COMPLIANCE WITH THE PROVISIONS OF THIS CERTIFICATE
AND SECTION 6.02(d) OF THE AGREEMENT. NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE NOT IN COMPLIANCE
WITH SUCH PROVISIONS SHALL BE VOID AND OF NO EFFECT.
<PAGE>
Certificate No. : ____
Percentage Interest
evidenced by this
Certificate : [0.000001%][99.999999%]
Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class R
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust consisting primarily of pool of closed-end fixed rate home
equity loans (the "Home Equity Loans")
Merrill Lynch Mortgage Investors, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Seller or the Trustee referred
to below or any of their respective affiliates. Neither this Certificate nor
the Home Equity Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [Finance One Corporation] [Norwest Bank
Minnesota, National Association] is the registered owner of the Percentage
Interest evidenced by this Certificate specified above in the interest
represented by all Certificates of the Class to which this Certificate belongs
in a Trust consisting primarily of the Home Equity Loans deposited by Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of March 1, 1999 (the
"Agreement") among the Depositor, Banc One Financial Services, Inc., as Seller
(the "Seller"), Bank One, Indiana, National Association, as Master Servicer
(the "Master Servicer"), and Norwest Bank Minnesota, National Association, as
Trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the
Trust will be made only upon presentment and surrender of this Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee.
No transfer, sale, pledge or other disposition of this Certificate
shall be made unless such disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and
any applicable state securities laws or is made in accordance with the 1933
Act and laws. In the event of any such transfer, other than the transfer of
the Tax Matters Person Residual Interest to the Trustee, (i) unless such
transfer is made in reliance upon Rule 144A (as evidenced by the investment
letter delivered to the Trustee, in substantially the form attached to the
Agreement as Exhibit H) 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 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 the 1933 Act or is being
made pursuant to the 1933 Act, which Opinion of Counsel shall not be an
expense of the Trustee or the Depositor or (ii) the Trustee shall require the
transferee to execute a certificate (in substantially the form attached to the
Agreement as Exhibit E) and the transferee to execute an investment letter (in
substantially the form attached to the Agreement as Exhibit H) acceptable to
and in form 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 this 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 this Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
Certificate, acceptable to and in form satisfactory to the Trustee and the
Depositor (such requirement is satisfied by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
E to the Agreement, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement
to effect such transfer or (ii) in the case of this Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement or using such
plan's or arrangement's assets, an Opinion of Counsel in form satisfactory to
the Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust, addressed to the Trustee, to the effect that the
purchase or holding of this Certificate will not result in the assets of the
Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee
to any obligation in addition to those expressly undertaken in the Agreement
or to any liability.
For purposes of clause (i) of the preceding paragraph, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of this Certificate, unless the Trustee shall have
received from the transferee an alternative representation acceptable in form
and substance to the Depositor. Notwithstanding anything else to the contrary
herein or in the Agreement, any purported transfer of this Certificate to or
on behalf of an employee benefit plan subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code without the delivery to the Trustee
of an Opinion of Counsel in form satisfactory to the Trustee as described
above shall be void and of no effect; provided, however, that the restriction
set forth in this sentence shall not be applicable if there has been delivered
to the Trustee an Opinion of Counsel in form satisfactory to the Trustee to
the effect that the purchase or holding of this Certificate will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to
the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee to any obligation in addition to those expressly
undertaken in the Agreement.
The Trustee shall be under no liability to any Person for any
registration of transfer of this Certificate that is in fact not permitted by
Section 6.02(d) of the Agreement or for making any payments due on this
Certificate to the Holder hereof or taking any other action with respect to
such Holder under the provisions of the Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any Holder of
this Certificate that was in fact an employee benefit plan subject to Section
406 of ERISA or a plan subject to Section 4975 of the Code or a Person acting
on behalf of any such plan at the time it became a Holder or, at such
subsequent time as it became such a plan or Person acting on behalf of such a
plan, all payments made on this Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of this Certificate that is not such a
plan or Person acting on behalf of a plan.
Each Person who has or who acquires any Ownership Interest in this
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 this Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
this 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 this
Certificate unless such Ownership Interest is a pro rata undivided
interest.
In connection with any proposed transfer of any Ownership Interest in
this Certificate, the Trustee shall as a condition to registration of the
transfer, require delivery to it, in form satisfactory to it, of each of the
following:
A. an affidavit in the form of Exhibit I to the Agreement
from the proposed transferee to the effect that such transferee
is a Permitted Transferee and that it is not acquiring its
Ownership Interest in this 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 this Certificate.
Any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of the foregoing provisions shall be absolutely null
and void and shall vest no rights in the purported transferee. If any
purported transferee shall, in violation of the foregoing provisions, become a
Holder of this Certificate, then the prior Holder of this Certificate that is
a Permitted Transferee shall, upon discovery that the registration of transfer
of this Certificate was not in fact permitted by the Agreement, be restored to
all rights as Holder thereof retroactive to the date of registration of
transfer of this Certificate.
The Trustee shall be under no liability to any Person for any
registration of transfer of this Certificate that is in fact not permitted by
the Agreement or for making any distributions due on this Certificate to the
Holder hereof or taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the documents
specified in clauses A. and B. above and in Section 6.02(d)(iii) of the
Agreement. The Trustee shall be entitled to recover from any Holder of this
Certificate that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on this Certificate. Any such
distributions so recovered by the Trustee shall be distributed and delivered
by the Trustee to the prior Holder of this Certificate that is a Permitted
Transferee.
If any Person other than a Permitted Transferee acquires any
Ownership Interest in this Certificate in violation of the above restrictions,
then the Trustee shall have the right but not the obligation, without notice
to the Holder of this Certificate or any other Person having an Ownership
Interest herein, to notify the Depositor to arrange for the sale of this
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 this Certificate that is a Permitted Transferee, except
that in the event that the Trustee determines that the Holder of this
Certificate may be liable for any amount due under Section 6.02(d) of the
Agreement or any other provisions thereof, the Trustee may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale hereunder and under Section 6.02(d)(v) of the
Agreement shall be determined in the sole discretion of the Trustee, and the
Trustee shall not be liable to any Person having an Ownership Interest in this
Certificate as a result of its exercise of such discretion.
If any Person other than a Permitted Transferee acquires any
Ownership Interest in a this Certificate in violation of the restrictions in
this Section, then the Trustee will provide to the Internal Revenue Service,
and to the persons specified in Sections 860E(e)(3) and (6) of the Code,
information needed to compute the tax imposed under Section 860E(e)(5) of the
Code on transfers of residual interests to disqualified organizations.
The foregoing provisions shall cease to apply to transfers occurring
on or after the date on which there shall have been delivered to the Trustee,
in form satisfactory to the Trustee, (i) written notification from each Rating
Agency that the removal of the restrictions on transfer set forth in Section
6.02 of the Agreement 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.
Reference is hereby made to the further provisions of this
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.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: March 31, 1999
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: _________________________________
Name:
Title:
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By: ________________________________________
Authorized Officer of Norwest Bank
Minnesota, National Association,
as Trustee
<PAGE>
[Reverse of Class R Certificate]
Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Banc One Financial Services Home Equity Loan Trust 1999-1, Home
Equity Loan Asset-Backed Certificates, Series 1999-1 (herein collectively
called the "Certificates"), and representing a beneficial ownership interest
in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, then
the first Business Day following such Distribution Date (the "Distribution
Date"), commencing on the first Distribution Date specified on the face
hereof, to the Person in whose name this Certificate is registered at the
close of business on the applicable Record Date in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to Holders of Certificates of the Class to
which this Certificate belongs on such Distribution Date pursuant to the
Agreement. The Record Date applicable to each Distribution Date is the last
Business Day of the month preceding the month of such Distribution Date.
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 below respecting the final distribution) by wire transfer to
an account with a banking or financial institution in the United States or
check or money order mailed to such Certificateholder at the address appearing
in the Certificate Register. Distributions among Certificateholders shall be
made in proportion to the Percentage Interests evidenced by the Certificates
held by such Certificateholders. The final distribution on each Certificate
will be made in like manner, but only upon presentment and surrender of such
Certificate at the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor and the Trustee with the consent of the Certificate
Insurer and of Holders of the requisite percentage of the Percentage Interests
of each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee nor any such agent shall be affected by any notice to the
contrary.
Subject to provisions in the Agreement concerning adopting a plan of
complete liquidation and to the consent of the Certificate Insurer if the
termination would result in any draw under the Policy, the holder of the Class
R Certificate (other than the Tax Matters Person Residual Interest) may, at
its option, terminate the Agreement on any date on which the aggregate
Principal Balance of the Home Equity Loans is 5% or less of the Cut-Off Date
Pool Principal Balance by purchasing, on the next succeeding Distribution
Date, all of the outstanding Home Equity Loans at a price equal to the
outstanding aggregate Principal Balance of the Home Equity Loans (subject to
reduction as provided in the Agreement if the purchase price is based in part
on the appraised value of any REO Property included in the Trust and such
appraised value is less than the Principal Balance of the related Home Equity
Loan) and accrued and unpaid interest thereon at the weighted average of the
Loan Rates through the end of the Collection Period preceding the final
Distribution Date together with all amounts due and owing to the Certificate
Insurer and any amounts owed to the Master Servicer.
The obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee by the Master Servicer of the later of
(A) payment in full of all amounts owing to the Certificate Insurer, unless
the Certificate Insurer shall otherwise consent and (B) the earliest of (i)
the Distribution Date on which the Certificate Principal Balance has been
reduced to zero, (ii) the final payment or other liquidation of the last Home
Equity Loan in the Trust, (iii) the optional purchase by the Class R
Certificateholder, the Master Servicer or the Certificate Insurer of the Home
Equity Loans as described above and (iv) the Distribution Date in July 2026.
Notwithstanding the foregoing, in no event shall the Trust continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late ambassador of the United States to the Court of
St. James's, living on the date of the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address: _______________________________________
_____________________________________________________________________________.
Dated: _____________
______________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _____________________________________________
for the account of__________________________________________________________,
account number _________, or, if mailed by check, to________________________
____________________________________________________________________________
Applicable statements should be mailed to___________________________________
____________________________________________________________________________.
This information is provided by____________________________________,
the assignee named above, or________________________________________________,
as its agent.
<PAGE>
EXHIBIT C
HOME EQUITY LOAN SCHEDULE
<PAGE>
EXHIBIT D
MONTHLY INFORMATION DELIVERED TO TRUSTEE
<PAGE>
EXHIBIT E
ERISA REPRESENTATION LETTER
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1, Class R
Ladies and Gentlemen:
Reference is made to the pooling and servicing agreement, dated as of
March 1, 1999 (the "Pooling and Servicing Agreement") by and among Merrill
Lynch Mortgage Investors, Inc., as Depositor (the "Depositor"), Banc One
Financial Services, Inc., as Seller (the "Seller"), Bank One, Indiana,
National Association, as Master Servicer (the "Master Servicer"), and Norwest
Bank Minnesota, National Association, as Trustee (the "Trustee"), pursuant to
which the Banc One Home Equity Loan Trust 1999-1, Home Equity Loan Asset
Backed Certificates, Series 1999-1, Class R (the "Class R Certificates") were
issued. Capitalized terms used herein but not defined shall have the meanings
given them in the Pooling and Servicing Agreement.
The undersigned acknowledges that the Class R Certificates may not be
transferred except in accordance with the transfer provisions of the Pooling
and Servicing Agreement.
Pursuant to Section 6.02 of the Pooling and Servicing Agreement, the
undersigned hereby represents and warrants:
[ ] that it is not an employee benefit plan or arrangement subject to
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended, or a plan subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement nor using the
assets of any such plan or arrangement to effect the transfer of the
Class R Certificates.
[ ] that it is an employee benefit plan subject to ERISA, or a plan
or arrangement subject to Section 4975 of the Code, or a trustee of
any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets; however,
the undersigned has provided an Opinion of Counsel satisfactory to
the Trustee to the effect that the purchase or holding of the Class R
Certificates by the undersigned will not result in the assets of the
Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Pooling and Servicing Agreement.
_________________________________
By: _________________________________
Name:
Title:
<PAGE>
EXHIBIT F
LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT G
FORM OF REQUEST FOR RELEASE
[DATE]
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
---------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Home Equity Loans held
by you as Trustee under the Pooling and Servicing Agreement dated as of March
1, 1999, among Merrill Lynch Mortgage Investors, Inc., as depositor (the
"Depositor"), Banc One Financial Services, Inc., as seller (the "Seller"),
Bank One, Indiana, National Association, as master servicer (the "Master
Servicer"), and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") (the "Agreement"), we hereby request a release of the Mortgage File
held by you as Trustee with respect to the following described Home Equity
Loan for the reason indicated below.
Loan No.: __________
Reason for requesting file:
____ a. Home Equity Loan paid in full. (The Master Servicer
hereby certifies that all amounts received in connection
with the payment in full of the Home Equity Loan which are
required to be deposited in the Collection Account pursuant
to Section 3.02 of the Agreement have been so deposited).
____ b. Retransfer of Home Equity Loan. (The Master Servicer
hereby certifies that the Substitution Adjustment has been
deposited in the Collection Account pursuant to the
Agreement.)
____ c. The Home Equity Loan is being foreclosed.
____ d. The Home Equity Loan is being re-financed by another
depository institution. (The Master Servicer hereby
certifies that all amounts received in connection with the
payment in full of the Home Equity Loan which are required
to be deposited in the Collection Account pursuant to
Section 3.02 of the Agreement have been so deposited).
____ e. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be
held by the undersigned in accordance with the provisions of the Agreement and
will promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to
them in the Agreement.
BANK ONE, INDIANA, NATIONAL
ASSOCIATION,
as Master Servicer
By: ________________________________
Name:
Servicing Officer
<PAGE>
EXHIBIT H
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
250 Vesey Street
New York, New York 10281
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1, Class R
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) we are acquiring
the Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action which would result in a violation of Section 5 of the Act, and
(g) we will not sell, transfer or otherwise dispose of any Certificates unless
(1) such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this Certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the
Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with
any conditions for transfer set forth in the Pooling Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By: ________________________________
Authorized Officer
<PAGE>
FORM OF RULE 144A LETTER
[DATE]
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
250 Vesey Street
New York, New York 10281
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1, Class R
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we have not, nor has anyone acting on our
behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar security from, or otherwise approached or negotiated with respect to
the Certificates, any interest in the Certificates or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other
action, that would constitute a distribution of the Certificates under the
Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (e) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is
being made in reliance on Rule 144A. We are acquiring the Certificates for our
own account or for resale pursuant to Rule 144A and further, understand that
such Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under
the Securities Act.
<PAGE>
ANNEX 1 TO EXHIBIT H
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Buyer.
ii. In connection with purchases by the Buyer, the Buyer is
a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $______(1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
- ---------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
___ Corporation, etc. The Buyer is a corporation (other than
a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks underwritten
by insurance companies and which is subject to supervision
by the insurance commissioner or a similar official or
agency of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
iii. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if the
Buyer is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned
but subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
v. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
vi. Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
____________________________________
Print Name of Buyer
By: ________________________________
Name:
Title:
Date: _________________________
<PAGE>
ANNEX 2 TO EXHIBIT H
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A
under the Securities Act of 1933, as amended ("Rule 144A") because Buyer is
part of a Family of Investment Companies (as defined below), is such an
officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be valued
at market.
___ The Buyer owned $______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $________ in securities (other
than the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that
have the same investment adviser or investment advisers that are affiliated
(by virtue of being majority owned subsidiaries of the same parent or because
one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and under-stands
that the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
____________________________________
Print Name of Buyer or Adviser
By: _______________________________
Name:
Title:
IF AN ADVISER:
____________________________________
Print Name of Buyer
Date:_______________________________
<PAGE>
EXHIBIT I
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES PURSUANT TO SECTION
6.02(d) OF THE AGREEMENT AND PURSUANT TO SECTION 860E(e)(4) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED
Banc One Financial Services Home Equity Loan Trust 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of __________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling Agreement, (the "Agreement"),
relating to the above-referenced Series, among Merrill Lynch Mortgage
Investors, Inc., as Depositor (the "Depositor"), Banc One Financial Services,
Inc., as Seller (the "Seller"), Bank One, Indiana, National Association, as
Master Servicer (the "Master Servicer"), and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"). Capitalized terms used, but not
defined herein or in Exhibit 1 hereto, shall have the meanings ascribed to
such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii)
as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit.
The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 6.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Certificate.
8. The Transferee's taxpayer identification number is __________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
* * *
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ___ day of ________, ____.
[NAME OF TRANSFEREE]
By: ______________________________
Name:
Title:
[Corporate Seal]
ATTEST:
____________________________________
[Assistant] Secretary
Personally appeared before me the above-named ___________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ______ day of ______, ____.
____________________________________
NOTARY PUBLIC
My Commission expires the ______ day
of ______, _____.
<PAGE>
EXHIBIT 1 to EXHIBIT I
Certain Definitions
-------------------
"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 pledge.
"Permitted Transferee": Any Person other than (i) the United States,
any State or 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 Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(c), (v) a Person that is not
a citizen or resident of the United States, a corporation, partnership, or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, or an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the transfer
to such Person may cause the Trust to fail to qualify as a REMIC at any time
that certain 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 Freddie Mac, a majority of its board of directors is not selected by such
governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint-stock company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
<PAGE>
EXHIBIT 2 to EXHIBIT I
Section 6.02(d) of the Agreement
--------------------------------
(d) Except with respect to the initial transfer of the Class R
Certificates by the Depositor to or upon the order of the Seller, no transfer,
sale, pledge or other disposition of any Class R Certificate shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, other than the transfer of the Tax Matters Person
Residual Interest to the Trustee (i) unless such transfer is made in reliance
upon Rule 144A (as evidenced by the investment letter delivered to the
Trustee, in substantially the form attached hereto as Exhibit H) 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 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 the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Depositor or
(ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit E) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit H) acceptable to and in form 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 Class R 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 Class R Certificate or of any Class A Certificate in
a Class of Class A Certificates with respect to which a Widely-Held
Certification was not delivered on the Closing Date (each, an
"ERISA-Restricted Certificate") shall be made unless the Trustee shall have
received either (i) a representation from the transferee of such Certificate,
acceptable to and in form satisfactory to the Trustee and the Depositor, (such
requirement is satisfied by the Trustee's receipt of a representation letter
from the transferee substantially in the form of Exhibit E hereto, as
appropriate), to the effect that such transferee is not an employee benefit
plan or arrangement subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, nor a person acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect
such transfer or (ii) in the case of any such ERISA-Restricted Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA or a plan or arrangement subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan or arrangement or
using such plan's or arrangement's assets, an Opinion of Counsel in form
satisfactory to the Trustee which Opinion of Counsel shall not be an expense
of either the Trustee or the Trust, addressed to the Trustee, to the effect
that the purchase or holding of such ERISA-Restricted Certificate will not
result in the assets of the Trust being deemed to be "plan assets" and subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. For purposes of clause (i)
of the preceding sentence, such representation shall be deemed to have been
made to the Trustee by the transferee's acceptance of an ERISA-Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial
interest in any such Class of ERISA-Restricted Certificates) unless the
Trustee shall have received from the transferee an alternative representation
acceptable in form and substance to the Depositor. Notwithstanding anything
else to the contrary herein, any purported transfer of an ERISA-Restricted
Certificate to or on behalf of an employee benefit plan subject to Section 406
of ERISA or a plan subject to Section 4975 of the Code without the delivery to
the Trustee of an Opinion of Counsel in form satisfactory to the Trustee as
described above shall be void and of no effect; provided, however, that the
restriction set forth in this sentence shall not be applicable if there has
been delivered to the Trustee an Opinion of Counsel in form satisfactory to
the Trustee to the effect that the purchase or holding of an ERISA-Restricted
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee to any obligation in addition to
those expressly undertaken in this Agreement. The Trustee shall be under no
liability to any Person for any registration of transfer of any
ERISA-Restricted Certificate that is in fact not permitted by this Section
6.02(d) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any
ERISA-Restricted Certificate that was in fact an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of
such a plan, all payments made on such ERISA-Restricted Certificate at and
after either such time. Any such payments so recovered by the Trustee shall be
paid and delivered by the Trustee to the last preceding Holder of such
Certificate that is not such a plan or Person acting on behalf of a plan.
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the 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 Class R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly notify
the Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form satisfactory to
it, of each of the following:
A. an affidavit in the form of Exhibit I hereto
from the proposed transferee to the effect that such
transferee is a Permitted Transferee and that it is not
acquiring its Ownership Interest in the Class R Certificate
that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted
Transferee; and
B. a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by
and to abide by the transfer restrictions applicable to the
Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become a Holder of a Class R Certificate, then the prior Holder of
such Class R Certificate that is a Permitted Transferee shall, upon discovery
that the registration of transfer of such Class R Certificate was not in fact
permitted by this Section, be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section or for making any distributions due on such Class R
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the Trustee
received the documents specified in clause (iii). The Trustee shall be
entitled to recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time such distributions were made all
distributions made on such Class R Certificate. Any such distributions so
recovered by the Trustee shall be distributed and delivered by the Trustee to
the prior Holder of such Class R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions
in this Section, then the Trustee shall have the right but not the obligation,
without notice to the Holder of such Class R Certificate or any other Person
having an Ownership Interest therein, to notify the Depositor to arrange for
the sale of such Class R Certificate. The proceeds of such sale, net of
commissions (which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if any, will
be remitted by the Trustee to the previous Holder of such Class R Certificate
that is a Permitted Transferee, except that in the event that the Trustee
determines that the Holder of such Class R Certificate may be liable for any
amount due under this Section or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as security
for such claim. The terms and conditions of any sale under this clause (v)
shall be determined in the sole discretion of the Trustee and it shall not be
liable to any Person having an Ownership Interest in a Class R Certificate as
a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions
in this Section, then the Trustee will provide to the Internal Revenue
Service, and to the persons specified in Sections 860E(e)(3) and (6) of the
Code, information needed to compute the tax imposed under Section 860E(e)(5)
of the Code on transfers of residual interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust to fail to qualify as a
REMIC. The Trustee shall be the initial holder of the Tax Matter Person
Residual Interest.
<PAGE>
EXHIBIT J
LIST OF SERVICING OFFICERS
<PAGE>
EXHIBIT K
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
March 31, 1999
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, IN 46250
Re: Banc One Financial Services Home Equity Loan Trust 1999-1,
Home Equity Loan Asset Backed Certificates, Series 1999-1
---------------------------------------------------------
Ladies and Gentlemen:
Pursuant to and in reference to Section 9.14 of the Pooling and
Servicing Agreement dated as of March 1, 1999 relating to the above referenced
Certificates, please note the following:
(a) CIK Number for Banc One Financial Services Home Equity Loan
Trust 1999-1 (the "Trust"): 0001082443.
(b) CCC Number for the Trust: tin@s8uk.
In order to comply with the reporting obligations for the Trust under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Master Servicer must file within 15 days following each Distribution Date a
copy of the report distributed by the Master Servicer to the
Certificateholders in a current report on Form 8-K. Such reports provide all
current information ordinarily of interest to the Certificateholders. The
Master Servicer must also report on a current report on Form 8-K any
significant occurrences during the reporting period that would be reportable
under Item 1, Item 2, Item 4 and Item 5. In addition, the Master Servicer
should cause the filing of an annual report on Form 10-K within 90 days
following the end of the Trust's fiscal year containing the following
information:
Part I, Item 3. A description of any material pending
litigation;
Part I, Item 4. A description of any submission matters to vote
of Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders
and the principal market, if any, in which the
Certificates trade;
Part II, Item 9. A statement as to any changes in or disagreements
with the independent public accounts for the
Trust;
Part IV, Item 14. A copy of the annual certificate of compliance
by an officer of the Master Servicer, and any
Subservicer and the audit of the servicing by
the independent accounting firm.
No later than January 30 following the end of the fiscal year of the
Trust during which there were 300 or fewer Certificate Owners, the Master
Servicer should file a Form 15 in accordance with Section 9.14 of the Pooling
and Servicing Agreement, deregistering the Trust and terminating the reporting
obligations under the Exchange Act. All filings must be made through the EDGAR
System and all acceptance slips from the filings should be saved as they will
be needed for the annual certificate.
<PAGE>
MERRILL LYNCH MORTGAGE INVESTORS, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT M-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION AS TO MORTGAGE NOTES
March 31, 1999
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-1,
Home Equity Loan Asset Backed Certificates, Series 1999-1
---------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement dated
as of March 1, 1999 (the "Pooling Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as Depositor, Bank One, Indiana, National Association, as
Master Servicer, Banc One Financial Services, Inc., as Seller, and Norwest
Bank Minnesota, National Association, as Trustee, we certify that, as to each
Home Equity Loan listed in the Home Equity Loan Schedule (other than any Home
Equity Loan paid in full or any Home Equity Loan specifically identified in
the exception report annexed hereto as Annex I), (i) the original Mortgage
Note (or a Lost Note Affidavit with a copy of the related Mortgage Note)
included in each Mortgage File required to be delivered to us pursuant to the
Pooling Agreement is in our possession and (ii) such Mortgage Note has been
reviewed by us and appears regular on its face and relates to such Home Equity
Loan.
Attached is the Trustee's exceptions in accordance with Section 2.02
of the Pooling Agreement. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Pooling Agreement.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Home Equity Loan.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-1
TRUSTEE'S EXCEPTIONS
<PAGE>
EXHIBIT M-2
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[DATE]
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-1,
Home Equity Loan Asset Backed Certificates, Series 1999-1
---------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.01 of the Pooling and
Servicing Agreement, dated as of March 1, 1999 (the "Pooling Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Banc One Financial Services, Inc., as seller (the "Seller"), Bank One,
Indiana, National Association, as master servicer (the "Master Servicer"), and
Norwest Bank Minnesota, National Association, as trustee, the undersigned, as
Trustee, hereby certifies that:
[we have reviewed each Mortgage and Assignment of Mortgage delivered to us,
and with respect to each Home Equity Loan listed on the Home Equity Loan
Schedule (other than any Home Equity Loan paid in full or any Home Equity Loan
specifically identified in Annex I hereto):]
[in connection with the occurrence of an Assignment Event, we have reviewed
the Mortgage Files, and with respect to each Home Equity Loan listed on the
Home Equity Loan Schedule (other than any Home Equity Loan paid in full or any
Home Equity Loan specifically identified in Annex I hereto):]
1. all documents constituting part of such Mortgage File required to
be delivered to it pursuant to Section 2.01 of the Pooling Agreement are
in our possession;
2. such documents have been reviewed by us, appear to be what they
purport to be and relate to such Home Equity Loan; and
3. based on our examination and only as to the foregoing, the
information set forth in the Home Equity Loan Schedule which corresponds
to items (ii), (iii), (iv), (v), (vi), (vii) and (viii) of the definition
of "Home Equity Loan Schedule" in the Pooling Agreement accurately
reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-2
TRUSTEE'S EXCEPTIONS
<PAGE>
EXHIBIT M-3
FORM OF TRUSTEE'S FINAL CERTIFICATION AS TO MORTGAGE FILE
[DATE]
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-1,
Home Equity Loan Asset Backed Certificates, Series 1999-1
---------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.01 of the Pooling and
Servicing Agreement, dated as of March 1, 1999 (the "Pooling Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Banc One Financial Services, Inc., as seller (the "Seller"), Bank One,
Indiana, National Association, as master servicer (the "Master Servicer"), and
Norwest Bank Minnesota, National Association, as trustee, the undersigned, as
Trustee, hereby certifies that it has reviewed each Mortgage File delivered to
it and that with respect to each Home Equity Loan listed on the Home Equity
Loan Schedule (other than any Home Equity Loan paid in full or any Home Equity
Loan specifically identified in Annex I hereto), and as to any document noted
in an exception included in the Trustee's initial certification:
1. all documents constituting part of such Mortgage File required to
be delivered to it pursuant to Section 2.01 of the Pooling Agreement are in
its possession;
2. such documents have been reviewed by us, appear to be what they
purport to be and relate to such Home Equity Loan; and
3. based on our examination and only as to the foregoing, the
information set forth in the Home Equity Loan Schedule which corresponds to
items (ii), (iii), (iv), (v), (vi), (vii) and (viii) of the definition of
"Home Equity Loan Schedule" in the Pooling Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-3
TRUSTEE'S EXCEPTIONS
