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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 25, 1999
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
(AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT,
DATED AS OF MARCH 1, 1999, PROVIDING FOR THE ISSUANCE OF
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1999-NC1)
Salomon Brothers Mortgage Securities VII, Inc.
----------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-72647 13-3439681
-------- --------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
390 Greenwich Street, Fourth Floor
New York, New York 10013
- ------------------ -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 723-6391
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<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
Description of the Certificates and the Mortgage Pools
On March 25, 1999, a single series of certificates, entitled
Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1999-NC1 (the "Certificates"), were issued pursuant to a
pooling and servicing agreement, dated as of March 1, 1999 (the "Agreement"),
attached hereto as Exhibit 4.1, among Salomon Brothers Mortgage Securities VII,
Inc. as depositor (the "Depositor"), New Century Mortgage Corporation ("New
Century") as master servicer (in such capacity, the "Master Servicer"), Firstar
Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S. Bank National
Association as trust administrator (the "Trust Administrator"). The Certificates
consist of ten classes of certificates (collectively, the "Certificates"),
designated as the "Class A-1 Certificates", the "Class A-2 Certificates", the
"Class M-1 Certificates", the "Class M-2 Certificates", the "Class M-3
Certificates", the "Class CE Certificates", the "Class P Certificates", the
"Class R-I Certificates", the "Class R-II Certificates" and the "Class R-III
Certificates." The Certificates evidence in the aggregate the entire beneficial
ownership interest in a trust fund (the "Trust Fund"), consisting primarily of a
segregated pool (the "Mortgage Pool") of conventional, one- to four- family,
fixed rate, first and second lien mortgage loans having original terms to
maturity up to 30 years (the "Mortgage Loans"). The Mortgage Pool consists of
Mortgage Loans having an aggregate principal balance of $317,514,924.99 as of
March 1, 1999 (the "Cut-off Date"). The Mortgage Loans were purchased pursuant
to the Mortgage Loan Purchase Agreement, dated March 24, 1999 (the "Mortgage
Loan Purchase Agreement") among the Depositor, New Century Mortgage Corporation,
and NC Capital Corporation. The Class A-1 Certificates, the Class A-2
Certificates, the Class M-1 Certificates, the Class M-2 Certificates, and the
Class M-3 Certificates were sold by the Depositor to Salomon Smith Barney Inc.
(the "Underwriter"), an affiliate of the Depositor, pursuant to an Underwriting
Agreement, dated March 24, 1999 between the Depositor and the Underwriter.
The Certificates have the following initial Certificate
Balances and Pass-Through Rates:
Initial Certificate
Class Principal Balance Pass-through Rate
----- ----------------- -----------------
A-1 $211,168,000 Variable
A-2 $54,433,000 6.9090 % per annum
M-1 $19,368,000 6.7500 % per annum
M-2 $14,288,000 6.7500 % per annum
M-3 $8,732,000 6.7500 % per annum
CE $9,525,824.99 Variable
<PAGE>
-3-
P $100 Variable
R-I N/A N/A
R-II N/A N/A
R-III N/A N/A
The Certificates, other than the Class CE Certificates, Class
P Certificates, the Class R-I Certificates, the Class R-II Certificates and the
R-III Certificates, and the Mortgage Loans are more particularly described in
the Prospectus, dated March 22, 1999, and the Prospectus Supplement, dated March
24, 1999, as previously filed with the Securities and Exchange Commission
pursuant to Rule 424(b). The Class CE Certificates, the Class P Certificates,
the Class R-I Certificates, Class R-II Certificates and Class R-III have not
been and will not be publicly offered by the Depositor. Capitalized terms used
but not otherwise defined herein shall have the meanings assigned to them in the
Prospectus Supplement.
<PAGE>
-4-
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Not applicable
(b) Not applicable
(c) Exhibits
Exhibit No. Description
----------- -----------
4.1 Pooling and Servicing Agreement,
dated as of March 1, 1999, by and
among Salomon Brothers Mortgage
Securities VII, Inc. as Depositor,
New Century Mortgage Corporation as
Master Servicer, Firstar Bank
Milwaukee, N.A. as Trustee and U.S.
Bank National Association as Trust
Administrator, relating to the
Series 1999-NC1 Certificates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: March 25, 1999
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Vincent J. Varca
---------------------------
Name: Vincent J. Varca
Title: Assistant Vice President
<PAGE>
Index To Exhibits
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
4.1 Pooling and Servicing Agreement, dated as of 7
March 1, 1999, by and among Salomon
Brothers Mortgage Securities VII, Inc. as
Depositor, New Century Mortgage Corporation
as Master Servicer, Firstar Bank Milwaukee,
N.A. as Trustee and U.S. Bank National
Association as Trust Administrator, relating to
the Series 1999-NC1 Certificates.
Exhibit 4.1
<PAGE>
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
Depositor
NEW CENTURY MORTGAGE CORPORATION
Master Servicer
FIRSTAR BANK MILWAUKEE, N.A.
Trustee
and
U.S. BANK NATIONAL ASSOCIATION
Trust Administrator
-----------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1999
-----------------------------------------
Mortgage Pass-Through Certificates
Series 1999-NC1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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SECTION PAGE
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<S> <C> <C>
ARTICLE I
DEFINITIONS
1.01. Defined Terms...................................................................................4
Accepted Servicing Practices....................................................................4
Accrued Certificate Interest....................................................................4
Administration Fee..............................................................................4
Administration Fee Rate.........................................................................4
Affiliate.......................................................................................5
Agreement.......................................................................................5
Allocated Realized Loss Amount..................................................................5
Assignment......................................................................................5
Available Distribution Amount...................................................................5
Available Class A Distribution Amount...........................................................6
Balloon Loan....................................................................................6
Balloon Payment.................................................................................6
Bankruptcy Code.................................................................................6
Bankruptcy Loss.................................................................................6
Book-Entry Certificate..........................................................................6
Book-Entry Custodian............................................................................6
Business Day....................................................................................6
Cash-Out Refinancing............................................................................6
Certificate.....................................................................................7
Certificate Factor..............................................................................7
Certificateholder or Holder.....................................................................7
Certificate Owner...............................................................................7
Certificate Principal Balance...................................................................7
Certificate Register............................................................................8
Class .......................................................................................8
Class A Certificate.............................................................................8
Class A-1 Certificate...........................................................................8
Class A-2 Certificate...........................................................................8
Class A Principal Distribution Amount...........................................................8
Class CE Certificate............................................................................8
Class M-1 Certificate...........................................................................8
Class M-1 Principal Distribution Amount.........................................................8
Class M-2 Certificate...........................................................................9
Class M-2 Principal Distribution Amount.........................................................9
Class M-3 Certificate...........................................................................9
Class M-3 Principal Distribution Amount.........................................................9
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<PAGE>
SECTION PAGE
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Class P Certificate.............................................................................9
Class R-I Certificate..........................................................................10
Class R-II Certificate.........................................................................10
Class R-III Certificates.......................................................................10
Closing Date...................................................................................10
Code ......................................................................................10
Collection Account.............................................................................10
Commission.....................................................................................10
Corporate Trust Office.........................................................................10
Corresponding Certificate......................................................................10
Credit Enhancement Percentage..................................................................11
Cumulative Loss Percentage.....................................................................11
Cut-off Date...................................................................................11
DCR ......................................................................................11
Debt Service Reduction.........................................................................11
Deficient Valuation............................................................................11
Definitive Certificates........................................................................11
Deleted Mortgage Loan..........................................................................11
Delinquency Percentage.........................................................................11
Depositor......................................................................................12
Depository.....................................................................................12
Depository Institution.........................................................................12
Depository Participant.........................................................................12
Determination Date.............................................................................12
Directly Operate...............................................................................12
Disqualified Organization......................................................................12
Distribution Account...........................................................................13
Distribution Date..............................................................................13
Due Date ......................................................................................13
Due Period.....................................................................................13
Eligible Account...............................................................................13
ERISA ......................................................................................13
Estate in Real Property........................................................................13
Excess Overcollateralized Amount...............................................................13
Expense Adjusted Mortgage Rate.................................................................14
Fannie Mae.....................................................................................14
FDIC ......................................................................................14
Final Recovery Determination...................................................................14
Freddie Mac....................................................................................14
Independent....................................................................................14
Independent Contractor.........................................................................14
Initial Deposit................................................................................15
Insurance Proceeds.............................................................................15
-ii-
<PAGE>
SECTION PAGE
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Interest Accrual Period........................................................................15
Interest Carry Forward Amount..................................................................15
Interest Determination Date....................................................................15
Interest Distribution Amount...................................................................16
Interest Remittance Amount.....................................................................16
Late Collections...............................................................................16
Liquidation Event..............................................................................16
Liquidation Proceeds...........................................................................16
Loan-to-Value Ratio............................................................................16
London Business Day............................................................................16
Majority Class CE Certificateholder............................................................16
Master Servicer................................................................................16
Master Servicer Event of Default...............................................................17
Master Servicer Prepayment Charge Payment Amount...............................................17
Master Servicer Remittance Date................................................................17
Master Servicer Termination Test...............................................................17
Maximum I-LT7 Uncertificated Interest Deferral Amount..........................................17
Mezzanine Certificate..........................................................................17
Monthly Payment................................................................................17
Mortgage ......................................................................................17
Mortgage File..................................................................................17
Mortgage Loan..................................................................................18
Mortgage Loan Purchase Agreement...............................................................18
Mortgage Loan Schedule.........................................................................18
Mortgage Note..................................................................................20
Mortgage Pool..................................................................................20
Mortgage Rate..................................................................................20
Mortgaged Property.............................................................................20
Mortgagor......................................................................................20
Net Monthly Excess Cashflow....................................................................20
Net Mortgage Rate..............................................................................20
Net WAC Pass-Through Rate......................................................................21
New Lease......................................................................................21
Nonrecoverable P&I Advance.....................................................................21
Nonrecoverable Servicing Advance...............................................................21
Non-United States Person.......................................................................21
Notional Amount................................................................................21
Officers' Certificate..........................................................................21
One-Month LIBOR................................................................................21
One-Month LIBOR Pass-Through Rate..............................................................22
Opinion of Counsel.............................................................................22
Mortgage Loan..................................................................................22
Overcollateralized Amount......................................................................22
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<PAGE>
SECTION PAGE
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Overcollateralization Deficiency Amount........................................................22
Overcollateralization Increase Amount..........................................................23
Overcollateralization Reduction Amount.........................................................23
Ownership Interest.............................................................................23
Pass-Through Rate..............................................................................23
Percentage Interest............................................................................25
Permitted Investments..........................................................................25
Permitted Transferee...........................................................................26
Person ......................................................................................26
P&I Advance....................................................................................26
Plan ......................................................................................26
Prepayment Assumption..........................................................................26
Prepayment Charge..............................................................................26
Prepayment Charge Schedule.....................................................................27
Prepayment Interest Shortfall..................................................................27
Prepayment Period..............................................................................27
Principal Distribution Amount..................................................................27
Principal Prepayment...........................................................................28
Purchase Price.................................................................................28
Qualified Substitute Mortgage Loan.............................................................29
Rate/Term Refinancing..........................................................................29
Rating Agency or Rating Agencies...............................................................30
Realized Loss..................................................................................30
Record Date....................................................................................31
Reference Banks................................................................................31
Refinanced Mortgage Loan.......................................................................31
Regular Certificate............................................................................31
Regular Interest...............................................................................31
Relief Act.....................................................................................31
Relief Act Interest Shortfall..................................................................31
REMIC ......................................................................................32
REMIC I ......................................................................................32
REMIC I Interest Loss Allocation Amount........................................................32
REMIC I Overcollateralized Amount..............................................................32
REMIC I Principal Loss Allocation Amount.......................................................32
REMIC I Regular Interest.......................................................................33
REMIC I Regular Interest I-LT1.................................................................33
REMIC I Regular Interest I-LT2.................................................................33
REMIC I Regular Interest I-LT3.................................................................33
REMIC I Regular Interest I-LT4.................................................................33
REMIC I Regular Interest I-LT5.................................................................33
REMIC I Regular Interest I-LT6.................................................................34
REMIC I Regular Interest I-LT7.................................................................34
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<PAGE>
SECTION PAGE
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REMIC I Regular Interest I-LTP.................................................................34
REMIC I Remittance Rate........................................................................34
REMIC I Required Overcollateralized Amount.....................................................34
REMIC II ......................................................................................34
REMIC II Regular Interest......................................................................34
REMIC II Regular Interest II-LT1...............................................................34
REMIC II Regular Interest II-LT2...............................................................35
REMIC II Regular Interest II-LT3...............................................................35
REMIC II Regular Interest II-LT4...............................................................35
REMIC II Regular Interest II-LT5...............................................................35
REMIC II Regular Interest II-LT6...............................................................35
REMIC II Regular Interest II-LT7...............................................................35
REMIC II Regular Interest II-LTP...............................................................36
REMIC II Regular Interest II-LT2S..............................................................36
REMIC II Regular Interest II-LT3S..............................................................36
REMIC II Regular Interest II-LT4S..............................................................36
REMIC II Regular Interest II-LT5S..............................................................36
REMIC II Regular Interest II-LT6S..............................................................36
REMIC II Remittance Rate.......................................................................36
REMIC III......................................................................................37
REMIC III Certificate..........................................................................37
REMIC III Certificateholder....................................................................37
Remittance Report..............................................................................37
Rents from Real Property.......................................................................37
REO Account....................................................................................37
REO Disposition................................................................................37
REO Imputed Interest...........................................................................37
REO Principal Amortization.....................................................................37
REO Property...................................................................................38
Request for Release............................................................................38
Required Overcollateralized Amount.............................................................38
Reserve Interest Rate..........................................................................38
Residential Dwelling...........................................................................38
Residual Certificate...........................................................................38
Residual Interest..............................................................................38
Responsible Officer............................................................................38
Scheduled Principal Balance....................................................................39
Senior Interest Distribution Amount............................................................39
Servicing Account..............................................................................40
Servicing Advances.............................................................................40
Servicing Fee..................................................................................40
Servicing Fee Rate.............................................................................40
Servicing Officer..............................................................................40
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<PAGE>
SECTION PAGE
- ------- ----
Single Certificate.............................................................................40
S&P ......................................................................................40
Startup Day....................................................................................40
Stated Principal Balance.......................................................................40
Stayed Funds...................................................................................41
Stepdown Date..................................................................................41
Sub-Servicer...................................................................................41
Sub-Servicing Account..........................................................................42
Sub-Servicing Agreement........................................................................42
Substitution Shortfall Amount..................................................................42
Tax Returns....................................................................................42
Telerate Page 3750.............................................................................42
Termination Price..............................................................................42
Terminator.....................................................................................42
Transfer ......................................................................................42
Transferee.....................................................................................42
Transferor.....................................................................................42
Trigger Event..................................................................................42
Trust Administrator............................................................................42
Trust Fund.....................................................................................42
Trustee ......................................................................................43
Uncertificated Balance.........................................................................43
Uncertificated Corresponding Component.........................................................43
Uncertificated Interest........................................................................43
Uncertificated Notional Amount.................................................................44
Uninsured Cause................................................................................44
United States Person...........................................................................44
Value ......................................................................................44
Voting Rights..................................................................................45
1.02. Allocation of Certain Interest Shortfalls......................................................45
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of the Mortgage Loans...............................................................47
2.02. Acceptance of REMIC I by Trustee...............................................................49
2.03. Repurchase or Substitution of Mortgage Loans by the Originator, the Seller
or the Depositor...............................................................................50
2.04. Representations and Warranties of the Depositor................................................53
2.05. Representations, Warranties and Covenants of the Master Servicer...............................55
2.06. Issuance of the Class R-I Certificates.........................................................58
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<PAGE>
SECTION PAGE
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2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II by
the Trustee....................................................................................59
2.08. Issuance of Class R-II Certificates............................................................59
2.09. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by
the Trustee....................................................................................59
2.10. Issuance of REMIC III Certificates.............................................................60
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
3.01. Master Servicer to Act as Master Servicer......................................................61
3.02. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.............................63
3.03. Successor Sub-Servicers........................................................................64
3.04. Liability of the Master Servicer...............................................................65
3.05. No Contractual Relationship Between Sub-Servicers and the Trust
Administrator, the Trustee or Certificateholders...............................................65
3.06. Assumption or Termination of Sub-Servicing Agreements by Trust
Administrator..................................................................................65
3.07. Collection of Certain Mortgage Loan Payments...................................................66
3.08. Sub-Servicing Accounts.........................................................................66
3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts.........................67
3.10. Collection Account and Distribution Account....................................................67
3.11. Withdrawals from the Collection Account and Distribution Account...............................70
3.12. Investment of Funds in the Collection Account and
the Distribution Account.......................................................................72
3.13. [intentionally omitted]........................................................................73
3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.......................................................................................73
3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................75
3.16. Realization Upon Defaulted Mortgage Loans......................................................76
3.17. Trustee and Trust Administrator to Cooperate;
Release of Mortgage Files......................................................................78
3.18. Servicing Compensation.........................................................................79
3.19. Reports to the Trust Administrator and the Trustee; Collection Account
Statements.....................................................................................80
3.20. Statement as to Compliance.....................................................................80
3.21. Independent Public Accountants' Servicing Report...............................................80
3.22. Access to Certain Documentation................................................................81
3.23. Title, Management and Disposition of REO Property..............................................81
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<PAGE>
SECTION PAGE
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3.24. Obligations of the Master Servicer in Respect of Prepayment Interest
Shortfall......................................................................................84
3.25. Obligations of the Master Servicer in Respect of Mortgage Rates and
Monthly Payments...............................................................................85
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions..................................................................................86
4.02. Statements to Certificateholders...............................................................93
4.03. Remittance Reports; P&I Advances...............................................................96
4.04. Allocation of Realized Losses..................................................................98
4.05. Compliance with Withholding Requirements......................................................100
4.06. Exchange Commission; Additional Information...................................................100
ARTICLE V
THE CERTIFICATES
5.01. The Certificates..............................................................................101
5.02. Registration of Transfer and Exchange of Certificates.........................................103
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.............................................107
5.04. Persons Deemed Owners.........................................................................108
5.05. Certain Available Information.................................................................108
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
6.01. Liability of the Depositor and the Master Servicer............................................110
6.02. Merger or Consolidation of the Depositor or the Master Servicer...............................110
6.03. Limitation on Liability of the Depositor, the Master Servicer and Others......................110
6.04. Limitation on Resignation of the Master Servicer..............................................111
6.05. Rights of the Depositor in Respect of the Master Servicer.....................................112
ARTICLE VII
DEFAULT
7.01. Master Servicer Events of Default.............................................................113
7.02. Trust Administrator or Trustee to Act; Appointment of Successor...............................115
7.03. Notification to Certificateholders............................................................116
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<PAGE>
SECTION PAGE
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7.04. Waiver of Master Servicer Events of Default...................................................117
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
8.01. Duties of Trustee and Trust Administrator.....................................................118
8.02. Certain Matters Affecting the Trustee and the Trust Administrator.............................119
8.03. Neither Trustee nor Trust Administrator Liable for Certificates or Mortgage
Loans.........................................................................................120
8.04. Trustee and Trust Administrator May Own Certificates..........................................121
8.05. Trustee's and Trust Administrator's Fees and Expenses.........................................121
8.06. Eligibility Requirements for Trustee and Trust Administrator..................................122
8.07. Resignation and Removal of the Trustee and the Trust Administrator............................122
8.08. Successor Trustee or Trust Administrator......................................................123
8.09. Merger or Consolidation of Trustee or Trust Administrator.....................................124
8.10. Appointment of Co-Trustee or Separate Trustee.................................................124
8.11. Appointment of Office or Agency...............................................................125
8.12. Representations and Warranties................................................................125
ARTICLE IX
TERMINATION
9.01 Termination Upon Repurchase or Liquidation of All Mortgage Loans..............................127
9.02 Additional Termination Requirements...........................................................129
ARTICLE X
REMIC PROVISIONS
10.01. REMIC Administration..........................................................................131
10.02. Prohibited Transactions and Activities........................................................134
10.03. Master Servicer, Trustee and Trust Administrator Indemnification..............................134
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment.....................................................................................135
11.02. Recordation of Agreement; Counterparts........................................................136
11.03. Limitation on Rights of Certificateholders....................................................136
11.04. Governing Law.................................................................................137
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<PAGE>
SECTION PAGE
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11.05. Notices.......................................................................................137
11.06. Severability of Provisions....................................................................138
11.07. Notice to Rating Agencies.....................................................................138
11.08. Article and Section References................................................................139
11.09. Grant of Security Interest....................................................................139
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class M-1 Certificate
Exhibit A-4 Form of Class M-2 Certificate
Exhibit A-5 Form of Class M-3 Certificate
Exhibit A-6 Form of Class CE Certificate
Exhibit A-7 Form of Class P Certificate
Exhibit A-8 Form of Class R-I Certificate
Exhibit A-9 Form of Class R-II Certificate
Exhibit A-10 Form of Class R-III Certificate
Exhibit B [Reserved]
Exhibit C-1 Form of Trust Administrator's Initial Certification
Exhibit C-2 Form of Trust Administrator's Final Certification
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release Mortgage Loans paid in full
Exhibit F-1 Form of Transferor Representation Letter and Form of Transferee
Representation Letter in Connection with Transfer of the Class CE
Certificates, Class P Certificates or Residual Certificates Pursuant to Rule
144A Under the 1933 Act
Exhibit F-2 Form of Transfer Affidavit and Agreement and Form of Transferor
Affidavit in Connection with Transfer of Residual Certificates
Exhibit G Form of Certification with respect to ERISA and the Code
Exhibit H Form of Report Pursuant to Section 4.06
Exhibit I Form of Lost Note Affidavit
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
</TABLE>
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<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of March 1, 1999, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. as
Depositor, NEW CENTURY MORTGAGE CORPORATION as Master Servicer, FIRSTAR BANK
MILWAUKEE, N.A. as Trustee and U.S. BANK NATIONAL ASSOCIATION as Trust
Administrator.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprising
of the Mortgage Loans and certain other related assets subject to this
Agreement.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Master Servicer Prepayment Charge Payment Amount)
subject to this Agreement as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." The Class R-I
Certificates will be the sole class of "residual interests" in REMIC I for
purposes of the REMIC Provisions (as defined herein). The following table
irrevocably sets forth the designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance and, solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular Interests will be certificated.
<TABLE>
<CAPTION>
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
<S> <C> <C> <C>
I-LT1 Variable(2) $311,164,528.49 April 25, 2029
I-LT2 Variable(2) $2,111,680.00 April 25, 2029
I-LT3 Variable(2) $544,330.00 April 25, 2029
I-LT4 Variable(2) $193,680.00 April 25, 2029
I-LT5 Variable(2) $142,880.00 April 25, 2029
I-LT6 Variable(2) $87,320.00 April 25, 2029
I-LT7 Variable(2) $3,270,406.50 April 25, 2029
I-LTP (3) $100.00 April 25, 2029
</TABLE>
- ----------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
(3) The REMIC I Regular Interest I-LTP will not accrue interest.
-1-
<PAGE>
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will evidence the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
The following table irrevocably sets forth the designation, the REMIC II
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC II Regular Interests. None of the REMIC II
Regular Interests will be certificated.
<TABLE>
<CAPTION>
REMIC II Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
<S> <C> <C> <C>
II-LT1 Variable(2) $311,164,528.49 April 25, 2029
II-LT2 Variable(2) $2,111,680.00 April 25, 2029
II-LT3 6.9090% per annum $544,330.00 April 25, 2029
II-LT4 6.7500% per annum $193,680.00 April 25, 2029
II-LT5 6.7500% per annum $142,880.00 April 25, 2029
II-LT6 6.7500% per annum $87,320.00 April 25, 2029
II-LT7 Variable(2) $3,270,406.50 April 25, 2029
II-LTP (3) $100.00 April 25, 2029
II-LT2S Variable(2) (4) April 25, 2029
II-LT3S Variable(2) (4) April 25, 2029
II-LT4S Variable(2) (4) April 25, 2029
II-LT5S Variable(2) (4) April 25, 2029
II-LT6S Variable(2) (4) April 25, 2029
</TABLE>
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC II Regular Interest.
(2) Calculated in accordance with the definition of "REMIC II Remittance Rate"
herein.
(3) The REMIC II Regular Interest II-LTP will not accrue interest.
(4) This REMIC II Regular Interest has no Uncertificated Balance but will
accrue interest at the related REMIC II Remittance Rate on the related
Uncertificated Notional Amount, which is equal to the Uncertificated
Balance of the Uncertificated Corresponding Component.
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<PAGE>
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Certificates will evidence the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions. "The following table irrevocably sets forth the designation, the
Pass-Through Rate, the initial aggregate Certificate Principal Balance and,
solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.
<TABLE>
<CAPTION>
Initial Aggregate Latest Possible
Designation Pass-Through Rate Certificate Principal Balance Maturity Date(1)
----------- ----------------- ----------------------------- ----------------
<S> <C> <C> <C>
Class A-1 Variable(2) $211,168,000.00 April 25, 2029
Class A-2 6.9090% per annum $54,433,000.00 April 25, 2029
Class M-1 6.7500% per annum $19,368,000.00 April 25, 2029
Class M-2 6.7500% per annum $14,288,000.00 April 25, 2029
Class M-3 6.7500% per annum $8,732,000.00 April 25, 2029
Class CE Variable(2) $9,525,824.99(3) April 25, 2029
Class P (4) $100.00 April 25, 2029
</TABLE>
- -------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loans with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class CE Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC II Regular Interests (other than the Uncertificated
Balance of REMIC II Regular Interest II-LTP). The Class CE Certificates
will not accrue interest on their Certificate Principal Balance.
(4) The Class P Certificates will not accrue interest.
As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $317,514,924.99.
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer, the Trustee and the Trust Administrator
agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
"Accepted Servicing Practices": The servicing standards set
forth in Section 3.01.
"Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate or Class CE Certificate and each Distribution
Date, interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Certificate for such Distribution Date on the
Certificate Principal Balance, in the case of the Class A Certificates and the
Mezzanine Certificates, or on the related Notional Amount, in the case of the
Class CE Certificates, of such Certificate immediately prior to such
Distribution Date. The Class P Certificates are not entitled to distributions in
respect of interest and, accordingly, will not accrue interest. All
distributions of interest on the Class A-1 Certificates will be calculated on
the basis of a 360-day year and the actual number of days in the applicable
Interest Accrual Period and all distributions of interest on the Class A-2
Certificates and the Mezzanine Certificates will be calculated on the basis of a
360- day year consisting of twelve 30-day months. Accrued Certificate Interest
with respect to each Distribution Date, as to any Class A Certificate, Mezzanine
Certificate or Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Certificate pursuant to Section 1.02 hereof of the sum
of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any, for
such Distribution Date. In addition, Accrued Certificate Interest with respect
to each Distribution Date, as to any Class CE Certificate, shall be reduced by
an amount equal to the portion allocable to such Class CE Certificate of
Realized Losses, if any, pursuant to Section 4.04 hereof.
"Administration Fee": The amount payable to the Trustee on
each Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Administration Fee
Rate, multiplied by (ii) the aggregate Scheduled Principal Balance of the
Mortgage Loans and any REO Properties as of the second preceding Due Date (or,
in the case of the initial Distribution Date, as of the Cut-off Date). The fee
payable to the Trust Administrator for all services rendered by it in the
exercise and performance of any of the powers and duties of the Trust
Administrator hereunder will be paid by the Trustee out of the Administration
Fee.
"Administration Fee Rate": 0.0085% per annum.
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<PAGE>
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Mezzanine Certificates, the sum of (i) any
Realized Losses allocated to such Class of Certificates on any Distribution Date
and (ii) the amount of any Allocated Realized Loss Amount for such Class of
Certificates remaining unpaid from previous Distribution Dates plus accrued
interest on such amount calculated at the related Pass-Through Rate for each
Interest Accrual Period such amount remained outstanding.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Master Servicer for such Distribution Date pursuant to
Section 4.03, (e) the aggregate of any advances made by the Trust Administrator
or the Trustee, as applicable, for such Distribution Date pursuant to Section
7.02(b) and (f) with respect to the initial Distribution Date, the Initial
Deposit, reduced (to not less than zero), by (2) the sum of (x) the portion of
the amount described in clause (1)(a) above that represents (i) Monthly Payments
on the Mortgage Loans received from a Mortgagor on or prior to the Determination
Date but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Master Servicer, the
Trustee, the Originator, the Trust Administrator, the Seller or any Sub-Servicer
pursuant to Section 3.11 or Section 3.12 or
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<PAGE>
otherwise payable in respect of extraordinary Trust Fund expenses, (v) Stayed
Funds, (vi) the Administration Fee payable from the Distribution Account
pursuant to Section 8.05, (vii) amounts deposited in the Collection Account or
the Distribution Account in error and (viii) the amount of any Prepayment
Charges collected by the Master Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or any Master Servicer Prepayment Charge
Payment Amount, and (y) amounts reimbursable to the Trustee or the Trust
Administrator, as applicable, for an advance made pursuant to Section 7.02(b)
which advance the Trustee or Trust Administrator, as applicable, has determined
to be nonrecoverable from the Stayed Funds in respect of which it was made.
"Available Class A Distribution Amount": With respect to any
Distribution Date (a) prior to the Stepdown Date or (b) on which a Trigger Event
is in effect, an amount equal to the Principal Distribution Amount. With respect
to any Distribution Date (a) on or after the Stepdown Date and (b) on which a
Trigger Event is not in effect, an amount equal to the lesser of (i) the
Principal Distribution Amount and (ii) the Class A Principal Distribution
Amount.
"Balloon Loan": Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.
"Balloon Payment": With respect to any Balloon Loan, as of any
date of determination, the Monthly Payment payable on the stated maturity date
of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificate": The Class A Certificates and the
Mezzanine Certificates for so long as the Certificates of such Class shall be
registered in the name of the Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of
California, the State of New York or in the city in which the Corporate Trust
Office of the Trust Administrator or the Corporate Trust Office of the Trustee
is located, are authorized or obligated by law or executive order to be closed.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal amount in excess of the principal
balance of any existing first mortgage or subordinate mortgage on the related
Mortgaged Property and related closing costs.
-6-
<PAGE>
"Certificate": Any one of the Depositor's Mortgage
Pass-Through Certificates, Series 1999-NC1, Class A-1, Class A-2, Class M-1,
Class M-2, Class M-3, Class CE, Class P, Class R-I, Class R-II or Class R-III,
issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the related Notional Amount, in the case of the Class CE
Certificates) of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of Realized
Losses in reduction of the Certificate Principal Balance (or the related
Notional Amount, in the case of the Class CE Certificates) of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial aggregate Certificate Principal Balance (or the related Notional
Amount, in the case of the Class CE Certificates) of such Class of Certificates
as of the Closing Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee and the Trust Administrator may
conclusively rely upon a certificate of the Depositor or the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto on such immediately prior Distribution Date (or, in the case of any date
of determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of
-7-
<PAGE>
the REMIC II Regular Interests over (B) the then aggregate Certificate Principal
Balances of the Class A Certificates, the Mezzanine Certificates and the Class P
Certificates then outstanding.
"Certificate Register": The register maintained pursuant to
Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any Class A-1 Certificate or any Class
A-2 Certificate.
"Class A-1 Certificate": Any one of the Class A Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Class A Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class A Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the aggregate of the Certificate Principal
Balances of the Class A Certificates of each Class immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 67.30% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $1,587,575.
"Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-6 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate of the Certificate
Principal Balances of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 79.50% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and
-8-
<PAGE>
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period minus $1,587,575.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-4 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate of the Certificate
Principal Balances of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (iii) the Certificate Principal Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 88.50% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period minus $1,587,575.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate of the Certificate
Principal Balances of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 94.00% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period and (B) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period minus
$1,587,575.
"Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-7 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC
Provisions.
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<PAGE>
"Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-8 and evidencing the
Residual Interest in REMIC I for purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Class R-II
Certificates executed, authenticated and delivered by the Trustee or the Trust
Administrator, substantially in the form annexed hereto as Exhibit A-9 and
evidencing the Residual Interest in REMIC II for purposes of the REMIC
Provisions.
"Class R-III Certificates": Any one of the Class R-III
Certificates executed, authenticated and delivered by the Trustee or the Trust
Administrator, substantially in the form annexed hereto as Exhibit A-10 and
evidencing the Residual Interest in REMIC III for purposes of the REMIC
Provisions.
"Closing Date": March 25, 1999.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Master Servicer
pursuant to Section 3.10(a), which shall be entitled "New Century Mortgage
Corporation, as Master Servicer for Firstar Bank Milwaukee, N.A., as Trustee, in
trust for the registered holders of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 1999-NC1". The Collection
Account must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office, with respect to the Trust Administrator, at
the date of the execution of this instrument is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, or at such other address as the Trust
Administrator may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Trustee and, with
respect to the Trustee, at the date of the execution of this instrument is
located at 1555 N. Rivercenter Drive, Milwaukee, Wisconsin 53212, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Trust
Administrator.
"Corresponding Certificate": With respect to REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4,
REMIC I Regular Interest I- LT5, REMIC I Regular Interest I-LT6 and REMIC I
Regular Interest I-LTP, the Class A-1 Certificates, the Class A-2 Certificates,
Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates and Class
P Certificates, respectively. With respect to REMIC II Regular Interest II- LT2,
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular
-10-
<PAGE>
Interest II-LT5, REMIC II Regular Interest II-LT6 and REMIC II Regular Interest
II-LTP, the Class A-1 Certificates, Class A-2 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates and Class P
Certificates, respectively.
"Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account
distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.
"Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Cut-off Date": With respect to each Original Mortgage Loan,
March 1, 1999. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.
"DCR": Duff & Phelps Credit Rating Co., or its successor in
interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding
initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
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<PAGE>
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master Servicer pursuant to Section 3.16(c) shall not be included in
either the numerator or the denominator for
purposes of calculating the Delinquency Percentage.
"Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee and the Trust Administrator, that (a) is
incorporated under the laws of the United States of America or any State
thereof, (b) is subject to supervision and examination by federal or state
banking authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other short-term unsecured debt
obligations) that are rated D-1+ by DCR and A-1 by S&P (or comparable ratings if
DCR and S&P are not the Rating Agencies).
"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 each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all
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<PAGE>
of its activities are subject to tax and, except for Freddie Mac, a majority of
its board of directors is not selected by such governmental unit), (ii) any
foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code, (v) an "electing large partnership" and (vi) any other Person so
designated by the Trustee or the Trust Administrator based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Residual Certificate by
such Person may cause any of REMIC I, REMIC II or REMIC III or any Person having
an Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 3.10(b), which
shall be entitled "U.S. Bank National Association, as Trust Administrator for
Firstar Bank Milwaukee, N.A., as Trustee, in trust for the registered holders of
Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1999-NC1". The Distribution Account must be an Eligible
Account.
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in April 1999.
"Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is
generally the day of the month on which the Monthly Payment is due on a Mortgage
Loan, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the related Due Date.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Overcollateralized Amount": With respect to the Class
A Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the
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Overcollateralized Amount for such Distribution Date over (ii) the Required
Overcollateralized Amount for such Distribution Date.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the sum of
(i) the Administration Fee Rate and (ii) the Servicing Fee Rate.
"Fannie Mae": Fannie Mae, formally known as the Federal
National Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator, the Seller, the Depositor, the Majority Class CE
Certificateholder or the Master Servicer pursuant to or as contemplated by
Section 2.03, Section 3.16(c) or Section 9.01), a determination made by the
Master Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Master Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Originator and their respective Affiliates, (b) does not have any
direct financial interest in or any material indirect financial interest in the
Depositor, the Originator, the Master Servicer or any Affiliate thereof, and (c)
is not connected with the Depositor, the Originator, the Master Servicer or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee, trust
administrator, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Originator, the Master Servicer or any Affiliate thereof merely
because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor, the Originator, the Master Servicer or any
Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Master Servicer) that would be an "independent contractor" with respect to
REMIC I within the meaning of Section 856(d)(3) of the Code if REMIC I were a
real estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Master Servicer) if the Trustee and the Trust Administrator have
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein
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contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Initial Deposit": $666.88 in cash to be deposited by the
Depositor with the Trust Administrator on or before the Closing Date, which
represents with respect to each Mortgage Loan having a first payment date due in
May 1999, interest accrued at the Net Mortgage Rate for each such Mortgage Loan
for the initial Interest Accrual Period.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Class A-1 Certificates, REMIC II Regular Interest II-LT2 and REMIC
II Regular Interest II-LT2S, the period commencing on the Distribution Date of
the month immediately preceding the month in which such Distribution Date occurs
(or, in the case of the first Distribution Date, commencing on the Closing Date)
and ending on the day preceding such Distribution Date. With respect to any
Distribution Date and the Class A-2 Certificates, the Mezzanine Certificates,
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5, REMIC II Regular Interest II-LT6, REMIC II Regular
Interest II-LT3S, REMIC II Regular Interest II- LT4S, REMIC II Regular Interest
II-LT5S, REMIC II Regular Interest II-LT6S, REMIC II Regular Interest II-LT1,
REMIC II Regular Interest II-LT7 and the REMIC I Regular Interests, the
one-month period ending on the last day of the calendar month preceding the
month in which such Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any
Distribution Date and any Class of Class A Certificates or Mezzanine
Certificates, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class of Certificates as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class of Certificates in respect of interest on such immediately preceding
Distribution Date and (ii) the amount of any Interest Carry Forward Amount for
such Class of Certificates remaining unpaid from previous Distribution Dates
plus accrued interest on such amount calculated at the related Pass-Through Rate
for each Interest Accrual Period such amount remained outstanding.
"Interest Determination Date": With respect to the Class A-1
Certificates, REMIC II Regular Interest II-LT2 and REMIC II Regular Interest
II-LT2S and any Interest Accrual Period therefor, the second London Business Day
preceding the commencement of such Interest Accrual Period.
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"Interest Distribution Amount": With respect to any
Distribution Date and any Class A Certificates, any Mezzanine Certificates and
any Class CE Certificates, the aggregate Accrued Certificate Interest on the
Certificates of such Class for such Distribution Date.
"Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Distribution Amount for such Distribution
Date allocable to interest.
"Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section
3.16(c)
or Section 9.01. With respect to any REO Property, either of the following
events: (i) a Final Recovery Determination is made as to such REO Property; or
(ii) such REO Property is removed from REMIC I by reason of its being purchased
pursuant to Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Master Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date (and the principal balance of
any related first lien Mortgage Loan, with respect to any second lien Mortgage
Loan) and the denominator of which is the Value of the related Mortgaged
Property.
"London Business Day": Any day on which banks in the City of
London are open and conducting transactions in United States dollars.
"Majority Class CE Certificateholder": Any single Holder or
group of Holders of Class CE Certificates representing a greater than 50%
Percentage Interest in such Class.
"Master Servicer": New Century Mortgage Corporation or any
successor master servicer appointed as herein provided, in its capacity as
Master Servicer hereunder.
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"Master Servicer Event of Default": One or more of the events
described in Section 7.01.
"Master Servicer Prepayment Charge Payment Amount": The
amounts payable by the Master Servicer in respect of any waived Prepayment
Charges pursuant to Section 2.05 or Section 3.01.
"Master Servicer Remittance Date": With respect to any
Distribution Date, 3:00 p.m. New York time on the 18th day of the calendar month
in which such Distribution Date occurs or, if such 18th day is not a Business
Day, the Business Day immediately succeeding such
18th day.
"Master Servicer Termination Test": With respect to any
Distribution Date, the Master Servicer Termination Test will be failed if the
Cumulative Loss Percentage exceeds 5.00%.
"Maximum I-LT7 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LT7 for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LT7 minus the REMIC I Overcollateralized Amount, in each case
for such Distribution Date, over (ii) Uncertificated Interest on REMIC II
Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II Regular
Interest II-LT4, REMIC II Regular Interest II-LT5 and REMIC II Regular Interest
II-LT6 for such Distribution Date.
"Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.07; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or a second lien on, or first priority or second priority
security interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
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"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and delivered to the Trust Administrator pursuant to Section 2.01
or Section 2.03(d) of this Agreement, as held from time to time as a part of the
Trust Fund, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule.
"Mortgage Loan Purchase Agreement": The agreement among the
Seller, the Originator and the Depositor, regarding the sale of the Mortgage
Loans by the Seller to the Depositor, substantially in the form of Exhibit D
annexed hereto.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the
state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the Cut-off
Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
(x) (A) the date on which the first Monthly Payment was due on
the Mortgage Loan and, (B) if such date is not consistent
with the Due Date currently in effect, such Due Date;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment due on the first Due
Date after the Cut-off Date;
(xiv) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
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(xv) the original principal amount of the Mortgage Loan;
(xvi) the Scheduled Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xvii) [intentionally omitted];
(xviii) [intentionally omitted];
(xix) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out
Refinancing);
(xx) [intentionally omitted];
(xxi) [intentionally omitted];
(xxii) the Mortgage Rate at origination;
(xxiii) [intentionally omitted];
(xxiv) a code indicating the documentation program (i.e., Full
Documentation, Limited Documentation, Stated Income
Documentation);
(xxv) [intentionally omitted];
(xxvi) [intentionally omitted];
(xxvii) the risk grade;
(xxviii) [intentionally omitted];
(xxix) [intentionally omitted];
(xxx) [intentionally omitted];
(xxxi) the Value of the Mortgaged Property;
(xxxii) the sale price of the Mortgaged Property, if applicable;
(xxxiii) the actual unpaid principal balance of the Mortgage Loan
as of the Cut-off Date;
(xxxiv) the type and term of the related Prepayment Charge;
(xxxv) [intentionally omitted];
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(xxxvi) [intentionally omitted];
(xxxvii) [intentionally omitted];
(xxxviii) [intentionally omitted];
(xxxix) [intentionally omitted];
(xl) the program code.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-Off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off Date shall refer to the related Cut-off
Date for such Mortgage Loan, determined in accordance with the definition of
Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the Interest Distribution Amount payable to the holders of the Class A
Certificates and the Mezzanine Certificates and (B) the sum of the amounts
described in clauses (b)(i) through (iii) of the definition of Principal
Distribution Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.
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"Net WAC Pass-Through Rate": With respect to REMIC II Regular
Interest II-LT2 and the Class A-1 Certificates and any Distribution Date, a per
annum rate equal to the fraction, expressed as a percentage, the numerator of
which is (i) an amount equal to 1/12 of the aggregate Scheduled Principal
Balance of the then outstanding Mortgage Loans and REO Properties multiplied by
the weighted average of the Expense Adjusted Mortgage Rates on such Mortgage
Loans and REO Properties, and the denominator of which is (ii) an amount equal
to (A) the sum of the aggregate Scheduled Principal Balance of the then
outstanding Mortgage Loans and REO Properties multiplied by (B) the actual
number of days elapsed in the related Interest Accrual Period divided by 360.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage
Loan or REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, will
not or, in the case of a proposed Servicing Advance, would not be ultimately
recoverable from related Late Collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests (other than the Uncertificated Balance of REMIC II Regular Interest
II-LTP) for such Distribution Date.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the
Originator, the Seller or the Depositor, as applicable.
"One-Month LIBOR": With respect to the Class A-1 Certificates
and REMIC II Regular Interest II-LT2 and any Interest Accrual Period therefor,
the rate determined by the Trust Administrator on the related Interest
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such Interest Determination Date; provided that if such rate does not
appear on Telerate Page 3750, the rate for such date will be determined on the
basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits, as of 11:00 a.m. (London time) on such Interest Determination Date. In
such event, the Trust Administrator will request the principal
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London office of each of the Reference Banks to provide a quotation of its rate.
If on such Interest Determination Date, two or more Reference Banks provide such
offered quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If on such Interest
Determination Date, fewer than two Reference Banks provide such offered
quotations, One-Month LIBOR for the related Interest Accrual Period shall be the
higher of (i) LIBOR as determined on the previous Interest Determination Date
and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination Date would be
based on LIBOR for the previous Interest Determination Date for the third
consecutive Interest Determination Date, the Trust Administrator shall select an
alternative comparable index (over which the Trust Administrator has no
control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
"One-Month LIBOR Pass-Through Rate": With respect to the Class
A-1 Certificates and REMIC II Regular Interest II-LT2, a per annum rate equal to
One-Month LIBOR plus 0.39%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans and REO Properties remaining in the Trust Fund is reduced
to less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date, or One-Month LIBOR plus 0.78%, in the case of any
Distribution Date thereafter.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Master
Servicer, acceptable to the Trustee, if such opinion is delivered to the
Trustee, or acceptable to the Trust Administrator, if such opinion is to be
delivered to the Trust Administrator, except that any opinion of counsel
relating to (a) the qualification of any of REMIC I, REMIC II or REMIC III as a
REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent counsel.
"Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.
"Originator": New Century Mortgage Corporation, or its
successor in interest, in its capacity as originator under the Mortgage Loan
Purchase Agreement.
"Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (b)(i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution
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Date over (b) the Overcollateralized Amount applicable to such Distribution Date
prior to taking into account the payment of any Overcollateralization Increase
Amount on such Distribution Date.
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued Certificate Interest payable on the Class CE Certificates on such
Distribution Date as reduced by Realized Losses allocated thereto with respect
to such Distribution Date pursuant to Section 4.04.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to:
(i) the Class A-1 Certificates, for any Distribution Date, a
rate per annum equal to the lesser of (i) the One-Month LIBOR
Pass-Through Rate for such Distribution Date and (ii) the Net
WAC Pass-Through Rate for such Distribution
Date;
(ii) the Class A-2 Certificates, for any Distribution Date, a
fixed rate equal to 6.9090% per annum;
(iii) the Class M-1 Certificates, for any Distribution Date, a
fixed rate equal to 6.7500% per annum;
(iv) the Class M-2 Certificates, for any Distribution Date, a
fixed rate equal to 6.7500% per annum;
(v) the Class M-3 Certificates, for any Distribution Date, a
fixed rate equal to 6.7500% per annum;
(vi) the Class CE Certificates, for any Distribution Date, a
rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts
calculated pursuant to clauses (a) through (h) below, and the
denominator of which is the Uncertificated Balance of the
REMIC II Regular Interests (other than the Uncertificated
Balance of REMIC II Regular Interest II-LTP). For
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purposes of calculating the Pass-Through Rate for the Class CE
Certificates, the numerator is equal to the sum of the
following components:
(a) the REMIC II Remittance Rate for REMIC II Regular
Interest II- LT1 minus two (2) times the weighted
average of the REMIC II Remittance Rates for REMIC II
Regular Interest II-LT2, REMIC II Regular Interest
II- LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II- LT5, REMIC II Regular Interest
II-LT6 and REMIC II Regular Interest II- LT7, with
the rate on REMIC II Regular Interest II-LT7 equal to
zero for the purpose of this calculation, applied to
an amount equal to the Uncertificated Balance of
REMIC II Regular Interest II-LT1;
(b) the weighted average of the REMIC II Remittance
Rates for REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest
II-LT4, REMIC II Regular Interest II-LT5 and REMIC II
Regular Interest II-LT6 minus two (2) times the
weighted average of the REMIC II Remittance Rates for
REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4,
REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6 and REMIC II Regular Interest II-LT7,
with the rate on REMIC II Regular Interest II-LT7
equal to zero for the purpose of this calculation,
applied to an amount equal to the sum of the
Uncertificated Balances of REMIC II Regular Interest
II- LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II- LT4, REMIC II Regular Interest
II-LT5 and REMIC II Regular Interest II- LT6;
(c) the REMIC II Remittance Rate for REMIC II Regular
Interest II- LT7 minus two (2) times the weighted
average of the REMIC II Remittance Rates for REMIC II
Regular Interest II-LT2, REMIC II Regular Interest
II- LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II- LT5, REMIC II Regular Interest
II-LT6 and REMIC II Regular Interest II- LT7, with
the rate on REMIC II Regular Interest II-LT7 equal to
zero for the purpose of this calculation, applied to
an amount equal to the Uncertificated Balance of
REMIC II Regular Interest II-LT7;
(d) 100% of the interest on REMIC II Regular Interest
II-LT2S;
(e) 100% of the interest on REMIC II Regular Interest
II-LT3S;
(f) 100% of the interest on REMIC II Regular Interest
II-LT4S;
(g) 100% of the interest on REMIC II Regular Interest
II-LT5S; and
(h) 100% of the interest on REMIC II Regular Interest
II-LT6S.
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"Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance of all of the Certificates of such Class.
The Class A Certificates and the Mezzanine Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $10,000 and integral multiples of $1.00 in excess thereof.
The Class P Certificates are issuable only in Percentage Interests corresponding
to initial Certificate Principal Balances of $20 and integral multiples thereof.
The Class CE Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $10,000 and
integral multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance of such Class or to an otherwise authorized denomination for
such Class plus such remainder. With respect to any Residual Certificate, the
undivided percentage ownership in such Class evidenced by such Certificate, as
set forth on the face of such Certificate. The Residual Certificates are
issuable in Percentage Interests of 20% and multiples thereof.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Master Servicer, the Trustee,
the Trust Administrator or any of their respective Affiliates:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United
States;
(ii) demand and time deposits in, certificates of
deposit of, or bankers' acceptances issued by, any Depository
Institution;
(iii) repurchase obligations with respect to any
security described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the laws
of the United States of America or any state thereof and that are rated
by each Rating Agency that rates such securities in its highest
long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than 30
days after the date of acquisition thereof) that is rated by each
Rating Agency that rates such securities in its highest short-term
unsecured debt rating available at the time of such investment;
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(vi) units of money market funds that have been rated
"AAA" by DCR (if rated by DCR) and "AAAm" by S&P; and
(viii) if previously confirmed in writing to the
Trustee and the Trust Administrator, any other demand, money market or
time deposit, or any other obligation, security or investment, as may
be acceptable to the Rating Agencies as a permitted investment of funds
backing securities having ratings equivalent to its highest initial
rating of the Class A Certificates;
provided, however, 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 provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date pursuant
to Section 4.03.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the
Code.
"Prepayment Assumption": A 100% Prepayment Vector. The
Prepayment Assumption is used solely for determining the accrual of original
issue discount on the Certificates for federal income tax purposes. A 100%
Prepayment Vector assumes that the outstanding balance of a pool of mortgage
loans prepays at a rate of 5.00% CPR in the first month of the life of such
pool, such rate increasing by an additional approximate 1.36% CPR (precisely
15/11, expressed as a percentage) each month thereafter through the eleventh
month of the life of such pool, and such rate thereafter remaining at 20% CPR
for the remainder of the life of such pool. A CPR (or Constant Prepayment Rate)
represents an annualized constant assumed rate of prepayment each month of a
pool of mortgage loans relative to its outstanding principal balance for the
life of such pool.
"Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment
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on a Mortgage Loan pursuant to the terms of the related Mortgage Note (other
than any Master Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on such date,
attached hereto as Schedule 2 (including the Prepayment Charge Summary attached
thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the principal balance of the related Mortgage Loan as of
the Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Master Servicer to reduce the outstanding principal balance of such loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period. The obligations of the Master Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the calendar month in which such Distribution Date
occurs.
"Principal Distribution Amount": With respect to any
Distribution Date, the lesser of:
(a) the excess of the Available Distribution Amount over
the amount payable on the Class A Certificates and
the Mezzanine Certificates pursuant to Section
4.01(a)(2); and
(b) the sum of:
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(i) the principal portion of each Monthly Payment on
the Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related
Determination Date;
(ii) the Stated Principal Balance of any Mortgage
Loan that was purchased during the related Prepayment
Period pursuant to or as contemplated by Section
2.03, Section 3.16(c) or Section 9.01 and the amount
of any shortfall deposited in the Collection Account
in connection with the substitution of a Deleted
Mortgage Loan pursuant to Section 2.03 during the
related Prepayment Period;
(iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds
and REO Principal Amortization) received during the
related Prepayment Period, net of any portion thereof
that represents a recovery of principal for which an
advance was made by the Master Servicer pursuant to
Section 4.03 in respect of a preceding Distribution
Date;
(iv) the principal portion of any Realized Losses
incurred on the Mortgage Loans in the calendar month
preceding such Distribution Date; and
(v) the amount of any Overcollateralization Increase
Amount for such Distribution Date;
minus:
(vi) the amount of any Overcollateralization
Reduction Amount for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Master Servicer to the Trustee and the Trust Administrator, an amount equal to
the sum of (i) 100% of the Stated Principal Balance thereof as of the date of
purchase (or such other price as provided in Section 9.01), (ii) in the case of
(x) a Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)
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accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an advance by the Master Servicer
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Master Servicer, the Trustee or the Trust Administrator in respect of the breach
or defect giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) [reserved], (iv) [reserved], (v)
[reserved], (vi) [reserved], (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan, (ix)
have a Loan-to- Value Ratio as of the date of substitution equal to or lower
than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x)
have a risk grading determined by the Originator at least equal to the risk
grading assigned on the Deleted Mortgage Loan and (xi) conform to each
representation and warranty set forth in Section 6 of the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the terms
described in clause (vii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(ix) hereof shall be satisfied as to each such mortgage loan, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xi) hereof must be satisfied
as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a nominal amount in excess of the existing
first mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were
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used exclusively (except for such nominal amount) to satisfy the then existing
first mortgage loan and any subordinate mortgage loan of the Mortgagor on the
related Mortgaged Property and to pay related closing costs.
"Rating Agency or Rating Agencies": DCR and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee, the Trust Administrator and the
Master Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv)
the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Master Servicer with respect to such
Mortgage Loan pursuant to Section 3.11(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all P&I Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the Master Servicer in respect of such REO Property or the
related Mortgage Loan for which the Master Servicer has been or, in connection
with such Final Recovery Determination, will be reimbursed pursuant to Section
3.23 out of rental income, Insurance Proceeds and Liquidation Proceeds received
in respect of such REO Property, minus (vi) the total
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of all net rental income, Insurance Proceeds and Liquidation Proceeds received
in respect of such REO Property that has been, or in connection with such Final
Recovery Determination, will be transferred to the Distribution Account pursuant
to Section 3.23.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected
Monthly Payment.
"Record Date": With respect to each Distribution Date and any
Book-Entry Certificate, the Business Day immediately preceding such Distribution
Date. With respect to each Distribution Date and any other Class of
Certificates, including any Definitive Certificates, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC,
The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors
in interest; provided, however, that if any of the foregoing banks are not
suitable to serve as a Reference Bank, then any leading banks selected by the
Trust Administrator which are engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, (ii) not controlling, under the control of or under common control
with the Depositor or any Affiliate thereof and (iii) which have been designated
as such by the Trust Administrator.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
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"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof; (ii) any REO Property, together
with all collections thereon and proceeds thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); (v) the Collection Account (other than any
amounts representing any Master Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Master Servicer
Prepayment Charge Payment Amount) and any REO Account, and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto. Notwithstanding
the foregoing, however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges payable in connection with Principal
Prepayments made before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LT1 minus two (2) times the weighted average of the REMIC II Remittance Rates
for REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular
Interest II-LT6 and REMIC II Regular Interest II-LT7, with the rate on REMIC II
Regular Interest II-LT7 equal to zero for purposes of this calculation, divided
by (b) 12.
"REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular
Interest I-LT4, REMIC I Regular Interest I-LT5 and REMIC I Regular Interest
I-LT6, in each case as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LT2,
REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular
Interest I- LT5 and REMIC I Regular Interest I-LT6 and the denominator of which
is the aggregate of the Uncertificated Balances of REMIC I Regular Interest
I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I
Regular Interest I-LT5, REMIC I Regular Interest I- LT6 and REMIC I Regular
Interest I-LT7.
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"REMIC I Regular Interest": Any of the eight separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
(other than REMIC I Regular Interest I-LTP, with respect to interest) shall
accrue interest at the related REMIC I Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
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"REMIC I Regular Interest I-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT7
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of the Expense Adjusted Mortgage Rates on
the then outstanding Mortgage Loans and REO Properties.
"REMIC I Required Overcollateralized Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the thirteen separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
(other than REMIC II Regular Interest II-LTP, with respect to interest) shall
accrue interest at the related REMIC II Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC II Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT1
shall accrue interest at the related REMIC II Remittance
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Rate in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Balance as set forth in the Preliminary
Statement hereto.
"REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT7
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
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"REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT2S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT3S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT4S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT5S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT6S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LT1 and REMIC II Regular Interest II-LT7, the weighted average of
the Expense Adjusted Mortgage Rates on the then outstanding Mortgage Loans and
REO Properties. With respect to REMIC II Regular Interest II-LT2, the lesser of
(i) the One-Month LIBOR Pass-Through Rate (based on the actual number of days
elapsed in the applicable Interest Accrual Period and a 360-day year) and (ii)
the Net WAC Pass-Through Rate, multiplied by the actual number of days elapsed
in the related Interest Accrual Period divided by 360. With respect to each of
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT6, a fixed rate per
annum equal to the related REMIC II Remittance Rate as set forth in the
Preliminary Statement hereto. With respect to REMIC II Regular Interest II-
LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular Interest II-LT4S,
REMIC II Regular Interest II-LT5S and REMIC II Regular Interest II-LT6S, a rate
per annum equal to excess of the REMIC I Remittance Rate for the related
Uncertificated Corresponding Component over
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the REMIC II Remittance Rate for REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular
Interest II-LT5 and REMIC II Regular Interest II-LT6, respectively.
"REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee, for the
benefit of the REMIC III Certificateholders pursuant to Section 2.09, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.
"REMIC III Certificate": Any Regular Certificate or Class
R-III Certificate.
"REMIC III Certificateholder": The Holder of any REMIC III
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time
to time.
"Remittance Report": A report in form and substance acceptable
to the Trust Administrator on a magnetic disk or tape prepared by the Master
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trust Administrator and the Master Servicer.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained, or caused
to be maintained, by the Master Servicer in respect of an REO Property pursuant
to Section 3.23.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is
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allocable to such REO Property) or otherwise, net of any portion of such amounts
(i) payable pursuant to Section 3.23(c) in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or reimbursable
to the Master Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Required Overcollateralized Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $9,525,824.99, (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (x) 6.00% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (y) $1,587,575, and (iii) on or
after the Stepdown Date and a Trigger Event is in effect, the Required
Overcollateralized Amount for the immediately preceding Distribution Date..
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates
which New York City banks selected by the Trust Administrator are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Trust
Administrator can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Trust
Administrator are quoting on such Interest Determination Date to leading
European banks.
"Residential Dwelling": Any one of the following: (i) an
attached, detached or semi-detached one-family dwelling, (ii) an attached,
detached or semi-detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none of which is a co-operative, mobile or manufactured home (as defined in 42
United States Code, Section 5402(6)).
"Residual Certificate": Any one of the Class R-I Certificates,
Class R-II Certificates or Class R-III Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee
or the Trust Administrator, the Chairman or Vice Chairman of the Board of
Directors or Trustees, the
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Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee or the Trust
Administrator, as the case may be, customarily performing functions similar to
those performed by any of the above designated officers and, with respect to a
particular matter, to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of such REO Property for all previously ended calendar months; and (b)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.
"Seller": NC Capital Corporation or its successor in interest,
in its capacity as seller under the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the aggregate of the
Interest Distribution Amounts for such Distribution Date for the Class A
Certificates and (ii) the aggregate of the Interest Carry Forward
Amounts with respect to the Class A Certificates.
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"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
and (iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.14, Section 3.16 and Section 3.23. The Master Servicer shall not be
required to make any Servicing Advance in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, would
not be ultimately recoverable from related Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full or in
part made by the Mortgagor during such calendar month, interest for the number
of days covered by such payment of interest) at the applicable Servicing Fee
Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month. A portion of such Servicing Fee may be retained
by any Sub- Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans, whose name and specimen signature appear on a list of Servicing Officers
furnished by the Master Servicer to the Trust Administrator, the Trustee and the
Depositor on the Closing Date, as such list may from time to time be amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 100% Percentage Interest in such Class.
"S&P": Standard & Poor's, a division of the McGraw-Hill
Companies, Inc., or its successor in interest.
"Startup Day": With respect to each of REMIC I, REMIC II and
REMIC III, the day designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of
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a Liquidation Event with respect to such Mortgage Loan would be distributed, the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date, as
shown in the Mortgage Loan Schedule, minus the sum of (i) the principal portion
of each Monthly Payment due on a Due Date subsequent to the Cut-off Date, to the
extent received from the Mortgagor or advanced by the Master Servicer and
distributed pursuant to Section 4.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
(iii) all Liquidation Proceeds and Insurance Proceeds applied by the Master
Servicer as recoveries of principal in accordance with the provisions of Section
3.16, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Prepayment Period
for the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Master Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": If the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds that are in the custody of the Master Servicer, a trustee
in bankruptcy or a federal bankruptcy court and should have been the
subject of such Remittance absent such prohibition.
"Stepdown Date": The later to occur of (i) the Distribution
Date occurring in April 2002 and (ii) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 32.70%.
"Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
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"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section
2.03(d).
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 9.01.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to
a Distribution Date if the Delinquency Percentage exceeds the lesser of (i) 40%
of the Credit Enhancement Percentage or (ii) 13.08%.
"Trust Administrator": U.S. Bank National Association, a
national banking association, or its successor in interest, or any successor
trust administrator appointed as herein provided.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and REMIC III.
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"Trustee": Firstar Bank Milwaukee, N.A., a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
"Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Balance of each REMIC
I Regular Interest and each REMIC II Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial uncertificated balance.
On each Distribution Date, the Uncertificated Balance of each REMIC I Regular
Interest and each REMIC II Regular Interest shall be reduced by all
distributions of principal made on such REMIC I Regular Interest or such REMIC
II Regular Interest, as applicable, on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04 and the Uncertificated Balances of REMIC I Regular Interest I-LT7
and REMIC II Regular Interest II-LT7 shall be increased by interest deferrals as
provided in Section 4.01(a)(1)(A)(i) and Section 4.01(a)(1)(B)(i), respectively.
The Uncertificated Balance of each REMIC I Regular Interest and each REMIC II
Regular Interest shall never be less than zero.
"Uncertificated Corresponding Component": With respect to:
REMIC II Regular Interest II-LT1, REMIC I Regular Interest I-LT1; REMIC II
Regular Interest II-LT2 and REMIC II Regular Interest II-LT2S, REMIC I Regular
Interest I-LT2; REMIC II Regular Interest II-LT3 and REMIC II Regular Interest
II-LT3S, REMIC I Regular Interest I-LT3; REMIC II Regular Interest II-LT4 and
REMIC II Regular Interest II-LT4S, REMIC I Regular Interest I-LT4; REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT5S, REMIC I Regular
Interest I- LT5; REMIC II Regular Interest II-LT6 and REMIC II Regular Interest
II-LT6S, REMIC I Regular Interest I-LT6; REMIC II Regular Interest II-LT7, REMIC
I Regular Interest I-LT7; and REMIC II Regular Interest II-LTP, REMIC I Regular
Interest I-LTP.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of any REMIC I Regular Interest (other
than REMIC I Regular Interest I-LTP) or any REMIC II Regular Interest (other
than REMIC II Regular Interest II-LTP and REMIC II Regular Interest II-LT2),
shall accrue on the basis of a 360-day year consisting of twelve 30-day months;
Uncertificated Interest in respect of REMIC II Regular Interest II-LT2, shall
accrue on the basis of a 360-day year and the actual number of days in the
applicable Interest Accrual Period. Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest or REMIC II Regular
Interest, shall be reduced by an amount equal to the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.24 and (b) the aggregate amount of
any Relief Act Interest Shortfall, if any allocated, in each case, to such REMIC
I Regular Interest or REMIC II Regular Interest pursuant to Section 1.02. In
addition, Uncertificated Interest with respect to each
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Distribution Date, as to any REMIC I Regular Interest or REMIC II Regular
Interest, shall be reduced by Realized Losses, if any, allocated to such REMIC I
Regular Interest or REMIC II Regular Interest pursuant to Section 1.02 and
Section 4.04.
"Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II- LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular
Interest II-LT4S, REMIC II Regular Interest II-LT5S and REMIC II Regular
Interest II-LT6S, the Uncertificated Balance of REMIC I Regular Interest I-LT2,
REMIC I Regular Interest I-LT3, REMIC I Regular Interest I- LT4, REMIC I Regular
Interest I-LT5 and REMIC I Regular Interest I-LT6, respectively.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.
"United States Person": 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
(except, in the case of a partnership, to the extent provided in regulations) or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the Secretary
of the Treasury, which have not yet been issued, a trust which was in existence
on August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part I of subchapter J of chapter 1 of the Code), and which was
treated as a United States person on August 20, 1996 may elect to continue to be
treated as a United States person notwithstanding the previous sentence. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code.
"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the Originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac and (b) the value thereof as determined by a review appraisal conducted by
the Master Servicer (in its capacity as Originator) in accordance with the
Master Servicer's underwriting guidelines, and (ii) the purchase price paid for
the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the Originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Fannie Mae and Freddie Mac and (2)
the value thereof as determined by a review appraisal conducted by the Master
Servicer (in its capacity as Originator) in accordance with the Master
Servicer's underwriting guidelines, and (B) in the case of a Mortgage Loan
originated in connection with a "lease-option purchase," such value of the
Mortgaged Property is based on the lower of the value determined by an appraisal
made for the Originator of such Mortgage Loan at the time of origination or the
sale price of such Mortgaged Property if the "lease option purchase price" was
set less than 12 months prior to origination, and is based on the value
determined by an appraisal made for the Originator of such Mortgage Loan
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at the time of origination if the "lease option purchase price" was set 12
months or more prior to origination.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 98% of all Voting Rights will be allocated among the holders
of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class P Certificates and 1/3 of 1% of all Voting
Rights will be allocated among the holders of each Class of Residual
Certificates. The Voting Rights allocated to each Class of Certificate shall be
allocated among Holders of each such Class in accordance with their respective
Percentage Interests as of the most recent Record Date.
SECTION 1.02. Allocation of Certain Interest
Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Mezzanine Certificates and the Class CE Certificates for any
Distribution Date, (1) the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Master Servicer
pursuant to Section 3.24) and any Relief Act Interest Shortfalls incurred in
respect of the Mortgage Loans for any Distribution Date shall be allocated
first, among the Class CE Certificates on a pro rata basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Notional Amount of each such Certificate and, thereafter,
among the Class A Certificates and the Mezzanine Certificates on a pro rata
basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance of each such Certificate and (2) the aggregate amount of any Realized
Losses incurred for any Distribution Date shall be allocated among the Class CE
Certificates on a pro rata basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount of each such Certificate.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Master Servicer pursuant to Section 3.24) and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LT1 and REMIC I Regular Interest I-LT7 up to an
aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98% and
2%, respectively, and thereafter among REMIC I Regular Interest I-LT1, REMIC I
Regular Interest I-LT2, REMIC I Regular Interest I- LT3, REMIC I Regular
Interest I-LT4, REMIC I Regular Interest I-LT5, REMIC I Regular Interest I-LT6
and REMIC I Regular Interest I-LT7 pro rata based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Uncertificated Balance of each such REMIC I Regular Interest.
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All Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls on the REMIC II Regular Interests shall be allocated by the Trust
Administrator on each Distribution Date among the REMIC II Regular Interests in
the proportion that Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls are allocated to the related Uncertificated Corresponding Component.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders, all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or the Master Servicer on or with respect to the
Mortgage Loans (other than payments of principal and interest due on such
Mortgage Loans on or before the Cut-off Date).
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trust Administrator, as custodian
for the Trustee (in which capacity the Trust Administrator will, unless
otherwise specified, be acting under this Article II), the following documents
or instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):
(i) the original Mortgage Note, endorsed in the
following form: "Pay to the order of Firstar Bank Milwaukee,
N.A., as Trustee under the applicable agreement, without
recourse," with all prior and intervening endorsements showing
a complete chain of endorsement from the originator to the
Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording
thereon, and the original recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(iii) an original Assignment of the Mortgage executed in
the following form: "Firstar Bank Milwaukee, N.A., as Trustee
under the applicable agreement";
(iv) the original recorded Assignment or Assignments of
the Mortgage showing a complete chain of assignment from the
originator to the Person assigning the Mortgage to the Trustee
as contemplated by the immediately preceding clause (iii);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
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(vi) the original lender's title insurance policy,
together with all endorsements or riders that were issued with
or subsequent to the issuance of such policy, insuring the
priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest
vested in the Mortgagor, or in the event such original title
policy is unavailable, a written commitment or uniform binder
or preliminary report of title issued by the title insurance
or escrow company.
The Trust Administrator, at the expense of the Master
Servicer, shall promptly (within sixty Business Days following the later of the
Closing Date and the date of receipt by the Trust Administrator of the recording
information for a Mortgage, but in no event later than ninety days following the
Closing Date) submit or cause to be submitted for recording, at no expense to
the Trust Fund, the Trustee, the Trust Administrator or the Depositor, in the
appropriate public office for real property records, each Assignment referred to
in Sections 2.01(iii) and (iv) above. In the event that any such Assignment is
lost or returned unrecorded because of a defect therein, the Master Servicer
shall promptly prepare or cause to be prepared a substitute Assignment or cure
or cause to be cured such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
With respect to a maximum of approximately 1.0% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any original Mortgage Note referred to
in Section 2.01(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trust Administrator of a photocopy of such Mortgage Note, if available, with a
lost note affidavit substantially in the form of Exhibit I attached hereto. If
any of the original Mortgage Notes for which a lost note affidavit was delivered
to the Trust Administrator is subsequently located, such original Mortgage Note
shall be delivered to the Trust Administrator within three Business Days. If any
of the documents referred to in Sections 2.01(ii), (iii) or (iv) above has as of
the Closing Date been submitted for recording but either (x) has not been
returned from the applicable public recording office or (y) has been lost or
such public recording office has retained the original of such document, the
obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trust Administrator of a copy of each such
document certified by the Master Servicer (in its capacity as Originator) in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Master Servicer (in its
capacity as Originator), delivery to the Trust Administrator promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee, the Trust Administrator and
the Rating Agencies by the Originator if delivery pursuant to clause (2) above
will be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trust Administrator,
promptly after receipt thereof, the original lender's title insurance policy.
The Depositor shall deliver or cause to be delivered to the Trust Administrator
promptly upon receipt thereof any other original documents constituting
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a part of a Mortgage File received with respect to any Mortgage Loan, including,
but not limited to, any original documents evidencing an assumption or
modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are
not delivered to the Trust Administrator are and shall be held by or on behalf
of the Originator, the Seller, the Depositor or the Master Servicer, as the case
may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trust Administrator. Any such
original document delivered to or held by the Depositor that is not required
pursuant to the terms of this Section to be a part of a Mortgage File, shall be
delivered promptly to the Master Servicer.
The Depositor herewith delivers to the Trustee and the Trust
Administrator an executed copy of the Mortgage Loan Purchase Agreement.
SECTION 2.02. Acceptance of REMIC I by Trustee.
The Trust Administrator, on behalf of the Trustee,
acknowledges receipt, subject to the provisions of Section 2.01 and subject to
any exceptions noted on the exception report described in the next paragraph
below, the documents referred to in Section 2.01 (other than such documents
described in Section 2.01(v)) above and all other assets included in the
definition of "REMIC I" under clauses (i), (iii), (iv) and (v) (to the extent of
amounts deposited into the Distribution Account) and declares that it holds and
will hold such documents and the other documents delivered to it constituting a
Mortgage File, and that it holds or will hold all such assets and such other
assets included in the definition of "REMIC I" in trust for the exclusive use
and benefit of all present and future Certificateholders.
The Trust Administrator agrees, for the benefit of the
Certificateholders, to review each Mortgage File on or before the Closing Date
and to certify in substantially the form attached hereto as Exhibit C-1 that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
exception report annexed thereto as not being covered by such certification),
(i) all documents constituting part of such Mortgage File (other than such
documents described in Section 2.01(v)) required to be delivered to it pursuant
to this Agreement are in its possession, (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan, (iii)
based on its examination and only as to the foregoing, the information set forth
in the Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(x)(A), (xi), (xii), (xv) and (xxii) of the definition of "Mortgage Loan
Schedule" accurately reflects information set forth in the Mortgage File. It is
herein acknowledged that, in conducting such review, the Trust Administrator was
under no duty or obligation (i) to inspect, review or examine any such
documents, instruments, certificates or other papers to determine whether they
are genuine, enforceable, or appropriate for the represented purpose or whether
they have actually been recorded or that they are other than what they purport
to be on their face, or (ii) to determine whether any Mortgage File should
include any of the documents specified in clause (v) of Section 2.01.
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Prior to the first anniversary date of this Agreement the
Trust Administrator shall deliver to the Depositor, the Master Servicer and the
Trustee a final certification in the form annexed hereto as Exhibit C-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon, and the Master Servicer shall forward a copy thereof
to any Sub-Servicer.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trust Administrator finds any document or documents constituting a part of a
Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trust Administrator shall so notify the Depositor,
the Master Servicer and the Trustee. In addition, upon the discovery by the
Depositor, the Master Servicer, the Trust Administrator or the Trustee of a
breach of any of the representations and warranties made by the Originator or
the Seller in the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially adversely affects such Mortgage Loan or the interests of
the related Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties.
The Trust Administrator shall, at the written request and
expense of any Certificateholder, provide a written report to such
Certificateholder of all Mortgage Files released
to the Master Servicer for servicing purposes.
SECTION 2.03. Repurchase or Substitution of
Mortgage Loans by the Originator,
the Seller or the Depositor.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Originator or the Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan that materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trust Administrator shall
promptly notify the Originator, the Seller, the Master Servicer and the Trustee
of such defect, missing document or breach and request that the Originator or
the Seller, as the case may be, deliver such missing document or cure such
defect or breach within 60 days from the date the Originator or the Seller, as
the case may be, was notified of such missing document, defect or breach, and if
the Originator or the Seller, as the case may be, does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Trustee, in accordance with Section 3.02(b), shall enforce the
obligations of the Originator or the Seller, as the case may be, under the
Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC I
at the Purchase Price within 90 days after the date on which the Originator or
the Seller, as the case may be, was notified (subject to Section 2.03(e)) of
such missing document, defect or breach, if and to the extent that the
Originator or the Seller, as the case may be, is obligated to do so under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account and the Trust
Administrator, upon receipt of written certification from the Master Servicer of
such deposit, shall release to the Originator or the Seller, as the case may be,
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Originator or the
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Seller, as the case may be, shall furnish to it and as shall be necessary to
vest in the Originator or the Seller, as the case may be, any Mortgage Loan
released pursuant hereto neither the Trustee nor the Trust Administrator shall
have any further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Originator or the Seller, as the case may
be, may cause such Mortgage Loan to be removed from REMIC I (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.03(d). It is understood and agreed that the obligation of the
Originator or the Seller, as the case may be, to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee and the Certificateholders.
(b) Subject to Section 2.03(e), within 90 days of the earlier
of discovery by the Depositor or receipt of notice by the Depositor of the
breach of any representation or warranty of the Depositor set forth in Section
2.04 with respect to any Mortgage Loan, which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Depositor shall (i) cure such breach in all material respects, (ii)
repurchase the Mortgage Loan from REMIC I at the Purchase Price or (iii) remove
such Mortgage Loan from REMIC I (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). If any
such breach is a breach of any of the representations and warranties included in
Section 2.04(a)(iv), and the Depositor is unable to cure such breach, the
Depositor shall repurchase or substitute the smallest number of Mortgage Loans
as shall be required to make such representation or warranty true and correct.
The Purchase Price for any repurchased Mortgage Loan shall be delivered to the
Master Servicer for deposit in the Collection Account, and the Trust
Administrator, upon receipt of written certification from the Master Servicer of
such deposit, shall at the Depositor's direction release to the Depositor the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment furnished by the Depositor, in each case without
recourse, as the Depositor shall furnish to it and as shall be necessary to vest
in the Depositor any Mortgage Loan released pursuant hereto.
(c) Within 90 days of the earlier of discovery by the Master
Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.05 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan or Prepayment Charge, the Master
Servicer shall cure such breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Originator or the Seller, or Section 2.03(b), in the case of the Depositor, must
be effected prior to the date which is two years
after the Startup Day for REMIC I.
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As to any Deleted Mortgage Loan for which the Originator or
the Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by the Originator, the Seller or the
Depositor, as the case may be, delivering to the Trust Administrator, on behalf
of the Trustee, for such Qualified Substitute Mortgage Loan or
Loans,
the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Trust Administrator shall acknowledge
receipt for such Qualified Substitute Mortgage Loan or Loans and, within ten
Business Days thereafter, review such documents as specified in Section 2.02 and
deliver to the Depositor, the Master Servicer and the Trustee, with respect to
such Qualified Substitute Mortgage Loan or Loans, a certification substantially
in the form attached hereto as Exhibit C-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trust Administrator
shall deliver to the Depositor, the Master Servicer and the Trustee a
certification substantially in the form of Exhibit C-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution are not part of REMIC I and will be
retained by the Depositor, the Originator or the Seller, as the case may be. For
the month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Depositor, the Originator or the Seller, as
the case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee and the
Trust Administrator. Upon such substitution, such Qualified Substitute Mortgage
Loan or Loans shall constitute part of the Mortgage Pool and shall be subject in
all respects to the terms of this Agreement and, in the case of a substitution
effected by the Originator or the Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by the Originator or the
Seller, all applicable representations and warranties thereof included in the
Mortgage Loan Purchase Agreement, and in the case of a substitution effected by
the Depositor, all applicable representations and warranties thereof set forth
in Section 2.04, in each case as of the date of substitution.
For any month in which the Depositor, the Originator or the
Seller substitutes one or more Qualified Substitute Mortgage Loans for one or
more Deleted Mortgage Loans, the Master Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such
Qualified Substitute Mortgage Loan, the Scheduled Principal Balance thereof as
of the date of substitution, together with one month's interest on such
Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding P&I Advances and Servicing Advances (including Nonrecoverable P&I
Advances and Nonrecoverable Servicing Advances) related thereto. On the date of
such substitution, the Depositor, the Originator or the Seller, as the case
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may be, will deliver or cause to be delivered to the Master Servicer for deposit
in the Collection Account an amount equal to the Substitution Shortfall Amount,
if any, and the Trust Administrator, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the Master Servicer of
such deposit, shall release to the Depositor, the Originator or the Seller, as
the case may be, the related Mortgage File or Files and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Depositor, the Originator or the Seller, as the case
may be, shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.
In addition, the Depositor, the Originator or the Seller, as
the case may be, shall obtain at its own expense and deliver to the Trust
Administrator and the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any of REMIC I,
REMIC II or REMIC III, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificate is outstanding.
(e) Upon discovery by the Depositor, the Originator, the
Seller, the Master Servicer, the Trustee or the Trust Administrator that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties. In connection
therewith, the Originator, the Seller or the Depositor shall repurchase or,
subject to the limitations set forth in Section 2.03(d), substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Such repurchase or substitution shall be made by (i) the
Originator or the Seller, as the case may be, if the affected Mortgage Loan's
status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Originator or the Seller, as
the case may be, under the Mortgage Loan Purchase Agreement, or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of any representation or warranty of the Depositor set forth in Section
2.04, or if its status as a non-qualified mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section 2.03(a), if made by the Originator or
the Seller, or Section 2.03(b), if made by the Depositor. The Trustee and the
Trust Administrator shall reconvey to the Depositor, the Originator or the
Seller, as the case may be, the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty.
SECTION 2.04. Representations and Warranties of
the Depositor.
(a) The Depositor hereby represents and warrants to the Trust
Administrator and the Trustee for the benefit of the Certificateholders that as
of the Closing Date or as of such other date specifically provided herein:
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(i) The information set forth in the Mortgage Loan
Schedule for the Original Mortgage Loans is complete, true and
correct in all material respects at the date or dates
respecting which such information is furnished;
(ii) Except with respect to approximately 0.21% of the
Original Mortgage Loans which were 30 days or more but less
than 60 days delinquent in their Monthly Payment as of
February 28, 1999, by outstanding principal balance of the
Original Mortgage Loans as of the Cut-off Date, as of February
28, 1999, the Monthly Payment due under each Original Mortgage
Loan is not 30 or more days delinquent in payment and has not
been 30 or more days delinquent in payment more than once in
the twelve month period prior to February 28, 1999 (assuming
that a "rolling" 30 day delinquency is considered to be
delinquent only once);
(iii) Each Original Mortgage Loan had an original term to
maturity of not greater than 30 years; except with respect to
two Original Mortgage Loans representing approximately 0.03%
of the Original Mortgage Loans, by outstanding principal
balance of the Original Mortgage Loans as of the Cut-off Date
which are adjustable-rate Mortgage Loans and except with
respect to two Original Mortgage Loans representing
approximately 0.06% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date which are Balloon Loans, each Original
Mortgage Loan is a fixed-rate mortgage loan with payments
generally due on the first day of each month and each such
Mortgage Loan is fully amortizing;
(iv) (A) No more than approximately 25.92%,
approximately 10.81%, approximately 8.88%, approximately
5.31%, approximately 4.60% and approximately 3.80% of the
Original Mortgage Loans, by outstanding principal balance of
the Original Mortgage Loans as of the Cut-off Date, will be
secured by Mortgaged Properties located in California, Texas,
Florida, Illinois, Ohio and Pennsylvania, respectively, and no
more than 3.00% of the Original Mortgage Loans, by outstanding
principal balance of the Original Mortgage Loans as of the
Cut-off Date, will be secured by Mortgaged Properties located
in any other state; (B) as of the Cut-off Date, no more than
approximately 0.41% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, are secured by Mortgaged Properties
located in any one California zip code area, and no more than
approximately 15.26% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, are secured by units in two- to
four-family dwellings, condominiums, town houses, planned unit
developments or manufactured housing and; (C) at least
approximately 84.75% of the Original Mortgage Loans, by
outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, are secured by real property with a
single family residence erected thereon;
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(v) If the Mortgaged Property securing an Original
Mortgage Loan is identified in the Federal Register by the
Federal Emergency Management Agency ("FEMA") as having special
flood hazards, as of the Closing Date, such Mortgaged Property
is covered by a flood insurance policy that met the
requirements of FEMA at the time such policy was issued;
(vi) With respect to each Original Mortgage Loan, the
Loan-to-Value Ratio was less than or equal to 100% at the
origination of such Original Mortgage Loan; and
(vii) With respect to at least approximately 83.98% of
the Original Mortgage Loans by outstanding principal balance
as of the Cut-off Date, at the time that such Mortgage Loan
was made, the Mortgagor represented that the Mortgagor would
occupy the Mortgaged Property as the Mortgagor's primary
residence. With respect to approximately 16.02% of the
Original Mortgage Loans by outstanding principal balance as of
the Cut-off Date, at the time that such Mortgage Loan was
made, the Mortgagor represented that the Mortgagor would
occupy the Mortgaged Property as the Mortgagor's secondary
residence or that the Mortgaged Property would be an investor
property.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trust Administrator and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Master Servicer, the
Trustee or the Trust Administrator of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties, and in no event later than two Business Days from
the date of such discovery. It is understood and agreed that the obligations of
the Depositor set forth in Section 2.03(b) to cure, substitute for or repurchase
a Mortgage Loan constitute the sole remedies available to the Certificateholders
or to the Trust Administrator or the Trustee on their behalf respecting a breach
of the representations and warranties contained in this Section 2.04.
SECTION 2.05. Representations, Warranties and
Covenants of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants
to the Trust Administrator and the Trustee, for the benefit of each of the
Trustee, the Trust Administrator, the Certificateholders and to the Depositor
that as of the Closing Date or as of such date specifically
provided herein:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the
laws of the State of California and is duly authorized and
qualified to transact any and all business contemplated by
this Agreement to be conducted by the Master Servicer in any
state in which a
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Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any
such State, to the extent necessary to ensure its ability to
enforce each Mortgage Loan and to service the Mortgage Loans
in accordance with the terms of this Agreement;
(ii) The Master Servicer has the full power and
authority to conduct its business as presently conducted by it
and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement.
The Master Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Depositor, the
Trust Administrator and the Trustee, constitutes a legal,
valid and binding obligation of the Master Servicer,
enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity;
(iii) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the
Master Servicer hereunder, the consummation by the Master
Servicer of any other of the transactions herein contemplated,
and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Master Servicer and
will not (A) result in a breach of any term or provision of
the charter or by-laws of the Master Servicer or (B) conflict
with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material
agreement or instrument to which the Master Servicer is a
party or by which it may be bound, or any statute, order or
regulation applicable to the Master Servicer of any court,
regulatory body, administrative agency or governmental body
having jurisdiction over the Master Servicer; and the Master
Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument,
or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Master Servicer's
knowledge, would in the future materially and adversely
affect, (x) the ability of the Master Servicer to perform its
obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of the
Master Servicer taken as a whole;
(iv) The Master Servicer is a HUD approved mortgagee
pursuant to Section 203 of the National Housing Act. No event
has occurred, including but not limited to a change in
insurance coverage, that would make the Master Servicer unable
to comply with HUD eligibility requirements or that would
require notification to HUD;
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(v) The Master Servicer does not believe, nor does it
have any reason or cause to believe, that it cannot perform
each and every covenant made by it and contained in this
Agreement;
(vi) With respect to each Mortgage Loan, the Master
Servicer, or Sub- Servicer, if any, is in possession of a
complete Mortgage File, except for such documents as have been
delivered to the Trust Administrator;
(vii) No litigation is pending against the Master
Servicer that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or the
ability of the Master Servicer to service the Mortgage Loans
or to perform any of its other obligations hereunder in
accordance with the terms hereof;
(viii) There are no actions or proceedings against, or
investigations known to it of, the Master Servicer before any
court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to
prevent the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Master Servicer of its
obligations under, or validity or enforceability of, this
Agreement;
(ix) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Master Servicer of,
or compliance by the Master Servicer with, this Agreement or
the consummation by it of the transactions contemplated by
this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained
prior to the Closing Date;
(x) The information set forth in the Prepayment Charge
Schedule (including the prepayment charge summary attached
thereto) is complete, true and correct in all material
respects on the date or dates when such information is
furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent
that the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally or the collectability
thereof may be limited due to acceleration in connection with
a foreclosure) under applicable state law;
(xi) The Master Servicer will not waive any Prepayment
Charge unless it is waived in accordance with the standard set
forth in Section 3.01; and
(xii) The Master Servicer's computer and other systems
used in servicing mortgage loans will be modified and
maintained to operate in a manner such that at all times,
including on and after January 1, 2000, (i) the Master
Servicer can service the Mortgage Loans in accordance with the
terms of this Agreement if
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necessary and (ii) the Master Servicer can operate its
business in the same manner as it is operating on the date
hereof; provided that the Master Servicer's ability to meet
the requirements of this representation may be limited in
circumstances where it relies (after reasonable due diligence
in inquiring into and obtaining reasonable compliance
representations) on third party systems which are incompatible
with those of the Master Servicer on or after January 1, 2000.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trust Administrator and shall inure to the benefit
of the Trust Administrator, the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, the Master Servicer,
the Trust Administrator or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan, Prepayment Charge or the interests therein of
the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the Trust Administrator and the Trustee. Subject to Section 7.01,
unless such breach shall not be susceptible of cure within 90 days, the
obligation of the Master Servicer set forth in Section 2.03(c) to cure breaches
shall constitute the sole remedy against the Master Servicer available to the
Certificateholders, the Depositor or the Trust Administrator and the Trustee on
behalf of the Certificateholders respecting a breach of the representations,
warranties and covenants contained in this Section 2.05. Notwithstanding the
foregoing, within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of the representation or
covenant of the Master Servicer set forth in Sections 2.05(x) or 2.05(xi) above
which materially and adversely affects the interests of the Holders of the Class
P Certificates in any Prepayment Charge, the Master Servicer shall remedy such
breach as follows: (a) if the representation made by the Master Servicer in
Section 2.05(x) above is breached and a Principal Prepayment has occurred in the
applicable Prepayment Period, the Master Servicer must pay the amount of the
scheduled Prepayment Charge, for the benefit of the holder of the Class P
Certificate, by depositing such amount into the Collection Account, net of any
amount previously collected by the Master Servicer or paid by the Master
Servicer, for the benefit of the Holders of the Class P Certificates, in respect
of such Prepayment Charge; and (b) if any of the covenants made by the Master
Servicer in Section 2.05(xi) above is breached, the Master Servicer must pay the
amount of such waived Prepayment Charge, for the benefit of the holders of the
Class P Certificates, by depositing such amount into the Collection Account. The
foregoing shall not, however, limit any remedies available to the
Certificateholders, the Depositor, the Trust Administrator or the Trustee on
behalf of the Certificateholders, pursuant to the Mortgage Loan Purchase
Agreement signed by the Master Servicer in its capacity as Originator,
respecting a breach of the representations, warranties and covenants of the
Master Servicer in its capacity as Originator contained in the Mortgage Loan
Purchase Agreement.
SECTION 2.06. Issuance of the Class R-I
Certificates.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the Trust Administrator on its behalf) of the
Mortgage Files, subject to the provisions of Section 2.01 and Section 2.02,
together with the assignment to it of all other assets
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included in REMIC I, the receipt of which is hereby acknowledged. Concurrently
with such assignment and delivery and in exchange therefor, the Trust
Administrator, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, authenticated and delivered to or upon
the order of the Depositor, the Class R-I Certificates in authorized
denominations. The interests evidenced by the Class R-I Certificates, together
with the REMIC I Regular Interests, constitute the entire beneficial ownership
interest in REMIC I. The rights of the Class R-I Certificateholders and REMIC II
(as holder of the REMIC I Regular Interests to receive distributions from the
proceeds of REMIC I in respect of the Class R-I Certificates and the REMIC I
Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-I Certificates and the REMIC I Regular Interests,
shall be as set forth in this Agreement.
SECTION 2.07. Conveyance of the REMIC I Regular
Interests; Acceptance of REMIC II by
the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II and REMIC
III Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future Class R-II
Certificateholders and REMIC III Certificateholders. The rights of the Class
R-II Certificateholders and REMIC III (as holder of the REMIC II Regular
Interests) to receive distributions from the proceeds of REMIC II in respect of
the Class R-II Certificates and REMIC II Regular Interests, respectively, and
all ownership interests evidenced or constituted by the Class R-II Certificates
and the REMIC II Regular Interests, shall be as set forth in this Agreement.
SECTION 2.08. Issuance of Class R-II Certificates.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R-II Certificates in authorized denominations.
The interests evidenced by the Class R-II Certificates, together with the REMIC
II Regular Interests, constitute the entire beneficial ownership interest in
REMIC II.
SECTION 2.09. Conveyance of REMIC II Regular
Interests; Acceptance of REMIC III
by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the REMIC III
Certificateholders. The Trustee acknowledges receipt of the REMIC II Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future REMIC III
Certificateholders. The rights of the REMIC III
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Certificateholders to receive distributions from the proceeds of REMIC III in
respect of the REMIC III Certificates, and all ownership interests evidenced or
constituted by the REMIC III Certificates, shall be as set forth in this
Agreement.
SECTION 2.10. Issuance of REMIC III Certificates.
The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the REMIC III Certificates in authorized denominations
evidencing the entire beneficial ownership interest in REMIC III.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Master Servicer to Act as Master
Servicer.
The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders (as determined by the Master Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of mortgage lenders and loan servicers administering similar mortgage
loans but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) the ownership or non-ownership of any Certificate
by the Master Servicer or any Affiliate of the Master
Servicer;
(iii) the Master Servicer's obligation to make P&I
Advances or Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right
to receive compensation for its services hereunder or with
respect to any particular transaction.
To the extent consistent with the foregoing, the Master Servicer (a) shall seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes and (b) shall waive (or permit a subservicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and (ii) either (A)
such waiver would, in the reasonable judgement of the Master Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan and, if such waiver is made in connection
with a refinancing of the related Mortgage Loan, such refinancing is related to
a default or a reasonably foreseeable default or (B) such waiver is made in
connection with a refinancing of the related Mortgage Loan unrelated to a
default or a reasonably foreseeable default where (x) the related mortgagor has
stated to the Master Servicer or an applicable subservicer an intention to
refinance the related Mortgage Loan and (y) the Master Servicer has concluded in
its reasonable judgement that the waiver of such Prepayment Charge would induce
such mortgagor to refinance with the Master Servicer. If a Prepayment Charge is
waived as permitted by meeting the standards described in clauses (i) and
(ii)(B) above, then the Master Servicer is required to pay the amount of such
waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account
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together with and at the time that the amount prepaid on the related Mortgage
Loan is required to be deposited into the Collection Account. Notwithstanding
any other provisions of this Agreement, any payments made by the Master Servicer
in respect of any waived Prepayment Charges pursuant to clauses (i) and (ii)(B)
shall be deemed to be paid outside of the Trust Fund. Subject only to the
above-described servicing standards and the terms of this Agreement and of the
respective Mortgage Loans, the Master Servicer shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 3.02, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the name
of a Sub-Servicer is hereby authorized and empowered by the Trustee when the
Master Servicer believes it appropriate in its best judgment in accordance with
the servicing standards set forth above, to execute and deliver, on behalf of
the Certificateholders and the Trustee, and upon notice to the Trustee and the
Trust Administrator, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Mortgage Loans and the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert
the ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Master Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall execute, at the written request of the Master Servicer, and
furnish to the Master Servicer and any Sub-Servicer any special or limited
powers of attorney and other documents necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder and the Trustee shall not be liable for the
actions of the Master Servicer or any Sub- Servicers under such powers of
attorney.
Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Master Servicer shall advance or cause
to be advanced funds as necessary for the purpose of effecting the timely
payment of taxes and assessments on the Mortgaged Properties, which advances
shall be Servicing Advances reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Master Servicer or by
Sub-Servicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary,
the Master Servicer may not make any future advances with respect to a Mortgage
Loan (except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably
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foreseeable) or (ii) permit any modification, waiver or amendment of any term of
any Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or Treasury regulations
promulgated thereunder) and (B) cause any of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions.
The Master Servicer may delegate its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Master Servicer from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Sub-Servicing Agreements Between
Master Servicer and Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements with Sub- Servicers for the servicing and administration of the
Mortgage Loans; provided, however, that such agreements would not result in a
withdrawal or a downgrading by any Rating Agency of the rating on any Class of
Certificates. The Trust Administrator and the Trustee are hereby authorized to
acknowledge, at the request of the Master Servicer, any Sub-Servicing Agreement
that meets the requirements applicable to Sub-Servicing Agreements set forth in
this Agreement and that is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights; provided, further, that the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights shall not be required (i) to cure
any ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a Sub-
Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing
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Accounts or the timing and amount of remittances by the Sub-Servicers to the
Master Servicer, are conclusively deemed to be inconsistent with this Agreement
and therefore prohibited. The Master Servicer shall deliver to the Trustee and
the Trust Administrator copies of all Sub- Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Master Servicer's
execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement and of the Originator and the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a). Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub- Servicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, and
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans, or (ii) from a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller and the Originator shall be effected by the Master Servicer
to the extent it is not the Originator, the Seller or an Affiliate of the
Seller, and otherwise by the Trustee in accordance with the foregoing provisions
of this paragraph.
SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trust Administrator or the
Trustee (if the Trust Administrator is acting as Master Servicer) without fee,
in accordance with the terms of this Agreement, in the event that the Master
Servicer (or the Trust Administrator, if it is then acting as Master Servicer)
shall, for any reason, no longer be the Master Servicer (including termination
due to a Master Servicer Event of Default).
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SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and the Trust
Administrator, the Trustee or
Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trust Administrator, the Trustee or the
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer shall be solely liable
for all fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
SECTION 3.06. Assumption or Termination of
Sub-Servicing Agreements by Trust
Administrator.
In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of the occurrence of a Master
Servicer Event of Default), the Trust Administrator or its designee shall
thereupon assume all of the rights and obligations of the Master Servicer under
each Sub-Servicing Agreement that the Master Servicer may have entered into,
unless the Trust Administrator or the Trustee elects to terminate any
Sub-Servicing Agreement in accordance with its terms as provided in Section
3.03. Upon such assumption, the Trust Administrator, its designee or the
successor servicer for the Trust Administrator appointed pursuant to Section
7.02 shall be deemed, subject to Section 3.03, to have assumed all of the Master
Servicer's interest therein and to have replaced the Master Servicer as a party
to each Sub- Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the Master
Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trust Administrator, its designee or any successor Master
Servicer shall be deemed to have assumed any liability or obligation of the
Master Servicer that arose before it ceased to be the Master Servicer.
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The Master Servicer at its expense shall, upon request of the
Trust Administrator, deliver to the assuming party all documents and records
relating to each Sub-Servicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by or on behalf of it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Sub-Servicing Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan
Payments.
The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater than 180 days; provided, however, that any extension pursuant to clause
(ii) above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event of
any such arrangement pursuant to clause (ii) above, the Master Servicer shall
make timely advances on such Mortgage Loan during such extension pursuant to
Section 4.03 and in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangement. Notwithstanding
the foregoing, in the event that any Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable, the
Master Servicer, consistent with the standards set forth in Section 3.01, may
also waive, modify or vary any term of such Mortgage Loan (including
modifications that would change the Mortgage Rate, forgive the payment of
principal or interest or extend the final maturity date of such Mortgage Loan),
accept payment from the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan (such payment, a
"Short Pay-off"), or consent to the postponement of strict compliance with any
such term or otherwise grant indulgence to any Mortgagor.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub- Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the
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Collection Account not later than two Business Days after the deposit of such
amounts in the Sub- Servicing Account. For purposes of this Agreement, the
Master Servicer shall be deemed to have received payments on the Mortgage Loans
when the Sub-Servicer receives such payments.
SECTION 3.09. Collection of Taxes, Assessments and
Similar Items; Servicing Accounts.
The Master Servicer shall establish and maintain, or cause to
be established and maintained, one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Master Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, all Escrow
Payments collected on account of the Mortgage Loans and shall thereafter deposit
such Escrow Payments in the Servicing Accounts, in no event more than two
Business Days after the receipt of such Escrow Payments, all Escrow Payments
collected on account of the Mortgage Loans for the purpose of effecting the
timely payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
timely payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article IX. As part of
its servicing duties, the Master Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in the Servicing Accounts, to the extent required
by law and, to the extent that interest earned on funds in the Servicing
Accounts is insufficient, to pay such interest from its or their own funds,
without any reimbursement therefor.
SECTION 3.10. Collection Account and Distribution
Account.
(a) On behalf of the Trust Fund, the Master Servicer shall
establish and maintain, or cause to be established and maintained, one or more
accounts (such account or accounts, the "Collection Account"), held in trust for
the benefit of the Trustee and the Certificateholders. On behalf of the Trust
Fund, the Master Servicer shall deposit or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Master Servicer's
receipt thereof, and shall thereafter deposit in the Collection Account, in no
event more than two Business Days after the Master Servicer's receipt thereof,
as and when received or as otherwise required hereunder, the following payments
and collections received or made by it subsequent to the Cut-off Date (other
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than in respect of principal or interest on the related Mortgage Loans due on or
before the Cut-off Date), or payments (other than Principal Prepayments)
received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the
related Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than proceeds collected in respect of any particular
REO Property and amounts paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to
Section 3.12 in connection with any losses realized on
Permitted Investments with respect to funds held in the
Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to the second paragraph of Section 3.14(a)
in respect of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03 or Section 9.01;
(vii) all amounts required to be deposited in
connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Master
Servicer in connection with the Principal Prepayment of any of
the Mortgage Loans.
The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, modification or assumption fees, or insufficient funds charges need not
be deposited by the Master Servicer in the Collection Account and may be
retained by the Master Servicer as additional compensation. In the event the
Master Servicer shall deposit in the Collection Account any amount not required
to be deposited therein, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trust Administrator, as
agent for the Trustee, shall establish and maintain one or more accounts (such
account or accounts, the "Distribution Account"), held in trust for the benefit
of the Trustee and the Certificateholders. On
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behalf of the Trust Fund, the Master Servicer shall deliver to the Trust
Administrator in immediately available funds for deposit in the Distribution
Account on or before 3:00 p.m. New York time (i) on the Master Servicer
Remittance Date, that portion of the Available Distribution Amount (calculated
without regard to the references in clause (2) of the definition thereof to
amounts that may be withdrawn from the Distribution Account) for the related
Distribution Date then on deposit in the Collection Account and the amount of
all Prepayment Charges collected by the Master Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account, and (ii) on each Business Day as of the commencement of
which the balance on deposit in the Collection Account exceeds $75,000 following
any withdrawals pursuant to the next succeeding sentence, the amount of such
excess, but only if the Collection Account constitutes an Eligible Account
solely pursuant to clause (ii) of the definition of "Eligible Account." If the
balance on deposit in the Collection Account exceeds $75,000 as of the
commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Master Servicer shall, on or before 3:00 p.m. New
York time on such Business Day, withdraw from the Collection Account any and all
amounts payable or reimbursable to the Depositor, the Master Servicer, the
Trustee, the Trust Administrator, the Originator, the Seller or any Sub-Servicer
pursuant to Section 3.11 and shall pay such amounts to the Persons entitled
thereto.
(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Master Servicer shall give notice to
the Trustee and the Trust Administrator of the location of the Collection
Account maintained by it when established and prior to any change thereof. The
Trust Administrator shall give notice to the Master Servicer, the Depositor and
the Trustee of the location of the Distribution Account when established and
prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trust Administrator for deposit in an
account (which may be the Distribution Account and must satisfy the standards
for the Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee and the Trust Administrator shall
have the sole authority to withdraw any funds held pursuant to this subsection
(d). In the event the Master Servicer shall deliver to the Trust Administrator
for deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trust Administrator withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Master
Servicer shall deliver to the Trust Administrator from time to time for deposit,
and the Trust Administrator shall so deposit, in the Distribution Account:
(i) any P&I Advances, as required pursuant to Section
4.03;
(ii) any amounts required to be deposited pursuant to
Section 3.23(d) or (f) in connection with any REO Property;
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(iii) any amounts to be paid in connection with a
purchase of Mortgage Loans and REO Properties pursuant to
Section 9.01;
(iv) any amounts required to be deposited pursuant to
Section 3.24 in connection with any Prepayment Interest
Shortfall; and
(v) any Stayed Funds, as soon as permitted by the
federal bankruptcy court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, federal bankruptcy court or other
source, the Trust Administrator shall deposit such funds in the Distribution
Account, subject to withdrawal thereof
pursuant to Section 7.02(b) or as otherwise permitted hereunder.
(f) The Master Servicer shall deposit in the Collection
Account or Distribution Account, as the case may be, any amounts required to be
deposited pursuant to Section 3.12(b) in connection with losses realized on
Permitted Investments with respect to funds held in the
Collection Account or Distribution Account, respectively.
SECTION 3.11. Withdrawals from the Collection
Account and Distribution Account.
(a) The Master Servicer shall, from time to time, make
withdrawals from the Collection Account for any of the following purposes or as
described in Section 4.03:
(i) to remit to the Trust Administrator for deposit in
the Distribution Account the amounts required to be so
remitted pursuant to Section 3.10(b) or permitted to be so
remitted pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the
Master Servicer for P&I Advances, but only to the extent of
amounts received which represent Late Collections (net of the
related Servicing Fees) of Monthly Payments on Mortgage Loans
with respect to which such P&I Advances were made in
accordance with the provisions of Section 4.03;
(iii) subject to Section 3.16(d), to pay the Master
Servicer or any Sub- Servicer (a) any unpaid Servicing Fees,
(b) any unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Late Collections,
Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan, and (c) any Nonrecoverable
Servicing Advances with respect to the final liquidation of a
Mortgage Loan, but only to the extent that Late Collections,
Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan are insufficient to reimburse
the Master Servicer or any Sub- Servicer for Servicing
Advances;
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(iv) to pay to the Master Servicer as servicing
compensation (in addition to the Servicing Fee) on the Master
Servicer Remittance Date any interest or investment income
earned on funds deposited in the Collection Account;
(v) to pay to the Master Servicer, the Depositor, the
Originator or the Seller, as the case may be, with respect to
each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.03 or Section 3.16(c) all
amounts received thereon subsequent to the date of purchase or
substitution, as the case may be;
(vi) to reimburse the Master Servicer for any P&I
Advance previously made which the Master Servicer has
determined to be a Nonrecoverable P&I Advance in accordance
with the provisions of Section 4.03;
(vii) to reimburse the Master Servicer or the Depositor
for expenses incurred by or reimbursable to the Master
Servicer or the Depositor, as the case may be, pursuant to
Section 6.03;
(viii) to reimburse the Master Servicer, the Trustee or
the Trust Administrator, as the case may be, for expenses
reasonably incurred in connection with any breach or defect
giving rise to the purchase obligation under Section 2.03 or
Section 2.04 of this Agreement, including any expenses arising
out of the enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Master Servicer for
Servicing Advances in respect of, expenses incurred in
connection with any Mortgage Loan pursuant to Section 3.16(b);
and
(x) to clear and terminate the Collection Account
pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above.
The Master Servicer shall provide written notification to the Trustee and the
Trust Administrator, on or prior to the next succeeding Master Servicer
Remittance Date, upon making any withdrawals from the Collection Account
pursuant to subclauses (vi) and (vii) above; provided that an Officer's
Certificate in the form described under Section 4.03(d) shall suffice for such
written notification to the Trustee and the Trust Administrator in respect of
clause (vi) hereof.
(b) The Trust Administrator shall, from time to time, make
withdrawals from the Distribution Account, for any of the following purposes,
without priority:
(i) to make distributions to Certificateholders in
accordance with Section 4.01;
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(ii) to pay to itself and the Trustee amounts to which
each is entitled pursuant to Section 8.05;
(iii) to pay to the Master Servicer on each
Distribution Date as servicing compensation any interest or
investment income earned on funds deposited in the
Distribution Account pursuant to Section 3.12(b);
(iv) to reimburse itself pursuant to Section 7.02;
(v) to pay any amounts in respect of taxes pursuant to
Section 10.01(g)(iii); and
(vi) to clear and terminate the Distribution Account
pursuant to Section 9.01.
SECTION 3.12. Investment of Funds in the
Collection Account and the
Distribution Account.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account and the Distribution Account (each, for
purposes of this Section 3.12, an "Investment Account") to invest the funds
(other than the Initial Deposit) in such Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trust
Administrator is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trust Administrator is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trust
Administrator (in its capacity as such), as agent for the Trustee, or in the
name of a nominee of the Trust Administrator. The Trust Administrator shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account and the Distribution Account and any income
and gain realized thereon) over each such investment, and any certificate or
other instrument evidencing any such investment shall be delivered directly to
the Trust Administrator or its agent, together with any document of transfer
necessary to transfer title to such investment to the Trust Administrator or its
nominee. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trust
Administrator shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
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(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Trust Administrator that such Permitted Investment
would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account, the Distribution Account and any REO
Account held by or on behalf of the Master Servicer shall be for the benefit of
the Master Servicer and shall be subject to its withdrawal in accordance with
Section 3.11 or Section 3.23, as applicable, or withdrawal by the Trustee or the
Trust Administrator in accordance with Section 3.11 or Section 3.25, as
applicable. The Master Servicer shall deposit in the Collection Account, the
Distribution Account or any REO Account, as applicable, the amount of any loss
of principal incurred in respect of any such Permitted Investment made with
funds in such accounts immediately upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), upon the request of the Holders of Certificates representing more than
50% of the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.
SECTION 3.13. [intentionally omitted]
SECTION 3.14. Maintenance of Hazard Insurance and
Errors and Omissions and Fidelity
Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Master Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Master Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Master Servicer under
any such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11,
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if received in respect of a Mortgage Loan, or in the REO Account, subject to
withdrawal pursuant to Section 3.23, if received in respect of an REO Property.
Any cost incurred by the Master Servicer in maintaining any such insurance shall
not, for the purpose of calculating distributions to Certificateholders, be
added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Mortgaged Property or REO Property is at any time in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards and flood insurance has been made available, the Master
Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the unpaid principal balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Master Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating of A:X
or better in Best's Key Rating Guide (or such other rating that is comparable to
such rating) insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first two sentences of this Section 3.14, it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
(b) The Master Servicer shall keep in force during the term of
this Agreement a policy or policies of insurance covering errors and omissions
for failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee and the Trust
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Administrator. The Master Servicer shall also cause each Sub-Servicer to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses;
Assumption Agreements.
The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Master Servicer shall not be required to take such action if
in its sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any such rights if prohibited
by law from doing so. If the Master Servicer reasonably believes it is unable
under applicable law to enforce such "due-on-sale" clause, or if any of the
other conditions set forth in the proviso to the preceding sentence apply, the
Master Servicer will enter into an assumption and modification agreement from or
with the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Master Servicer and has a credit risk rating at least equal to
that of the original Mortgagor. In connection with any assumption or
substitution, the Master Servicer shall apply such underwriting standards and
follow such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Master Servicer shall not take or enter into any assumption
and modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Master Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Master Servicer as additional
servicing compensation. In connection with any such assumption, no material term
of the Mortgage Note (including but not limited to the related Mortgage Rate and
the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Master Servicer shall
notify the Trustee and the Trust Administrator that any such substitution,
modification or assumption agreement has been completed by forwarding to the
Trust Administrator (with a copy to the Trustee) the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by
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the terms of the Mortgage Note or any assumption which the Master Servicer may
be restricted by law from preventing, for any reason whatever. For purposes of
this Section 3.15, the term "assumption" is deemed to also include a sale (of
the Mortgaged Property) subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage
Loans.
(a) The Master Servicer shall use its best efforts, consistent
with Accepted Servicing Practices, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. The Master
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Master Servicer as contemplated in
Section 3.11 and Section 3.23. The foregoing is subject to the provision that,
in any case in which Mortgaged Property shall have suffered damage from an
Uninsured Cause, the Master Servicer shall not be required to expend its own
funds toward the restoration of such property unless it shall determine in its
discretion that such restoration will increase the proceeds of liquidation of
the related Mortgage Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Master Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Master Servicer shall not, on behalf of the Trustee,
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Trust Administrator, the Trust Fund or the
Certificateholders would be considered to hold title to, to be a "mortgagee-in-
possession" of, or to be an "owner" or "operator" of such Mortgaged Property
within the meaning of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, or any comparable law,
unless the Master Servicer has also previously determined, based on its
reasonable judgment and a report prepared by a Person who regularly conducts
environmental audits using customary industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in
the best economic interest of the Trust Fund to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation, or that if any such materials are present for
which such action could be required, that it would be in the
best
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economic interest of the Trust Fund to take such actions with
respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.03(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (a)(ix), such right
of reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
(c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan or related REO Property that is 90 days or more delinquent,
which the Master Servicer determines in good faith will otherwise become subject
to foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trust Administrator and the Trustee prior to purchase), at a
price equal to the Purchase Price; provided, however, that the Master Servicer
shall purchase any such Mortgage Loans or related REO Properties on the basis of
delinquency, purchasing the most delinquent Mortgage Loans or related REO
Properties first. The Purchase Price for any Mortgage Loan or related REO
Property purchased hereunder shall be deposited in the Collection Account, and
the Trust Administrator, upon receipt of written certification from the Master
Servicer of such deposit, shall release or cause to be released to the Master
Servicer the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Master Servicer shall furnish and as shall be necessary to vest in the
Master Servicer title to any Mortgage Loan or related REO Property released
pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in
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connection with a Final Recovery Determination; and third, as a recovery of
principal of the Mortgage Loan. If the amount of the recovery so allocated to
interest is less than the full amount of accrued and unpaid interest due on such
Mortgage Loan, the amount of such recovery will be allocated by the Master
Servicer as follows: first, to unpaid Servicing Fees; and second, to the balance
of the interest then due and owing. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Master Servicer or any
Sub-Servicer pursuant to Section 3.11(a)(iii).
SECTION 3.17. Trustee and Trust Administrator to
Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Master Servicer will
immediately notify or cause to be notified the Trust Administrator and the
Trustee by a certification in the form of Exhibit E-2 (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trust Administrator shall
promptly release the related Mortgage File to the Master Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trust Administrator
shall, upon any request made by or on behalf of the Master Servicer and delivery
to the Trust Administrator of a Request for Release in the form of Exhibit E-l,
release the related Mortgage File to the Master Servicer, and the Trustee shall,
at the direction of the Master Servicer, execute such documents as shall be
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Master Servicer to return each and every document previously
requested from the Mortgage File to the Trust Administrator when the need
therefor by the Master Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Collection Account or the Mortgage File or such document
has been delivered to an attorney, or to a public trustee or other public
official as required by law, for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer has delivered, or caused
to be delivered, to the Trust Administrator an additional Request for Release
certifying as to such liquidation or action or proceedings. Upon the request of
the Trust Administrator or the Trustee, the Master Servicer shall provide notice
to the Trust Administrator and the Trustee of the name and address of the Person
to which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated and that all amounts received or
to be received in connection with such liquidation that are required to be
deposited into the Collection Account have been so deposited, or that such
Mortgage Loan has become an REO Property, any outstanding Requests
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for Release with respect to such Mortgage Loan shall be released by the Trust
Administrator to the Master Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Master Servicer or the Sub-Servicer, as
the case may be, any court pleadings, requests for trustee's sale or other
documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.
Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Master Servicer only to the extent such fees or charges are received by the
Master Servicer. The Master Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account, pursuant to Section 3.11 to
be paid by the Trust Administrator from the Distribution Account and pursuant to
Section 3.23(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.12 and Section 3.24. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including premiums for the insurance required by Section 3.14, to the extent
such premiums are not paid by the related Mortgagors or by a Sub-Servicer,
servicing compensation of each Sub- Servicer, and to the extent provided herein
in Section 8.05, the fees and expenses of the Trustee and the Trust
Administrator) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
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SECTION 3.19. Reports to the Trust Administrator
and the Trustee; Collection Account
Statements.
Not later than twenty days after each Distribution Date, the
Master Servicer shall forward to the Trust Administrator, the Trustee and the
Depositor the most current available bank statement for the Collection Account.
Copies of such statement shall be provided by the Trust Administrator to any
Certificateholder and to any Person identified to the Trust Administrator as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Master Servicer to
the Trust Administrator.
SECTION 3.20. Statement as to Compliance.
The Master Servicer will deliver to the Trust Administrator,
the Trustee and the Depositor not later than 90 days following the end of the
fiscal year of the Master Servicer, which as of the Closing Date ends on the
last day in December, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Master Servicer during the
preceding year and of performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trust Administrator to any Certificateholder and to any Person
identified to the Trust Administrator as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Master Servicer to the Trust Administrator.
SECTION 3.21. Independent Public Accountants'
Servicing Report.
Not later than 90 days following the end of each fiscal year
of the Master Servicer, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer which includes an assertion that the Master Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of residential mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
Immediately upon receipt of such report, the Master Servicer shall furnish a
copy of such report to the Trust Administrator, the Trustee and each Rating
Agency. Copies of such statement shall be provided by the Trust Administrator to
any Certificateholder upon request at the Master
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Servicer's expense, provided that such statement is delivered by the Master
Servicer to the Trust Administrator.
SECTION 3.22. Access to Certain Documentation.
The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer designated by it. In addition, access to the documentation
regarding the Mortgage Loans will be provided to any Certificateholder, the
Trustee, the Trust Administrator and to any Person identified to the Master
Servicer as a prospective transferee of a Certificate, upon reasonable request
during normal business hours at the offices of the Master Servicer designated by
it at the expense of the Person requesting such access.
SECTION 3.23. Title, Management and Disposition of
REO Property.
(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Master Servicer, on behalf of REMIC I, shall either
sell any REO Property within three years after REMIC I acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or request from
the Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire, an extension of the three-year
grace period, unless the Master Servicer shall have delivered to the Trust
Administrator and the Trustee an Opinion of Counsel, addressed to the Trust
Administrator, the Trustee and the Depositor, to the effect that the holding by
REMIC I of such REO Property subsequent to three years after its acquisition
will not result in the imposition on REMIC I, REMIC II or REMIC III of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under
Federal law at any time that any Certificates are outstanding. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by REMIC I, REMIC II or REMIC III of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions.
(b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets and shall establish and
maintain, or cause to be established and maintained, with respect to REO
Properties an account held in trust for the Trustee for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account. The
Master Servicer shall be permitted to allow the Collection Account to serve as
the REO Account, subject
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to separate ledgers for each REO Property. The Master Servicer shall be entitled
to retain or withdraw any interest income paid on funds deposited in the REO
Account.
(c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:
(i) all insurance premiums due and payable in respect
of such REO Property;
(ii) all real estate taxes and assessments in respect
of such REO Property that may result in the imposition of a
lien thereon; and
(iii) all costs and expenses necessary to maintain such
REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, none of the Master Servicer,
the Trust Administrator or the Trustee shall:
(i) authorize the Trust Fund to enter into, renew or
extend any New Lease with respect to any REO Property, if the
New Lease by its terms will give rise to any income that does
not constitute Rents from Real Property;
(ii) authorize any amount to be received or accrued
under any New Lease other than amounts that will constitute
Rents from Real Property;
(iii) authorize any construction on any REO Property,
other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the
construction of such building or other improvement was
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completed before default on the related Mortgage Loan became
imminent, all within the meaning of Section 856(e)(4)(B) of
the Code; or
(iv) authorize any Person to Directly Operate any REO
Property on any date more than 90 days after its date of
acquisition by the Trust Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trust Administrator and the Trustee, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by REMIC I, in which case the Master Servicer may take such actions
as are specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall
not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay
all costs and expenses incurred in connection with the
operation and management of such REO Property, including those
listed above and remit all related revenues (net of such costs
and expenses) to the Master Servicer as soon as practicable,
but in no event later than thirty days following the receipt
thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve the
Master Servicer of any of its duties and obligations to the
Trustee on behalf of the Certificateholders with respect to
the operation and management of any such REO Property; and
(iv) the Master Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all
duties and obligations in connection with the operation and
management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
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(d) In addition to the withdrawals permitted under Section
3.23(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall deem
necessary or advisable, as shall be normal and usual in its Accepted Servicing
Practices.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Master Servicer Remittance Date in
the month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. Any REO Disposition shall be
for cash only (unless changes in the REMIC Provisions made subsequent to the
Startup Day allow a sale for other consideration).
(g) The Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Master Servicer
in Respect of Prepayment Interest
Shortfalls.
The Master Servicer shall deliver to the Trust Administrator
for deposit into the Distribution Account on or before 3:00 p.m. New York time
on the Master Servicer Remittance Date from its own funds an amount equal to the
lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from full or partial Principal Prepayments
during the related Prepayment Period and (ii) the aggregate Servicing Fee for
the related Prepayment Period. Any amounts paid by the Master Servicer pursuant
to this Section 3.24 shall not be reimbursed by REMIC I.
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SECTION 3.25. Obligations of the Master Servicer
in Respect of Mortgage Rates and
Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the terms
of the related Mortgage Note and this Agreement, the Master Servicer, upon
discovery or receipt of notice thereof, immediately shall deliver to the Trust
Administrator for deposit in the Distribution Account from its own funds the
amount of any such shortfall and shall indemnify and hold harmless the Trust
Fund, the Trust Administrator, the Trustee, the Depositor and any successor
master servicer in respect of any such liability. Such indemnities shall survive
the termination or discharge of this Agreement. Notwithstanding the foregoing,
this Section 3.25 shall not limit the ability of the Master Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note, as permitted by law.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the
Class R-I Certificates, as the case may be:
(i) to the Holders of REMIC I Regular Interests (other
than REMIC I Regular Interest I-LTP), in an amount equal to
(A) the Uncertificated Interest for such Distribution Date,
plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates. Amounts payable as Uncertificated
Interest in respect of REMIC I Regular Interest I-LT7 shall be
reduced when the REMIC I Overcollateralized Amount is less
than the REMIC I Required Overcollateralized Amount, by the
lesser of (x) the amount of such difference and (y) the
Maximum I-LT7 Uncertificated Interest Deferral Amount; and
(ii) on each Distribution Date, to the Holders of REMIC
I Regular Interests, in an amount equal to the remainder of
the Available Distribution Amount for such Distribution Date
after the distributions made pursuant to clause (i) above,
allocated as follows (except as provided below):
(a) to the Holders of the REMIC I Regular
Interest I-LTP, on the Distribution Date immediately
following the expiration of the latest Prepayment
Charge term as identified on the Mortgage Loan
Schedule or any Distribution Date thereafter until
$100 has been distributed pursuant to this clause;
(b) to the Holders of the REMIC I Regular
Interest I-LT1, 98.00% of the amount remaining after
application of clause (a), until the Uncertificated
Balance of such REMIC I Regular Interest is reduced
to zero and any remaining amount to the Holders of
the Class R-I Certificates;
(c) to the Holders of the REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC
I Regular Interest I-LT4, REMIC I Regular Interest
I-LT5 and REMIC I Regular Interest I-LT6, 1.00% of
the amount remaining after application of clause (a),
in the same proportion as principal payments are
allocated to the Corresponding Certificates, until
the Uncertificated Balances of such REMIC I Regular
Interests are reduced to zero and any remaining
amount to the Holders of the Class R-I Certificates;
and
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(d) to the Holders of the REMIC I Regular
Interest I-LT7, 1.00% of the amount remaining after
application of clause (a), until the Uncertificated
Balance of such REMIC I Regular Interest is reduced
to zero and any remaining amount to the Holders of
the Class R-I Certificates;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Overcollateralization Reduction Amount shall be allocated to
Holders of the REMIC I Regular Interest I-LT1 and REMIC I Regular Interest
I-LT7, respectively.
(B) On each Distribution Date, the following amounts shall be
distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests:
(i) any amounts paid as either Uncertificated Interest
paid or accrued to the REMIC I Regular Interests (other than
REMIC I Regular Interest I-LTP) shall be deemed to have been
paid to the related Uncertificated Corresponding Component in
REMIC II in accordance with the REMIC II Remittance Rates and
any amounts deferred on REMIC I Regular Interest I-LT7
pursuant to Section 4.01(a)(1)(A) shall be deemed to have been
deferred with respect to REMIC II Regular Interest II-LT7; and
(ii) any amounts paid as principal on the REMIC I
Regular Interests shall be deemed to have been paid to the
related Uncertificated Corresponding Component in REMIC II in
accordance with the same priorities and conditions.
(2) On each Distribution Date, the Trust Administrator shall
withdraw from the Distribution Account an amount equal to the Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:
(i) to the Holders of the Class A Certificates, an
amount equal to the Senior Interest Distribution Amount;
(ii) to the extent of the Interest Remittance Amount
remaining after distribution of the Senior Interest
Distribution Amount, to the Holders of the Class M-1
Certificates, an amount equal to the Interest Distribution
Amount allocable to the Class M-1 Certificates;
(iii) to the extent of the Interest Remittance Amount
remaining after distribution of the Senior Interest
Distribution Amount and the Interest Distribution Amount
allocable to the Class M-1 Certificates, to the Holders of the
Class M-2 Certificates, an amount equal to the Interest
Distribution Amount allocable to the Class M-2 Certificates;
and
(iv) to the extent of the Interest Remittance Amount
remaining after distribution of the Senior Interest
Distribution Amount and the Interest Distribution Amounts
allocable to the Class M-1 Certificates and the Class M-2
Certificates, to
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the Holders of the Class M-3 Certificates, an amount equal to
the Interest Distribution Amount allocable to the Class M-3
Certificates.
(3) On each Distribution Date, the Trust Administrator shall
withdraw from the Distribution Account an amount equal to the Principal
Distribution Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:
(i) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the
Principal Distribution Amount shall be distributed in the
following order of priority;
first, to the Holders of the Class A Certificates in
the priorities and amounts set forth in Section
4.01(a)(4) below, until the Certificate Principal
Balances of such Certificates have been reduced to
zero;
second, to the Holders of the Class M-1 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
third, to the Holders of the Class M-2 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero; and
fourth, to the Holders of the Class M-3 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero.
(ii) On each Distribution Date (a) on or after the
Stepdown Date and (b) on which a Trigger Event is not in
effect, the Principal Distribution Amount shall be distributed
in the following order of priority;
first, the lesser of (x) the Principal Distribution
Amount and (y) the Class A Principal Distribution
Amount shall be distributed to the Holders of the
Class A Certificates in the priorities and amounts
set forth in Section 4.01(a)(4) below, until the
Certificate Principal Balances of such Certificates
have been reduced to zero;
second, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the amount
distributed to the Holders of the Class A
Certificates pursuant to clause first above and (y)
the Class M-1 Principal Distribution Amount shall be
distributed to the Holders of the Class M-1
Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero;
third, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause first above and to
the Holders of the Class M-1 Certificates pursuant to
clause second above and (y) the Class M-2
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Principal Distribution Amount shall be distributed to
the Holders of the Class M-2 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero; and
fourth, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause first above, to the
Holders of the Class M-1 Certificates pursuant to
clause second above and to the Holders of the Class
M-2 Certificates pursuant to clause third above and
(y) the Class M-3 Principal Distribution Amount shall
be distributed to the Holders of the Class M-3
Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero.
(4) On each Distribution Date, the aggregate distributions of
principal made on such date in respect of the Class A Certificates pursuant to
Section 4.01(a)(3)(i) first or Section 4.01(a)(3)(ii) first above shall be
applied among the various Classes thereof in the following order of priority, in
each case to the extent of the Available Class A Principal Distribution Amount:
first, to the holders of the Class A-1 Certificates, until the
Certificate Principal Balance of such Class has been reduced
to zero; and
second, to the holders of the Class A-2 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero.
Notwithstanding the foregoing priorities, upon the reduction of the
Certificate Principal Balances of the Mezzanine Certificates to zero, the
sequential nature of distributions of principal among the Class A Certificates
will be disregarded and distributions allocable to principal will be paid on
each succeeding Distribution Date to the holders of the Class A Certificates on
a pro rata basis, based on the Certificate Principal Balances thereof.
(5) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed as follows:
(i) to the Holders of the Class or Classes of
Certificates then entitled to receive distributions
in respect of principal, in an amount equal to the
principal portion of any Realized Losses incurred on
the Mortgage Loans, applied to reduce the Certificate
Principal Balance of such Certificates until the
aggregate Certificate Principal Balance of such
Certificates is reduced to zero;
(ii) to the Holders of the Class or Classes of
Certificates then entitled to receive distributions
in respect of principal, in an amount equal to the
Overcollateralization Increase Amount, applied to
reduce the Certificate
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Principal Balance of such Certificates until the
aggregate Certificate Principal Balance of such
Certificates is reduced to zero;
(iii) to the Holders of the Class M-1 Certificates,
in an amount equal to the Interest Carry Forward
Amount allocable to such Class of Certificates;
(iv) to the Holders of the Class M-1 Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to such Class of Certificates;
(v) to the Holders of the Class M-2 Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(vi) to the Holders of the Class M-2 Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to such Class of Certificates;
(vii) to the Holders of the Class M-3 Certificates,
in an amount equal to the Interest Carry Forward
Amount allocable to such Class of Certificates;
(viii) to the Holders of the Class M-3 Certificates,
in an amount equal to the Allocated Realized Loss
Amount allocable to such Class of Certificates;
(ix) to the Holders of the Class A Certificates, in
an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to such Certificates;
(x) to the Holders of the Class M-1 Certificates, in
an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to such Certificates;
(xi) to the Holders of the Class M-2 Certificates, in
an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to such Certificates;
(xii) to the Holders of the Class M-3 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to such Certificates;
(xiii) to the Holders of the Class CE Certificates
the Interest Distribution Amount and any
Overcollateralization Reduction Amount for such
Distribution Date; and
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(xiv) to the Holders of the Class R-III Certificates,
any remaining amounts; provided that if such
Distribution Date is the Distribution Date
immediately following the expiration of the latest
Prepayment Charge term as identified on the Mortgage
Loan Schedule or any Distribution Date thereafter,
then any such remaining amounts will be distributed
first, to the Holders of the Class P Certificates,
until the Certificate Principal Balance thereof has
been reduced to zero; and second, to the Holders of
the Class R-III Certificates.
(b) On each Distribution Date, the Trust Administrator shall
withdraw any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by the Master Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans or any Master Servicer
Prepayment Charge Payment Amount and shall distribute such amounts to the
Holders of the Class P Certificates. Such distributions shall not be applied to
reduce the Certificate Principal Balance of the Class P Certificates.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated pro rata among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trust Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance that is in excess of the lesser
of (i) $5,000,000 or (ii) two-thirds of the initial Certificate Principal
Balance of such Class of Certificates, or otherwise by check mailed by first
class mail to the address of such Holder appearing in the Certificate Register.
The final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the Corporate Trust Office
of the Trust Administrator or such other location specified in the notice to
Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting 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. None of the Trust Administrator,
the Trustee, the Depositor or the Master Servicer shall have any responsibility
therefor except as otherwise provided by this Agreement or applicable law.
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(d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trust
Administrator, the Trustee or the Master Servicer shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trust Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Trust
Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:
(i) the Trust Administrator expects that the final distribution
with respect to such Class of Certificates will be made on such
Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trust Administrator therein
specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trust Administrator and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(e) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trust Administrator shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall, directly or through an agent, mail
a final notice to the remaining non- tendering Certificateholders concerning
surrender of their Certificates but shall continue to hold any remaining funds
for the benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall pay to Salomon Smith Barney Inc. all
such amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trust Administrator as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(e). Any such amounts
held in trust by the Trust Administrator shall be held in an Eligible Account
and the Trust Administrator may direct any depository institution maintaining
such account to invest the funds in one or more Permitted Investments. All
income and gain realized from the investment of funds deposited in such accounts
held in trust by the Trust Administrator shall be for the benefit of the Trust
Administrator; provided, however, that the Trust Administrator shall deposit in
such account the amount of any loss of principal incurred in respect of any such
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Permitted Investment made with funds in such accounts immediately upon the
realization of such loss.
(f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest be reduced more than once
in respect of any particular amount both (a) allocated to such REMIC I Regular
Interest in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed on such REMIC I Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 4.01.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trust Administrator shall
prepare and forward by mail to each Holder of the Regular Certificates, a
statement as to the distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to principal, and the amount of the
distribution made on such Distribution Date to the Holders of
the Class P Certificates allocable to Prepayment Charges;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to interest;
(iii) the aggregate Servicing Fee received by the Master
Servicer during the related Due Period and such other
customary information as the Trust Administrator deems
necessary or desirable, or which a Certificateholder
reasonably requests, to enable Certificateholders to prepare
their tax returns;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) the aggregate Stated Principal Balance of the
Mortgage Loans and any REO Properties as of the close of
business on such Distribution Date;
(vi) the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average
Mortgage Rate of the Mortgage Loans as of the related Due
Date;
(vii) the number and aggregate unpaid principal balance
of Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent
60 to 89 days, (c) delinquent 90 or more days, in each case,
as of the last day of the preceding calendar month, (d)
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as to which foreclosure proceedings have been commenced and
(e) with respect to which the related Mortgagor has filed for
protection under applicable bankruptcy laws, with respect to
whom bankruptcy proceedings are pending or with respect to
whom bankruptcy protection is in force;
(viii) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the loan
number of such Mortgage Loan, the unpaid principal balance and
the Stated Principal Balance of such Mortgage Loan
as of the date it became an REO Property;
(ix) the book value of any REO Property as of the close
of business on the last Business Day of the calendar month
preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made
during the related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred
during the related Prepayment Period (or, in the case of
Bankruptcy Losses allocable to interest, during the related
Due Period), separately identifying whether such Realized
Losses constituted Bankruptcy Losses and the aggregate amount
of Realized Losses incurred since the Closing Date;
(xii) the aggregate amount of extraordinary Trust Fund
expenses withdrawn from the Collection Account or the
Distribution Account for such Distribution Date;
(xiii) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses, made on
such Distribution Date, separately identifying any reduction
thereof due to allocations of Realized Losses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of the
Class A Certificates, the Mezzanine Certificates and the Class
CE Certificates for such Distribution Date and the Interest
Carry Forward Amount, if any, with respect to the Class A
Certificates and the Mezzanine Certificates on such
Distribution Date, and in the case of the Class A
Certificates, the Mezzanine Certificates and the Class CE
Certificates, separately identifying any reduction thereof due
to allocations of Realized Losses, Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls;
(xvi) the Allocated Realized Loss Amount with respect
to each Class of Mezzanine Certificates for such Distribution
Date and the aggregate unpaid
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Allocated Realized Loss Amount with respect to each Class of
Mezzanine Certificates for all prior Distribution Dates;
(xvii) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not
covered by payments by the Master Servicer pursuant to Section
3.24;
(xviii) the aggregate amount of Relief Act Interest
Shortfalls for such Distribution Date;
(xix) the Required Overcollateralized Amount and the
Credit Enhancement Percentage for such Distribution Date;
(xx) the Overcollateralization Increase Amount, if any,
for such Distribution Date;
(xxi) the Overcollateralization Reduction Amount, if
any, for such Distribution Date; and
(xxii) the respective Pass-Through Rates applicable to
the Class A-1 Certificates and the Class CE Certificates for
such Distribution Date and the Pass- Through Rate applicable
to the Class A-1 Certificates for the immediately succeeding
Distribution Date.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trust Administrator
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trust Administrator pursuant to
any requirements of the Code as from time to time are in force.
On each Distribution Date, the Trust Administrator shall
forward to the Depositor, the Trustee, to each Holder of a Residual Certificate
and to the Master Servicer, a copy of the reports forwarded to the Regular
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.
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Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trust Administrator's duties are limited to
the extent that the Trust Administrator receives timely reports as required from
the Master Servicer.
On each Distribution Date the Trust Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for
each class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Trust Administrator
and Bloomberg.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) On the Business Day following each Determination Date, the
Master Servicer shall deliver to the Trust Administrator and the Trustee by
telecopy (or by such other means as the Master Servicer, the Trust Administrator
or the Trustee, as the case may be, may agree from time to time) a Remittance
Report with respect to the related Distribution Date. On the same date, the
Master Servicer shall forward to the Trust Administrator by overnight mail a
computer readable magnetic tape containing the information set forth in such
Remittance Report with respect to the related Distribution Date. Such Remittance
Report will include (i) the amount of P&I Advances to be made by the Master
Servicer in respect of the related Distribution Date, the aggregate amount of
P&I Advances outstanding after giving effect to such P&I Advances, and the
aggregate amount of Nonrecoverable P&I Advances in respect of such Distribution
Date and (ii) such other information with respect to the Mortgage Loans as the
Trust Administrator may reasonably require to perform the calculations necessary
to make the distributions contemplated by Section 4.01 and to prepare the
statements to Certificateholders contemplated by Section 4.02. The Trust
Administrator shall not be responsible (except with regard to any information
regarding the Prepayment Charges to the extent set forth below) to recompute,
recalculate or verify any information provided to it by the Master Servicer.
Notwithstanding the foregoing, in connection with any Principal Prepayment on
any Mortgage Loan listed on Schedule 2 hereto, the Trust Administrator shall
verify that the related Prepayment Charge was delivered to the Trust
Administrator for deposit in the Distribution Account in the amount set forth on
such Schedule 2 or that such Prepayment Charge was waived in accordance with the
terms hereof.
(b) The amount of P&I Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of
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Monthly Payments (with each interest portion thereof net of the related
Servicing Fee), due on the related Due Date in respect of the Mortgage Loans
(other than with respect to any Balloon Loan with a delinquent Balloon Payment
as described in clause (iii) below), which Monthly Payments were delinquent as
of the close of business on the related Determination Date plus, (ii) with
respect to each REO Property (other than with respect to any REO Property
relating to a Balloon Loan with a delinquent Balloon Payment as described in
clause (iv) below), which REO Property was acquired during or prior to the
related Prepayment Period and as to which REO Property an REO Disposition did
not occur during the related Prepayment Period, an amount equal to the excess,
if any, of the REO Imputed Interest on such REO Property for the most recently
ended calendar month, over the net income from such REO Property transferred to
the Distribution Account pursuant to Section 3.23 for distribution on such
Distribution Date, plus (iii) with respect to each Balloon Loan with a
delinquent Balloon Payment, an amount equal to the assumed monthly principal and
interest payment (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date based on the
original principal amortization schedule for such Balloon Loan assuming such
Mortgage Loan was not a Balloon Loan, plus (iv) with respect to each REO
Property relating to a Balloon Loan with a delinquent Balloon Payment, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the assumed monthly
principal and interest payment (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date based on
the original principal amortization schedule for the related Balloon Loan
assuming such Mortgage Loan was not a Balloon Loan, over the net income from
such REO Property transferred to the Distribution Account pursuant to Section
3.23 for distribution on such Distribution Date.
On or before 3:00 p.m. New York time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trust Administrator for deposit in the Distribution Account an amount
equal to the aggregate amount of P&I Advances, if any, to be made in respect of
the Mortgage Loans and REO Properties for the related Distribution Date either
(i) from its own funds or (ii) from the Collection Account, to the extent of
funds held therein for future distribution (in which case it will cause to be
made an appropriate entry in the records of Collection Account that amounts held
for future distribution have been, as permitted by this Section 4.03, used by
the Master Servicer in discharge of any such P&I Advance) or (iii) in the form
of any combination of (i) and (ii) aggregating the total amount of P&I Advances
to be made by the Master Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trust
Administrator will provide notice to the Trustee and the Master Servicer by
telecopy by the close of business on the third Business Day prior to the
Distribution Date in the event that the amount remitted by the Master Servicer
to the Trust Administrator on such date
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is less than the P&I Advances required to be made by the Master Servicer for the
related Distribution Date.
(c) The obligation of the Master Servicer to make such P&I
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Master Servicer if such P&I Advance or Servicing Advance would, if made,
constitute a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance,
respectively. The determination by the Master Servicer that it has made a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance or that any
proposed P&I Advance or Servicing Advance, if made, would constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
shall be evidenced by an Officers' Certificate of the Master Servicer delivered
to the Depositor, the Trust Administrator and the Trustee.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, the Master Servicer
shall determine as to each Mortgage Loan and REO Property: (i) the total amount
of Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Master Servicer
shall also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the Trust Administrator and
the Trustee by the Master Servicer prior to the Determination Date immediately
following the end of (i) in the case of Bankruptcy Losses allocable to interest,
the Due Period during which any such Realized Loss was incurred, and (ii) in the
case of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.
(b) All Realized Losses on the Mortgage Loans allocated to any
REMIC II Regular Interest pursuant to Section 4.04(c) on the Mortgage Loans
shall be allocated by the Trust Administrator on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class CE
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
fifth, to the Class M-1 Certificates, until the
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Certificate Principal Balance thereof has been reduced to zero. All Realized
Losses to be allocated to the Certificate Principal Balances of all Classes on
any Distribution Date shall be so allocated after the actual distributions to be
made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class CE Certificate shall be made by reducing the amount otherwise payable in
respect thereof pursuant to Section 4.01(a)(4)(xiii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.
As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
(c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trust Administrator on each Distribution Date to the following
REMIC I Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC I Regular Interest I-LT1 and REMIC
I Regular Interest I-LT7 up to an aggregate amount equal to the REMIC I Interest
Loss Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Balances of the REMIC I Regular Interest I-LT1 and REMIC I Regular Interest I-
LT7 up to an aggregate amount equal to the REMIC I Principal Loss Allocation
Amount, 98% and 2%, respectively; third, to the Uncertificated Balances of REMIC
I Regular Interest I-LT1, REMIC I Regular Interest I-LT6 and REMIC I Regular
Interest I-LT7, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LT6 has been reduced to zero; fourth to the
Uncertificated Balances of REMIC I Regular Interest I-LT1, REMIC I Regular
Interest I-LT5 and REMIC I Regular Interest I-LT7, 98%, 1% and 1%, respectively,
until the Uncertificated Balance of REMIC I Regular Interest I-LT5 has been
reduced to zero; fifth to the Uncertificated Balances of REMIC I Regular
Interest I-LT1, REMIC I Regular Interest I-LT4 and REMIC I Regular Interest
I-LT7, 98%, 1% and 1%, respectively, until the Uncertificated Balance of REMIC I
Regular Interest I-LT4 has been reduced to zero.
(d) All Realized Losses on the REMIC II Regular Interests
shall be allocated by the Trust Administrator on each Distribution Date among
the REMIC II Regular Interests in the proportion that Realized Losses are
allocated to the related Uncertificated Corresponding Component.
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As used herein, an allocation of a Realized Loss on a "pro
rata basis" among the REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTP) means an allocation on a pro rata basis among the REMIC I
Regular Interests (other than REMIC I Regular Interest I- LTP) on the basis of
their then outstanding Uncertificated Balances, in each case prior to giving
effect to distributions to be made on such Distribution Date.
SECTION 4.05. Compliance with Withholding
Requirements.
Notwithstanding any other provision of this Agreement, the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trust Administrator reasonably believes are applicable under the Code.
The consent of Certificateholders shall not be required for such withholding. In
the event the Trust Administrator does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trust Administrator shall
indicate the amount withheld to such Certificateholders.
SECTION 4.06. Exchange Commission; Additional
Information.
Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2000, the Trust Administrator shall file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
2000, the Trust Administrator shall file a Form 10-K, substantially in the form
attached hereto as Exhibit H, with respect to the Trust Fund. The Depositor
hereby grants to the Trust Administrator a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until the earlier of (i) receipt by the Trust Administrator from
the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. Upon request, the Trust Administrator shall
deliver to the Depositor a copy of any Form 8-K or Form 10-K filed pursuant to
this Section 4.06.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-10. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or the Trust Administrator to or upon
the order of the Depositor. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee or the Trust Administrator by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee or the Trust Administrator
by manual signature, and such certificate of authentication 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.
(b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trust Administrator except to another Depository that agrees
to hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trust Administrator is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to act
as such in accordance herewith and in accordance with the
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agreement that it has with the Depository authorizing it to act as such. The
Book-Entry Custodian may, and, if it is no longer qualified to act as such, the
Book-Entry Custodian shall, appoint, by a written instrument delivered to the
Depositor, the Master Servicer, the Trustee and, if the Trust Administrator is
not the Book-Entry Custodian, the Trust Administrator, any other transfer agent
(including the Depository or any successor Depository) to act as Book-Entry
Custodian under such conditions as the predecessor Book-Entry Custodian and the
Depository or any successor Depository may prescribe, provided that the
predecessor Book-Entry Custodian shall not be relieved of any of its duties or
responsibilities by reason of any such appointment of other than the Depository.
If the Trust Administrator resigns or is removed in accordance with the terms
hereof, the Trustee, the successor trust administrator or, if it so elects, the
Depository shall immediately succeed to its predecessor's duties as Book-Entry
Custodian. The Depositor shall have the right to inspect, and to obtain copies
of, any Certificates held as Book-Entry Certificates by the Book- Entry
Custodian.
The Trust Administrator, the Trustee, the Master Servicer and
the Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book- Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trust Administrator may establish a
reasonable record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository of such
record date.
If (i)(A) the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Master Servicer Event
of Default, Certificate Owners representing in the aggregate not less than 51%
of the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $10,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $10,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Master Servicer, the
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Trust Administrator or the Trustee shall be liable for any delay in the delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed to be imposed upon and performed by the Trust
Administrator, to the extent applicable with respect to such Definitive
Certificates, and the Trust Administrator shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and
Exchange of Certificates.
(a) The Trust Administrator shall cause to be kept at one of
the offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11 a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
(b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. In the event that such a
transfer of a Class CE Certificate, Class P Certificate or Residual Certificate
is to be made without registration or qualification (other than in connection
with the initial transfer of any such Certificate by the Depositor to an
affiliate of the Depositor), the Trust Administrator shall require receipt of:
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Certificateholder desiring to
effect the transfer and from such Certificateholder's prospective transferee,
substantially in the forms attached hereto as Exhibit F-1; and (ii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trust Administrator,
the Trustee, the Master Servicer in its capacity as such or any Sub-Servicer),
together with copies of the written certification(s) of the Certificateholder
desiring to effect the transfer and/or such Certificateholder's prospective
transferee upon which such Opinion of Counsel is based, if any. None of the
Depositor, the Trust Administrator or the Trustee is obligated to register or
qualify any such Certificates under the 1933 Act or any other securities laws or
to take any action not otherwise required under this Agreement to permit the
transfer of such Certificates without registration or qualification. Any
Certificateholder desiring to effect the transfer of any such Certificate shall,
and does hereby agree to, indemnify the Trust Administrator, the Trustee, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Mezzanine Certificate, Class CE
Certificate, Class P Certificate or Residual Certificate or any interest therein
shall be made to any Plan subject to ERISA or Section 4975 of the Code, any
Person acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan within the
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meaning of the Department of Labor regulation promulgated at 29 C.F.R. ss.
2510.3-101 ("Plan Assets") unless the Depositor, the Trust Administrator, the
Trustee and the Master Servicer are provided with an Opinion of Counsel which
establishes to the satisfaction of the Depositor, the Trust Administrator, the
Trustee and the Master Servicer that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicer, the Trust Administrator, the Trustee
or the Trust Fund to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Depositor, the Master Servicer, the Trust Administrator, the Trustee or
the Trust Fund. In lieu of such Opinion of Counsel, any prospective Transferee
of such Certificates may provide a certification (which in the case of the
Mezzanine Certificates, the Transferee will be deemed to have represented such
certification) in the form of Exhibit G to this Agreement (or other form
acceptable to the Depositor, the Trust Administrator, the Trustee and the Master
Servicer), which the Trust Administrator may rely upon without further inquiry
or investigation. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that such affiliate is
not a Plan or a Person investing Plan Assets) and the Trust Administrator shall
be entitled to conclusively rely upon a representation (which, upon the request
of the Trust Administrator, shall be a written representation) from the
Depositor of the status of such transferee as an affiliate of the Depositor.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trust Administrator
or its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale under
clause (iii)(B) below and to execute all instruments of Transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall be
a Permitted Transferee and shall promptly notify the
Trust Administrator of any change or impending change
in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer
of any Ownership Interest in a Residual Certificate,
the Trust Administrator shall require delivery to it,
and shall not register the Transfer of any Residual
Certificate until its receipt of, an affidavit and
agreement (a "Transfer Affidavit and Agreement," in
the form attached hereto as Exhibit F-2) from the
proposed Transferee, in form and substance
satisfactory to the Trust Administrator, representing
and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed
Transfer as a
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nominee, trustee or agent for any Person that is not
a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions
of this Section 5.02(d) and agrees to be bound by
them.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by a proposed
Transferee under clause (B) above, if a Responsible
Officer of the Trust Administrator who is assigned to
this transaction has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be
effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall
agree (x) to require a transferor affidavit (a
"Transferor Affidavit," in the form attached hereto
as Exhibit F-2) from any other Person to whom such
Person attempts to transfer its Ownership Interest in
a Residual Certificate and (y) not to transfer its
Ownership Interest unless it provides a Transferor
Affidavit (in the form attached hereto as Exhibit
F-2) to the Trust Administrator stating that, among
other things, it has no actual knowledge that such
other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an
Ownership Interest in a Residual Certificate, by
purchasing an Ownership Interest in such Certificate,
agrees to give the Trust Administrator written notice
that it is a "pass-through interest holder" within
the meaning of temporary Treasury regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it
is, or is holding an Ownership Interest in a Residual
Certificate on behalf of, a "pass-through interest
holder."
(ii) The Trust Administrator will register the Transfer
of any Residual Certificate only if it shall have received the
Transfer Affidavit and Agreement and all of such other
documents as shall have been reasonably required by the Trust
Administrator as a condition to such registration. In
addition, no Transfer of a Residual Certificate shall be made
unless the Trust Administrator shall have received a
representation letter from the Transferee of such Certificate
to the effect that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the
provisions of this Section 5.02(d), then the last preceding
Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as holder thereof retroactive
to the date of registration of such Transfer of such Residual
Certificate. The Trust Administrator shall be under no
liability to any Person for any registration of Transfer of a
Residual Certificate that
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is in fact not permitted by this Section 5.02(d) or for making
any payments due on such Certificate to the holder thereof or
for taking any other action with respect to such holder under
the provisions of this Agreement.
(B) If any purported Transferee shall become
a holder of a Residual Certificate in violation of the
restrictions in this Section 5.02(d) and to the extent that
the retroactive restoration of the rights of the holder of
such Residual Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trust Administrator shall have the right, without notice to
the holder or any prior holder of such Residual Certificate,
to sell such Residual Certificate to a purchaser selected by
the Trust Administrator on such terms as the Trust
Administrator may choose. Such purported Transferee shall
promptly endorse and deliver each Residual Certificate in
accordance with the instructions of the Trust Administrator.
Such purchaser may be the Trust Administrator itself or any
Affiliate of the Trust Administrator. The proceeds of such
sale, net of the commissions (which may include commissions
payable to the Trust Administrator or its Affiliates),
expenses and taxes due, if any, will be remitted by the Trust
Administrator to such purported Transferee. The terms and
conditions of any sale under this clause (iii)(B) shall be
determined in the sole discretion of the Trust Administrator,
and the Trust Administrator shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) The Trust Administrator shall 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 Residual Certificate to any Person who is a
Disqualified Organization, 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
Residual 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
Residual Certificate having as among its record holders at any
time any Person which is a Disqualified Organization.
Reasonable compensation for providing such information may be
accepted by the Trust Administrator.
(v) The provisions of this Section 5.02(d) set forth
prior to this subsection (v) may be modified, added to or
eliminated, provided that there shall have been delivered to
the Trust Administrator at the expense of the party seeking to
modify, add to or eliminate any such provision the following:
(A) written notification from each Rating
Agency to the effect that the modification, addition
to or elimination of such provisions will not
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cause such Rating Agency to downgrade its
then-current ratings of any Class of Certificates;
and
(B) an Opinion of Counsel, in form and
substance satisfactory to the Trust Administrator, to
the effect that such modification of, addition to or
elimination of such provisions will not cause any of
REMIC I, REMIC II or REMIC III to cease to qualify as
a REMIC and will not cause any of REMIC I, REMIC II
or REMIC III, as the case may be, to be subject to an
entity-level tax caused by the Transfer of any
Residual Certificate to a Person that is not a
Permitted Transferee or a Person other than the
prospective transferee to be subject to a REMIC-tax
caused by the Transfer of a Residual Certificate to a
Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trustee,
or the Trust Administrator on behalf of the Trustee shall execute, and the
Trustee or the Trust Administrator shall authenticate and deliver, in the name
of the designated Transferee or Transferees, one or more new Certificates of the
same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trust Administrator
maintained for such purpose pursuant to Section 8.11. Whenever any Certificates
are so surrendered for exchange the Trustee, or the Trust Administrator on
behalf of the Trustee shall execute, and the Trustee or the Trust Administrator
shall authenticate and deliver, the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trust
Administrator) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Trust Administrator duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trust Administrator may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trust Administrator in accordance with
its customary procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee and the Trust Administrator such
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security or indemnity as may be required by it to save it harmless, then, in the
absence of actual knowledge by the Trust Administrator or the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee, or the
Trust Administrator on behalf of the Trustee shall execute, and the Trustee or
the Trust Administrator shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trust
Administrator may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Trust
Administrator) connected therewith. Any replacement Certificate issued pursuant
to this Section shall constitute complete and indefeasible evidence of ownership
in the applicable REMIC created hereunder, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Master Servicer, the Trust Administrator,
the Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Master Servicer, the Trust
Administrator, the Trustee or any agent of any of them shall be affected by
notice to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Trust Administrator ten copies of any
private placement memorandum or other disclosure document used by the Depositor
in connection with the offer and sale of such Certificate. In addition, if any
such private placement memorandum or disclosure document is revised, amended or
supplemented at any time following the delivery thereof to the Trust
Administrator, the Depositor promptly shall inform the Trust Administrator of
such event and shall deliver to the Trust Administrator ten copies of the
private placement memorandum or disclosure document, as revised, amended or
supplemented. The Trust Administrator shall maintain at its Corporate Trust
Office and shall make available free of charge during normal business hours for
review by any Holder of a Certificate or any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, originals or copies
of the following items: (i) in the case of a Holder or prospective transferee of
a Class CE Certificate, Class P Certificate or Residual Certificate, the related
private placement memorandum or other disclosure document relating to such Class
of Certificates, in the form most recently provided to the Trust Administrator;
and (ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 11.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 10.01(h), (D) any and all Officers'
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Certificates delivered to the Trust Administrator by the Master Servicer since
the Closing Date to evidence the Master Servicer's determination that any P&I
Advance or Servicing Advance was, or if made, would be a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance, respectively, and (E) any and all
Officers' Certificates delivered to the Trust Administrator by the Master
Servicer since the Closing Date pursuant to Section 4.04(a). Copies and mailing
of any and all of the foregoing items will be available from the Trust
Administrator upon request at the expense of the Person requesting the same.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Liability of the Depositor and the
Master Servicer.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and
Master Servicer and undertaken hereunder by the Depositor
and the Master Servicer herein.
SECTION 6.02. Merger or Consolidation of the
Depositor or the Master Servicer.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Master Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation. The Depositor and the Master Servicer each will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agencies'
ratings of the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies).
SECTION 6.03. Limitation on Liability of the
Depositor, the Master Servicer and
Others.
None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific
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liability imposed on the Master Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
and held harmless by the Trust Fund against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense relating to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action unless such action is related to its respective duties under
this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor and the Master Servicer
may in its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, unless the Depositor or the Master Servicer acts without the consent of
Holders of Certificates entitled to at least 51% of the Voting Rights, the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor and the Master Servicer
shall be entitled to be reimbursed therefor from the Collection Account as and
to the extent provided in Section 3.11, any such right of reimbursement being
prior to the rights of the Certificateholders to receive any amount in the
Collection Account.
SECTION 6.04. Limitation on Resignation of the
Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Trust
Administrator. No resignation of the Master Servicer shall become effective
until the Trustee, the Trust Administrator or a successor servicer shall have
assumed the Master Servicer's responsibilities, duties, liabilities (other than
those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.
Except as expressly provided herein, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, or delegate to or subcontract with, or authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
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assignment shall not prohibit the Master Servicer from designating a Subservicer
as payee of any indemnification amount payable to the Master Servicer hereunder;
provided, however, that as provided in Section 3.06 hereof, no Subservicer shall
be a third-party beneficiary hereunder and the parties hereto shall not be
required to recognize any Subservicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor master servicer, the entire amount of the Servicing
Fee and other compensation payable to the Master Servicer pursuant hereto shall
thereafter be payable to such successor master servicer.
SECTION 6.05. Rights of the Depositor in Respect
of the Master Servicer.
The Master Servicer shall afford (and any Sub-Servicing
Agreement shall provide that each Sub-Servicer shall afford) the Depositor, the
Trustee and the Trust Administrator, upon reasonable notice, during normal
business hours, access to all records maintained by the Master Servicer (and any
such Sub-Servicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Sub-Servicer) responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Depositor, the Trustee and the Trust Administrator
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's capacity to perform its
obligations under this Agreement as it possesses (and that any such Sub-Servicer
possesses). To the extent such information is not otherwise available to the
public, the Depositor, the Trustee and the Trust Administrator shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee, the Trust Administrator or the Trust Fund, and in any
case, the Depositor, the Trustee or the Trust Administrator, as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information. The Depositor may, but is not obligated to,
enforce the obligations of the Master Servicer under this Agreement and may, but
is not obligated to, perform, or cause a designee to perform, any defaulted
obligation of the Master Servicer under this Agreement or exercise the rights of
the Master Servicer under this Agreement; provided that the Master Servicer
shall not be relieved of any of its obligations under this Agreement by virtue
of such performance by the Depositor or its designee. The Depositor shall not
have any responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Master Servicer Events of Default.
(a) "Master Servicer Event of Default," wherever used herein,
means any one of the following events:
(i) any failure by the Master Servicer to remit to the
Trust Administrator for distribution to the Certificateholders
any payment (other than a P&I Advance required to be made from
its own funds on any Master Servicer Remittance Date pursuant
to Section 4.03) required to be made under the terms of the
Certificates and this Agreement which continues unremedied for
a period of one Business Day after the date upon which written
notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Depositor,
the Trustee or the Trust Administrator (in which case notice
shall be provided by telecopy), or to the Master Servicer, the
Depositor, the Trustee and the Trust Administrator by the
Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) any failure on the part of the Master Servicer duly
to observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer
contained in this Agreement, or the breach by the Master
Servicer of any representation and warranty contained in
Section 2.05, which continues unremedied for a period of 30
days after the earlier of (i) the date on which written notice
of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor, the
Trustee, the Trust Administrator or to the Master Servicer,
the Depositor, the Trustee and the Trust Administrator by the
Holders of Certificates entitled to at least 25% of the Voting
Rights and (ii) actual knowledge of such failure by a
Servicing Officer of the Master Servicer; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in
an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of
its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iv) the Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of
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assets and liabilities or similar proceedings of or relating
to it or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its
obligations; or
(vi) any failure by the Master Servicer of the Master
Servicer Termination Test; or
(vii) any failure of the Master Servicer to make any
P&I Advance on any Master Servicer Remittance Date required to
be made from its own funds pursuant to Section 4.03 which
continues unremedied until 3:00 p.m. New York time on the
second Business Day immediately following the Master Servicer
Remittance Date.
If a Master Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor and the Trust Administrator
if given by the Trustee or to the Trustee and the Trust Administrator if given
by the Depositor), terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. If
a Master Servicer Event of Default described in clause (vii) hereof shall occur,
the Trustee shall, by notice in writing to the Master Servicer, the Trust
Administrator and the Depositor, terminate all of the rights and obligations of
the Master Servicer in its capacity as Master Servicer under this Agreement and
in and to the Mortgage Loans and the proceeds thereof. On or after the receipt
by the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Certificates
(other than as a Holder of any Certificate) or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trust Administrator pursuant to and under
this Section, and, without limitation, the Trust Administrator is hereby
authorized and empowered, as attorney-in-fact or otherwise, to execute and
deliver, on behalf of and at the expense of the Master Servicer, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise. The Master Servicer agrees promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trust Administrator with all documents and records requested by it
to enable it to assume the Master Servicer's functions under this Agreement, and
to cooperate with the Trust Administrator and the Trustee in effecting the
termination of the Master Servicer's responsibilities and rights under this
Agreement, including, without limitation, the transfer within one Business Day
to the Trust Administrator for administration by it of all cash amounts which at
the time shall be or should have been credited by the Master Servicer to the
Collection Account held by or on behalf of the Master Servicer, the Distribution
Account or any REO Account or Servicing Account
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held by or on behalf of the Master Servicer or thereafter be received with
respect to the Mortgage Loans or any REO Property serviced by the Master
Servicer (provided, however, that the Master Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination, whether in respect of P&I Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, each of the Trustee and
the Trust Administrator shall not be deemed to have knowledge of a Master
Servicer Event of Default unless a Responsible Officer of the Trustee or the
Trust Administrator, as applicable, assigned to and working in the Trustee's or
the Trust Administrator's, as the case may be, Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such a
Master Servicer Event of Default is received by the Trustee or the Trust
Administrator, as applicable, and such notice references the Certificates, the
Trust Fund or this Agreement.
SECTION 7.02. Trust Administrator or Trustee to
Act; Appointment of Successor.
(a) (1) On and after the time the Master Servicer receives a
notice of termination, the Trust Administrator (and in the event the Trust
Administrator fails in its obligation, the Trustee) shall be the successor in
all respects to the Master Servicer in its capacity as Master Servicer under
this Agreement and the transactions set forth or provided for herein, and all
the responsibilities, duties and liabilities relating thereto and arising
thereafter shall be assumed by the Trust Administrator or the Trustee, as
applicable, (except for any representations or warranties of the Master Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.03(c) and the obligation to deposit amounts in respect of losses
pursuant to Section 3.12) by the terms and provisions hereof including, without
limitation, the Master Servicer's obligations to make P&I Advances pursuant to
Section 4.03; provided, however, that if the Trust Administrator or the Trustee,
as applicable, is prohibited by law or regulation from obligating itself to make
advances regarding delinquent mortgage loans, then the Trust Administrator or
the Trustee, as applicable, shall not be obligated to make P&I Advances pursuant
to Section 4.03; and provided further, that any failure to perform such duties
or responsibilities caused by the Master Servicer's failure to provide
information required by Section 7.01 shall not be considered a default by the
Trust Administrator or the Trustee, as applicable, as successor to the Master
Servicer hereunder. As compensation therefor, the Trust Administrator or the
Trustee, as applicable, shall be entitled to the Servicing Fee and all funds
relating to the Mortgage Loans to which the Master Servicer would have been
entitled if it had continued to act hereunder. Notwithstanding the above and
subject to Section 7.02(a)(2) below, the Trust Administrator or the Trustee, as
applicable, may, if it shall be unwilling to so act, or shall, if it is unable
to so act or if it is prohibited by law from making advances regarding
delinquent mortgage loans or if the Holders of Certificates entitled to at least
51% of the Voting Rights so request in writing to the Trust Administrator or
Trustee, as applicable, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
acceptable to each Rating Agency and having a net worth of not less than
$15,000,000, as the successor to the Master Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer under this Agreement.
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(2) No appointment of a successor to the Master
Servicer under this Agreement shall be effective until the assumption by the
successor of all of the Master Servicer's responsibilities, duties and
liabilities hereunder. In connection with such appointment and assumption
described herein, the Trust Administrator or the Trustee, as applicable, may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Master Servicer as
such hereunder. The Depositor, the Trustee, the Trust Administrator and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the Master Servicer under this Agreement, the Trust Administrator or the
Trustee, as applicable, shall act in such capacity as hereinabove provided.
(b) If the Master Servicer fails to remit to the Trust
Administrator for distribution to the Certificateholders any payment required to
be made under the terms of this Agreement (for purposes of this Section 7.02(b),
a "Remittance") because the Master Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator shall (and
in the event the Trust Administrator fails in its obligation, the Trustee) upon
notice of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
the Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator or the deposit thereof in the Distribution Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from the Master
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Distribution Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trust Administrator shall give prompt
written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
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(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee or the Trust Administrator becomes aware of
the occurrence of such an event, the Trustee or the Trust Administrator shall
transmit (or, in the case of the Trustee, the Trustee shall cause the Trust
Administrator to transmit) by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Master Servicer Event of Default shall
have been cured or waived.
SECTION 7.04. Waiver of Master Servicer Events of
Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Master
Servicer Event of Default hereunder may waive such default or Master Servicer
Event of Default; provided, however, that a default or Master Servicer Event of
Default under clause (i) or (vii) of Section 7.01 may be waived only by all of
the Holders of the Regular Certificates. Upon any such waiver of a default or
Master Servicer Event of Default, such default or Master Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Master Servicer Event of Default or impair any right consequent
thereon except to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
SECTION 8.01. Duties of Trustee and Trust
Administrator.
Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Event of Default and after the curing of all
Master Servicer Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. During a Master Servicer Event of Default, each of the Trustee and
the Trust Administrator 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. Any permissive right of the Trustee or
the Trust Administrator enumerated in this Agreement shall not be construed as a
duty.
Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it, which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve
the Trustee or the Trust Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:
(i) Prior to the occurrence of a Master Servicer Event
of Default, and after the curing of all such Master Servicer
Events of Default which may have occurred, the duties and
obligations of each of the Trustee and the Trust Administrator
shall be determined solely by the express provisions of this
Agreement, neither the Trustee nor the Trust Administrator
shall be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this
Agreement against the Trustee or the Trust Administrator and,
in the absence of bad faith on the part of the Trustee or the
Trust Administrator, as applicable, the Trustee or the Trust
Administrator, as the case may be, may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee or the Trust Administrator, as the
case may be, that conform to the requirements of this
Agreement;
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(ii) Neither the Trustee nor the Trust Administrator
shall be personally liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of
it unless it shall be proved that it was negligent in
ascertaining the pertinent facts; and
(iii) Neither the Trustee nor the Trust Administrator
shall be personally liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates
entitled to at least 25% of the Voting Rights relating to the
time, method and place of conducting any proceeding for any
remedy available to it or exercising any trust or power
conferred upon it under this Agreement.
SECTION 8.02. Certain Matters Affecting the
Trustee and the Trust Administrator.
(a) Except as otherwise provided in Section 8.01:
(i) Each of the Trustee and the Trust Administrator may
request and rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) Each of the Trustee and the Trust Administrator may
consult with counsel and 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 Opinion of Counsel;
(iii) Neither the Trustee nor the Trust Administrator
shall be under any obligation to exercise any of the trusts or
powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee or the Trust Administrator, as applicable,
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee
or the Trust Administrator of the obligation, upon the
occurrence of a Master Servicer Event of Default (which has
not been cured or waived), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct
of such person's own affairs;
(iv) Neither the Trustee nor the Trust Administrator
shall be personally liable for any action taken, suffered or
omitted by it in good faith and believed by
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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 Master Servicer Event
of Default hereunder and after the curing of all Master
Servicer Events of Default which may have occurred, neither
the Trustee nor the Trust Administrator shall be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by the Holders of Certificates entitled to at least 25% of the
Voting Rights; provided, however, that if the payment within a
reasonable time to the Trustee or the Trust Administrator, as
applicable, of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Trustee or the Trust Administrator, as
applicable, not reasonably assured to the Trustee or the Trust
Administrator, as applicable, by such Certificateholders, the
Trustee or the Trust Administrator, as applicable, may require
reasonable indemnity against such expense, or liability from
such Certificateholders as a condition to taking any such
action;
(vi) Each of the Trustee and the Trust Administrator
may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents
or attorneys; and
(vii) Neither the Trustee nor the Trust Administrator
shall be personally liable for any loss resulting from the
investment of funds held in the Collection Account at the
direction of the Master Servicer pursuant to Section 3.12.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Neither Trustee nor Trust
Administrator Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.12) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.12) or of the
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Certificates (other than the signature of the Trustee, or the Trust
Administrator on behalf of the Trustee, and authentication of the Trustee or the
Trust Administrator on the Certificates) or of any Mortgage Loan or related
document. Neither the Trustee nor the Trust Administrator shall be accountable
for the use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer,
other than any funds held by or on behalf of the Trustee or the Trust
Administrator in accordance with Section 3.10.
SECTION 8.04. Trustee and Trust Administrator May
Own Certificates.
Each of the Trustee and the Trust Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee or Trust
Administrator, as applicable.
SECTION 8.05. Trustee's and Trust Administrator's
Fees and Expenses.
The Trust Administrator shall withdraw from the Distribution
Account on each Distribution Date and pay to itself the related portion of the
Administration Fee and pay to the Trustee the related portion of the
Administration Fee and, to the extent that the funds therein are at anytime
insufficient for such purpose, the Master Servicer shall pay such fees. Each of
the Trustee and the Trust Administrator and any director, officer, employee or
agent of the Trustee or the Trust Administrator, as applicable, shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense (not including expenses, disbursements and advances incurred or made by
the Trustee or the Trust Administrator, as applicable, including the
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of the Trustee's or Trust Administrator's, as the case may
be, performance in accordance with the provisions of this Agreement) incurred by
the Trustee or the Trust Administrator, as applicable, in connection with any
claim or legal action or any pending or threatened claim or legal action arising
out of or in connection with the acceptance or administration of its obligations
and duties under this Agreement, other than any loss, liability or expense (i)
resulting from any breach of the Master Servicer's (and in the case of the
Trustee, the Trust Administrator's or in the case of the Trust Administrator,
the Trustee's) obligations in connection with this Agreement, (ii) that
constitutes a specific liability of the Trustee or the Trust Administrator, as
applicable, pursuant to Section 10.01(g) or (iii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder or in the case of the Trust Administrator, as a
result of a breach of the Trust Administrator's obligations under Article X
hereof. The Master Servicer agrees to indemnify the Trustee and the Trust
Administrator, from, and hold each harmless against, any loss, liability or
expense arising in respect of any breach by the Master Servicer of its
obligations in connection with this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee or the Trust Administrator, as the case may be. Any payment hereunder
made by the Master Servicer to the Trustee or the Trust Administrator shall be
from the Master Servicer's own funds, without reimbursement from REMIC I
therefor.
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SECTION 8.06. Eligibility Requirements for Trustee
and Trust Administrator.
Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or an association (other than the Depositor,
the Originator, the Seller, the Master Servicer or, in the case of the Trustee,
any Affiliate of the foregoing) organized and doing business under the laws of
any state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee or the
Trust Administrator shall cease to be eligible in accordance with the provisions
of this Section, the Trustee or the Trust Administrator, as the case may be,
shall resign immediately in the manner and with the effect specified in Section
8.07.
SECTION 8.07. Resignation and Removal of the
Trustee and the Trust Administrator.
Either of the Trustee or the Trust Administrator may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Depositor, the Master Servicer, to the Certificateholders
and, if the Trustee is resigning, to the Trust Administrator, or, if the Trust
Administrator is resigning, to the Trustee. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee or trust
administrator (which may be the same Person in the event both the Trustee and
the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee or Trust
Administrator and to the successor trustee or trust administrator, as
applicable. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or Trust Administrator, as applicable, and the
Master Servicer by the Depositor. If no successor trustee or trust administrator
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee or Trust
Administrator, as applicable, may petition any court of competent jurisdiction
for the appointment of a successor trustee or trust administrator, as
applicable.
If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 and shall
fail to resign after written request therefor by the Depositor (or in the case
of the Trust Administrator, the Trustee), or if at any time the Trustee or the
Trust Administrator shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or the Trust Administrator or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor (or in the case of the Trust Administrator, the Trustee) may remove
the Trustee or the Trust Administrator, as applicable, and appoint a successor
trustee or trust
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administrator (which may be the same Person in the event both the Trustee and
the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or Trust
Administrator, as the case may be, so removed and to the successor trustee or
trust administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or the Trust Administrator, as applicable, and
the Master Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Trust Administrator and
appoint a successor trustee or trust administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee or the Trust Administrator, as the
case may be, so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Master Servicer by the Depositor. In addition, if the Trustee has knowledge that
the Trust Administrator has breached any of its duties under this Agreement, the
Trustee may remove the Trust Administrator in the same manner as provided in the
prior sentence. For purposes of this Section, the Trustee shall not be deemed to
have knowledge of a breach by the Trust Administrator of any of its duties
hereunder, unless a Responsible Officer of the Trustee, assigned to and working
in the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a breach is received by the
Trustee, and such notice references the Certificates, the Trust Fund or this
Agreement.
Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor trustee or trust administrator, as
the case may be, pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee or
trust administrator as provided in Section 8.08. Notwithstanding the foregoing,
in the event the Trust Administrator advises the Trustee that it is unable to
continue to perform its obligations pursuant to the terms of this Agreement
prior to the appointment of a successor, the Trustee shall be obligated to
perform such obligations until a new trust administrator is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trust Administrator's breach of its
obligations hereunder.
SECTION 8.08. Successor Trustee or Trust
Administrator.
Any successor trustee or trust administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Trustee or the Trust Administrator, as applicable, and its
predecessor trustee or trust administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee or trust administrator shall become effective and such
successor trustee or trust administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee or trust administrator herein. The predecessor trustee or trust
administrator shall deliver to the successor trustee or trust administrator all
Mortgage Files and related documents and statements
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to the extent held by it hereunder, as well as all moneys, held by it hereunder,
and the Depositor and the predecessor trustee or trust administrator shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
trustee or trust administrator all such rights, powers, duties and obligations.
No successor trustee or trust administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or trust administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor trustee or
trust administrator shall not result in a downgrading of any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.
Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession of such trustee or trust administrator hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or trust administrator, the successor
trustee or trust administrator shall cause such notice to be mailed at the
expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee
or Trust Administrator.
Any corporation or association into which either the Trustee
or the Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or
Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, such title to REMIC I, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.
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In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee, or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee or co-trustee.
SECTION 8.11. Appointment of Office or Agency.
The Trust Administrator will appoint an office or agency in
the City of St. Paul, Minnesota where the Certificates may be surrendered for
registration of transfer or exchange, and presented for final distribution, and
where notices and demands to or upon the Trust Administrator in respect of the
Certificates and this Agreement may be served.
SECTION 8.12. Representations and Warranties.
Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Master Servicer, the Depositor and the Trustee or
the Trust Administrator, as applicable, as
of the Closing Date, that:
(i) it is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States of America.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
will not violate its articles of
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association or bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of
its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this
Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it in accordance with the
terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in its good faith and reasonable judgment, is likely
to affect materially and adversely either the ability of it to perform
its obligations under this Agreement or its financial condition.
(vi) No litigation is pending or, to the best of its
knowledge, threatened against it, which would prohibit it from entering
into this Agreement or, in its good faith reasonable judgment, is
likely to materially and adversely affect either the ability of it to
perform its obligations under this Agreement or its financial
condition.
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ARTICLE IX
TERMINATION
SECTION 9.01 Termination Upon Repurchase or
Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Trustee and the Trust Administrator (other than the obligations of the Master
Servicer to the Trustee and the Trust Administrator pursuant to Section 8.05 and
of the Master Servicer to provide for and the Trust Administrator to make
payments in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests or the Classes of Certificates as hereinafter set forth) shall
terminate upon payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur of (i) the purchase by the Terminator (as defined below) of all Mortgage
Loans and each REO Property remaining in REMIC I and (ii) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in REMIC I; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof. Subject to Section 3.11 hereof, the purchase by the Terminator of all
Mortgage Loans and each REO Property remaining in REMIC I shall be at a price
(the "Termination Price") equal to the greater of (A) the aggregate Purchase
Price of all the Mortgage Loans included in REMIC I, plus the appraised value of
each REO Property, if any, included in REMIC I, such appraisal to be conducted
by an appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets of REMIC I (as determined by the Terminator and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 9.01).
(b) The Master Servicer shall have the right (the party
exercising such right, the "Terminator"), to purchase all of the Mortgage Loans
and each REO Property remaining in REMIC I pursuant to clause (i) of the
preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Terminator may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only if the aggregate Stated Principal Balance of the Mortgage Loans and
each REO Property remaining in the Trust Fund at the time of such election is
reduced to less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date. By acceptance of the Residual
Certificates, the Holder of the Residual Certificates agrees, in connection with
any termination hereunder, to assign and transfer any amounts in excess of par,
and to the extent received in respect of such termination, to pay any such
amounts to the Holders of the Class CE Certificates.
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(c) Notice of the liquidation of the REMIC I Regular Interests
shall be given promptly by the Trust Administrator by letter to
Certificateholders mailed (a) in the event such notice is given in connection
with the purchase of the Mortgage Loans and each REO Property by the Terminator,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of the REMIC I Regular Interests, the REMIC II Regular Interests and the
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trust Administrator therein designated, (ii)
the amount of any such final payment, (iii) that no interest shall accrue in
respect of the REMIC I Regular Interests, the REMIC II Regular Interests or the
Certificates from and after the Interest Accrual Period relating to the final
Distribution Date therefor and (iv) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trust
Administrator. In the event such notice is given in connection with the purchase
of all of the Mortgage Loans and each REO Property remaining in REMIC I by the
Terminator, the Terminator shall deliver to the Trust Administrator for deposit
in the Distribution Account not later than the last Business Day of the month
next preceding the month of the final distribution on the Certificates an amount
in immediately available funds equal to the above-described purchase price. The
Trust Administrator shall remit to the Master Servicer from such funds deposited
in the Distribution Account (i) any amounts which the Master Servicer would be
permitted to withdraw and retain from the Collection Account pursuant to Section
3.11 and (ii) any other amounts otherwise payable by the Trust Administrator to
the Master Servicer from amounts on deposit in the Distribution Account pursuant
to the terms of this Agreement, in each case prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trust Administrator by a Servicing Officer of the making of such final deposit,
the Trust Administrator shall promptly release to the Terminator the Mortgage
Files for the remaining Mortgage Loans, and the Trustee shall execute all
assignments, endorsements and other instruments necessary to effectuate such
transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trust Administrator shall
distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 9.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Trust Administrator shall mail a
second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trust
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
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contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Trust Administrator shall
pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trust Administrator as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 9.01. Any such amounts held in trust by the Trust
Administrator shall be held in an Eligible Account and the Trust Administrator
may direct any depository institution maintaining such account to invest the
funds in one or more Permitted Investments. All income and gain realized from
the investment of funds deposited in such accounts held in trust by the Trust
Administrator shall be for the benefit of the Trust Administrator; provided,
however, that the Trust Administrator shall deposit in such account the amount
of any loss of principal incurred in respect of any such Permitted Investment
made with funds in such accounts immediately upon the realization of such loss.
Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.
SECTION 9.02 Additional Termination Requirements.
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to REMIC
I's, REMIC II's and REMIC III's final Tax Return pursuant to
Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of
the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period and, at or
prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the
assets of REMIC I to the Terminator for cash; and
(iii) At the time of the making of the final payment on
the Certificates, the Trust Administrator shall distribute or
credit, or cause to be distributed or credited, to the Holders
of the Residual Certificates all cash on hand in the Trust
Fund (other than cash retained to meet claims), and the Trust
Fund shall terminate at that time.
(b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 9.01, at the expense
of the Trust Administrator without the right of reimbursement from
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the Trust Fund), the Trust Administrator shall prepare or cause to be prepared
the documentation required in connection with the adoption of a plan of
liquidation of each of REMIC I , REMIC II and REMIC III pursuant to this Section
9.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each of REMIC I, REMIC II and REMIC III, which authorization shall be
binding upon all successor Certificateholders.
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ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Each such election will be made by the Master Servicer on behalf of
the Trustee on Form 1066 or other appropriate federal tax or information return
or any appropriate state return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, the REMIC I Regular Interests shall be
designated as the Regular Interests in REMIC I and the Class R-I Certificates
shall be designated as the Residual Interests in REMIC I. The REMIC II Regular
Interests shall be designated as the Regular Interests in REMIC II and the Class
R-II Certificates shall be designated as the Residual Interests in REMIC II. The
Class A Certificates, the Mezzanine Certificates, the Class CE Certificates and
the Class P Certificates shall be designated as the Regular Interests in REMIC
III and the Class R-III Certificates shall be designated as the Residual
Interests in REMIC III. Neither the Trustee nor the Trust Administrator shall
permit the creation of any "interests" in REMIC I, REMIC II or REMIC III (within
the meaning of Section 860G of the Code) other than the REMIC I Regular
Interests, the REMIC II Regular Interests and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code.
(c) The Master Servicer shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the Trust Fund (including, but not limited to, any professional fees or
any administrative or judicial proceedings with respect to any REMIC I, REMIC II
or REMIC III that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Master Servicer, as agent for all of
REMIC I's, REMIC II's and REMIC III's tax matters person shall (i) act on behalf
of the Trust Fund in relation to any tax matter or controversy involving any of
REMIC I, REMIC II or REMIC III and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The holder of the largest
Percentage Interest of each Class of Residual Certificates shall be designated,
in the manner provided under Treasury regulations section 1.860F-4(d) and
Treasury regulations section 301.6231(a)(7)-1, as the tax matters person of the
related REMIC created hereunder. By their acceptance thereof, the holder of the
largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Master Servicer or an Affiliate as its agent to perform
all of the duties of the tax matters person for the Trust Fund.
(d) The Master Servicer shall prepare and the Trustee shall
sign and the Trust Administrator shall file all of the Tax Returns in respect of
each REMIC created hereunder. The
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expenses of preparing and filing such returns shall be borne by the Master
Servicer without any right of reimbursement therefor.
(e) The Master Servicer shall perform on behalf of each of
REMIC I, REMIC II and REMIC III all reporting and other tax compliance duties
that are the responsibility of such REMIC under the Code, the REMIC Provisions
or other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority. Among its other duties, as required by the Code, the
REMIC Provisions or other such compliance guidance, the Master Servicer shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of REMIC I,
REMIC II and REMIC III. The Depositor shall provide or cause to be provided to
the Master Servicer, within ten (10) days after the Closing Date, all
information or data that the Master Servicer reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Master Servicer, the Trustee and the Trust
Administrator shall take such action and shall cause each REMIC created
hereunder to take such action as shall be necessary to create or maintain the
status thereof as a REMIC under the REMIC Provisions. The Master Servicer, the
Trustee and the Trust Administrator shall not take any action, cause the Trust
Fund to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of REMIC I, REMIC II or REMIC III as a REMIC
or (ii) result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Trust Administrator have received an Opinion of Counsel, addressed to
the Trustee and the Trust Administrator (at the expense of the party seeking to
take such action but in no event at the expense of the Trust Administrator or
the Trustee) to the effect that the contemplated action will not, with respect
to any of REMIC I, REMIC II or REMIC III, endanger such status or result in the
imposition of such a tax, nor shall the Master Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee or the
Trust Administrator has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action; provided that the Master Servicer may conclusively rely on such
Opinion of Counsel and shall incur no liability for its action or failure to act
in accordance with such Opinion of Counsel. In addition, prior to taking any
action with respect to any of REMIC I, REMIC II or REMIC III or the respective
assets of each, or causing REMIC I, REMIC II or REMIC III to take any action,
which is not contemplated under the terms of this Agreement, the Master Servicer
will consult with the Trustee and the Trust Administrator or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with
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respect to REMIC I, REMIC II or REMIC III, and the Master Servicer shall not
take any such action or cause REMIC I, REMIC II or REMIC III to take any such
action as to which the Trustee or the Trust Administrator has advised it in
writing that an Adverse REMIC Event could occur; provided that the Master
Servicer may conclusively rely on such writing and shall incur no liability for
its action or failure to act in accordance with such writing. The Trust
Administrator and the Trustee may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement, but in no event shall such cost be an
expense of the Trustee or the Trust Administrator, as applicable. At all times
as may be required by the Code, the Trust Administrator, the Trustee or the
Master Servicer will ensure that substantially all of the assets of both REMIC I
and REMIC II will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code, to the extent such obligations are within such party's
control and not otherwise inconsistent with the terms of this Agreement.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trust Administrator pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article X, (ii) to the
Trustee pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article X,
(iii) to the Master Servicer pursuant to Section 10.03 hereof, if such tax
arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article X, or (iv) against amounts on
deposit in the Distribution Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 2000, the Master Servicer shall deliver to each Rating Agency an
Officer's Certificate of the Master Servicer stating the Master Servicer's
compliance with this Article X.
(i) The Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to each of REMIC I, REMIC II
and REMIC III on a calendar year and on an accrual basis.
(j) Following the Startup Day, the Master Servicer, the
Trustee and the Trust Administrator shall not accept any contributions of assets
to any of REMIC I, REMIC II or REMIC III other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause the related REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject such REMIC to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
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(k) None of the Trustee, the Trust Administrator or the Master
Servicer shall enter into any arrangement by which REMIC I, REMIC II or REMIC
III will receive a fee or other compensation for services nor permit either
REMIC to receive any income from assets other than "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
SECTION 10.02. Prohibited Transactions and
Activities.
None of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, (iii) the termination of REMIC I pursuant to Article IX of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire
any assets for any of REMIC I, REMIC II or REMIC III (other than REO Property
acquired in respect of a defaulted Mortgage Loan), nor sell or dispose of any
investments in the Collection Account or the Distribution Account for gain, nor
accept any contributions to any of REMIC I, REMIC II or REMIC III after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it has received an Opinion of Counsel,
addressed to the Trustee and the Trust Administrator (at the expense of the
party seeking to cause such sale, disposition, substitution, acquisition or
contribution but in no event at the expense of the Trustee or the Trust
Administrator) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of any of REMIC I, REMIC
II or REMIC III as a REMIC or (b) cause any of REMIC I, REMIC II or REMIC III to
be subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions.
SECTION 10.03. Master Servicer, Trustee and Trust
Administrator Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer and the Trust Administrator for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trust
Administrator, as a result of a breach of the Trustee's covenants set forth in
this Article X.
(b) The Trust Administrator agrees to indemnify the Trust
Fund, the Depositor, the Master Servicer and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trustee,
as a result of a breach of the Trust Administrator's covenants set forth in this
Article X.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the Trustee and the Trust Administrator for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trustee or the Trust
Administrator, as a result of a breach of the Master Servicer's covenants set
forth in Article III or this Article X.
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<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Trustee and the Trust Administrator without
the consent of any of the Certificateholders, (i) to cure any ambiguity or
defect, (ii) to correct, modify or supplement any provisions herein (including
to give effect to the expectations of Certificateholders), or (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee and the Trust Administrator, adversely affect in any
material respect the interests of any Certificateholder. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement,
neither the Trustee nor the Trust Administrator shall consent to any amendment
to this Agreement unless it shall have first received an Opinion of Counsel to
the effect that such amendment will not result in the imposition of any tax on
any of REMIC I, REMIC II or REMIC III pursuant to the REMIC Provisions or cause
any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time
that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trust
Administrator shall furnish a copy of such amendment to each Certificateholder.
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<PAGE>
It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee or the Trust Administrator
may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee or
Trust Administrator.
Each of the Trustee and the Trust Administrator may, but shall
not be obligated to enter into any amendment pursuant to this Section that
affects its rights, duties and immunities
under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement;
Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Trustee or the Trust Administrator accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of
Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any 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.
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<PAGE>
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights 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 15 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 is
understood and intended, and 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 whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the 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 and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, 390 Greenwich Street, 4th Floor, New York, New York
10013, Attention: Mortgage Finance Group (telecopy number (212) 723-8604), or
such other address or telecopy number as may hereafter be furnished to the
Master Servicer, the Trustee and the Trust Administrator in writing by the
Depositor, (b) in the case of the Master Servicer, 18400 Von Karman, Suite 1000,
Irvine, California 92612 (telecopy number: (949) 225-7878), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Trust Administrator and the Depositor in writing by the Master Servicer, (c) in
the case of the Trust Administrator, 180 East Fifth Street, St. Paul, Minnesota,
55101, Attention: Structured Finance/New Century 1999-NC1 (telecopy number (612)
244-0089), or such other address or telecopy number as may hereafter be
furnished to the Master Servicer, the Depositor and the Trustee in writing by
the Trust Administrator and (d) in the case of the Trustee, 1555 North
RiverCenter Drive, Suite 301, Milwaukee, Wisconsin 53212, Attention: Charles
Pedersen (telecopy number (414) 905-5049), or such other address or telecopy
number as may hereafter be furnished to the Master Servicer, the Trust
Administrator and the Depositor in writing by the Trustee. Any notice required
or permitted to be given to a Certificateholder shall be given by first
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<PAGE>
class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder also shall be mailed to the appropriate
party in the manner set forth above.
SECTION 11.06. 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. Notice to Rating Agencies.
The Trust Administrator shall use its best efforts promptly to
provide notice to the Rating Agencies with respect to each of the following of
which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Master Servicer Event of
Default that has not been cured or waived;
3. The resignation or termination of the Master
Servicer, the Trustee or the Trust Administrator;
4. The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Collection Account
or the Distribution Account;
7. Any event that would result in the inability of the
Trust Administrator or the Trustee, as applicable, to
make advances regarding delinquent Mortgage Loans;
and
8. The filing of any claim under any Master Servicer's
blanket bond and errors and omissions insurance
policy required by Section 3.14 or the cancellation
or material modification of coverage under any such
instrument.
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<PAGE>
In addition, the Trust Administrator shall promptly furnish to
each Rating Agency copies of each report to Certificateholders described in
Section 4.02 and the Master Servicer shall promptly furnish to each Rating
Agency copies of the following:
1. Each annual statement as to compliance described in
Section 3.20; and
2. Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Duff & Phelps Credit Rating Company, 17 State Street, New York, New York
10004 and to Standard & Poor's, a division of the McGraw-Hill Companies, Inc.,
25 Broadway, New York, New York 10004, or such other addresses as the Rating
Agencies may designate in writing to the parties hereto.
SECTION 11.08. Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
SECTION 11.09. Grant of Security Interest.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
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<PAGE>
Trustee for the purpose of perfecting such security interest under applicable
law. Accordingly, the Depositor hereby grants to the Trustee a security interest
in the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.
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<PAGE>
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Trust Administrator and the Trustee have caused their names to be signed hereto
by their respective officers thereunto duly authorized, in each case as of the
day and year first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.,
as Depositor
By: /s/ Vincent J. Varca
--------------------------------
Name: Vincent J. Varca
Title: Assistant Vice President
NEW CENTURY MORTGAGE CORPORATION
as Master Servicer
By: /s/ John Kontoulis
--------------------------------
Name: John Kontoulis
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By: /s/ Eve D. Kaplan
--------------------------------
Name: Eve D. Kaplan
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
as Trustee
By: /s/ Charles F. Pederson
--------------------------------
Name: Charles F. Pederson
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of March 1999, before me, a notary public in
and for said State, personally appeared Vincent J. Varca, known to me to be an
Assistant Vice President of Salomon Brothers Mortgage Securities VII, Inc., one
of the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 25th day of March 1999, before me, a notary public in
and for said State, personally appeared John Kontoulis, known to me to be Vice
President of New Century Mortgage Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF RAMSEY )
On the 25th day of March 1999, before me, a notary public in
and for said State, personally appeared Eve D. Kaplan, known to me to be a Vice
President of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF WISCONSIN )
) ss.:
COUNTY OF __________ )
On the 25th day of March 1999, before me, a notary public in
and for said State, personally appeared Charles F. Pederson, known to me to be
an Assistant Vice President of Firstar Bank Milwaukee, N.A., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A-1
-----------
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
Series 1999-NC1, Class A-1
Pass-Through Rate: Variable
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Certificate Principal Balance of the Class A-1 Certificates as of the
Issue Date: $211,168,000.00
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
CUSIP: 79548K L7 1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-1 Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-1 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A-1 Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trust Administrator of the
<PAGE>
-3-
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trust Administrator for
that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus 0.39%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus 0.78% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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
<PAGE>
-4-
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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 of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator or the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-2
-----------
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
Series 1999-NC1, Class A-2
Pass-Through Rate: 6.9090% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Certificate Principal Balance of the Class A-2 Certificates as of the
Issue Date: $54,433,000.00
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
CUSIP: 79548K L8 9
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-2
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-2 Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-2 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A-2 Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register.
<PAGE>
-3-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-4-
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator or the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-3
-----------
FORM OF CLASS M-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES
TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH
THE PROCEDURES DESCRIBED HEREIN.
Series 1999-NC1, Class M-1
Pass-Through Rate: 6.75% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Certificate Principal Balance of the Class M-1 Certificates as of the
Issue Date: $19,368,000.00
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
CUSIP: 79548K L9 7
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class M-1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class M-1 Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-1 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class M-1 Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register.
<PAGE>
-3-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-4-
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator or the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-4
-----------
FORM OF CLASS M-2 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES
OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF
THIS CERTIFICATE IS MARCH 25, 1999. BASED ON THE OID
REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT
100% OF THE PREPAYMENT VECTOR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT UNDER WHICH THIS CERTIFICATE WAS ISSUED), USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $28.44 OF OID PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY
IS 7.28% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $0.27 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT
METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES
AND THE CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE SHALL BE MADE EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
<PAGE>
Series 1999-NC1, Class M-2
Pass-Through Rate: 6.75% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Certificate Principal Balance of the Class M-2 Certificates as of the
Issue Date: $14,288,000.00
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
CUSIP: 79548K M2 1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class M-2
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class M-2 Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-2 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class M-2 Certificates, or
otherwise by check mailed by first class mail to the address of the
<PAGE>
-3-
Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trust Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trust Administrator for
that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-4-
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator or the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-5
-----------
FORM OF CLASS M-3 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES
OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF
THIS CERTIFICATE IS MARCH 25, 1999. BASED ON THE OID
REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT
100% OF THE PREPAYMENT VECTOR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT UNDER WHICH THIS CERTIFICATE WAS ISSUED), USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $97.23 OF OID PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY
IS 8.68% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $0.91 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT
METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A
CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS
M-2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE SHALL BE MADE EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
<PAGE>
Series 1999-NC1, Class M-3
Pass-Through Rate: 6.75% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Certificate Principal Balance of the Class M-3 Certificates as of the
Issue Date: $8,732,000.00
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
CUSIP: 79548K M3 9
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
-1-
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class M-3
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class M-3 Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-3 Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class M-3 Certificates, or
otherwise by check mailed by first class mail to the address of the
<PAGE>
-3-
Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trust Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trust Administrator for
that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-4-
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator or the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-6
-----------
FORM OF CLASS CE CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES
OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF
THIS CERTIFICATE IS MARCH 25, 1999. BASED ON THE OID
REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT
100% OF THE PREPAYMENT VECTOR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT UNDER WHICH THIS CERTIFICATE WAS ISSUED), USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $________ OF OID PER
$100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
_____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $______ PER $100,000 OF
INITIAL NOTIONAL AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT
A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,
THE CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND
THE CLASS M-3 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
<PAGE>
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Series 1999-NC1, Class CE
Pass-Through Rate: Variable
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Notional Amount of the Class CE Certificates as of the Issue Date:
$317,514,824.99
Notional Amount: $_________________
Aggregate Certificate Principal Balance of the Class CE Certificates as of the
Issue Date: $9,525,824.99
Denomination: $_____________
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
-4-
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
CE Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
<PAGE>
-4-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the Trust
Administrator 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 evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
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 evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-5-
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee or the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect
<PAGE>
-6-
thereto) of the last Mortgage Loan remaining in REMIC I and (ii) the purchase by
the party designated in the Agreement at a price determined as provided in the
Agreement from REMIC I of all the Mortgage Loans and all property acquired in
respect of such Mortgage Loans. The Agreement permits, but does not require, the
party designated in the Agreement to purchase from REMIC I all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will effect
early retirement of the Certificates; however, such right to purchase is subject
to the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 10% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trustee or the Trust Administrator, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
-7-
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-7
-----------
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES
OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF
THIS CERTIFICATE IS MARCH 25, 1999. BASED ON THE OID
REGULATIONS AND ASSUMING THAT THE MORTGAGE LOANS PREPAY AT
100% OF THE PREPAYMENT VECTOR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT UNDER WHICH THIS CERTIFICATE WAS ISSUED), USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE
HAS BEEN ISSUED WITH NO MORE THAN $_____ OF OID PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY
IS _____% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $_____ PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT
METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
<PAGE>
Series 1999-NC1, Class P
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___ Aggregate Certificate Principal Balance of the Class P Certificates as
of the Issue Date: $100.00
Denomination: $100.00
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank National Association
Issue Date: March 25, 1999
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
<PAGE>
-3-
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ___________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trustee and the Trust Administrator, a summary of certain
of the pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
P Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class P Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the
<PAGE>
-4-
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trust Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trust Administrator for
that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trustee 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 evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are
<PAGE>
-5-
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, or the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee,
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee nor the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust
<PAGE>
-6-
Administrator on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
-7-
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-8
-----------
FORM OF CLASS R-I CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED
STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN
OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (1), (2) OR (3)
<PAGE>
-2-
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION
AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE
SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER
OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
Series 1999-NC1, Class R-I
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Percentage Interest of the Class R-I Certificates as of the Issue
Date: 100.00%
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank Milwaukee, N.A.
Issue Date: March 25, 1999
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-I Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-I Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-I Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-I Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-I Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register.
<PAGE>
-4-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
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 evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-5-
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.
<PAGE>
-6-
The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trustee or the Trust Administrator, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-9
-----------
FORM OF CLASS R-II CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-
UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (1), (2) OR (3)
<PAGE>
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION
AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE
SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER
OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
Series 1999-NC1, Class R-II
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Percentage Interest of the Class R-II Certificates as of the Issue
Date: 100.00%
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank Milwaukee, N.A.
Issue Date: March 25, 1999
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-II Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-II Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-II Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-II Certificates the aggregate initial Certificate Principal Balance of which
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-II Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register.
<PAGE>
-4-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
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 evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-5-
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-II Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-II Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
<PAGE>
-6-
The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trustee or the Trust Administrator, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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 A-10
------------
FORM OF CLASS R-III CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-
UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
511 OF THE CODE, (3) ANY ORGANIZATION
<PAGE>
DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION
AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE
SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER
OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
Series 1999-NC1, Class R-III
Date of Pooling and Servicing Agreement and Cut-off Date: March 1, 1999
First Distribution Date: April 26, 1999
No. ___
Aggregate Percentage Interest of the Class R-III Certificates as of the Issue
Date: 100.00%
Master Servicer: New Century Mortgage Corporation
Trustee: Firstar Bank Milwaukee, N.A.
Trust Administrator: U.S. Bank Milwaukee, N.A.
Issue Date: March 25, 1999
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed-rate
first lien and second lien mortgage loans (the "Mortgage Loans") formed and sold
by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
THE MASTER SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R-III Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R-III Certificates in REMIC I created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trustee and the Trust Administrator, a summary of certain of the
pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-III Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator on behalf
of the Trustee by wire transfer in immediately available funds to the account of
the Person entitled thereto if such Person shall have so notified the Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R-III Certificates the aggregate initial Certificate Principal Balance of which
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class R-III Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register.
<PAGE>
-4-
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor 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 upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
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 evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
<PAGE>
-5-
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-III Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-III Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
<PAGE>
-6-
The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator on behalf of the Trustee and required to
be paid to them pursuant to the Agreement following the earlier of (i) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in REMIC I and (ii) the purchase by the party designated
in the Agreement at a price determined as provided in the Agreement from REMIC I
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Trustee or the Trust Administrator, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: March __, 1999
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-III Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Trust Administrator
By:_________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
--------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Mortgage
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or Trust Administrator to
issue a new Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Certificate to the following address: __________
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<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
---------
[Reserved]
<PAGE>
EXHIBIT C-1
-----------
FORM OF TRUST ADMINISTRATOR'S INITIAL CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, New York 10013
[Master Servicer]
- -------------------------
- ---------------------------
Re: Pooling and Servicing Agreement, dated as of March 1, 1999,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation, Firstar Bank Milwaukee, N.A.
and U.S. Bank National Association,
Mortgage Pass-Through Certificates, Series 1999-NC1
--------------------------------------------------------------
Ladies and Gentlemen:
Attached is the Trust Administrator's preliminary exceptions in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Pooling
and Servicing Agreement.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan, or (iii) whether any Mortgage File included any of the documents
specified in clause (v) of Section 2.01 of the Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT C-2
-----------
FORM OF TRUST ADMINISTRATOR'S FINAL CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, New York 10013
[Master Servicer]
________________________
________________________
Re: Pooling and Servicing Agreement, dated as of March 1, 1999,
among Salomon Brothers Mortgage Securities VII, Inc.,
New Century Mortgage Corporation, Firstar Bank Milwaukee, N.A.
and U.S. Bank National Association,
Mortgage Pass-Through Certificates, Series 1999-NC1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:
(i) the original recorded Mortgage, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, or a certified copy thereof in those instances where the
public recording office retains the original or where the original has
been lost; and
(ii) an original recorded Assignment of the Mortgage to the Trust
Administrator together with the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment from
the originator, or a certified copy of such Assignments in those
instances where the public recording retains the original or where
original has been lost;
(iii) the original lender's title insurance policy; and
(iv) the original Primary Insurance Policy for each Mortgage Loan
indicated on the Mortgage Loan Schedule as having a Loan-to-Value Ratio
at origination in excess of 80%.
<PAGE>
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
the Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT D
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
<PAGE>
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (this "Agreement"),
dated March 24, 1999, among NC Capital Corporation, a California corporation
(the "Seller"), Salomon Brothers Mortgage Securities VII, Inc., a Delaware
corporation (the "Purchaser") and New Century Mortgage Corporation, a California
corporation (the "Originator").
PRELIMINARY STATEMENT
The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Purchaser intends to deposit the Mortgage Loans
into a mortgage pool comprising the Trust Fund. The Trust Fund will be evidenced
by a single series of mortgage pass-through certificates designated as Series
1999-NC1 (the "Certificates"). The Certificates will consist of ten classes of
certificates. The Class CE Certificates, the Class P Certificates, the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "NC Residual Certificates") will be delivered to NC Residual
II Corporation ("NC Residual") a wholly- owned bankruptcy remote entity of the
Seller as partial consideration for the Mortgage Loans as further described
below. The Certificates will be issued pursuant to a Pooling and Servicing
Agreement for Series 1999-NC1, dated as of March 1, 1999 (the "Pooling and
Servicing Agreement"), among the Depositor as depositor, the Originator as
master servicer (in such capacity, the "Master Servicer"), Firstar Bank
Milwaukee, N.A. as trustee (the "Trustee") and U.S. Bank National Association as
trust administrator (the "Trust Administrator"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell,
and the Purchaser agrees to purchase, on or before March 25, 1999 (the "Closing
Date"), certain conventional, one- to four-family, residential mortgage loans
(the "Mortgage Loans"), having an aggregate principal balance as of the close of
business on March 1, 1999, (the "Cut-off Date") of approximately $317,514,925
(the "Closing Balance"), after giving effect to all payments due on the Mortgage
Loans on or before the Cut-off Date, whether or not received including the right
to any Prepayment Charges payable by the related Mortgagors in connection with
any Principal Prepayments on the Mortgage Loans. Except with respect to two
adjustable rate Mortgage Loans (the "Adjustable Mortgage Loans"), all of the
Mortgage Loans are fixed-rate.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare or cause to be prepared on or prior to the Closing Date a final schedule
(the "Closing Schedule") that shall describe such Mortgage Loans and set forth
all of the Mortgage Loans to be purchased under this Agreement, including the
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing
<PAGE>
-2-
Agreement. The Closing Schedule shall be used as the Mortgage Loan Schedule
under the Pooling and Servicing Agreement.
SECTION 3. CONSIDERATION.
(a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, (i) pay to or upon
the order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to the net sale proceeds of the Class A-1 Certificates, Class A-2
Certificates, the Class M-1 Certificates, the Class M-2 Certificates, and the
Class M-3 Certificates and (ii) will have delivered to NC Residual upon the
order of the Seller the NC Residual Certificates.
(b) The Purchaser or any assignee, transferee or designee of
the Purchaser shall be entitled to all scheduled payments of principal due after
the Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the Certificateholders.
SECTION 4. TRANSFER OF THE MORTGAGE LOANS.
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans, including the related Prepayment Charges. The
contents of each Mortgage File not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date are and shall be held in trust by the Seller for the benefit of the
Purchaser or any assignee, transferee or designee of the Purchaser. Upon the
sale of the Mortgage Loans, the ownership of each Mortgage Note, the related
Mortgage and the other contents of the related Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or that come into the possession of the Seller
on or after the Closing Date shall immediately vest in the Purchaser and shall
be delivered immediately to the Purchaser or as otherwise directed by the
Purchaser.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on
or prior to the Closing Date, deliver or cause to be delivered to the Purchaser
or any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in the
following form: "Pay to the order of Firstar Bank Milwaukee, N.A., as Trustee
under the applicable agreement, without
<PAGE>
-3-
recourse," with all prior and intervening endorsements showing a complete chain
of endorsement from the originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording
thereon;
(iii) an original Assignment of Mortgage executed in
the following form: "Firstar Bank Milwaukee, N.A. as Trustee under the
applicable agreement";
(iv) the original recorded Assignment or Assignments
of the Mortgage showing a complete chain of assignment from the originator to
the Person assigning the Mortgage to the Trustee as contemplated by the
immediately preceding clause (iii);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy,
together with all endorsements or riders that were issued with or subsequent to
the issuance of such policy, insuring the priority of the Mortgage as a first
lien or second lien on the Mortgaged Property represented therein as a fee
interest vested in the Mortgagor.
The Seller promptly shall (within sixty Business Days
following the later of the Closing Date and the date of the receipt by the
Seller of the recording information for a Mortgage but in no event later than
ninety days following the Closing Date) submit or cause to be submitted for
recording, at no expense to the Purchaser (or the Trust Fund, the Trustee or the
Trust Administrator under the Pooling and Servicing Agreement), in the
appropriate public office for real property records, each Assignment referred to
in clauses (b)(iii) and (b)(iv) of this Section 4. In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller promptly shall prepare a substitute Assignment or cure such defect, as
the case may be, and thereafter cause each such Assignment to be duly recorded.
Notwithstanding anything to the contrary contained in this
Section 4, with respect to a maximum of approximately 1.0% of the Mortgage
Loans, by aggregate principal balance of the Mortgage Loans, if any original
Mortgage Note referred to in Section 4(b)(i) above cannot be located, the
obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon delivery to the Purchaser or any assignee, transferee or designee
of the Purchaser of a photocopy of such Mortgage Note, if available, with a lost
note affidavit substantially in the form of Exhibit 7 attached hereto. If any of
the original Mortgage Notes for which a lost note affidavit was delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser within three
Business Days; and if any document referred to in Section 4(b)(ii) or 4(b)(iv)
above has been submitted for recording but either (x) has not been returned from
the applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations of
the Seller hereunder shall be deemed to have been satisfied upon delivery to the
Purchaser or any assignee, transferee
<PAGE>
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or designee of the Purchaser promptly upon receipt thereof by or on behalf of
the Seller of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original.
In the event that the original lender's title insurance policy
has not yet been issued, the Seller shall deliver to the Purchaser or any
assignee, transferee or designee of the Purchaser a written commitment or
interim binder or preliminary report of title issued by the title insurance or
escrow company. The Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser promptly upon receipt by the Seller of
any such original title insurance policy.
Each original document relating to a Mortgage Loan which is
not delivered to the Purchaser or its assignee, transferee or designee, if held
by the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.
(c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered
pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or any
assignee, transferee or designee of the Purchaser at any time before or after
the Closing Date (and with respect to each document permitted to be delivered
after the Closing Date, within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller, and the assignee shall succeed to
the rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser or the Trustee in connection with
enforcing any obligations of the Seller under this Agreement will be promptly
reimbursed by the Seller.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date,
the Seller shall either (i) deliver in escrow to the Purchaser or to any
assignee, transferee or designee of the Purchaser for examination the Mortgage
File pertaining to each Mortgage Loan, or (ii) make such Mortgage Files
available to the Purchaser or to any assignee, transferee or designee of the
Purchaser for examination. Such examination may be made by the Purchaser, the
Trustee or the Trust Administrator, and their respective designees, upon
reasonable notice to the Seller during normal business hours before the Closing
Date and within 60 days after the Closing Date. If any such person makes such
examination prior to the Closing Date and identifies any Mortgage Loans that do
not conform to the requirements of the Purchaser as described in this Agreement,
such Mortgage Loans shall be deleted from the Closing Schedule. The Purchaser
may, at its option and without notice to the Seller, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination. The fact
that the Purchaser or any person has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect the
rights of the Purchaser or any assignee, transferee or designee of the Purchaser
to demand repurchase or other relief as provided herein or under the Pooling and
Servicing Agreement.
<PAGE>
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SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER.
(a) The Seller hereby represents and warrants to the
Originator and the Purchaser, as of the date hereof and as of the Closing Date,
and covenants, that:
(i) The Seller is duly organized, validly existing
and in good standing as a corporation under the laws of the State of California
with full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Seller had the full corporate power and authority to
own the Mortgage Loans and to transfer and convey the Mortgage Loans to the
Purchaser and has the full corporate power and authority to execute and deliver,
engage in the transactions contemplated by, and perform and observe the terms
and conditions of this Agreement.
(ii) The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Originator and the Purchaser, constitutes a legal, valid and
binding obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity.
(iii) The execution, delivery and performance of this
Agreement by the Seller (x) does not conflict and will not conflict with, does
not breach and will not result in a breach of and does not constitute and will
not constitute a default (or an event, which with notice or lapse of time or
both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Seller, (B) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or by which the Seller or any of its property is bound, or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Seller or any of its
property and (y) does not create or impose and will not result in the creation
or imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Seller of, or compliance by the Seller with, this Agreement or the consummation
by the Seller of any other transaction contemplated hereby and by the Pooling
and Servicing Agreement; provided, however, that the Seller makes no
representation or warranty regarding federal or state securities laws in
connection with the sale or distribution of the Certificates.
(v) This Agreement does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained herein not misleading. The written statements, reports
and other documents prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the
<PAGE>
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transactions contemplated hereby taken in the aggregate do not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements contained therein not misleading.
(vi) The Seller is not in violation of, and the
execution and delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Seller or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Seller or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.
(vii) The Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement.
(viii) Immediately prior to the sale of the Mortgage
Loans to the Purchaser as herein contemplated, the Seller was the owner of the
related Mortgage and the indebtedness evidenced by the related Mortgage Note,
and, upon the payment to the Seller of the Purchase Price, in the event that the
Seller retains or has retained record title, the Seller shall retain such record
title to each Mortgage, each related Mortgage Note and the related Mortgage
Files with respect thereto in trust for the Purchaser as the owner thereof from
and after the date hereof.
(ix) There are no actions or proceedings against, or
investigations known to it of, the Seller before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Seller or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or validity or enforceability of, this Agreement.
(x) The consummation of the transactions contemplated
by this Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or any similar statutory
provisions.
(xi) [intentionally omitted]
(xii) The Seller has not dealt with any broker,
investment banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Seller's ownership of the Mortgage Loans may be entitled to a fee
to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).
<PAGE>
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(xiii) There is no litigation currently pending or,
to the best of the Seller's knowledge without independent investigation,
threatened against the Seller that would reasonably be expected to adversely
affect the transfer of the Mortgage Loans, the issuance of the Certificates or
the execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition of the
Seller.
(b) The Originator hereby represents and warrants to the
Seller and the Purchaser, as of the date hereof and as of the Closing Date, and
covenants, that:
(i) The Originator is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
California with full corporate power and authority to conduct its business as
presently conducted by it to the extent material to the consummation of the
transactions contemplated herein. The Originator had the full corporate power
and authority to own the Mortgage Loans and to transfer and convey the Mortgage
Loans to the Seller and has the full corporate power and authority to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of this Agreement.
(ii) The Originator has duly authorized the
execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller and the Purchaser, constitutes a legal,
valid and binding obligation of the Originator, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization or by general principles of equity.
(iii) The execution, delivery and performance of this
Agreement by the Originator (x) does not conflict and will not conflict with,
does not breach and will not result in a breach of and does not constitute and
will not constitute a default (or an event, which with notice or lapse of time
or both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Originator, (B) any term or
provision of any material agreement, contract, instrument or indenture, to which
the Originator is a party or by which the Originator or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Originator or any of its property and (y) does not create or impose and will not
result in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates.
<PAGE>
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(v) In this Agreement the Originator has not made any
untrue statement of material fact or omit to state a material fact necessary to
make the statements contained herein not misleading. The written statements,
reports and other documents prepared and furnished or to be prepared and
furnished by the Originator pursuant to this Agreement or in connection with the
transactions contemplated hereby taken in the aggregate do not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements contained therein not misleading.
(vi) The Originator is not in violation of, and the
execution and delivery of this Agreement by the Originator and its performance
and compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction over
the Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.
(vii) The Originator is a HUD approved mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act. No event
has occurred, including but not limited to a change in insurance coverage, that
would make the Originator unable to comply with HUD eligibility requirements or
that would require notification to HUD.
(viii) The Originator does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement.
(ix) Immediately prior to the sale of the Mortgage
Loans to the Seller, the Originator was the owner of the related Mortgage and
the indebtedness evidenced by the related Mortgage Note, and, upon the payment
to the Originator of the Purchase Price, in the event that the Originator
retains or has retained record title, the Originator shall retain such record
title to each Mortgage, each related Mortgage Note and the related Mortgage
Files with respect thereto in trust for the Seller as the owner thereof from and
after the date hereof.
(x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Originator or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the
Originator of its obligations under, or validity or enforceability of, this
Agreement.
(xi) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Originator, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Originator are not subject to the bulk transfer or any
similar statutory provisions.
<PAGE>
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(xii) The information delivered by the Originator to
the Seller with respect to the Originator's loan loss, foreclosure and
delinquency experience on mortgage loans is true and correct in all material
respects.
(xiii) The Originator has not dealt with any broker,
investment banker, agent or other person, except for the Seller or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Originator's ownership of the Mortgage Loans may be entitled to a
fee to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).
(xiv) There is no litigation currently pending or, to
the best of the Originator's knowledge without independent investigation,
threatened against the Originator that would reasonably be expected to adversely
affect the transfer of the Mortgage Loans, the issuance of the Certificates or
the execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition of the
Originator.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
RELATING TO THE MORTGAGE LOANS.
REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE
LOANS. The Originator hereby represents and warrants to the Purchaser that as to
each Mortgage Loan as of the Closing Date:
(i) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is complete, true
and correct as of the Cut-off Date;
(ii) The Mortgage Loan is in compliance with all requirements
set forth on Exhibit 6, and the characteristics of the Mortgage Loans as set
forth on Exhibit 6 are true and correct;
(iii) (a) All payments required to be made on or before the
first day of the month prior to the month of the Closing Date, with respect to
such Mortgage Loan under the terms of the Mortgage Note have been made; (b) the
Originator has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the owner of the related Mortgaged
Property, directly or indirectly, for the payment of any amount required by the
Mortgage Note or Mortgage; and (c) except with respect to approximately 0.21% of
the Mortgage Loans which were 30 days or more but less than 60 days delinquent
in payments as of February 28, 1999, by outstanding principal balance of the
Mortgage Loans as of the Cut-off Date, as of February 28, 1999, the payment
required under any Mortgage Loan is not now and has not been 30 or more days
delinquent more than once during the last twelve months;
<PAGE>
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(iv) 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;
(v) To the best knowledge of the Originator, the terms of the
Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien priority of
the Mortgage; the substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required by the related
policy, and is reflected on the Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed by the Originator or the Seller or
any other person in the chain of title from the Originator to the Seller, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by
the policy, and the terms of which are reflected in the Mortgage Loan Schedule;
(vi) Prior to the transfer to the Purchaser by the Seller, the
Mortgage Note and the Mortgage are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note and the Mortgage, or the
exercise of any right thereunder, render the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by
a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to insurance policies conforming to the
requirements of the Pooling and Servicing Agreement. All such insurance policies
contain a standard mortgagee clause naming the Originator, its successors and
assigns as mortgagee and all premiums thereon have been paid. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of Fannie Mae and Freddie
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(viii) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the origination and servicing of the Mortgage Loan
have been complied with. Any and all statements or acknowledgments required to
be made by the Mortgagor relating to such requirements are and will remain in
the Mortgage File;
<PAGE>
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(ix) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;
(x) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the appraised value of the Mortgaged Property and (c) 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 the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
existing and enforceable first or second lien and first or second priority
security interest on the property described therein and, as of the time it
contributed the Mortgage Loan to the Seller, the Originator had full right to
contribute and assign the same to the Seller. The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person
who is a party to the Mortgage Note and the Mortgage is in an individual
capacity or family trust that is guaranteed by a natural person;
(xiii) The proceeds of the Mortgage 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 Mortgage 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;
(xiv) As of the Closing Date and prior to the sale of the
Mortgage Loan to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;
<PAGE>
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(xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;
(xvi) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, with an adjustable rate mortgage endorsement substantially in
the form of ALTA Form 6.0 or 6.1 for each Adjustable Mortgage Loan, acceptable
to Fannie Mae or Freddie Mac, issued by a title insurer acceptable to Fannie Mae
and Freddie Mac and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions contained in
(x)(a) and (b) above) the Originator, its successors and assigns as to the first
or second priority lien of the Mortgage in the original principal amount of the
Mortgage Loan and, for each Adjustable Mortgage Loan, against any loss by reason
of the invalidity or unenforceablity of the lien resulting from the provisions
of the Mortgage providing for adjustment in the Mortgage Rate and monthly
payment. Additionally, such lender's title insurance policy affirmatively
insures ingress and egress to and from the Mortgaged Property, and against
encroachments by or upon the Mortgaged Property or any interest therein. The
Originator is the sole insured of such lender's title insurance policy, and such
lender's title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender's title insurance policy,
and no prior holder of the related Mortgage, including the Originator, has done,
by act or omission, anything which would impair the coverage of such lender's
title insurance policy;
(xvii) Other than as specified in paragraph (iii) above, there
is no default, breach, violation or event of acceleration existing under the
Mortgage or the Mortgage Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration, and the Originator has not
waived any default, breach, violation or event of acceleration;
(xviii) There are no mechanics' or similar liens or claims
which 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 which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(xix) All improvements which were considered in determining
the appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(xx) The Mortgage Loan was (i) originated by the Originator or
by a savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD or (ii)
acquired by the Originator directly through loan brokers or
<PAGE>
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correspondents such that (a) the Mortgage Loan was originated in conformity with
the Originator's underwriting guidelines, (b) the Originator approved the
Mortgage Loan prior to funding and (c) the Originator provided the funds used to
originate the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;
(xxi) Principal payments on the Mortgage Loan commenced no
more than two months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Rate. The Mortgage Note is payable
on the first day of each month, and for each Adjustable Mortgage Loan, in
Monthly Payments which are changed on each Adjustment Date to an amount which
will amortize the Stated Principal Balance of the Mortgage Loan over its
remaining term at the Mortgage Rate. Interest on the Mortgage Loan is calculated
on the basis of a 360-day year consisting of twelve 30- day months. The Mortgage
Note does not permit negative amortization. For each Adjustable Mortgage Loan,
the Mortgage Loan does not permit the Mortgagor to convert the Mortgage Loan to
a fixed rate Mortgage Loan;
(xxii) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by the Originator
(directly or through a subservicer) and any predecessor servicer in accordance
with the terms of the Mortgage Note. With respect to escrow deposits and Escrow
Payments, if any, all such payments are in the possession of, or under the
control of, the Originator and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. No escrow deposits or Escrow Payments or other charges or payments due the
Originator have been capitalized under any Mortgage or the related Mortgage
Note;
(xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation thereof;
(xxiv) The Mortgage and related Mortgage Note contain
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, and (b)
otherwise by judicial foreclosure. Since the date of origination of the Mortgage
Loan, the Mortgaged Property has not been subject to any bankruptcy proceeding
or foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. The
Mortgagor has not notified the Originator and the Originator has no knowledge of
any relief requested or allowed to the Mortgagor under the Soldiers and Sailors
Civil Relief Act of 1940;
(xxv) The related Mortgaged Property is not a leasehold estate
or, if such Mortgaged Property is a leasehold estate, the remaining term of such
lease is at least ten (10) years greater than the remaining term of the related
Mortgage Note;
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(xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser, approved by the Originator, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, whose compensation is not affected by the approval or
disapproval of the Mortgage Loan and who met the minimum qualifications of
Fannie Mae and Freddie Mac;
(xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, 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 Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(xxx) The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law, including as to any Adjustable Mortgage Loan, disclosure with respect to
the making of adjustable rate mortgage loans; and if the Mortgage Loan is a
Refinanced Mortgage Loan, the Mortgagor has received all disclosure and
rescission materials required by applicable law with respect to the making of a
Refinanced Mortgage Loan, and evidence of such receipt is and will remain in the
Mortgage File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxxii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to the Pooling and Servicing Agreement, have been
delivered to the Trustee all in compliance with the specific requirements of the
Pooling and Servicing Agreement;
(xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same,
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including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person, including, without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
(xxxv) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxvi) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(xxxvii) Except with respect to approximately 0.06% of
Mortgage Loans, by outstanding principal balance as of the Cut-off Date, no
Mortgage Loan has a balloon payment feature;
(xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development (other
than a de minimis planned unit development) such condominium or planned unit
development project meets the Fannie Mae's eligibility requirements;
(xxxix) Neither the Originator nor any affiliate of the
Originator has made a mortgage on any Mortgaged Property other than the Mortgage
Loan;
(xl) Any Mortgage Loan subject to the provisions of the
Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160 was
originated in compliance therewith;
(xli) The Mortgage Loan was not intentionally selected by the
Originator in a manner intended to adversely affect the interest of the
Purchaser;
(xlii) The Originator 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
Purchaser except as set forth in the parenthetical in Section 5(xiii) hereof;
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(xliii) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a 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. The Mortgaged Property is improved with a Residential
Dwelling. Without limiting the foregoing, the Mortgaged Property does not
consist of any of the following property types: (a) co-operative units, (b) log
homes, (c) earthen homes, (d) underground homes, (e) mobile homes and (f)
manufactured homes (as defined in the Fannie Mae Originator-Servicer's Guide),
except when the appraisal indicates that the home is of comparable construction
to a stick or beam construction home, is readily marketable, has been
permanently affixed to the site and is not in a mobile home "park." The
Mortgaged Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential lease, unless
otherwise specifically disclosed in the Mortgage Loan Schedule, (A) the terms of
such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent (or the lessor's consent
has been obtained and such consent is the Mortgage File) and the acquisition by
the holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protection; (B) the terms of such lease do not (x) allow
the termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity to cure,
such default or (y) prohibit the holder of the Mortgage from being insured under
the hazard insurance policy relating to the Mortgaged Property; (C) the original
term of such lease is not less than 15 years; (D) the term of such lease does
not terminate earlier than ten years after the maturity date of the Mortgage
Note; and (E) the Mortgaged Property is located in a jurisdiction in which the
use of leasehold estates for residential properties is an accepted practice;
(xliv) At the time of origination, the Loan-To-Value Ratio of
the Mortgage Loan was not greater than 100%;
(xlv) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the Mortgagee, at the option of the Mortgagee;
(xlvi) The Mortgage Loan either contains a customary
due-on-sale clause or may be assumed by a creditworthy purchaser of the related
Mortgaged Property; and
(xlvii) As of any Adjustment Date for an Adjustable Mortgage
Loan, the index applicable to the determination of the Mortgage Rate on such
Mortgage Loan will be the average of the interbank offered rates for six-month
United States dollar deposits in the London market, generally as published in
THE WALL STREET JOURNAL and as most recently available as of either (i) the
first business day 45 days prior to such Adjustment Date or (ii) the first
business day of the month preceding the month of such adjustment date, as
specified in the related Mortgage Note.
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SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
AND FOR BREACH OF REPRESENTATION AND WARRANTY.
(a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Seller or the Purchaser to review or examine such documents and
shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trust Administrator on behalf of the Trustee for the
benefit of holders of the Certificates. With respect to the representations and
warranties contained herein as to which the Originator has no knowledge, if it
is discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed to
be made, and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan or the interest therein of the Purchaser or the
Purchaser's assignee, transferee or designee, then notwithstanding the lack of
knowledge by the Originator with respect to the substance of such representation
and warranty being inaccurate at the time the representation and warranty was
made, the Originator shall take such action described in the following paragraph
in respect of such Mortgage Loan.
Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller (as listed on
the Trustee's Preliminary Exception Report) as part of any Mortgage File, or of
a breach of any of the representations and warranties contained in Section 6
that materially and adversely affects the value of any Mortgage Loan or the
interest therein of the Purchaser or the Purchaser's assignee, transferee or
designee, the party discovering such breach shall give prompt written notice to
the Originator. Within sixty (60) days of its discovery or its receipt of notice
of any such missing documentation that was not transferred by the Seller as
described above, or of materially defective documentation, or of any such breach
of a representation and warranty, the Originator promptly shall deliver such
missing document or cure such defect or breach in all material respects or, in
the event the Originator cannot deliver such missing document or cannot cure
such defect or breach, the Originator shall, within ninety (90) days of its
discovery or receipt of notice, repurchase the affected Mortgage Loan at the
Purchase Price (as such term is defined in the Pooling and Servicing Agreement).
The Originator shall amend the Closing Schedule to reflect the withdrawal of
such Mortgage Loan from the terms of this Agreement and the Pooling and
Servicing Agreement. The Originator shall deliver to the Purchaser such amended
Closing Schedule and shall deliver such other documents as are required by this
Agreement or the Pooling and Servicing Agreement within five (5) days of any
such amendment. Any repurchase pursuant to this Section 7(a) shall be
accomplished by transfer to an account designated by the Purchaser of the amount
of the Purchase Price in accordance with Section 2.03 of the Pooling and
Servicing Agreement. Any repurchase required by this Section shall be made in a
manner consistent with Section 2.03 of the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the
Originator set forth in this Section 7 to cure or repurchase a defective
Mortgage Loan constitute the sole remedies of
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the Purchaser against the Originator respecting a missing document or a breach
of the representations and warranties contained in Section 6.
SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The
closing of the purchase and sale of the Mortgage Loans shall be held at the New
York City office of Thacher Proffitt & Wood at 10:00 a.m. New York City time on
the Closing Date.
The closing shall be subject to each of the following
conditions:
(a) All of the representations and warranties of the Seller
under this Agreement shall be true and correct in all material respects as of
the date as of which they are made and no event shall have occurred which, with
notice or the passage of time, would constitute a default under this Agreement;
(b) All of the representations and warranties of the
Originator under this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would constitute a default
under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from escrow at the time
of closing), all Closing Documents as specified in Section 9 of this Agreement,
in such forms as are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required pursuant to the
respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered
and released to the Purchaser or to its designee, all documents (including
without limitation, the Mortgage Loans) required to be so delivered by the
Purchaser pursuant to Section 2.01 of the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement and the
Pooling and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Closing Date, against
delivery and release by the Seller to the Trustee of all documents required
pursuant to the Pooling and Servicing Agreement, the consideration for the
Mortgage Loans as specified in Section 3 of this Agreement, by delivery to the
Seller of the Purchase Price in immediately available funds and delivery of the
NC Residual Certificates to NC Residual.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality
of Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
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(a) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Originator, the Purchaser and Salomon Smith Barney Inc.
(the "Underwriter") may rely, in the form of Exhibit 1 hereto, and attached
thereto copies of the certificate of incorporation, by-laws and certificate of
good standing of the Seller under the laws of California;
(b) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Originator, the Purchaser and the Underwriter may rely, in
the form of Exhibit 2 hereto, with respect to certain facts regarding the sale
of the Mortgage Loans by the Seller to the Purchaser;
(c) An Opinion of Counsel of the Seller, dated the Closing
Date and addressed to the Originator, the Purchaser and the Underwriter,
substantially in the form attached hereto as Exhibit 3;
(d) An Officer's Certificate of the Originator, dated the
Closing Date, upon which the Seller, the Purchaser and the Underwriter may rely,
in the form of Exhibit 4 hereto, and attached thereto copies of the certificate
of incorporation, by- laws and certificate of good standing of the Originator
under the laws of its state of incorporation;
(e) An opinion of Counsel of the Originator, dated the Closing
Date and addressed to the Seller, the Purchaser and the Underwriter
substantially in the form attached hereto as Exhibit 5;
(f) Such opinions of counsel as the Rating Agencies or the
Trustee may request in connection with the sale of the Mortgage Loans by the
Seller to the Purchaser or the Seller's execution and delivery of, or
performance under, this Agreement;
(g) A letter from KPMG Peat Marwick, L.L.P., certified public
accountants, dated the date hereof, to the effect that they have performed
certain specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth in the
Depositor's Prospectus Supplement for Series 1999-NC1, dated March 24, 1999
under the captions "Summary--The Mortgage Loans," "Risk Factors," "The Mortgage
Pool" (except with respect to the information contained under the caption "The
Mortgage Pool--Underwriting Standards") agrees with the records of the Seller
and the information contained under the captions "The Mortgage
Pool--Underwriting Standards" and "Pooling and Servicing Agreement-- The Master
Servicer" agrees with the records of the Master Servicer; and
(h) Such further information, certificates, opinions and
documents as the Purchaser or the Underwriter may reasonably request.
SECTION 10. COSTS. The Seller shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments of Mortgage, the fees and expenses of the
Seller's accountants and
<PAGE>
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attorneys, the costs and expenses incurred in connection with producing the
Master Servicer's or any Subservicer's loan loss, foreclosure and delinquency
experience, and the costs and expenses incurred in connection with obtaining the
documents referred to in Sections 9(d), 9(e) and 9(g), the costs and expenses of
printing (or otherwise reproducing) and delivering this Agreement, the Pooling
and Servicing Agreement, the Certificates, the prospectus and prospectus
supplement, and any private placement memorandum relating to the Certificates
and other related documents, the initial fees, costs and expenses of the Trustee
and the Trust Administrator, the fees and expenses of the Purchaser's counsel in
connection with the preparation of all documents relating to the securitization
of the Mortgage Loans, the filing fee charged by the Securities and Exchange
Commission for registration of the Certificates and the fees charged by any
rating agency to rate the Certificates. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense.
SECTION 11. SERVICING. The Originator has represented to the
Purchaser that the Mortgage Loans are being serviced by the Originator, in its
capacity as Master Servicer under the Pooling and Servicing Agreement, and that
such Mortgage Loans are not subject to any other servicing agreements with third
parties. It is understood and agreed among the Originator, the Seller and the
Purchaser that the Mortgage Loans are to be delivered free and clear of any
servicing agreements. The Originator, without reimbursement from the Purchaser,
shall pay any fees or penalties required by any servicer for releasing the
Mortgage Loans from any such servicing agreement (it being understood that
neither the Purchaser nor any affiliate of the Purchaser is servicing the
Mortgage Loans under any such servicing agreement and, accordingly, that neither
the Purchaser nor any affiliate of the Purchaser is entitled to receive any fee
for releasing the Mortgage Loans from any such servicing agreement) and shall
arrange for the orderly transfer, as of the Cut-off Date, of such servicing from
any such servicer to the Master Servicer. The Mortgage Loans shall be serviced
by the Originator, in its capacity as Master Servicer, in accordance with the
terms of the Pooling and Servicing Agreement. For so long as the Originator
services the Mortgage Loans, the Originator shall be entitled to the Servicing
Fee and such other payments as provided for under the terms of the Pooling and
Servicing Agreement.
SECTION 12. INDEMNIFICATION. (a) The Originator shall
indemnify and hold harmless each of (i) the Purchaser, (ii) the Underwriter,
(iii) the Person, if any, to which the Purchaser assigns its rights in and to a
Mortgage Loan and each of their respective successors and assigns and (iv) each
person, if any, who controls the Purchaser within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "1933 Act") ((i) through (iv)
collectively, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the prospectus supplement (the "Prospectus
Supplement") or any private placement memorandum relating to the offering by the
Purchaser or an affiliate thereof, of the Class CE Certificates or the Class P
Certificates, or the omission or the alleged omission to state therein the
material fact necessary in order to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged
<PAGE>
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omission was made in reliance upon and in conformity with (i) information
furnished in writing to the Purchaser or any of its affiliates by the Originator
or any of its affiliates specifically for use therein, which shall include, with
respect to the Prospectus Supplement, the information set forth under the
captions "Summary -- The Mortgage Loans,""Risk Factors," "The Mortgage Pool,"
"Pooling and Servicing Agreement -- The Master Servicer" agrees with the records
of the Originator or any of its affiliates and, with respect to any private
placement memorandum, any information of a comparable nature, or (ii) the data
files containing information with respect to the Mortgage Loans as transmitted
by modem to the Purchaser by the Originator or any of its affiliates on March
__, 1999 (as such transmitted information may have been amended in writing by
the Originator or any of its affiliates with the written consent of the
Purchaser subsequent to such transmission), (b) any representation, warranty or
covenant made by the Originator or any affiliate of the Originator herein or in
the Pooling and Servicing Agreement, on which the Purchaser has relied, being,
or alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriter to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Originator or an affiliate of the Originator, including
the current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Purchaser for the losses
and damages incurred by the Purchaser in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in the
Seller's interest in each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance by the Seller of
its obligation hereunder, and the Seller agrees that it holds such Mortgage
Loans in custody for the Purchaser, subject to the Purchaser's (i) right, prior
to the Closing Date, to reject any Mortgage Loan to the extent permitted by this
Agreement, and (ii) obligation to deliver or cause to be delivered the
consideration for the Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
Loans rejected by the Purchaser shall concurrently therewith be released from
the security interest created hereby. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
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Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at 390 Greenwich Street, 4th Floor, New
York, New York 10013, fax (212) 723-8603/4, or such other address as may
hereafter be furnished to the Seller and the Originator in writing by the
Purchaser; and if to the Seller, addressed to the Seller at 18400 Von Karman,
Suite 1000, Irvine, California 92612, fax (949) 440-7033, or to such other
address as the Seller may designate in writing to the Purchaser and the Seller
and if to the Originator, addressed to the Originator at 18400 Von Karman, Suite
1000, Irvine, California 92612, fax (949) 440-7033, or such other address as may
hereafter be furnished to the Seller and the Purchaserr in writing by the
Originator.
SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller
and the Purchaser each agree to execute and deliver such instruments and take
such actions as either of the others may, from time to time, reasonably request
in order to effectuate the purpose and to carry out the terms of this Agreement
and the Pooling and Servicing Agreement.
SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and
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notwithstanding subsequent termination of this Agreement, the Pooling and
Servicing Agreement or the Trust Fund.
(b) The Originator agrees that the representations, warranties
and agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Seller to the Purchaser as provided in
Section 4 hereof be, and be construed as, a sale of the Mortgage Loans by the
Seller to the Purchaser and not as a pledge of the Mortgage Loans by the Seller
to the Purchaser to secure a debt or other obligation of the Seller. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account whether in the
<PAGE>
-24-
form of cash, instruments, securities or other property; (3) the possession by
the Purchaser or its agent of Mortgage Notes, the related Mortgages and such
other items of property that constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
New York Uniform Commercial Code; and (4) notifications to persons holding such
property and acknowledgments, receipts or confirmations from persons holding
such property shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant to
Section 4(d) hereof shall also be deemed to be an assignment of any security
interest created hereby. The Seller and the Purchaser shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first or second priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
<PAGE>
-25-
IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:_____________________________
Name: Vincent J. Varca
Title: Assistant Vice President
NC CAPITAL CORPORATION
By:_____________________________
Name: John Kontoulis
Title: Senior Vice President
NEW CENTURY MORTGAGE CORPORATION
By:_____________________________
Name:
Title:
<PAGE>
EXHIBIT 1
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER]
I, __________________ hereby certify that I am the duly
appointed __________________________ of NC Capital Corporation, a California
corporation (the "Company"), and further certify, on behalf of the Company, as
follows:
1. Attached hereto as Attachment I is a true and correct copy
of the Articles of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. Attached hereto as Attachment II is a certificate of
good standing, dated March __, 1999, issued by the State of California with
respect to the Company. No event has occurred since the date thereof that has
affected the good standing of the Company under the laws of the State of
California.
2. There are no actions, suits or proceedings pending or, to
the best of my knowledge, threatened against or affecting the Company which, if
adversely determined, individually or in the aggregate, would materially and
adversely affect the Company's ability to perform its obligations under the
Mortgage Loan Purchase Agreement, dated March 24, 1999 (the "Mortgage Loan
Purchase Agreement"), among the Company, Salomon Brothers Mortgage Securities
VII, Inc. (the "Purchaser") and New Century Mortgage Corporation (the
"Originator"). No proceedings looking toward merger, consolidation or
liquidation, dissolution or bankruptcy of the Company are pending or
contemplated.
3. Each person who, as an officer or representative of the
Company, signed the Mortgage Loan Purchase Agreement and any other document
delivered prior hereto or on the date hereof in connection with the transactions
contemplated by the Mortgage Loan Purchase Agreement was at the respective times
of such signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. Each of the Mortgage Loans referred to in the Mortgage Loan
Purchase Agreement was originated in accordance with Section 6(xx) of the
Mortgage Loan Purchase Agreement.
5. Attached hereto as Attachment III is a true and correct
copy of the resolutions duly adopted by the Board of Directors of the Company on
March __, 1999 (the "Resolutions") with respect to the transactions contemplated
by the Mortgage Loan Purchase Agreement said Resolutions have not been amended
or modified, annulled or revoked and are in full force and effect on the date
hereof.
6. All of the representations and warranties of the Company
contained in the Mortgage Loan Purchase Agreement are true and correct in all
material respects as of the Closing Date, and no event has occurred which, with
notice or the passage of time or both, would constitute a default under the
Mortgage Loan Purchase Agreement.
<PAGE>
7. The information set forth in the Mortgage Loan Schedule is
true and correct in all material respects.
8. The transactions contemplated in the Mortgage Loan Purchase
Agreement will be reported as a sale in the Company's financial reports.
9. The Company has performed all of its duties and has
satisfied all of the material conditions on its part to be performed or
satisfied prior to the Closing Date.
10. Capitalized terms used but not defined herein shall have
the meanings assigned in the Mortgage Loan Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.
Dated: March 25, 1999
By:__________________________________
Name:
[Seal] Title:
I, ____________________________, an [Assistant] Secretary of
NC Capital Corporation, hereby certify that __________________ is the duly
appointed, qualified and acting _______________________ of NC Capital
Corporation and that the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: March 25, 1999
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT 2
[FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
FACTS REGARDING THE SALE OF THE MORTGAGE LOANS]
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1999-NC1
Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by NC Capital Corporation ("NC Capital") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to the Mortgage Loan Purchase
Agreement, dated March 24, 1999 (the "Purchase Agreement"), among New Century
Mortgage Corporation (the "Originator"), the Depositor and NC Capital, and the
simultaneous issuance of Floating Rate Mortgage Pass-Through Certificates,
Series 1999-NC1, Class A-1, Class A-2, Class M-1, Class M-2, Class M-3, Class
CE, Class P, Class R-I, Class R-II and Class R-III (the "Certificates"),
pursuant to a Pooling and Servicing Agreement, dated as of March 1, 1999 (the
"Pooling and Servicing Agreement"), among the Depositor as depositor, the
Originator, as master servicer (in such capacity, the "Master Servicer"),
Firstar Bank Milwaukee, N.A. as trustee (the "Trustee") and U.S. Bank National
Association as trust administrator. In consideration for its purchase of the
Mortgage Loans, the Depositor will deliver to NC Capital immediately available
funds an amount (the "Purchase Price") equal to the net sale proceeds of the
Class A-1 Certificates, the Class A-2 Certificates, the Class M-1 Certificates,
the Class M- 2 Certificates and the Class M-3 Certificates and will deliver to
NC Residual II Corporation upon the order of the Seller the Class CE
Certificates, the Class P Certificates, the Class R-I Certificates, the Class
R-II Certificates and the Class R-III Certificates. The Depositor will sell the
Class A-1 Certificates, the Class A-2 Certificates, the Class M-1 Certificates,
the Class M-2 Certificates and the Class M-3 Certificates to Salomon Smith
Barney Inc. (the "Underwriter") for offer and sale pursuant to the terms of an
Underwriting Agreement, dated March 24, 1999 (the "Underwriting Agreement"),
between the Depositor and the Underwriter. The Purchase Agreement, the Pooling
and Servicing Agreement and the Underwriting Agreement are hereinafter
collectively referred to as the "Agreements." Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Agreements.
The undersigned is a duly appointed ___________________ of NC
Capital Corporation and hereby certifies after reasonable investigation that:
1. The price to be paid to NC Capital for the Mortgage Loans
will have been paid in full at the closing of the sale pursuant to the Purchase
Agreement, and no agreement or arrangement exists or will exist that permits the
modification of the consideration for the Mortgage Loans subsequent to that
sale. NC Capital will not have any right or obligation to repurchase any
Mortgage Loan, except as provided in the Purchase Agreement.
2. Each Mortgage Note and each related Mortgage has been
appropriately prepared and duly executed and delivered by the related Mortgagor,
and each Mortgage has been appropriately recorded in the applicable jurisdiction
and any intervening endorsement of any
<PAGE>
Mortgage Note and any intervening assignment of any Mortgage, which was required
in order to transfer to NC Capital ownership of the Mortgage Loans, was obtained
and completed.
3. Each Mortgage Note has been endorsed or assigned in a
manner that satisfies all requirements necessary to transfer to the Trustee all
right, title and interest of the party so endorsing or assigning, as noteholder
or transferee thereof, in and to that Mortgage Note, as provided in the Purchase
Agreement and the Pooling and Servicing Agreement. Each Assignment is in
recordable form and is sufficient to effect the assignment and transfer to the
Depositor of the benefits of the assignor, as original mortgagee or assignee
thereof, under each Mortgage to which that Assignment relates, as provided in
the Purchase Agreement and the Pooling and Servicing Agreement. Each Assignment
has been or will be appropriately recorded to the extent required under
applicable law, as provided in the Purchase Agreement.
4. Each original Mortgage Note, each original recorded
Mortgage, each original recorded intervening Assignment and each Assignment has
been delivered to the Trustee at the direction of the Depositor.
5. Immediately prior to the transfer of the Mortgage Loans by
NC Capital to the Depositor, NC Capital was the sole owner of each Mortgage
Loan, free and clear of any and all prior liens, mortgages, security interests,
pledges, participation interests, adverse claims, charges or other equities or
encumbrances of any nature, and had full right and authority to sell, assign and
transfer the Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting
part of the Mortgage File reflects or will reflect on its face any interest that
is inconsistent with the ownership interest of the Trustee in and to the
Mortgage Loans or the transfer of the Mortgage Loans by NC Capital to the
Trustee.
7. The transfer of the Mortgage Loans by NC Capital to the
Depositor as provided in the Purchase Agreement is intended by NC Capital to be,
and is in fact, a contemporaneous exchange in which NC Capital receives new
value.
8. NC Capital was solvent at all relevant times prior to, and
will not be rendered insolvent by, the transfer of the Mortgage Loans to the
Depositor.
9. NC Capital did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of NC Capital's
creditors.
10. Neither NC Capital nor any agent acting on behalf of it,
has been or will become a party to any fraud or illegality affecting any
Mortgage Loan or Certificate.
11. To the best of my knowledge, no breach of the Agreements
by any party, misrepresentation or failure by any party to perform all acts
required to be performed prior to the Closing Date, or fraud or mistake on the
part of any party to the Agreements in connection with the transactions
contemplated by the Agreements, has occurred or will occur.
<PAGE>
12. To the best of my knowledge, no party to the Agreements
has taken or will take any action that is unreasonable, arbitrary or capricious,
or that is not taken in good faith or in a commercially reasonable manner,
affecting the Mortgage Loans in connection with the transactions contemplated by
the Agreements.
13. To the best of my knowledge, there is not and will not be
any other agreement among the parties to the Agreements that modifies or
otherwise supplements the agreement of the parties as expressed in the
Agreements.
14. NC Capital does not have and will not have any right to
modify or alter the terms of the transfer of the Mortgage Loans by NC Capital to
the Depositor, or to substitute or add any mortgage loan thereafter, except as
provided in the Agreements.
15. NC Capital will not take any action that is inconsistent
with the ownership interest in the Mortgage Loans evidenced by the Certificates.
NC Capital will promptly indicate to other persons or entities, when a response
is appropriate, that the Mortgage Loans were transferred by NC Capital to the
Depositor. NC Capital will not claim any ownership interest directly in the
Mortgage Loans other than that represented by Certificates in which it may have
an ownership interest from time to time.
16. Under generally accepted accounting principles ("GAAP")
and for federal income tax purposes, NC Capital will report the transfer of the
Mortgage Loans to the Depositor, as provided in the Purchase Agreement as a sale
of all of its interest in the Mortgage Loans. NC Capital has been advised by or
has confirmed with its independent public accountants for similar transactions
that the sale will be so classified under GAAP in accordance with Statement No.
125 of the Financial Accounting Standards Board.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the 25th day of March, 1999.
NC CAPITAL CORPORATION
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT 3
[FORM OF OPINION OF COUNSEL TO THE SELLER]
<PAGE>
EXHIBIT 4
[FORM OF OFFICER'S CERTIFICATE OF THE ORIGINATOR]
I, __________________ hereby certify that I am the duly
appointed __________________________ of New Century Mortgage Corporation, a
California corporation (the "Company"), and further certify, on behalf of the
Company, as follows:
1. Attached hereto as Attachment I is a true and correct copy
of the Articles of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. Attached hereto as Attachment II is a certificate of
good standing, dated March __, 1999, issued by the State of California with
respect to the Company. No event has occurred since the date thereof that has
affected the good standing of the Company under the laws of the State of
California.
2. There are no actions, suits or proceedings pending or, to
the best of my knowledge, threatened against or affecting the Company which, if
adversely determined, individually or in the aggregate, would materially and
adversely affect the Company's ability to perform its obligations under the
Mortgage Loan Purchase Agreement, dated March 24, 1999 (the "Mortgage Loan
Purchase Agreement"), among the Company, Salomon Brothers Mortgage Securities
VII, Inc. (the "Purchaser") and NC Capital Corporation (the "Seller") or the
Pooling and Servicing Agreement, dated as of March 1, 1999 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (the
"Depositor") as depositor, the Company as master servicer, Firstar Bank
Milwaukee, N.A. as trustee and U.S. Bank National Association as trust
administrator. No proceedings looking toward merger, consolidation or
liquidation, dissolution or bankruptcy of the Company are pending or
contemplated.
3. Each person who, as an officer or representative of the
Company, signed the Mortgage Loan Purchase Agreement and the Pooling and
Servicing Agreement and any other document delivered prior hereto or on the date
hereof in connection with the transactions contemplated by the Mortgage Loan
Purchase Agreement and the Pooling and Servicing Agreement was at the respective
times of such signing and delivery, and is as of the date hereof, duly elected
or appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. Each of the Mortgage Loans referred to in the Mortgage Loan
Purchase Agreement was originated in accordance with Section 6(xx) of the
Mortgage Loan Purchase Agreement.
5. Attached hereto as Attachment III is a true and correct
copy of the resolutions duly adopted by the Board of Directors of the Company on
March __, 1999 (the "Resolutions") with respect to the transactions contemplated
by the Mortgage Loan Purchase Agreement and the Pooling and Servicing Agreement;
said Resolutions have not been amended or modified, annulled or revoked and are
in full force and effect on the date hereof.
<PAGE>
6. All of the representations and warranties of the Company
contained in the Mortgage Loan Purchase Agreement and the Pooling and Servicing
Agreement are true and correct in all material respects as of the Closing Date,
and no event has occurred which, with notice or the passage of time or both,
would constitute a default under the Mortgage Loan Purchase Agreement or an
Event of Default under the Pooling and Servicing Agreement.
7. The information set forth in the Mortgage Loan Schedule is
true and correct in all material respects.
8. The information contained in the Prospectus Supplement,
dated March 24, 1999 including, but not limited to, information contained in the
data file, specifically for use in the preparation of the Prospectus Supplement,
relating to the Mortgage Loans and its loan portfolio, specifically the
information, in the summary under the subheadings "Summary--The Mortgage Pool,"
"Risk Factors," "The Mortgage Pool" and "Pooling and Servicing Agreement--The
Master Servicer" is true and accurate and does not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
9. The Company has performed all of its duties and has
satisfied all of the material conditions on its part to be performed or
satisfied prior to the Closing Date.
11. Capitalized terms used but not defined herein shall have
the meanings assigned in the Mortgage Loan Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.
Dated: March 25, 1999
By:______________________________
Name:
[Seal] Title:
I, ____________________________, an [Assistant] Secretary of
NC Capital Corporation, hereby certify that __________________ is the duly
appointed, qualified and acting _______________________ of NC Capital
Corporation and that the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: March 25, 1999
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 5
[FORM OF OPINION OF COUNSEL FOR ORIGINATOR]
March 25, 1999
NC Capital Corporation Salomon Smith Barney Inc.
18400 Von Karman, Suite 1000 390 Greenwich Street, 4th Floor
Irvine, California 92612 New York, New York 10013
Salomon Brothers Mortgage
Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, New York 10013
Re: Salomon Brothers Mortgage Securities VII, Inc.
Floating Rate Mortgage Pass-Through
Certificates, Series 1999-NC1
Ladies and Gentlemen:
I have acted as counsel to New Century Mortgage Corporation, a
California corporation (the "Company"), in connection with the sale of certain
mortgage loans, previously sold by the Company to NC Capital Corporation ("NC
Capital"), to Salomon Brothers Mortgage Securities VII, Inc. (the "Depositor")
pursuant to a Mortgage Loan Purchase Agreement, dated March 24, 1999 (the
"Purchase Agreement"), among the Company, NC Capital and the Depositor. Salomon
Brothers Mortgage Securities VII, Inc., Floating Rate Mortgage Pass-Through
Certificates, Series 1999-NC1 have or will be issued pursuant to the Pooling and
Servicing Agreement, dated as of March 1, 1999 (the "Pooling Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc., the Company, Firstar Bank
Milwaukee, N.A. and U.S. Bank National Association. Capitalized terms not
otherwise defined herein have the meanings set forth in the Pooling Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Pooling Agreement;
C. The Company's Certificate of Incorporation and Bylaws, as
amended to date; and
D. Resolutions adopted by the Board of Directors of the Company
with specific reference to actions relating to the transactions covered by this
opinion.
<PAGE>
For the purpose of rendering this opinion, I have made such documentary, factual
and legal examinations as I deemed necessary under the circumstances. As to
factual matters, I have relied upon statements, certificates and other
assurances of public officials and of officers and other representatives of the
Company, and upon such other certificates as I deemed appropriate, which factual
matters have not been independently established or verified by me. I have also
assumed, among other things, the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
me as originals, and the conformity to original documents of all documents
submitted to me as copies and the authenticity of the originals of such copied
documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of California with corporate power
and authority to own its properties and conduct its business as presently
conducted by it. The Company has the corporate power and authority to execute,
deliver, and perform its obligations under the Purchase Agreement.
2. The Purchase Agreement has been duly and validly authorized,
executed and delivered by the Company.
3. The Purchase Agreement constitutes valid, legal and binding
obligations of the Company, enforceable against the Company in accordance with
its terms.
4. No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and
performance by the Company of the Purchase Agreement or the consummation of the
transactions contemplated by the Purchase Agreement, except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. The fulfillment of the terms of or the consummation of the
transactions contemplated in the Purchase Agreement will not result in a breach
of any term or provision of the Certificate of Incorporation or By-laws of the
Company, or, to the best of my knowledge, will conflict with, result in a breach
or violation of, or constitute a default under, (i) the terms of any indenture
or other agreement or instrument known to me to which the Company is a party or
by which it is bound, (ii) any State of California or federal statute or
regulation applicable to the Company, or (iii) any order of any State of
California or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company, except in any such case
where the default, breach or violation would not have a material adverse effect
on the Company or its ability to perform its obligations under the Purchase
Agreement.
6. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Purchase Agreement, which seeks
<PAGE>
to prevent the consummation of any of the transactions contemplated in the
Purchase Agreement or which would be likely to impair materially the ability of
the Company to perform under the terms of the Purchase Agreement.
7. No information has come to my attention that causes me to believe
that the information contained in the Prospectus Supplement, dated March 24,
1999, relating to the Company, its financial condition, its underwriting
standards and its loan portfolio, specifically the information in the
"Summary--The Mortgage Loans," "Risk Factors," "The Mortgage Pool," and "Pooling
and Servicing Agreement--Master Servicer" contained an untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
The opinions above are subject to the following additional assumptions,
exceptions, qualifications and limitations:
A. I have assumed that all parties to the Purchase Agreement other than
the Seller have all requisite power and authority to execute, deliver and
perform their respective obligations under the Purchase Agreement, and that the
Purchase Agreement has been duly authorized by all necessary corporate actions
on the part of such parties, has been executed and delivered by such parties and
constitutes the legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraph 3 above is subject to the
qualifications that the enforceability of the Purchase Agreement may be limited
by the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Purchase Agreement
and upon the availability of injunctive relief or other equitable remedies and
the application of principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) as such
principles relate to limit or affect the enforcement of creditors' rights
generally and the discretion of the court before which any proceeding for such
enforcement may be brought.
I express no opinion as to whether the courts of the United States
located in California or state courts of California would respect or enforce any
contractual provision regarding choice of law, selection of forum or waiver of a
jury trial.
This opinion is given to you for your sole benefit, and no other person
or entity is entitled to rely hereon.
I am admitted to practice in the State of California, and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of California and the Federal laws of the United States of America.
Very truly yours,
<PAGE>
EXHIBIT 6
References to percentage of the Mortgage Loans as set forth in this
Exhibit 6, unless otherwise noted, are calculated based on the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
On the Cut-off Date, the Mortgage Loans complied with the following
conditions:
(i) no less than 66.79% of the Mortgage Loans have a risk grade of A+,
A+MO, A- or A-MO, no more than 18.34% of such loans have a risk grade of B and
no more than 14.88% of such loans have a risk grade of C, C- or C-HS;
(ii) any Mortgage Loan with a loan-to-value ratio between ______% and
_____% have a risk grade of A+, A+MO, A-, A-MO or B;
(iii) the weighted average loan-to-value ratio for each of the Mortgage
Loans at origination is approximately 74.38%;
(iv) the maximum percentage concentration of Mortgage Loans secured by
mortgaged properties in any one zip code is approximately _____%;
(v) approximately 73.29% of the Mortgage Loans provide for payment by
the mortgagor of a prepayment charge within a specified period as provided in
the related Mortgage Note not in excess of 5 years;
(vi) the Mortgage Loans have a weighted average Mortgage Rate equal to
approximately 10.242% per annum and a weighted average Gross Margin equal to
approximately _____% per annum. The Mortgage Loans are not subject to negative
amortization and do not provide for graduated payments. None of the Adjustable
Mortgage Loans are convertible to a fixed mortgage interest rate. None of the
Mortgage Loans are subject to temporary buydown agreements. Each of the Mortgage
Loans is fully-amortizing. Except with respect to approximately 0.06% of
Mortgage Loans, by outstanding principal balance as of the Cut-off Date, none of
the Mortgage Loans provides for the payment of a balloon payment.
<PAGE>
EXHIBIT 7
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by NC Capital Corporation, a California corporation as
Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:
1. The Seller's address is : _____________________
_____________________
_____________________
2. The Seller previously delivered to the Purchaser a signed
Initial Certification with respect to such Mortgage and/or Assignment of
Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was
assigned or sold to the Purchaser by NC Capital Corporation, a California
corporation pursuant to the terms and provisions of a Mortgage Loan Purchase
Agreement dated as of March 24, 1999;
4. Such Mortgage Note and/or Assignment of Mortgage is not
outstanding pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search
for the Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of
the loss; and
8. Deponent agrees that, if said Original should ever come
into Seller's possession, custody or power, Seller will immediately and without
consideration surrender the Original to the Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note,
endorsed in blank by the Mortgagee and (ii) the Mortgage or Deed of Trust
(strike one) which secures the Note, which Mortgage or Deed of Trust is recorded
in the county where the property is located.
<PAGE>
10. Deponent hereby agrees that the Seller (a) shall indemnify
and hold harmless the Purchaser, its successors and assigns, against any loss,
liability or damage, including reasonable attorney's fees, resulting from the
unavailability of any Notes, including but not limited to any loss, liability or
damage arising from (i) any false statement contained in this Affidavit, (ii)
any claim of any party that purchased a mortgage loan evidenced by the Lost Note
or any interest in such mortgage loan, (iii) any claim of any borrower with
respect to the existence of terms of a mortgage loan evidenced by the Lost Note
on the related property to the fact that the mortgage loan is not evidenced by
an original note and (iv) the issuance of a new instrument in lieu thereof
(items (i) through (iv) above hereinafter referred to as the "Losses") and (b)
if required by any Rating Agency in connection with placing such Lost Note into
a Pass-Through Transfer, shall obtain a surety from an insurer acceptable to the
applicable Rating Agency to cover any Losses with respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the
Purchaser, its successors and assigns. NC Capital Corporation, a California
corporation represents and warrants that is has the authority to perform its
obligations under this Affidavit of Lost Note.
Executed this __ day of ________, 199_.
NC CAPITAL CORPORATION
By:____________________________
Name:
Title:
On this __ day of ________, 199_, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.
Signature:
[Seal]
<PAGE>
EXHIBIT E-1
-----------
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
- ----------------
Name of Mortgagor: _____________________________
Master Servicer
Loan No.: _____________________________
Trustee/Custodian
- -----------------
Name: ____________________________
Address: ____________________________
____________________________
Trustee/Custodian
Mortgage File No.: ____________________________
Depositor
- ---------
Name: SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
Address: ________________________________
________________________________
Certificates: Mortgage Pass-Through
Certificates, Series 1999-NC1.
<PAGE>
The undersigned Master Servicer hereby acknowledges that it
has received from _______________________, as Trustee for the Holders of
Mortgage Pass-Through Certificates, Series 1999-NC1, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of March 1, 1999, among the Trustee, the Trust
Administrator, the Depositor and the Master Servicer (the "Pooling and Servicing
Agreement").
( ) Promissory Note dated _______________, 19__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
( ) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County
Recorder's Office of the County of _______________, State of
_______________________ in book/reel/docket ____________ of official
records at page/image ____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees
as follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Master Servicer assert or seek to assert any claims or
rights of setoff to or against the Documents or any proceeds thereof.
<PAGE>
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Collection Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
Dated:
NEW CENTURY MORTGAGE CORPORATION
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT E-2
-----------
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-NC1
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:________________________ BORROWER'S NAME:___________________
COUNTY:_____________________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
___________________________ DATED:____________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT F-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
[Trustee]
_____________________
_____________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates,
Series 1999-NC1, Class ___, representing a ___%
Class ___ Percentage Interest
-----------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 1999, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, New Century Mortgage Corporation as Master Servicer Firstar Bank
Milwaukee, N.A. as Trustee and U.S. Bank National Association as Trust
Administrator (the "Pooling and Servicing Agreement"), pursuant to which Pooling
and Servicing Agreement the Certificates were issued.
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:_______________________________
Name:
Title:
<PAGE>
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
[Trustee]
___________________
___________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates,
Series 1999-NC1, Class ___, representing a ___%
Class ___ Percentage Interest
-----------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of
1933 (the "1933 Act") and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. The
Transferee is aware that the sale to it is being made in reliance on
Rule 144A. The Transferee is acquiring the Certificates for its own
account or for the account of a qualified institutional buyer, and
understands that such Certificate 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 1933
Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the
nature, performance and servicing of the Mortgage Loans, (c) the
Pooling and Servicing Agreement referred to below, and (d) any credit
enhancement mechanism associated with the Certificates, that it has
requested.
<PAGE>
All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of March 1, 1999, among Salomon Brothers Mortgage Securities
VII, Inc. as Depositor, New Century Mortgage Corporation as Master Servicer,
Firstar Bank Milwaukee, N.A. as trustee and U.S. Bank National Association as
Trust Administrator, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:_______________________
Name:
Title:
<PAGE>
ANNEX 1 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and U.S. Bank National Association, as Trust
Administrator, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
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 Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (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 Transferee (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
- --------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
$25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee 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 Transferee 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 Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor 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 Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the
Certificates Yes No only for the
Transferee's own account?
<PAGE>
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee 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 Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
__________________________________
Print Name of Transferee
By:_______________________________
Name:
Title:
<PAGE>
ANNEX 2 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and U.S. Bank National Association, as Trust
Administrator, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee'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 Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities (other
than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Transferee 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 Transferee'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 Transferee or are part of the
Transferee'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,
<PAGE>
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
_____________________________________
Print Name of Transferee or Advisor
By:__________________________________
Name:
Title:
IF AN ADVISER:
_____________________________________
Print Name of Transferee
<PAGE>
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933,
as amended.
3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on
a discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser_______________________________________________________________
By: (Signature)____________________________________________________________
Name of Signatory_______________________________________________________________
Title___________________________________________________________________________
Date of this certificate________________________________________________________
Date of information provided in paragraph 3_____________________________________
<PAGE>
EXHIBIT F-2
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
___________________________________, being duly sworn,
deposes, represents and warrants as follows:
1. I am a ______________________ of
____________________________ (the "Owner") a corporation duly
organized and existing under the laws of ______________, the
record owner of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 1999-NC1,
[Class R-I] [Class R- II] [and Class R-III] (the "Class R
Certificates"), on behalf of whom I make this affidavit and
agreement. Capitalized terms used but not defined herein have
the respective meanings assigned thereto in the Pooling and
Servicing Agreement pursuant to which the Class R Certificates
were issued.
2. The Owner (i) is and will be a "Permitted Transferee"
as of ____________________, 199___ and (ii) is acquiring the
Class R Certificates for its own account or for the account of
another Owner from which it has received an affidavit in
substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified
organization" or a possession of the United States. For this
purpose, a "disqualified organization" means the United
States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to
tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of whose board of directors is not
selected by any such governmental entity) or any foreign
government, international organization or any agency or
instrumentality of such foreign government or organization,
any rural electric or telephone cooperative, or any
organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business
taxable income.
3. The Owner is aware (i) of the tax that would be
imposed on transfers of the Class R Certificates to
disqualified organizations under the Internal Revenue Code of
1986 that applies to all transfers of the Class R Certificates
after March 31, 1988; (ii) that such tax would be on the
transferor or, if such transfer is through an agent (which
person includes a broker, nominee or middleman) for a
non-Permitted Transferee, on the agent; (iii) that the person
otherwise liable for the tax shall be relieved of liability
for the tax if the transferee furnishes to such person an
affidavit that the transferee is a Permitted Transferee and,
at the time of transfer, such person does not have actual
knowledge that the affidavit is false;
<PAGE>
and (iv) that each of the Class R Certificates may be a
"noneconomic residual interest" within the meaning of proposed
Treasury regulations promulgated under 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 is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a
"pass-through entity" holding the Class R Certificates if, at
any time during the taxable year of the pass-through entity, a
non-Permitted Transferee is the record holder of an interest
in such entity. (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.)
5. The Owner is aware that the Trustee will not register
the transfer of any Class R Certificate unless the transferee,
or the transferee's agent, delivers to the Trustee, among
other things, an affidavit in substantially the same form as
this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any
of the representations contained in such affidavit and
agreement are false.
6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of
counsel to constitute a reasonable arrangement to ensure that
the Class R Certificates will only be owned, directly or
indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is
___________________.
8. The Owner has reviewed the restrictions set forth on
the face of the Class R Certificates and the provisions of
Section 5.02(d) of the Pooling and Servicing Agreement under
which the Class R Certificates were issued (in particular,
clauses (iii)(A) and (iii)(B) of Section 5.02(d) which
authorize the Trustee to deliver payments to a person other
than the Owner and negotiate a mandatory sale by the Trustee
in the event that the Owner holds such Certificate in
violation of Section 5.02(d)); and that the Owner expressly
agrees to be bound by and to comply with such restrictions and
provisions.
9. The Owner is not acquiring and will not transfer the
Class R Certificates in order to impede the assessment or
collection of any tax.
10. The Owner anticipates that it will, so long as it
holds the Class R Certificates, have sufficient assets to pay
any taxes owed by the holder of such Class R Certificates, and
hereby represents to and for the benefit of the person from
whom it acquired the Class R Certificates that the Owner
intends to pay taxes associated with holding such Class R
Certificates as they become due, fully understanding that it
may incur tax liabilities in excess of any cash flows
generated by the Class R Certificates.
<PAGE>
11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as
it holds the Class R Certificates.
12. The Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by
it so long as any of the Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates
with the intent to transfer the Class R Certificates to any
person or entity that will not have sufficient assets to pay
any taxes owed by the holder of such Class R Certificates, or
that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain
outstanding.
14. The Owner will, in connection with any transfer that
it makes of the Class R Certificates, obtain from its
transferee the representations required by Section 5.02(d) of
the Pooling and Servicing Agreement under which the Class R
Certificate were issued and will not consummate any such
transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.
15. The Owner will, in connection with any transfer that
it makes of the Class R Certificates, deliver to the Trustee
an affidavit, which represents and warrants that it is not
transferring the Class R Certificates to impede the assessment
or collection of any tax and that it has no actual knowledge
that the proposed transferee: (i) has insufficient assets to
pay any taxes owed by such transferee as holder of the Class R
Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted
Transferee".
16. The Owner is a citizen or resident of the United
States, a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any
political subdivision thereof, or an estate or trust whose
income from sources without the United States may be included
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.
17. The Owner of the Class R-III Certificate, hereby
agrees that in the event that the Trust Fund created by the
Pooling and Servicing Agreement is terminated pursuant to
Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates any
amounts in excess of par received in connection with such
termination. Accordingly, in the event of such termination,
the Trustee is hereby authorized to withhold any such amounts
in excess of par and to pay such amounts directly to the
Holders of the Class CE Certificates. This agreement shall
bind and be enforceable against any successor, transferee or
assigned of the undersigned in the Class R-III Certificate. In
connection with any transfer of the Class R-III Certificate,
the Owner shall obtain an agreement substantially similar to
this clause from any subsequent owner.
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 199___.
[OWNER]
By:___________________________________
Name:
Title: [Vice] President
ATTEST:
By:______________________________
Name:
Title: [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 a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this ____ day of __________,
199___.
__________________________
Notary Public
County of _______________________
State of ________________________
My Commission expires:
<PAGE>
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK )
___________________________________, being duly sworn,
deposes, represents and warrants as follows:
1. I am a ____________________ of _____________________________ (the "Owner"), a
corporation duly organized and existing under the laws of ______________, on
behalf of whom I make this affidavit.
2. The Owner is not transferring the [Class R-I][Class
R-II][Class R-III] (the "Residual Certificates") to impede the assessment or
collection of any tax.
3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to
the Trust Administrator a transfer affidavit and agreement in the form attached
to the Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know
or believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 199___.
[OWNER]
By:______________________________
Name:
Title: [Vice] President
ATTEST:
By:_______________________________
Name:
Title: [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 a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this ____ day of __________,
199___.
___________________________
Notary Public
County of ______________________
State of _______________________
My Commission expires:
<PAGE>
EXHIBIT G
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 199__
Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, New York 10013
U.S. Bank National Association
_____________________________
_____________________________
Firstar Bank Milwaukee, N.A.
_____________________________
_____________________________
New Century Mortgage Corporation
_____________________________
_____________________________
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through
Certificates, Series 1999-NC1, Class ___
----------------------------------------------
Dear Sirs:
__________________________________ (the "Transferee") intends
to acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1999-NC1, Class ___ (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of March 1, 1999 among Salomon
Brothers Mortgage Securities VII, Inc. as depositor (the "Depositor"), New
Century Mortgage Corporation as master servicer (the "Master Servicer") Firstar
Bank Milwaukee, N.A. as trustee and U.S. Bank National Association as trust
administrator (the "Trust Administrator"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in the Pooling and
Servicing Agreement. The Transferee hereby certifies, represents and warrants
to, and covenants with the Depositor, the Trustee, the Trust Administrator and
the Master Servicer that the following statements in either (1) or (2) are
accurate:
_____ (1) The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or other retirement
<PAGE>
arrangement, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company
general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986 (the "Code") (any of
the foregoing, a "Plan"), (ii) are not being acquired with "plan
assets" of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not be transferred
to any entity that is deemed to be investing in plan assets within the
meaning of the DOL regulation at 29 C.F.R. ss. 2510.3-101; or
_____ (2) The purchase of Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under
ERISA or Section 4975 of the Code, will not subject the Depositor, the
Trustee or the Master Servicer to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement and one of the
following conditions are met:
(i) the transferee is an insurance company and (A)
the source of funds used to purchase such Certificate is an
"insurance company general account" (as such term is defined
in PTCE 95-60), (B) the conditions set forth in PTCE 95-60
have been satisfied and (C) there is no Plan with respect to
which the amount of such general account's reserves and
liabilities for contracts held by or on behalf of such Plan
and all other Plans maintained by the same employer (or any
"affiliate" thereof, as defined in PTCE 95-60) or by the same
employee organization, exceeds 10% of the total of all
reserves and liabilities of such general account (as
determined under PTCE 95-60) as of the date of the acquisition
of such Certificates;
(ii) the transferee is an insurance company and (A)
the source of funds used to purchase such Certificates is an
insurance company general account, (B) the requirements of
Section 401(c) of ERISA and the regulations to be promulgated
thereunder ("401(c) Regulations") have been satisfied and will
continue to be satisfied and (C) the insurance company
represents that it understands that the operation of the
general account after December 31, 1998 may affect its ability
to continue to hold such Certificates after the date which is
18 months after the 401(c) Regulations become final and that
unless a Class Exemption or an exception under Section 401(c)
of ERISA is then available for the continued holding of such
Certificates, it will dispose of such Certificates prior to
the date which is 18 months after the 401(c) Regulations
become final;
(iii) the transferee is an insurance company and (A)
the source of funds used to purchase such Certificates is an
"insurance company pooled separate account" (as such term is
defined in PTCE 90-1), (B) the conditions set forth in PTCE
90-1 have been satisfied and (C) there is no Plan, together
with all other Plans maintained by the same employer (or any
"affiliate" thereof, as defined in PTCE 90-1) or by the same
employee organization, with assets which exceed 10% of the
total of all assets in such pooled separate account (as
determined under PTCE 90-1) as of the date of the acquisition
of such Certificates;
<PAGE>
(iv) the transferee is a bank and (A) the source of
funds used to purchase such Certificates is a "collective
investment fund" (as defined in PTCE 91-38), (B) the
conditions set forth in PTCE 91-38 have been satisfied and (C)
there is no Plan, the interests of which, together with the
interests of any other Plans maintained by the same employer
or employee organization, in the collective investment fund
exceed 10% of the total of all assets in the collective
investment fund (as determined under PTCE 91-38) as of the
date of acquisition of such Certificates;
(v) the transferee is a "qualified professional asset
manager" described in PTCE 84-14 and the conditions set forth
in PTCE 84-14 have been satisfied and will continue to be
satisfied; or
(vi) the transferee is an "in-house asset manager"
described in PTCE 96-23 and the conditions set forth in PTCE
96-23 have been satisfied and will continue to be satisfied.
Very truly yours,
_________________________________
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF REPORT PURSUANT TO SECTION 4.06
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-K
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required). For fiscal year ended __________
Commission file number: 333-72647
Salomon Brothers Mortgage Securities VII, Inc.
(AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT DATED AS
OF____________________,
PROVIDING FOR THE ISSUANCE OF MORTGAGE PASS-THROUGH CERTIFICATES
SERIES _______)
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3439681
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation Identification Number)
390 Greenwich Street, 4th Floor
New York, New York 10013
---------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number: (212) 816-6000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter
<PAGE>
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X YES No
--- ---
Item 1. Business:
Not applicable
Item 2. Properties:
Not applicable
Item 3. Legal Proceedings:
None
Item 4. Submission of Matters to a Vote of Security-Holders
None
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
To the best knowledge of the registrant there is no established public
trading market for the certificates.
There are approximately _____ holders of record as of the end of the
reporting year.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Not applicable
Item 8. Financial Statements and Supplementary Data.
Not applicable.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
Item 10.
<PAGE>
Not applicable
Item 11. Executive Compensation
Not applicable
Item 12. Security Ownership of Certain Beneficial Owners and Management
Not applicable
Item 13. Certain Relationships and Related Transactions
Not applicable
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a) The company filed on Form 8-K, separately for each
distribution date, the distribution of funds related to the
trust for each of the following distribution dates:
Distribution Date Form 8-K Filing Date
----------------- --------------------
________________________ _______________________
________________________ _______________________
________________________ _______________________
b) 99.1 Annual Report of Independent Public Accountants' as
to master servicing activities or servicing
activities, as applicable
(a) New Century Mortgage Corporation, as
servicer <F1>
99.2 Annual Statement of Compliance with obligations under
the Pooling and Servicing Agreement or servicing
agreement, as applicable, of:
(a) New Century Mortgage Corporation, as
servicer <F1>
<F1> Such document (i) is not filed herewith since such document was not
received by the Reporting Person at least three business days prior to
the due date of this report; and (ii) will be included in an amendment
to this report on Form 10-K/A to be filed within 30 days of the
Reporting Person's receipt of such document.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: ___________
Salomon Brothers Mortgage Securities VII, Inc. by U.S. Bank National
Association, as Trustee for Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series _______,
By: /s/ Eve Kaplan
------------------------
Name: Eve Kaplan
Title: Vice President
Company: U.S. Bank National Association
<PAGE>
EXHIBIT I
FORM OF LOST NOTE AFFIDAVIT
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
-------------------
I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:
1. The Seller's address is : _____________________
_____________________
_____________________
2. The Seller previously delivered to the Purchaser a signed
Initial Certification with respect to such Mortgage and/or
Assignment of Mortgage;
3. Such Mortgage Note and/or Assignment of Mortgage was assigned
or sold to the Purchaser by ________________________, a
____________ corporation pursuant to the terms and provisions of
a Mortgage Loan Purchase Agreement dated as of __________ __,
_____;
4. Such Mortgage Note and/or Assignment of Mortgage is not
outstanding pursuant to a request for release of Documents;
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost;
6. Deponent has made or caused to be made a diligent search for
the Original and has been unable to find or recover same;
7. The Seller was the Seller of the Original at the time of the
loss; and
8. Deponent agrees that, if said Original should ever come into
Seller's possession, custody or power, Seller will immediately
and without consideration surrender the Original to the
Purchaser.
9. Attached hereto is a true and correct copy of (i) the Note,
endorsed in blank by the Mortgagee and (ii) the Mortgage or Deed
of Trust (strike one) which
<PAGE>
secures the Note, which Mortgage or Deed of Trust is recorded in
the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify
and hold harmless the Purchaser, its successors and assigns,
against any loss, liability or damage, including reasonable
attorney's fees, resulting from the unavailability of any Notes,
including but not limited to any loss, liability or damage
arising from (i) any false statement contained in this
Affidavit, (ii) any claim of any party that has already
purchased a mortgage loan evidenced by the Lost Note or any
interest in such mortgage loan, (iii) any claim of any borrower
with respect to the existence of terms of a mortgage loan
evidenced by the Lost Note on the related property to the fact
that the mortgage loan is not evidenced by an original note and
(iv) the issuance of a new instrument in lieu thereof (items (i)
through (iv) above hereinafter referred to as the "Losses) and
(b) if required by any Rating Agency in connection with placing
such Lost Note into a Pass-Through Transfer, shall obtain a
surety from an insurer acceptable to the applicable Rating
Agency to cover any Losses with respect to such Lost Note.
11. This Affidavit is intended to be relied upon by the
Purchaser, its successors and assigns. _____________________, a
______________ corporation represents and warrants that is has
the authority to perform its obligations under this Affidavit of
Lost Note.
Executed this ____ day, of ___________ ______.
SELLER
By:______________________
Name:
Title:
On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.
Signature:
[Seal]
<PAGE>
Schedule 1
----------
MORTGAGE LOAN SCHEDULE
FILED BY PAPER
<PAGE>
Schedule 2
----------
SCHEDULE OF PREPAYMENT CHARGES
