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: May 27, 1999
(Date of earliest event reported)
Commission File No. 333-61785
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV (as depositor under the Pooling
and Servicing Agreement, dated as of May 1, 1999, relating to the New South Home
Equity Trust 1999-1, Home Equity Asset Backed Certificates, Series 1999-1)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
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(Exact name of registrant as specified in its charter)
DELAWARE 06-1204982
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(State of Incorporation) (I.R.S. Employer Identification No.)
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
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(Address of principal executive offices) (Zip Code)
(212) 713-2000
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(Registrant's Telephone Number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
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On May 27, 1999, New South Home Equity Trust 1999-1 (the "TRUST")
issued the Home Equity Asset Backed Certificates, Series 1999-1, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-6IO (the
"OFFERED CERTIFICATES"), having an aggregate original principal balance of
$432,734,027. The Offered Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as of May 1, 1999 (the "POOLING AND SERVICING
AGREEMENT"), among PaineWebber Mortgage Acceptance Corporation IV, as depositor,
New South Federal Savings Bank, as transferor and servicer, and The Chase
Manhattan Bank, as trustee, a copy of which is filed as an exhibit hereto. The
Depositor's Home Equity Asset Backed Certificates, Series 1999-1, Class X-IO,
Class Z-IO and Class R (together with the Offered Certificates, the
"CERTIFICATES") were also issued pursuant to the Pooling and Servicing
Agreement. The Certificates represent, in the aggregate, the entire beneficial
ownership interest in a separate trust fund (the "TRUST FUND"), the property of
which is primarily comprised of a pool of closed-end, fixed-rate loans secured
primarily by first or second mortgages or deeds of trust on residential one- to
four-family properties and security interests in manufactured homes (the
"LOANS"). Interest on the Offered Certificates will be distributed on each
Distribution Date (as defined in the Pooling and Servicing Agreement). Monthly
payments in reduction of the principal balance of the Offered Certificates will
be allocated to the Offered Certificates in accordance with the priorities set
forth in the Pooling and Servicing Agreement.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits
ITEM 601(A)
OF REGULATION S-K
EXHIBIT NO. DESCRIPTION
- ----------------- -----------
(EX-4) Pooling and Servicing Agreement, dated as of May 1,
1999, between PaineWebber Mortgage Acceptance
Corporation IV, New South Federal Savings Bank and The
Chase Manhattan Bank.
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<PAGE>
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 hereunto duly authorized.
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
June 11, 1999
/S/ BARBARA J. DAWSON
By: _________________________________________
Name: Barbara J. Dawson
Title: Senior Vice President
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<PAGE>
INDEX TO EXHIBITS
-----------------
PAPER (P) OR
EXHIBIT NO. DESCRIPTION ELECTRONIC(E)
- ----------- ----------- -------------
(EX-4) Pooling and Servicing Agreement, dated as of May E
1, 1999, among PaineWebber Mortgage Acceptance
Corporation IV, New South Federal Savings Bank
and The Chase Manhattan Bank.
-5-
================================================================================
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1999
by and among
PaineWebber Mortgage Acceptance Corporation IV
(Depositor)
and
New South Federal Savings Bank
(Transferor and Servicer)
and
The Chase Manhattan Bank
(Trustee)
================================================================================
New South Home Equity Trust 1999-1
New South Home Equity Asset Backed Certificates,
Series 1999-1
Class A, Class X-IO, Class Z-IO and Class R
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms.......................................
Section 1.2 Provisions of General Application...........................
ARTICLE II
Establishment of the Trust;
Sale and Conveyance of Trust Fund
Section 2.1 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests; Establishment
of the Trust..............................................
Section 2.2 Possession of Loan Files; Access to Loan Files..............
Section 2.3 Delivery of Loan Documents..................................
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee...................
Section 2.5 Creation of the Uncertificated Regular Interests
and Residual Interests; Basis Risk
Arrangements; Issuance of Certificates....................
Section 2.6 Designations under REMIC Provisions; Designation of
Startup Day and Latest Possible Maturity Date.............
Section 2.7 Application of Principal and Interest.......................
Section 2.8 Grant of Security Interest..................................
Section 2.9 Further Assurances; Powers of Attorney......................
ARTICLE III
Representations and Warranties
Section 3.1 Representations of the Servicer.............................
Section 3.2 Representations, Warranties and Covenants of the Depositor..
Section 3.3 Representations and Warranties of the Transferor............
Section 3.4 Representations and Warranties of the Transferor Regarding
Individual Loans..........................................
Section 3.5 Purchase and Substitution...................................
Section 3.6 Servicer Covenants..........................................
ARTICLE IV
The Certificates
Section 4.1 The Certificates............................................
Section 4.2 Registration of Transfer and Exchange of Certificates.......
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates...........
Section 4.4 Persons Deemed Owners.......................................
ARTICLE V
Administration and Servicing of the Loans
Section 5.1 Appointment of the Servicer.................................
Section 5.2 Subservicing Agreements Between the Servicer and
Subservicers..............................................
Section 5.3 Collection of Certain Loan Payments; Collection Account.....
Section 5.4 Permitted Withdrawals from the Collection Account...........
Section 5.5 Payment of Taxes, Insurance and Other Charges...............
Section 5.6 Maintenance of Casualty Insurance...........................
Section 5.7 Servicer Account............................................
Section 5.8 Fidelity Bond; Errors and Omissions Policy..................
Section 5.9 Collection of Taxes, Assessments and Other Items............
Section 5.10 Periodic Filings with the Securities and Exchange
Commission; Additional Information........................
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption Agreements...
Section 5.12 Realization upon Defaulted Loans............................
Section 5.13 Trustee to Cooperate; Release of Loan Files.................
Section 5.14 Servicing Fee; Servicing Compensation.......................
Section 5.15 Reports to the Trustee; Collection Account Statements.......
Section 5.16 Annual Statement as to Compliance...........................
Section 5.17 Annual Independent Public Accountants' Servicing Report.....
Section 5.18 Reports to be Provided by the Servicer......................
Section 5.19 Adjustment of Servicing Compensation in Respect of
Prepaid Loans.............................................
Section 5.20 Periodic Advances...........................................
Section 5.21 Indemnification; Third Party Claims.........................
Section 5.22 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer...................
Section 5.23 Assignment of Agreement by Servicer; Servicer Not to Resign.
ARTICLE VI
Distributions and Payments
Section 6.1 Establishment of Certificate Account, Deposits to the
Certificate Account.......................................
Section 6.2 Permitted Withdrawals From the Certificate Account..........
Section 6.3 Collection of Money.........................................
Section 6.4 The Certificate Insurance Policy............................
Section 6.5 Distributions...............................................
Section 6.6 Investment of Accounts......................................
Section 6.7 Reports by Trustee..........................................
Section 6.8 Additional Reports by Trustee and by Servicer...............
Section 6.9 Compensating Interest.......................................
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation..
ARTICLE VII
Default
Section 7.1 Events of Default...........................................
Section 7.2 Trustee to Act; Appointment of Successor....................
Section 7.3 Waiver of Defaults..........................................
Section 7.4 Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Holders and Certificate Insurer........
ARTICLE VIII
Termination
Section 8.1 Termination.................................................
Section 8.2 Additional Termination Requirements.........................
Section 8.3 Accounting Upon Termination of Servicer.....................
ARTICLE IX
The Trustee
Section 9.1 Duties of Trustee...........................................
Section 9.2 Certain Matters Affecting the Trustee.......................
Section 9.3 Not Liable for Certificates or Loans........................
Section 9.4 Trustee May Own Certificates................................
Section 9.5 Trustee's Fees and Expenses; Indemnity......................
Section 9.6 Eligibility Requirements for Trustee........................
Section 9.7 Resignation and Removal of the Trustee......................
Section 9.8 Successor Trustee...........................................
Section 9.9 Merger or Consolidation of Trustee..........................
Section 9.10 Appointment of Co-Trustee or Separate Trustee...............
Section 9.11 Tax Returns; OID Interest Reporting.........................
Section 9.12 Retirement of Certificates..................................
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation on Liability of the Depositor and the Servicer...
Section 10.2 Acts of Certificateholders; Certificateholders' Rights......
Section 10.3 Amendment or Supplement.....................................
Section 10.4 Recordation of Agreement....................................
Section 10.5 Duration of Agreement.......................................
Section 10.6 Notices.....................................................
Section 10.7 Severability of Provisions..................................
Section 10.8 No Partnership..............................................
Section 10.9 Counterparts................................................
Section 10.10 Successors and Assigns......................................
Section 10.11 Headings....................................................
Section 10.12 The Certificate Insurer Default.............................
Section 10.13 Third Party Beneficiary.....................................
Section 10.14 Intent of the Parties.......................................
Section 10.15 Appointment of Tax Matters Person...........................
Section 10.16 GOVERNING LAW...............................................
<PAGE>
EXHIBITS
EXHIBIT A Specimen Certificate Insurance Policy
EXHIBIT B-1 Specimen Class A-1 Certificate
EXHIBIT B-2 Specimen Class A-2 Certificate
EXHIBIT B-3 Specimen Class A-3 Certificate
EXHIBIT B-4 Specimen Class A-4 Certificate
EXHIBIT B-5 Specimen Class A-5 Certificate
EXHIBIT B-6 Specimen Class A-6 Certificate
EXHIBIT B-7 Specimen Class A-6IO Certificate
EXHIBIT B-8 Specimen Class X-IO Certificate
EXHIBIT B-9 Specimen Class Z-IO Certificate
EXHIBIT B-10 Specimen Class R1 Certificate
EXHIBIT B-11 Specimen Class R2 Certificate
EXHIBIT C Loan Schedule
EXHIBIT D-1 Form of Initial Certification of Trustee
EXHIBIT D-2 Form of Updated Initial Certification of the Trustee
EXHIBIT E Form of Final Certification of Trustee
EXHIBIT F Form of Request for Release of Loan Files
EXHIBIT G-1 Form of Transfer Affidavit
EXHIBIT G-2 Form of Transferor Letter
EXHIBIT H Form of Investment Representation Letter
EXHIBIT I Form of ERISA Investment Representation Letter
EXHIBIT J Form of Officer's Certificate of the Transferor: Prepaid Loans
EXHIBIT K Form of Servicer Remittance Report
<PAGE>
This Pooling and Servicing Agreement (the "AGREEMENT"), relating to New
South Home Equity Trust 1999-1 (the "TRUST"), dated as of May 1, 1999 by and
among PaineWebber Mortgage Acceptance Corporation IV, as depositor of the Trust
(the "DEPOSITOR"), New South Federal Savings Bank, as Transferor (in such
capacity, the "TRANSFEROR") and as Servicer (in such capacity, the "SERVICER"),
and The Chase Manhattan Bank, in its capacity as trustee (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Loans (as
described herein), which constitute the principal assets of the trust estate;
WHEREAS, The Chase Manhattan Bank, is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, Ambac Assurance Corporation (the "CERTIFICATE
INSURER") is intended to be a third-party beneficiary of this Agreement, and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Transferor, the Servicer
and the Trustee hereby agree as follows:
PRELIMINARY STATEMENT
As provided herein, the Trustee will elect that designated
portions of the Trust Fund be treated for federal income tax purposes as four
separate real estate mortgage investment conduits (each, a "REMIC" and
designated, respectively as "REMIC I," "REMIC II," "REMIC III" and "REMIC IV"),
and will treat the remainder of the Trust Fund as a grantor trust (the "GRANTOR
TRUST") for federal income tax purposes.
The following tables set forth the designation, Initial Class
Principal Balance and Initial Pass-Through Rate for each Class of Interests and
Certificates comprising the interests in the Trust Fund created hereunder.
<PAGE>
REMIC I
-------
INITIAL CLASS
PRINCIPAL BALANCE OR INITIAL PASS-THROUGH RATE
CLASS DESIGNATION NOTIONAL BALANCE (PER ANNUM)
- ----------------- -------------------- -------------------------
L1 $424,079,346.46(1) 7.1257%(2)
L2 $4,327,340.27(3) 7.1257%(2)
L3 $4,327,340.27(4) 7.1257%(2)
L4N $432,734,027(5) 1.93%(6)
R-I (7) (7)
- -------------------
(1) The Class Principal Balance of the Class L1 Interest is 98% of the
Aggregate Principal Balance.
(2) The Pass-Through Rate of the Class L1, Class L2 and Class L3 Interests is
the Reduced Weighted Average Net Loan Rate.
(3) The Class Principal Balance of the Class L2 Interest is 1% of the
difference between the Aggregate Principal Balance and the
Overcollateralization Amount.
(4) The Class Principal Balance of the Class L3 Interest is 1% of the sum of
the Aggregate Principal Balance and the Overcollateralization Amount.
(5) The Class L4N Interest has no Class Principal Balance. The Notional Balance
of the Class L4N Interest is the Aggregate Principal Balance.
(6) The Pass-Through Rate of the Class L4N Interest is 1.93%.
(7) The Class R-I Interest has no Class Principal Balance and no Pass-Through
Rate. The Class R-I Interest is represented by the Class R1 Certificate.
<PAGE>
REMIC II
--------
INITIAL CLASS
PRINCIPAL BALANCE OR INITIAL PASS-THROUGH RATE
CLASS DESIGNATION NOTIONAL BALANCE (PER ANNUM)
- ----------------- -------------------- -------------------------
M1 $424,079,346.46(1) 7.1257%(2)
M1N $424,079,346.46(3) 0%(4)
M2 $4,327,340.27(5) 7.1257%(2)
M2N $4,327,340.27(6) 0%(4)
M3 $4,327,340.27(7) 7.1257%(2)
M3N $4,327,340.27(8) 0%(4)
M4N $432,734,027(9) 1.93%(10)
R-II N/A(11) N/A(11)
- -------------------
(1) The Class Principal Balance of the Class M1 Interest is 98% of the
Aggregate Principal Balance.
(2) The Pass-Through Rate of the Class M1, Class M2 and Class M3 Interests is
the REMIC II Weighted Average Rate.
(3) The Class M1N Interest has no Class Principal Balance. The Notional Balance
of the Class M1N Interest is the Class L1 Principal Balance of the Class L1
Interest.
(4) The Pass-Through Rate of the Class M1N, Class M2N and Class M3N Interests
is the REMIC II/III Strip Rate.
(5) The Class Principal Balance of the Class M2 Interest is 1% of the
difference between the Aggregate Principal Balance and the
Overcollateralization Amount.
(6) The Class M2N Interest has no Class Principal Balance. The Notional
Balance of the Class M2N Interest is the Class L2 Principal Balance of
the Class L2 Interest.
(7) The Class Principal Balance of the Class M3 Interest is 1% of the sum of
the Aggregate Principal Balance and the Overcollateralization Amount.
(8) The Class M3N Interest has no Class Principal Balance. The Notional Balance
of the Class M3N Interest is the Class L3 Principal Balance of the Class L3
Interest.
(9) The Class M4N Interest has no Class Principal Balance. The Notional Balance
of the Class M4N Interest is the Aggregate Principal Balance.
(10) The Pass-Through Rate of the Class M4N Interest is 1.93%.
(11) The Class R-II Interest has no Class Principal Balance and no Pass-Through
Rate. The Class R-II Interest is represented by the Class R2 Certificate.
<PAGE>
REMIC III
---------
INITIAL CLASS
PRINCIPAL BALANCE OR INITIAL PASS-THROUGH RATE
CLASS DESIGNATION NOTIONAL BALANCE (PER ANNUM)
- ----------------- -------------------- -------------------------
PA-1 $105,701,000(1) 7.1257%(2)
PA-2 $104,998,000(3) 7.1257%(2)
PA-3 $104,428,000(4) 7.1257%(2)
PA-4 $44,884,203(5) 7.1257%(2)
PA-5 $50,722,824(6) 7.1257%(2)
PA-6 $22,000,000(7) 7.1257%(2)
P3N $432,734,027(9) 0%(9)
P4N N/A(10) N/A(11)
R-III N/A(12) N/A(12)
- -------------------
(1) The Class Principal Balance of the Class PA-1 Interest is the Class A-1
Principal Balance.
(2) The Pass-Through Rate of the Class PA-1, Class PA-2, Class PA-3, Class
PA-4, Class PA-5 and Class PA-6 Interests is the Reduced Weighted Average
Net Loan Rate.
(3) The Class Principal Balance of the Class PA-2 Interest is the Class A-2
Principal Balance.
(4) The Class Principal Balance of the Class PA-3 Interest is the Class A-3
Principal Balance.
(5) The Class Principal Balance of the PA-4 Interest is the Class A-4 Principal
Balance.
(6) The Class Principal Balance of the PA-5 Interest is the Class A-5 Principal
Balance.
(7) The Class Principal Balance of the Class PA-6 Interest is the Class A-6
Principal Balance.
(8) The Class P3N Interest has no Class Principal Balance. The Notional
Principal Balance of the Class P3N Interest is the Aggregate Principal
Balance.
(9) The Pass-Through Rate of the Class P3N Interest is the REMIC II/III Strip
Rate.
(10) The Class P4N Interest has no Class Principal Balance or Notional Balance.
(11) The Class P4N Interest has no Pass-Through Rate. The Class P4N Interest is
entitled to an amount equal to the Class Z-IO REMIC Amount.
(12) The Class R-III Interest has no Class Principal Balance and no Pass-Through
Rate. The Class R-III Interest is represented by the Class R2 Certificate.
<PAGE>
REMIC IV
--------
INITIAL CLASS
PRINCIPAL BALANCE OR INITIAL PASS-THROUGH RATE
CLASS DESIGNATION NOTIONAL BALANCE (PER ANNUM)
- ----------------- -------------------- -------------------------
QA-1 $105,701,000(1) 3.5%(2)
QA-1N $105,701,000(3) 3.6257%(4)
QA-2 $104,998,000(5) 3.5%(6)
QA-2N $104,998,000(7) 3.6257%(8)
QA-3 $104,428,000(9) 3.5%(6)
QA-3N $104,428,000(10) 3.6257%(8)
QA-4 $44,884,203(11) 3.5%(6)
QA-4N $44,884,203(12) 3.6257%(8)
QA-5 $50,722,824(13) 3.5%(6)
QA-5N $50,722,824(14) 3.6257%(8)
QA-6 $22,000,000(15) 3.5%(6)
QA-6N $22,000,000(16) 3.6257%(8)
Q3N $432,734,027(17) 0%(18)
Q4N NA(19) N/A(20)
R-IV N/A(21) N/A(21)
- -------------------
(1) The Class Principal Balance of the Class QA-1 Interest is the Class A-1
Principal Balance.
(2) The Pass-Through Rate of the Class QA-1 Interest is the lesser of (i) the
Reduced Weighted Average Net Loan Rate and (ii) the lesser of the Class A-1
Pass-Through Rate (expressed on the basis of a 360 day year consisting of
twelve 30-day months) and 3.5%.
(3) The Class QA-1N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-1N Interest is the Class A-1 Principal Balance.
(4) The Pass-Through Rate of the Class QA-1N Interest is the Reduced Weighted
Average Net Loan Rate minus the lesser of the Class A-1 Pass-Through Rate
and 3.5%.
(5) The Class Principal Balance of the Class QA-2 Interest is the Class A-2
Principal Balance.
(6) The Pass-Through Rate of the Class QA-2, Class QA-3, Class QA-4, Class QA-5
and Class QA-6 Interests is the lesser of the Reduced Weighted Average Net
Loan Rate and 3.5%.
(7) The Class QA-2N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-2N Interest is the Class A-2 Principal Balance.
(8) The Pass-Through Rate of the Class QA-2N, Class QA-3N, Class QA-4N, Class
QA-5N and Class QA-6N Interests is the Reduced Weighted Average Net Loan
Rate minus 3.5%.
(9) The Class Principal Balance of the Class QA-3 Interest is the Class A-3
Principal Balance.
(10) The Class QA-3N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-3N Interest is the Class A-3 Principal Balance.
(11) The Class Principal Balance of the Class QA-4 Interest is the Class A-4
Principal Balance.
(12) The Class QA-4N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-4N Interest is the Class A-4 Principal Balance.
(13) The Class Principal Balance of the Class QA-5 Interest is the Class A-5
Principal Balance.
(14) The Class QA-5N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-5N Interest is the Class A-5 Principal Balance.
(15) The Class Principal Balance of the Class QA-6 Interest is the Class A-6
Principal Balance.
(16) The Class QA-6N Interest has no Class Principal Balance. The Notional
Balance of the Class QA-6N Interest is the Class A-6 Principal Balance.
(17) The Class Q3N Interest has no Class Principal Balance. The Notional Balance
of the Class Q3N Interest is the Aggregate Principal Balance.
(18) The Pass-Through Rate of the Class Q3N Interest is the REMIC II/III Strip
Rate.
(19) The Class Q4N Interest has no Class Principal Balance or Notional Balance.
(20) The Class Q4N Interest has no Pass-Through Rate. The Class Q4N Interest is
entitled to an amount equal to the Class Z-IO REMIC Amount.
(21) The Class R-IV Interest has no Class Principal Balance and no Pass-Through
Rate. The Class R-IV Interest is represented by the Class R Certificate.
<PAGE>
GRANTOR TRUST
-------------
INITIAL CLASS
PRINCIPAL BALANCE OR INITIAL PASS-THROUGH RATE
CLASS DESIGNATION NOTIONAL BALANCE (PER ANNUM)
- ----------------- -------------------- -------------------------
A-1 $105,701,000 %(1)(2)
A-2 $104,998,000 6.21%(2)
A-3 $104,428,000 6.39%(2)(3)
A-4 $44,884,203 6.75%(2)(3)
A-5 $50,722,824 7.21%(2)(3)
A-6 $22,000,000 6.73%(2)(3)
A-6IO $22,000,000(4) 8.00%
X-IO (5) (6)
Z-IO (7) (8)
R1 N/A (9) N/A (9)
R2 N/A (10) N/A (10)
- -------------------
(1) The Pass-Through Rate of the Class A-1 Certificates is equal to the lesser
of (i) LIBOR plus 0.09% and (ii) the Class A-1 Available Funds Cap.
(2) The Pass-Through Rate of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates shall increase by 0.50% per annum on
the first day of the Accrual Period in which the Optional Termination Date
occurs.
(3) The Pass-Through Rate of the Class A-3, Class A-4, Class A-5 and Class A-6
Certificates is the lesser of their respective fixed rates and the Fixed
Rate Available Funds Cap.
(4) The Class A-6IO Certificates have no Class Principal Balance. The Notional
Balance of the Class A-6IO Certificates is the Class A-6 Principal Balance.
(5) The Class X-IO Certificates have no Class Principal Balance or Notional
Balance.
(6) The Class X-IO Certificates have no Pass-Through Rate. The Class X-IO
Certificates are entitled to the Class X-IO Distribution Amount.
(7) The Class Z-IO Certificates have no Class Principal Balance or Notional
Balance.
(8) The Class Z-IO Certificates have no Pass-Through Rate. The Class Z-IO
Certificates are entitled to the Class Z-IO Distribution Amount.
(9) The Class R1 Certificates have no Class Principal Balance and no
Pass-Through Rate. The Class R Certificates represent the Class R-I
Interest.
(10) The Class R2 Certificates have no Class Principal Balance and no
Pass-Through Rate. The Class R2 Certificates represent the Class R-II,
Class R-III and Class R-IV Interests.
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. Whenever used herein the following
words and phrases, unless the context otherwise requires, shall have the
following meanings.
"ACCEPTED SERVICING PRACTICES" shall mean the Servicer's normal
servicing practices in servicing and administering mortgage loans or
manufactured home contracts for its own account, which in general will conform
to the mortgage servicing practices of prudent mortgage lending institutions
which service for their own account loans of the same type as the Loans in the
jurisdictions in which the related Properties are located and will give due
consideration to the Certificate Insurer's and the Certificateholders' reliance
on the Servicer.
"ACCOUNT" shall mean any Eligible Account established hereunder.
"ACCRUAL PERIOD" shall mean (i) with respect to the Class A-1
Certificates and any Distribution Date, the period commencing on the immediately
preceding Distribution Date or, in the case of the first Distribution Date, the
Closing Date, and ending on the day preceding such Distribution Date and (ii)
with respect to the Certificates other than the Class A-1 Certificates and any
Distribution Date, the calendar month immediately prior to the month in which
such Distribution Date occurs.
"ADVANCE" shall mean any Servicing Advance or Periodic Advance.
"ADVERSE REMIC EVENT" shall have the meaning set forth in Section
5.1(c).
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
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.
"AGGREGATE CLASS PRINCIPAL BALANCE" shall mean the sum of the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance and
the Class A-6 Principal Balance.
"AGGREGATE PRINCIPAL BALANCE" shall mean the sum of the Principal
Balances of each of the Loans as of any date of determination.
"AGREEMENT" shall mean this Pooling and Servicing Agreement, including
the Exhibits hereto, as amended or supplemented from time to time in accordance
herewith.
"APPRAISED VALUE" shall mean the lesser of (i) the appraised value of
any Property, based upon the appraisal or other property valuation made at the
time the related Loan is originated and (ii) the purchase price of such
Property, or with respect to a Manufactured Home, the stated cash sale price of
such Property plus all sales and other taxes, financing fees and insurance
premiums, and any applicable filing and recording fees imposed by law.
"ASSIGNMENT OF MORTGAGE" shall mean, with respect to each Mortgage
Loan, an assignment of the Mortgage, notice of transfer or equivalent instrument
(which may be in blank) sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer.
"AUTHORIZED DENOMINATIONS" shall mean, in the case of the Class A
Certificates, $25,000 or integral multiples of $1,000 in excess thereof;
PROVIDED, HOWEVER, that one Class A-1 Certificate, one Class A-2 Certificate,
one Class A-3 Certificate, one Class A-4 Certificate, one Class A-5 Certificate,
one Class A-6 Certificate, and one Class A-6IO Certificate, each is issuable in
a denomination equal to an amount less than $1,000 such that the aggregate
denomination of all Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates and Class A-6IO Certificates, as the case may be, shall be equal to
the applicable initial Class Principal Balance or initial Notional Balance set
forth in the Preliminary Statement hereto. In the case of the Class X-IO
Certificates, the Class Z-IO Certificates and the Class R Certificates, a 25%
Percentage Interest therein.
"AVAILABLE DISTRIBUTION AMOUNT" shall mean for any Distribution Date,
the (i) the Servicer Remittance Amount for such Distribution Date minus (ii) the
sum of the (A) Trustee Fee for such Distribution Date and (B) the Certificate
Insurance Premium Amount for such Distribution Date.
"AVAILABLE TURBO AMOUNT" shall mean for any Distribution Date the
lesser of (a) the Available Distribution Amount remaining after the
distributions are made in Sections 6.5(b)(iii) through (v) hereof on such
Distribution Date and (b) the Class Z-IO Distribution Amount for such
Distribution Date.
"BASIS RISK ARRANGEMENT" shall mean (i) the rights of the Principal
Balance Certificates to receive the excess of interest computed at their
respective Uncapped Pass-Through Rates over interest computed at the
Pass-Through Rates on their corresponding REMIC IV Regular Interests having the
prefix "Q" and the same alphabetical and numerical designation, (ii) the rights
of the Class A-6IO Certificates to receive interest distributions and (iii) the
arrangement by which distributions on the Class X-IO and Class Z-IO Certificates
are diminished by the amounts in clauses (i) and (ii) above.
"BORROWER" shall mean the obligor on a Mortgage Note or Manufactured
Home Contract.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday,
or (ii) a day on which banking institutions in the States of New York or Alabama
are authorized or obligated by law or executive order to be closed.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"CERTIFICATE" shall mean any Class A Certificate, any Class X-IO
Certificate, any Class Z-IO Certificate or any Class R Certificate executed by
the Trustee on behalf of the Trust Fund and authenticated by the Trustee.
"CERTIFICATE ACCOUNT" shall mean the Certificate Account established in
accordance with Section 6.1(a) hereof and maintained by the Trustee.
"CERTIFICATE INSURANCE POLICY" shall mean the certificate guaranty
insurance policy #AB0261BE, and all endorsements thereto dated the Closing Date,
issued by the Certificate Insurer for the benefit of the Class A
Certificateholders, a copy of which is attached hereto as Exhibit A.
"CERTIFICATE INSURANCE PREMIUM AMOUNT" shall mean for any Distribution
Date the product of the 1/12th of the Premium Percentage and the Aggregate
Principal Balance for the related Due Period.
"CERTIFICATE INSURER" shall mean Ambac Assurance Corporation, a stock
insurance company organized and created under the laws of the State of
Wisconsin, and any successors thereto.
"CERTIFICATE INSURER DEFAULT" shall mean the existence and continuance
of any of the following: (i) a failure by the Certificate Insurer to make a
payment required under a Certificate Insurance Policy in accordance with its
terms; (ii) the entry of a decree or order of a court or agency having
jurisdiction in respect of the Certificate Insurer in an involuntary case under
any present or future federal or state bankruptcy, insolvency or similar law
appointing a conservator or receiver or liquidator or other similar official of
the Certificate Insurer or of any substantial part of its property, or the
entering of an order for the winding up or liquidation of the affairs of the
Certificate Insurer and the continuance of any such decree or order undischarged
or unstayed and in force for a period of 90 consecutive days; (iii) the
Certificate Insurer shall consent to the appointment of a conservator or
receiver or liquidator or other similar proceedings or of relating to the
Certificate Insurer or of or relating to all or substantially all of its
property; or (iv) the Certificate Insurer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of or otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"CERTIFICATE REGISTER" shall have the meaning described in Section
4.2(a).
"CERTIFICATEHOLDER" shall mean, except as provided in Article X, each
Person in whose name a Certificate is registered in the Certificate Register,
except that, solely for the purposes of giving any consent (except any consent
required to be obtained pursuant to Section 10.2), waiver, requestor demand
pursuant to this Agreement, any Certificate registered in the name of the
Servicer or any Subservicer or the Transferor, or any Affiliate of any of them,
shall be deemed not to be outstanding and the undivided interest in the Trust
Fund evidenced thereby shall not be taken into account in determining whether
the requisite percentage of Certificates necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Certificateholders pursuant to this Agreement, upon
the Trustee's request, the Servicer and the Transferor shall provide to the
Trustee a notice identifying any of their respective Affiliates or the
Affiliates of any Subservicer that is a Certificateholder as of the date(s)
specified by the Trustee in such request. Any Certificates on which payments are
made under the Certificate Insurance Policy shall be deemed to be outstanding
and held by the Certificate Insurer to the extent of such payment.
"CIVIL RELIEF ACT" shall mean the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"CLASS" shall mean any designated Class of Certificates of this Series
or of any new Series issued hereunder.
"CLASS A CERTIFICATE" shall mean any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate, Class A-6 Certificate or Class A-6IO Certificate.
"CLASS A CERTIFICATEHOLDER" shall mean a Holder of a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate, Class A-5 Certificate, Class A-6 Certificate or Class A-6IO
Certificate.
"CLASS A TURBO AMOUNT" shall mean for any Distribution Date lesser of
(a) the amount of the Available Turbo Amount remaining after the distribution is
made in Sections 6.5(b)(vi) hereof on such Distribution Date and (b) the
Overcollateralization Deficiency Amount for such Distribution Date.
"CLASS A-1 AVAILABLE FUNDS CAP RATE" shall mean with respect to the
Class A-1 Certificates for any Distribution Date a per annum rate determined by
taking the amount of interest that would accrue on the Class Principal Balance
of the Class A-1 Certificates at the Fixed Rate Available Funds Cap Rate
(assuming that interest were to accrue on the Class A-1 Certificates on the
basis of a 360-day year consisting of twelve 30-day months) and converting such
amount of interest into a per annum rate calculated on the basis of a 360-day
year and the actual number of days elapsed in the Accrual Period for the
applicable Distribution Date. The Class A-1 Available Funds Cap Rate shall only
apply when the Class A-1 Certificates are determined to be one of the Classes
whose interest will be capped after determining the Fixed Rate Available Funds
Cap Rate described in the definition thereof.
"CLASS A-1 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-1 CERTIFICATE" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-1 CERTIFICATEHOLDER" shall mean a Holder of a Class A-1
Certificate.
"CLASS A-1 LIBOR INTEREST CARRYOVER" shall mean for any Distribution
Date and the Class A-1 Certificates, the sum of (i) the difference between (a)
the amount of interest the Class A-1 Certificates would be entitled to receive
on such Distribution Date at its applicable Uncapped Pass-Through Rate and (b)
the amount of interest actually distributed to the Class A-1 Certificates on
such Distribution Date pursuant to Section 6.5(b)(iii) of this Agreement, (ii)
the portion of any amount calculated pursuant to clause (i) above remaining
unpaid from prior Distribution Dates and (iii) interest accrued thereon at the
then-applicable Class A-1 LIBOR Rate.
"CLASS A-1 LIBOR RATE" shall mean with respect to the Class A-1
Certificates for any Distribution Date a per annum rate (calculated on the basis
of actual days elapsed and an assumed year of 360 days) equal to the sum of (a)
LIBOR on the Interest Determination Date plus a margin of (b) 0.09% per annum
or, commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.59% per annum.
"CLASS A-1 PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a per annum rate (calculated on the basis of actual days
elapsed and an assumed year of 360 days) equal to the lesser of (i) the Class
A-1 LIBOR Rate and (ii) the Class A-1 Available Funds Cap Rate.
"CLASS A-1 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance for such Class less all
distributions pursuant to Section 6.5(b) attributable to principal on the Class
A-1 Certificates on all prior Distribution Dates.
"CLASS A-2 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-2 CERTIFICATE" on the face thereof, in the form of Exhibit B-2 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-2 CERTIFICATEHOLDER" shall mean a Holder of a Class A-2
Certificate.
"CLASS A-2 PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a 6.21% per annum rate (calculated on the basis of an assumed
month of 30 days and an assumed year of 360 days) plus, commencing on the first
day of the Accrual Period during which the Optional Termination Date occurs,
0.50% per annum.
"CLASS A-2 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance of such Class less all
distributions pursuant to Section 6.5(b) attributable to principal on the Class
A-2 Certificates on all prior Distribution Dates.
"CLASS A-3 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-3 CERTIFICATE" on the face thereof, in the form of Exhibit B-3 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-3 CERTIFICATEHOLDER" shall mean a Holder of a Class A-3
Certificate.
"CLASS A-3 PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a per annum rate (calculated on the basis of an assumed month
of 30 days and an assumed year of 360 days) equal to the lesser of (i) 6.39%
plus, commencing on the first day of the Accrual Period during which the
Optional Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds
Cap Rate.
"CLASS A-3 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance of such Class less all
distributions pursuant to Section 6.5(b) attributable to principal on the Class
A-3 Certificates on all prior Distribution Dates.
"CLASS A-4 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-4 CERTIFICATE" on the face thereof, in the form of Exhibit B-4 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-4 CERTIFICATEHOLDER" shall mean a Holder of a Class A-4
Certificate.
"CLASS A-4 PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a per annum rate (in each case calculated on the basis of an
assumed month of 30 days and an assumed year of 360 days) equal to the lesser of
(i) 6.75% plus, commencing on the first day of the Accrual Period during which
the Optional Termination Date occurs, 0.50% per annum and (ii) the Fixed Rate
Available Funds Cap Rate.
"CLASS A-4 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance of such Class less all
distributions pursuant to Section 6.5(b) attributable to principal on the Class
A-4 Certificates on all prior Distribution Dates.
"CLASS A-5 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-5 CERTIFICATE" on the face thereof, in the form of Exhibit B-5 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-5 CERTIFICATEHOLDER" shall mean a Holder of a Class A-5
Certificate.
"CLASS A-5 PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a per annum rate (in each case calculated on the basis of an
assumed month of 30 days and an assumed year of 360 days) equal to the lesser of
(i) 7.21% plus, commencing on the first day of the Accrual Period during which
the Optional Termination Date occurs, 0.50% per annum and (ii) the Fixed Rate
Available Funds Cap Rate.
"CLASS A-5 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance of such Class less all
distributions pursuant to Section 6.5(b) attributable to principal on the Class
A-5 Certificates on all prior Distribution Dates.
"CLASS A-6 CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-6 CERTIFICATE" on the face thereof, in the form of Exhibit B-4 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS A-6 CERTIFICATEHOLDER" shall mean a Holder of a Class A-6
Certificate.
"CLASS-A-6 LOCKOUT DISTRIBUTION AMOUNT" shall mean with respect to any
Distribution Date, the product of (a) the applicable Class A-6 Lockout
Percentage for such Distribution Date and (b) the Class A-6 Lockout Pro Rata
Distribution Amount for such Distribution Date.
"CLASS A-6 LOCKOUT PERCENTAGE" shall mean with respect to each
Distribution Date as follows:
DISTRIBUTION DATES LOCKOUT PERCENTAGE
June 1999 - May 2002 0%
June 2002 - May 2004 45%
June 2004 - May 2005 80%
June 2005 - May 2006 100%
June 2006 and thereafter 300%
"CLASS A-6 LOCKOUT PRO RATA DISTRIBUTION AMOUNT" shall mean with
respect to any Distribution Date, an amount equal to the product of (a) a
fraction, the numerator of which is the Class A-6 Principal Balance immediately
prior to such Distribution Date and the denominator of which is the aggregate
Class Principal Balances for all Principal Balance Certificates immediately
prior to such Distribution Date and (b) the Principal Distribution Amount for
such Distribution Date.
"CLASS A-6 LOCKOUT PRO RATA TURBO AMOUNT" shall mean with respect to
any Distribution Date, an amount equal to the product of (a) a fraction, the
numerator of which is the Class A-6 Principal Balance immediately prior to such
Distribution Date and the denominator of which is the aggregate Class Principal
Balances of the Principal Balance Certificates immediately prior to such
Distribution Date and (b) the Class A Turbo Amount for such Distribution Date.
"CLASS A-6 LOCKOUT TURBO AMOUNT" shall mean with respect to any
Distribution Date, the product of (a) the applicable Class A-6 Lockout
Percentage for such Distribution Date and (b) the Class A-6 Lockout Pro Rata
Turbo Amount for such Distribution Date.
"CLASS A-6 PASS-THROUGH RATE" with respect to any Distribution Date
will be equal to a per annum rate (in each case calculated on the basis of an
assumed month of 30 days and an assumed year of 360 days) equal to the lesser of
(i) 6.73% plus, commencing on the first day of the Accrual Period during which
the Optional Termination Date occurs, 0.50% per annum and (ii) the Fixed Rate
Available Funds Cap Rate.
"CLASS A-6 PRINCIPAL BALANCE" shall mean, as of any date of
determination, the Original Class Principal Balance for such Class less all
distributions pursuant to Section 6.5(b) allocable to principal on the Class A-6
Certificates on all prior Distribution Dates.
"CLASS A-6IO CERTIFICATE" shall mean any Certificate designated as a
"CLASS A-6IO CERTIFICATE" on the face thereof, in the form of Exhibit B-7
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"CLASS A-6IO CERTIFICATEHOLDER" shall mean a Holder of a Class A-6IO
Certificate.
"CLASS A-6IO NOTIONAL AMOUNT" shall mean, as of any date of
determination, the outstanding Class A-6 Class Principal Balance on such date.
The Class A-6IO Certificates will not have a Class Principal Balance and will
not be entitled to any distributions in respect of principal.
"CLASS A-6IO PASS-THROUGH RATE" with respect to any Distribution Date,
will be equal to a 8.00% per annum rate (in each case calculated on the basis of
an assumed month of 30 days and an assumed year of 360 days); PROVIDED, HOWEVER,
that the Class A-6IO Pass-Through Rate shall be 0% commencing with the Accrual
Period for the Distribution Date in June 2001.
"CLASS L1 INTEREST" shall mean the REMIC I Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS L2 INTEREST" shall mean the REMIC I Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS L3 INTEREST" shall mean the REMIC I Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS L4N INTEREST" shall mean the REMIC I Regular Interest having the
Notional Balance and Pass-Through Rate set forth in the Preliminary Statement
hereto.
"CLASS M1 INTEREST" shall mean the REMIC II Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M1N INTEREST" shall mean the REMIC II Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M2 INTEREST" shall mean the REMIC II Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M2N INTEREST" shall mean the REMIC II Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M3 INTEREST" shall mean the REMIC II Regular Interest having the
Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M3N INTEREST" shall mean the REMIC II Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS M4N INTEREST" shall mean the REMIC II Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS P3N INTEREST" shall mean the REMIC III Regular Interest
having the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS P4N INTEREST" shall mean the REMIC III Regular Interest entitled
to an amount equal to the Class Z-IO REMIC Amount.
"CLASS PA-1 INTEREST" shall mean the REMIC III Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PA-2 INTEREST" shall mean the REMIC III Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PA-3 INTEREST" shall mean the REMIC III Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PA-4 INTEREST" shall mean the REMIC III Regular
Interest having the Class Principal Balance and Pass-Through Rate set forth in
the Preliminary Statement hereto.
"CLASS PA-5 INTEREST" shall mean the REMIC III Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PA-6 INTEREST" shall mean the REMIC III Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PA-6N INTEREST" shall mean the REMIC III Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS PRINCIPAL BALANCE" shall mean, with respect to the Class A
Certificates (other than the Class A-6IO Certificates) and, except as provided
in the next sentence, the Uncertificated Regular Interests, as of any time of
determination, the related initial Class Principal Balances set forth in the
Preliminary Statement hereto, less any amounts distributed as principal pursuant
to Section 6.5(b) or Section 6.5(d), as applicable, respectively, on all prior
Distribution Dates. The Class L4N, Class M1N, Class M2N, Class M3N, Class M4N,
Class P3N, Class P4N, Class QA-1N, Class QA-2N, Class QA-3N, Class QA-4N, Class
QA-5N, Class QA-6N, Class Q3N, Class Q4N, Class R-I, Class R-II, Class R-III and
Class R-IV Interests and the Class A-6IO, Class X-IO and Class Z-IO Certificates
have no Class Principal Balances.
"CLASS Q3N INTEREST" shall mean the REMIC IV Regular Interest the
having the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS Q4N INTEREST" shall mean the REMIC IV Regular Interest entitled
to an amount equal to the Class Z-IO REMIC Amount.
"CLASS QA-1 INTEREST" shall mean the REMIC IV Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-1N INTEREST" shall mean the REMIC IV Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-2 INTEREST" shall mean the REMIC IV Regular Interest having
the Class Principal Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-2N INTEREST" shall mean the REMIC IV Regular Interest the
having the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-3 INTEREST" shall mean the REMIC IV Regular Interest
having the Class Principal Balance and Pass-Through Rate set forth in the
Preliminary Statement hereto.
"CLASS QA-3N INTEREST" shall mean the REMIC IV Regular Interest the
having the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-4 INTEREST" shall mean the REMIC IV Regular Interest
having the Class Principal Balance and Pass-Through Rate set forth in the
Preliminary Statement hereto.
"CLASS QA-4N INTEREST" shall mean the REMIC IV Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-5 INTEREST" shall mean the REMIC IV Regular Interest
having the Class Principal Balance and Pass-Through Rate set forth in the
Preliminary Statement hereto.
"CLASS QA-5N INTEREST" shall mean the REMIC IV Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS QA-6 INTEREST" shall mean the REMIC IV Regular Interest
having the Class Principal Balance and Pass-Through Rate set forth in the
Preliminary Statement hereto.
"CLASS QA-6N INTEREST" shall mean the REMIC IV Regular Interest having
the Notional Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"CLASS R CERTIFICATE" shall mean either of the subclasses consisting of
the Class R1 Certificates or the Class R2 Certificates.
"CLASS R1 CERTIFICATE" shall mean any Certificate denominated as a
Class R1 Certificate, which Certificate shall be in the form of Exhibit B-10
hereto. The Class R1 Certificate represents the Class R-I Interest.
"CLASS R1 CERTIFICATEHOLDER" shall mean a Holder of a Class R1
Certificate.
"CLASS R2 CERTIFICATE" shall mean any Certificate denominated as a
Class R2 Certificate, which Certificate shall be in the form of Exhibit B-II
hereto. The Class R2 Certificate represents the Class R-II, Class R-III and
Class R-IV Interests.
"CLASS R2 CERTIFICATEHOLDER" shall mean a Holder of a Class R2
Certificate.
"CLASS R-I INTEREST" shall mean the residual interest in REMIC I
represented by the Class R1 Certificate.
"CLASS R-II INTEREST" shall mean the residual interest in REMIC II
represented by the Class R2 Certificate.
"CLASS R-III INTEREST" shall mean the residual interest in REMIC III
represented by the Class R2 Certificate.
"CLASS R-IV INTEREST" shall mean the residual interest in REMIC IV
represented by the Class R2 Certificate.
"CLASS R-V INTEREST" shall mean the residual interest in REMIC V
represented by the Class R Certificate
"CLASS X-IO CARRYOVER AMOUNTS" shall mean, with respect to any
Distribution Date, the portion of all Class X-IO Distribution Amounts from prior
Distribution Dates that remain undistributed on such Distribution Date.
"CLASS X-IO CERTIFICATE" shall mean any Certificate designated
as a "CLASS X-IO CERTIFICATE" on the face thereof, in the form of Exhibit B-8
hereto, and authenticated by the Trustee in accordance with the procedures set
forth herein.
"CLASS X-IO CERTIFICATEHOLDER" shall mean a Holder of a Class X-IO
Certificate.
"CLASS X-IO DISTRIBUTION AMOUNT" shall mean, with respect to any
Distribution Date, (i) the amount of all interest accrued on the Loans at the
Reduced Weighted Average Net Loan Rate for the related Due Period less (ii) the
amount of Net Prepayment Interest Shortfalls allocated to the Class X-IO
Certificates pursuant to Section 6.5(c) of this Agreement and less (iii) the
aggregate Distributable Certificate Interest on the Class A Certificates for
such Distribution Date but determined by using their applicable Uncapped
Pass-Through Rates for such Distribution Date rather than their applicable
Pass-Through Rates for such Distribution Date.
"CLASS X-IO REMIC AMOUNT" shall mean the aggregate of the amounts
distributable on the Class QA-1N, Class QA-2N, Class QA-3N, Class QA-4N, Class
QA-5N, Class QA-6N and Class Q3N Interests.
"CLASS Z-IO CARRYOVER AMOUNTS" shall mean, with respect to any
Distribution Date, the portion of all Class Z-IO Distribution Amounts from prior
Distribution Dates that remain undistributed on such Distribution Date.
"CLASS Z-IO CERTIFICATE" shall mean any Certificate designated as a
"CLASS Z-IO CERTIFICATE" on the face thereof, in the form of Exhibit B-9 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"CLASS Z-IO CERTIFICATEHOLDER" shall mean a Holder of a Class Z-IO
Certificate.
"CLASS Z-IO DISTRIBUTION AMOUNT" shall mean, with respect to any
Distribution Date, an amount equal to the lesser of (i) the product of (A) the
aggregate unpaid principal balance of the Loans as of the beginning of the
related Due Period and (B) 1.93% per annum, and (ii) (A) interest accrued on the
Loans during the related Due Period at the Weighted Average Net Loan Rate, less
(B) the amount of Net Prepayment Interest Shortfalls allocated to the Class Z-IO
Certificates pursuant to Section 6.5(c) of this Agreement and less (C) the
aggregate Distributable Certificate Interest on the Class A Certificates for
such Distribution Date but determined by using their applicable Uncapped
Pass-Through Rates for such Distribution Date rather than their applicable
Pass-Through Rates for such Distribution Date.
"CLASS Z-IO REMIC AMOUNT" shall mean, with respect to any Distribution
Date, the Class Z-IO Distribution Amount less any losses on the Loans allocable
to interest that were incurred during the related Due Period.
"CLOSING DATE" shall mean May 27, 1999.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" shall mean the Eligible Account established and
maintained for the benefit of the Certificateholders and the Certificate Insurer
pursuant to Section 5.3(a) hereof.
"COMBINED LOAN-TO-VALUE RATIO" shall mean with respect to any Loan, (i)
the sum of (x) if applicable, the outstanding principal balance of any mortgage
loan or manufactured home contract senior to such Loan and secured by the
related Property as of the date of origination of the related Loan, plus (y) the
Principal Balance of the related Loan as of the Cut-Off Date, divided by (ii)
the Appraised Value of such Property.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMPENSATING INTEREST" shall have the meaning defined in Section 6.9
hereof.
"CURTAILMENT" shall mean, with respect to a Loan, any payment
of principal received during a Due Period as part of a payment that is in excess
of the amount of the Monthly Payment due for such Due Period and which is
neither intended to satisfy the Loan in full, intended as an advance payment of
an amount due in a subsequent Due Period, nor intended to cure a delinquency.
"CUSTODIAN" shall have the meaning defined in Section 2.2(c).
"CUT-OFF DATE" shall mean the beginning of business on May 1, 1999.
"DEBT INSTRUMENT" shall mean the Mortgage Note, the Manufactured Home
Contract or other evidence of indebtedness evidencing the indebtedness of a
Borrower under a Loan.
"DEBT SERVICE REDUCTION" shall mean, with respect to any Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Loan in a proceeding under the United States Bankruptcy Code (11 U.S.C.) as
amended from time to time, except such a reduction that constitutes a Deficient
Valuation or a permanent forgiveness of principal.
"DEFICIENT VALUATION" shall mean, with respect to any Loan, a valuation
of the related Property by a court of competent jurisdiction in an amount less
than the then outstanding principal balance of the Loan, which valuation results
from a proceeding initiated under the United States Bankruptcy Code.
"DELETED LOAN" shall mean a Loan replaced by a Qualified Substitute
Loan or repurchased pursuant to Sections 2.4(c) or 3.5 hereof.
"DELINQUENT," a Loan is "DELINQUENT" if any payment due thereon is not
made by the close of business on the day such payment is scheduled to be due. A
Loan is "30 days delinquent" if such payment has not been received by the close
of business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was due
on the 31st day of such month) then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on.
"DEPOSITOR" shall mean PaineWebber Mortgage Acceptance
Corporation IV and any successor thereto.
"DEPOSITORY" shall mean the Depository Trust Company, 7 Hanover Square,
New York, New York 10004 and any successor Depository hereafter
named.
"DETERMINATION DATE" shall mean the 18th calendar day of each month, or
if such day is not a Business Day, then the immediately preceding Business Day.
"DIRECT PARTICIPANT" shall mean any broker-dealer, bank or other
financial institution for which the Depository holds Class A Certificates from
time to time as a securities depositary.
"DISQUALIFIED ORGANIZATION" shall mean any of (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing (other than an instrumentality which is a corporation if
all of its activities are subject to tax and, except for the FHLMC, 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 (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), or cooperatives engaged in furnishing electric energy, or
providing telephone service, to persons in rural areas as described in Section
1381(a)(2)(C) of the Code and (iv) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided to the Trustee that the holding of an
ownership interest in a Class R Certificate by such Person may cause any of the
REMICs or any Person having an ownership interest in any Class of Certificates
(other than such Person) to incur liability for any federal tax imposed under
the Code that would not otherwise be imposed but for the transfer of an
ownership interest in the Class R Certificate to such Person. The terms "UNITED
STATES," "STATE" and "INTERNATIONAL ORGANIZATION" shall have the meanings set
forth in Section 7701 of the Code.
"DISTRIBUTABLE CERTIFICATE INTEREST" shall mean with respect to each
Class of Class A Certificates for each Distribution Date, an amount equal to
equal to interest at the Pass-Through Rate applicable to such Class of
Certificates for such Distribution Date accrued on the related Class Principal
Balance or Class A-6 Notional Amount, as applicable, during the related Accrual
Period, as the case may be, outstanding immediately prior to such Distribution
Date, reduced by such Class of Certificate's allocable share of any Net
Prepayment Interest Shortfalls for such Distribution Date pursuant to Section
6.5(c) hereof. Distributable Certificate Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months, except that such
interest calculated with respect to the Class A-1 Certificates will be based on
a 360-day year and the actual number of days elapsed.
"DISTRIBUTION DATE" shall mean the 25th day of any month or if such
25th day is not a Business Day, the next succeeding Business Day, commencing in
June, 1999.
"DUE DATE" shall mean, with respect to any Loan, the day of the month
upon which payment is due from the related Borrower on a Loan.
"DUE PERIOD" shall mean, with respect to each Distribution Date, the
period beginning on the opening of business on the first day of the calendar
month preceding the calendar month in which such Distribution Date occurs, and
ending at the close of business on the last day of the calendar month preceding
the calendar month in which such Distribution Date occurs.
"ELIGIBLE ACCOUNT" shall mean either (i) a segregated interest bearing
trust account or accounts maintained with a depositary institution which is
acceptable to the Certificate Insurer and to each Rating Agency, which
institution shall be New South Federal Savings Bank until notice to the contrary
is given to the Servicer by the Certificate Insurer and such trust account shall
be held in (a) the corporate trust account department of such depositary
institution or (b) an institution with capital and surplus of not less than
$50,000,000, and a minimum unsecured debt rating of BBB by S&P or Baa3 by
Moody's; or (ii) an account or accounts maintained with an institution
acceptable to the Certificate Insurer and whose deposits are insured by the
FDIC, the unsecured and uncollateralized debt obligations of which institution
shall be rated AA or better by S&P and Aa2 or better by Moody's and the highest
short-term rating by S&P and Moody's, and which is (a) a federal savings and
loan association duly organized, validly existing and in good standing under the
federal banking laws, (b) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (c) a national
banking association duly organized, validly existing and in good standing under
the federal banking laws institution (including the Trustee), (d) a principal
subsidiary of a bank holding company, or (e) approved in writing by the
Certificate Insurer, S&P and Moody's, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity.
"ERISA" shall have the meaning defined in Section 4.2(j) hereof.
"EVENT OF DEFAULT" shall have the meaning described in Section 7.1.
"FDIC" shall mean the Federal Deposit Insurance Corporation and any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation and any
successor thereto.
"FNMA" shall mean the Federal National Mortgage Association and any
successor thereto.
"FIXED RATE AVAILABLE FUNDS CAP RATE" shall mean for any Distribution
Date and for each of the Class A-3, Class A-4, Class A-5 and Class A-6
Certificates if such Class's Uncapped Pass-Through Rate would be greater than
the Weighted Average Net Loan Rate, the rate per annum determined for each such
Class by taking (A) all interest that accrued on the Loans at their respective
Net Loan Rates and was due in the related Due Period, less (B) all interest
accrued on the Class A-2 and Class A-6IO Certificates for such Distribution
Date, and less (C) all interest accrued on the Class A-1, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates during their related Accrual Periods, in
each case only if their respective Uncapped Pass-Through Rates are less than or
equal to the Weighted Average Net Loan Rate, divided by (D) the sum of the Class
Principal Balance of such Class and the Class Principal Balance of each other
Class of Class A Certificates whose accrued interest is not included in clauses
(B) or (C) above, and multiplied by (E) 12; provided that, in the event that the
capped rate determined as described would be in excess of the Uncapped
Pass-Through Rate of any such Class, then such capped rate will be recalculated
so that interest accrued on such Class for such Distribution Date at its
Uncapped Pass-Through Rate will be included in clause (B) above. This
calculation shall be repeated as appropriate so that in no event will the capped
rate so calculated exceed any such Class's Uncapped Pass-Through Rate.
"FIXED RATE INTEREST CARRYOVER" shall mean for any Distribution Date
and any Class of Class A-3, Class A-4, Class A-5 and Class A-6 Certificates
subject to the Fixed Rate Available Funds Cap, an amount equal to the sum of (i)
the difference between (a) the amount of interest such Class would be entitled
to receive on such Distribution Date without regard to the applicable Fixed Rate
Available Funds Cap Rate and (b) the amount of interest actually distributed to
such Class with respect to such Distribution Date pursuant to Section
6.5(b)(iii) of this Agreement, (ii) the portion of any amount calculated
pursuant to clause (i) above remaining unpaid from prior Distribution Dates and
(iii) interest accrued thereon at the applicable Uncapped Pass-Through Rate
without regard to the Fixed Rate Available Funds Cap Rate.
"FORECLOSURE PROFITS" shall mean, as to any Distribution Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Loan that
became a Liquidated Loan during the month immediately preceding the month of
such Distribution Date over (ii) the sum of the unpaid principal balance of each
such Liquidated Loan plus accrued and unpaid interest at the applicable Loan
Interest Rate on the unpaid principal balance thereof from the Due Date to which
interest was last paid by the Borrower (or, in the case of a Liquidated Loan
that had been an REO Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.12) to the first day of the month
following the month in which such Loan became a Liquidated Loan.
"GRANTOR TRUST" shall mean that portion of the Trust Fund exclusive of
the Trust REMICs, which is comprised of the REMIC IV Regular Interests and the
Basis Risk Arrangements.
"HAZARDOUS MATERIALS" shall mean any dangerous, toxic or hazardous
pollutants, chemical wastes or substances, including, without limitation, those
identified pursuant to CERCLA or any other federal, state or local environmental
related laws now existing or hereafter enacted.
"HOLDER" shall mean each Person in whose name a Certificate is
registered in the Certificate Register, except that solely for the purposes of
giving any consent (except any consent required to be obtained pursuant to
Section 10.2), waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Servicer or any Subservicer or the
Transferor, or any Affiliate of any of them, shall be deemed not to be
outstanding and in the case of any Certificate, the undivided interest in the
Trust Fund evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained.
"INDIRECT PARTICIPANT" shall mean any financial institution for who
many Direct Participant holds an interest in a Class A Certificate.
"INSURANCE AGREEMENT" shall mean that certain Insurance and Indemnity
Agreement among the Certificate Insurer, the Depositor, and New South Federal
Savings Bank, as Transferor and Servicer dated as of May 27, 1999.
"INSURANCE PROCEEDS" shall mean proceeds paid by any insurer pursuant
to any insurance policy covering a Loan to the extent such proceeds are not
applied to the restoration of the related Property or released to the related
Borrower in accordance with Accepted Servicing Practices. "Insurance Proceeds"
do not include "Insured Payments."
"INSURED PAYMENT" shall have the meaning assigned thereto in the
Certificate Insurance Policy.
"INTEREST COLLECTIONS" shall mean all amounts (including, without
limitation, Monthly Payments (or Periodic Advances in respect thereof) and
Liquidation Proceeds) collected on any Loan allocable to interest pursuant to
the terms of the related Mortgage Note or Manufactured Home Contract, or if no
provision for allocation is made therein, pursuant to the terms hereof.
"INTEREST DETERMINATION DATE" shall mean, with respect to any Accrual
Period applicable to the Class A-1 Certificates, the second LIBOR Business Day
preceding the first day of such Accrual Period.
"LATE PAYMENT RATE" shall have the meaning assigned thereto in the
Insurance Agreement.
"LIBOR" shall mean, for any Accrual Period, the rate for United States
dollar deposits for one month that appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London, England time, on the second LIBOR Business Day prior to
the first day of such Accrual Period. If such rate does not appear on such page
(or such other page as may replace such page on such service, or if such service
is no longer offered, such other service for displaying LIBOR or comparable
rates as may be reasonably selected by the Trustee after consultation with the
Servicer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Distribution Date.
The establishment of LIBOR on each Interest Determination Date by the
Trustee and the Trustee's calculation of the rate of interest applicable to the
Class A-1 Certificates for the related Accrual Period shall (in the absence of
manifest error) be final and binding.
"LIBOR BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the city of London,
England are required or authorized by law to be closed.
"LIEN" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), claim, charge, preference, priority, right, interest or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financial statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
"LIQUIDATED LOAN" shall mean a Loan (i) with respect to which the
related Property has been acquired, liquidated and/or foreclosed upon by the
Servicer or (ii) which the Servicer has elected to write down the outstanding
Principal Balance of such Loan that has been delinquent for a period equal to or
greater than 270 days to zero and, in either case, with respect to which the
Servicer determines that all Liquidation Proceeds which it expects to recover
have been recovered, as set forth in an Officer's Certificate of the Servicer.
"LIQUIDATED LOAN LOSS" shall mean, with respect to any Distribution
Date, the aggregate of the amount of losses with respect to each Loan which
became a Liquidated Loan in the Due Period prior to such Distribution Date,
equal to the excess of (i) the unpaid principal balance of each such Liquidated
Loan, plus accrued interest thereon in accordance with the amortization schedule
at the time applicable thereto at the applicable Loan Interest Rate from the Due
Date as to which interest was last paid with respect thereto through the last
day of the month in which such Loan became a Liquidated Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Loan.
"LIQUIDATION EXPENSES" shall mean expenses incurred by the Servicer in
connection with the liquidation of any defaulted Loan, REO Loan or REO Property
(including, without limitation, legal fees and expenses, committee or referee
fees, and, if applicable, brokerage commissions and conveyance taxes), any
unreimbursed amount expended by the Servicer pursuant to Sections 5.5, 5.6 and
5.12 respecting the related Loan and any unreimbursed expenditures for real
property taxes or for property restoration or preservation of the related
Property. Liquidation Expenses shall not include any previously incurred
expenses in respect of an REO Loan which have been netted against related REO
Proceeds.
"LIQUIDATION PROCEEDS" shall mean amounts received by the Servicer
(including Insurance Proceeds) in connection with the liquidation of defaulted
or written-down Loans or property acquired in respect thereof, whether through
foreclosure, sale or otherwise, including payments in connection with such Loans
received from the Borrower, other than amounts required to be paid to the
Borrower pursuant to the terms of the applicable Mortgage or Manufactured Home
Contract or to be applied otherwise pursuant to law.
"LOAN" shall mean a Mortgage Loan or a Manufactured Home Loan.
"LOAN FILE" shall include the Loan documents described in Section 2.3
hereof and such documents as are required to be included in the Loan File
pursuant to the Loan Sale Agreement.
"LOAN INTEREST RATE" shall mean, as to any Loan, the per annum rate at
which interest accrues on the unpaid principal balance thereof as set forth in
the related Mortgage Note or in the related Manufactured Home Contract.
"LOAN REPURCHASE PRICE" shall have the meaning defined in Section
2.4(c) as set forth in an Officer's Certificate of the Servicer.
"LOAN SALE AGREEMENT" shall mean the Loan Sale Agreement dated as of
May 1, 1999, between New South Federal Savings Bank, as seller thereunder, and
the Depositor, as purchaser thereunder, as such agreement may be amended,
modified or supplemented from time to time.
"LOAN SCHEDULE" shall mean the list of the Loans transferred to the
Trustee on the Closing Date as part of the Trust Fund and attached hereto as
Exhibit C (and also provided to the Certificate Insurer and the Trustee on a
computer readable magnetic tape or disk). The Loan Schedule shall set forth at a
minimum the following information as to each Loan:
(A) the Loan identifying number;
(B) the Principal Balance of the Loan;
(C) the city, state and ZIP code of the Property;
(D) the type of property;
(E) the current Monthly Payment as of the Cut-Off Date;
(F) the original number of months to maturity;
(G) the scheduled maturity date;
(H) the Combined Loan-to-Value Ratio as of the Cut-Off Date;
(I) the Loan Interest Rate as of the Cut-Off Date;
(J) the Appraised Value;
(K) the documentation type (as described in the Underwriting
Guidelines);
(L) the lien priority;
(M) the loan purpose;
(N) whether such loan is a balloon loan;
(O) the paid through date;
(P) whether such loan provides for prepayment penalties; and
(Q) if the related Property is an Owner-Occupied Mortgaged Property.
Such "LOAN SCHEDULE" may consist of multiple reports that collectively set forth
all of the information required, including the aggregate number of Loans and the
Aggregate Principal Balance as of the Cut-Off Date. In addition, a summary of
the information regarding the Loans shall be included as a part of the Loan
Schedule which summary shall include such consolidated and aggregated
information as may be requested by the Trustee or the Certificate Insurer from
time to time.
"MAJORITY CERTIFICATEHOLDERS" shall mean the Holder or Holders of Class
A Certificates evidencing an undivided beneficial ownership interest in the
Class A Certificates in excess of 50% in the aggregate by Class Principal
Balance.
"MANUFACTURED HOME" shall mean the personal property encumbered by a
lien or security interest created pursuant to a Manufactured Home Contract, but
excluding any such property whereby the related encumbrance was created pursuant
to a mortgage.
"MANUFACTURED HOME CONTRACT" shall mean any manufactured housing
installment sale contract or manufactured housing installment loan agreement
whereby the related security interest was not created pursuant to a mortgage,
including, without limitation, all related security interests or security
instruments creating a lien in accordance with applicable law to secure a
Manufactured Home Loan.
"MANUFACTURED HOME DOCUMENTS" shall mean the documents described in
Section 2.3 hereof or required to be contained in a Loan File pursuant to the
Loan Sale Agreement.
"MANUFACTURED HOME LOAN" shall mean a loan, the proceeds of which were
used by the Borrower primarily for the purposes of financing the acquisition or
refinancing of a Manufactured Home, but excluding any such loan whereby the
related security interest was created pursuant to a mortgage. Unless otherwise
clearly indicated by the context, Manufactured Home Loan shall be deemed to
refer to the related REO Loan and REO Property.
"MONTHLY PAYMENT" shall mean, as to any Loan (including any REO Loan)
and any Due Date, the scheduled payment of principal and interest due thereon by
such Due Date (after adjustment for any Curtailments and Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
"MOODY'S" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "MOODY'S" shall be deemed to refer to any other nationally
recognized rating agency designated by the Certificate Insurer.
"MORTGAGE" shall mean the mortgage, deed of trust or other instrument
creating a lien on the Mortgaged Property to secure the Mortgage Loan.
"MORTGAGE DOCUMENTS" shall mean the documents described in Section 2.3
hereof or required to be contained in a Loan File pursuant to the Loan Sale
Agreement.
"MORTGAGE LOAN" shall mean (i) each fixed rate, closed end mortgage
loan identified on the Loan Schedule on the Closing Date secured by a lien on
the related Mortgaged Property, (ii) any additional fixed rate, closed end
mortgage loans identified on the Loan Schedule after the Closing Date, as such
schedule is amended and supplemented from time to time to reflect the deletion
of the Deleted Loans and the substitution of Qualified Substitute Loans for
Deleted Loans, (iii) each Mortgage Note evidencing any loan referred to in (i)
or (ii) above, including all amounts now or hereafter due under such Mortgage
Notes, whether relating to such loans or other loans which may be made from time
to time, and (iv) the related Mortgage. Unless otherwise clearly indicated by
the context, Mortgage Loan shall be deemed to refer to the related REO Loan and
REO Property.
"MORTGAGE NOTE" shall mean the original, executed note, loan agreement
or other evidence of indebtedness evidencing the indebtedness of a Borrower
under a Mortgage Loan.
"MORTGAGED PROPERTY" shall mean the underlying property securing a
Mortgage Loan, consisting of a fee simple estate in a single parcel of land
improved by a Residential Dwelling.
"NET FORECLOSURE PROFITS" shall mean, as to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits for such Distribution
Date, over (ii) the Liquidated Loan Loss for such Distribution Date.
"NET LIQUIDATION PROCEEDS" shall mean, as to any Liquidated Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer. For purposes of this Agreement, Net
Liquidation Proceeds shall be allocated first to the payment of the related Loan
as provided in the related Loan document and if not so provided, first to
accrued and unpaid interest on the related Loan and then to the unpaid principal
balance thereof.
"NET LOAN RATE" shall mean with respect to each Loan, the Loan Interest
Rate for such Loan, net of the Premium Percentage and the rates at which the
Servicing Fee and the Trustee's Fee are calculated; provided, however, that for
purposes of calculating the Net Loan Rate for any Distribution Date the Premium
Percentage and the rate used to calculate the Trustee's fee shall be adjusted by
multiplying such rates by a fraction the numerator of which is the Class
Principal Balances of the Principal Balance Certificates and the denominator of
which is the Aggregate Principal Balance as of the first day of the related Due
Period.
"NET PREPAYMENT INTEREST SHORTFALL" shall mean, with respect to any
Distribution Date and as to any Loan, any Prepayment Interest Shortfall for
which no payment of Compensating Interest is paid.
"NET REO PROCEEDS" shall mean, as to any REO Loan, REO Proceeds net of
any related expenses of the Servicer.
"NON-UNITED STATES PERSON" shall mean any Person other than a United
States Person.
"NONRECOVERABLE ADVANCE" shall mean, with respect to any Loan, (i) any
Advance previously made and not reimbursed from late collections pursuant to
Section 5.4(b), or (ii) a Advance proposed to be made in respect of a Loan or
REO Property either of which, in the good faith business judgment of the
Servicer, as evidenced by an Officer's Certificate delivered to the Certificate
Insurer and the Trustee no later than the Business Day following such
determination, would not be ultimately recoverable pursuant to Section 5.4.
"NOTIONAL BALANCE" shall mean, with respect to the Class A-6IO
Certificates, the Class A-6IO Notional Amount, and with respect to the Class
L4N, Class M1N, Class M2N, Class M3N, Class M4N, Class PA-6N, Class P3N, Class
P4N, Class QA-1N, Class QA-2N, Class QA-3N, Class QA-4N, Class QA-5N, Class
QA-6N, Class Q3N and Class Q4N Interests and the first Distribution Date, the
balance set forth in the Preliminary Statement hereto, and for any succeeding
Distribution Date, as reduced by all distributions of principal on the Loans or
the related Class of Uncertificated Regular Interests, as the case may be, prior
to the first day of the related Due Period, or such Distribution Date, as
applicable, not representing any entitlement to principal distributions, on
which the Pass-Through Rate thereof is computed.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the Chairman
of the Board, the President or a Vice President and the Treasurer, the Secretary
or one of the Assistant Treasurers, Assistant Secretaries or other Responsible
Officer of the Transferor, the Servicer or the Depositor, as required by this
Agreement.
"OPINION OF COUNSEL" shall mean a written opinion of counsel, who may,
without limitation, be counsel for the Transferor, the Servicer, the Trustee, a
Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including, except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (i) the qualification of any of the Trust REMICs as a REMIC,
or (ii) compliance with the REMIC Provisions must be an opinion of counsel who
(a) is in fact independent of the Transferor, the Servicer and the Trustee, (b)
does not have any direct financial interest or any material indirect financial
interest in the Transferor or the Servicer or the Trustee or in an Affiliate
thereof, (c) is not connected with the Transferor or the Servicer or the Trustee
as an officer, employee, director or person performing similar functions, and
(d) is reasonably acceptable to the Certificate Insurer. The Certificate Insurer
shall be an addressee on each Opinion of Counsel relating to, or otherwise
affecting, the Series 1999-1 Certificates.
"OPTIONAL TERMINATION DATE" shall mean the first Distribution Date upon
which the Aggregate Principal Balance is less than 10% of the Aggregate
Principal Balance as of the Cut-Off Date.
"ORIGINAL CLASS PRINCIPAL BALANCE" shall mean, with respect to any
Class, the initial Class Principal Balance set forth in the Preliminary
Statement hereto.
"OUTSTANDING LOAN" shall mean, as to any Due Date, a Loan (including an
REO Loan) which has not been paid in full prior to such Due Date, which did not
become a Liquidated Loan prior to such Due Date and which was not repurchased by
the Transferor prior to such Due Date pursuant to Sections 2.4 or 3.5.
"OVERCOLLATERALIZATION AMOUNT" shall mean, with respect to any
Distribution Date, the excess, if any, of (i) the aggregate Principal Balance of
all Loans as of the close of business on the last day of the related Due Period
over (ii) the aggregate Class Principal Balances of the Principal Balance
Certificates as of such Distribution Date (after taking into account all
distributions of the Principal Distribution Amount (but not any Class A Turbo
Amount) made to the Principal Balance Certificates for such Distribution Date).
"OVERCOLLATERALIZATION DEFICIENCY AMOUNT" shall mean, with respect to
any Distribution Date, the excess, if any, of the Overcollateralization Target
Amount over the Overcollateralization Amount.
"OVERCOLLATERALIZATION TARGET AMOUNT" shall have the meaning assigned
thereto in the Insurance Agreement. Notwithstanding the above, the Certificate
Insurer may, in its sole discretion, modify the definition of
Overcollateralization Target Amount. The Trustee and the Rating Agencies shall
be notified in writing of such modification prior to the related Distribution
Date and any such modification shall not result in a downgrading of the
then-current ratings of any Class A Certificate without regard to the
Certificate Insurance Policy.
"OWNER-OCCUPIED MORTGAGED PROPERTY" shall mean a Residential Dwelling
as to which (i) the related Borrower represented an intent to occupy as such
Borrower's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (ii) the Transferor has no actual knowledge that such
Residential Dwelling is not so occupied.
"OWNERSHIP INTEREST" shall mean, 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.
"PERCENTAGE INTEREST" shall mean, with respect to a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate, Class A-5 Certificate, Class A-6 Certificate or Class A-6IO
Certificate, the portion of the total beneficial ownership interest in the Loans
evidenced by such Certificate, expressed as a percentage rounded to four decimal
places, equal to a fraction the numerator of which is the original denomination
of such Certificate and the denominator of which is the respective initial Class
Principal Balance or Notional Balance thereof set forth in the Preliminary
Statement hereto. With respect to a Class X-IO, Class Z-IO and Class R
Certificate, the portion evidenced thereby as stated on the face of such
Certificate.
"PERIODIC ADVANCE" shall mean the aggregate of the advances required to
be made by the Servicer on any Servicer Remittance Date pursuant to Section 5.20
hereof, the amount of any such advances being equal to the sum of: (i) all the
interest portion of all Monthly Payments (net of the related Servicing Fee and
any amount excluded from the Servicer Remittance Amount pursuant to clauses (A)
- - (H) of the definition of "Servicer Remittance Amount") on the Loans that are
not received by the Servicer as of the close of business on the related
Determination Date and have not been determined by the Servicer to be
Nonrecoverable Advances, plus (ii) with respect to each REO Property which was
acquired during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount equal to the
excess, if any, of (a) interest on the Principal Balance of the related REO Loan
at the related Loan Interest Rate, net of the Servicing Fee, for the most
recently ended Due Period for the related Loan over (b) the net income from the
REO Property transferred to the Certificate Account for such Distribution Date.
"PERMITTED INVESTMENTS" shall mean each of the following:
(1) obligations of, or guaranteed as to principal and interest
by, the United States of America, FHLMC, FNMA or any agency or
instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of
America;
(2) a repurchase agreement that satisfies the following
criteria: (A) it must be between the Trustee and either (x) primary
dealers on the Federal Reserve reporting dealer list which are rated
one of the two highest ratings for long-term unsecured debt obligations
by each Rating Agency or (y) banks rated in the highest categories for
long-term unsecured debt obligations by each Rating Agency; and (B) it
must be in writing and include the following terms: (a) the securities
acceptable for transfer are either (i) direct U.S. government
obligations or (ii) obligations of a federal agency that are backed by
the full faith and credit of the U.S. government or by FNMA or FHLMC;
(b) a term no greater than 60 days for any repurchase transaction; (c)
the collateral must be delivered to the Trustee or a third party
custodian acting as agent for the Trustee by appropriate book entries
and confirmation statements, and must have been delivered before or
simultaneously with payment (i.e., perfection by possession of
certificated securities); and (d) the securities sold thereunder must
be valued weekly, marked-to-market at current market price plus accrued
interest and the value of the collateral must be equal to at least 104%
of the amount of cash transferred by the Trustee under the repurchase
agreement and, if the value of the securities held as collateral
declines to an amount below 104% of the cash transferred by the Trustee
plus accrued interest (i.e., a margin call), then additional cash
and/or acceptable securities must be transferred to the Trustee to
satisfy such margin call; PROVIDED, HOWEVER, that if the securities
used as collateral are obligations of FNMA or FHLMC, then the value of
the securities held as collateral must equal at least 105% of the cash
transferred by the Trustee under such repurchase agreement;
(3) certificates of deposit, time deposits and bankers
acceptances of any United States depository institution or trust
company incorporated under the laws of the United States or any state,
including the Trustee which have an original term to maturity of not
more than 365 days; PROVIDED, HOWEVER, that the debt obligations of
such depository institution or trust company at the date of the
acquisition thereof have been rated by each Rating Agency in the
highest long-term rating categories;
(4) deposits, including deposits with the Transferor or
Trustee, which are fully insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the
laws of the United States or any state thereof, including corporate
Affiliates of the Trustee, which at the date of acquisition is rated by
each Rating Agency in its highest short-term rating category and which
has an original maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time
at which the investment is made in its highest long-term rating
category which have an original term to maturity of not more than 365
days (or those investments specified in (3) above with depository
institutions which have debt obligations rated by each Rating Agency in
the highest long-term rating categories);
(7) money market funds which are rated by each Rating Agency
at the time at which the investment is made in its highest long-term
rating category; PROVIDED that any such money market funds which
provide for demand withdrawals being conclusively deemed to satisfy any
maturity requirements for Permitted Investments set forth in this
Agreement; or
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency at
the time at which the investment is made;
PROVIDED, HOWEVER, that no instrument described in the foregoing subparagraphs
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 where the interest
and principal payments with respect to such instrument provide a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and PROVIDED, FURTHER, that no instrument described in
the foregoing subparagraphs may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
estate, national banking association, unincorporated organization or government
or any agency or political subdivision thereof.
"PREFERENCE AMOUNT" shall have the meaning assigned thereto in the
Insurance Agreement.
"PREMIUM PERCENTAGE" shall have the meaning assigned thereto in the
Insurance Agreement.
"PREPAYMENT INTEREST SHORTFALL" shall mean with respect to any
Distribution Date and any Loan, an amount equal to the excess, if any, of (a) 30
days' interest on the outstanding Principal Balance of such Loan at a per annum
rate equal to the related Loan Interest Rate, less any Deficient Valuation
and/or any Debt Service Reduction, and less the rate at which the Servicing Fee
is calculated, over (b) the amount of interest actually remitted by the borrower
in connection with the related Principal Prepayment, less the Servicing Fee for
such Loan in such month.
"PRINCIPAL BALANCE" shall mean with respect to any Loan, (i) at the
Cut-Off Date, the outstanding unpaid principal balance of the Loan as of the
Cut-Off Date after giving effect to payments due on or prior to such date, and
(ii) with respect to any date of determination, the outstanding unpaid principal
balance of the Loan as of the last day of the preceding Due Period (after giving
effect to all payments received thereon and the allocation of any Liquidated
Loan Loss with respect thereto which relates to such Due Period), without giving
effect to amounts received in respect of such Loan or related REO Property after
such Due Period; provided, HOWEVER, that any Liquidated Loan shall have a
Principal Balance of zero.
"PRINCIPAL BALANCE CERTIFICATES" shall mean the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates.
"PRINCIPAL DISTRIBUTION AMOUNT" shall mean, the sum, without
duplication, of:
(i) that portion of all scheduled installments of principal in
respect of the Loans which is received during the related Due Period together
with all unscheduled recoveries of principal (including Principal Prepayments,
Curtailments and Deficient Valuations) on such Loans actually collected by the
Servicer during the prior calendar month,
(ii) the Principal Balance of each Loan that either was,
effective on such Distribution Date, repurchased by the Transferor but only to
the extent the amount equal to such Principal Balance is actually received by
the Trustee,
(iii) any Substitution Adjustment amounts delivered by the
Depositor on the related Distribution Date in connection with a substitution of
a Loan, to the extent such Substitution Adjustments are actually received by the
Trustee,
(iv) with respect to each Loan that became a Liquidated Loan
during the prior calendar month, the Principal Balance of such Loan immediately
prior to the time when such Loan became a Liquidated Loan, and
(v) the principal portion of the proceeds relating to the
Loans received by the Trust Fund following any optional termination of the Trust
Fund and the Trust REMICs by either the Servicer or Certificate Insurer in
accordance with Section 8.1 hereof, up to the then outstanding aggregate Class
Principal Balance.
"PRINCIPAL PREPAYMENT" shall mean any payment or other recovery of
principal on a Loan equal to the outstanding Principal Balance thereof, received
in advance of the final scheduled Due Date which is not intended as an advance
payment of a Scheduled Monthly Payment.
"PROPERTY" shall mean a Mortgaged Property or a Manufactured Home.
"PROPERTY STATE" shall mean any state in which any Property is located.
"PROSPECTUS SUPPLEMENT" shall mean the Prospectus Supplement
dated May 24, 1999, as amended and supplemented, relating to the Class A
Certificates and filed with the Commission in connection with the Registration
Statement heretofore filed or to be filed with the Commission pursuant to Rule
424(b).
"QUALIFIED APPRAISER" shall mean an appraiser, duly appointed by the
Servicer, who had no interest, direct or indirect, in the Property or in any
loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Loan, and such appraiser and the appraisal made
by such appraiser both satisfy the requirements of Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Loan was originated.
"QUALIFIED MORTGAGE" shall have the meaning set forth from time to time
in the definition of "Qualified Mortgage" at Section 860G(a)(3) of the Code (or
any successor statute thereto).
"QUALIFIED SUBSTITUTE LOAN" shall mean a mortgage loan or mortgage
loans or manufactured home contract which (i) has an interest rate at least
equal to the Deleted Loan for which it is to be substituted (ii) relates or
relate to a detached one-family residence or to the same type of Residential
Dwelling as the Deleted Loan for which it is to be substituted and in each case
has or have the same occupancy status or is an Owner-Occupied Mortgaged
Property, (iii) matures or mature no later than (and not more than one year
earlier than) the Deleted Loan for which it is to be substituted, (iv) has or
have a Combined Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time
of such substitution no higher than the Combined Loan-to-Value Ratio of the
Deleted Loan for which it is to be substituted, (v) has or have a principal
balance or principal balances (after application of all payments received on or
prior to the date of substitution) not substantially less and not more than the
Principal Balance of the Deleted Loan for which it is to be substituted as of
such date, (vi) satisfies or satisfy the criteria set forth from time to time in
the definition of "qualified replacement mortgage" at Section 860G(a)(4) of the
Code (or any successor statute thereto), (vii) has or have an applicable
borrower or borrowers with the same or better traditionally ranked credit status
as the borrower or borrowers under the Deleted Loan for which it is to be
substituted, and (viii) complies or comply as of the date of substitution with
each representation and warranty set forth in Section 3.4 herein.
"RATING AGENCY" shall mean S&P or Moody's.
"RECORD DATE" shall mean, with respect to any Distribution Date, the
last Business Day of the calendar month immediately preceding the month in which
such Distribution Date occurs.
"REDUCED WEIGHTED AVERAGE NET LOAN RATE" shall mean with respect to any
Distribution Date, the Weighted Average Net Loan Rate minus 1.93% per annum.
"REFERENCE BANK RATE" shall mean, with respect to any Accrual Period,
as follows: the arithmetic mean (rounded upwards, if necessary, to the nearest
one sixteenth of one percent) of the offered rates for United States dollar
deposits for one month which are offered by the Reference Banks as of 11:00
a.m., London, England time, on the second LIBOR Business Day prior to the first
day of such Accrual Period to prime banks in the London interbank market for a
period of one month in amounts approximately equal to the then outstanding Class
A-1 Principal Balance; PROVIDED, that at least two such Reference Banks provide
such rate. If fewer than two offered rates appear, the Reference Bank Rate will
be the arithmetic mean of the rates quoted by one or more major banks in New
York City, selected by the Trustee after consultation with the Servicer, as of
11:00 a.m., New York time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately equal to the
then outstanding Class A-1 Principal Balance. If no such quotations can be
obtained, the Reference Bank Rate will be the Reference Bank Rate applicable to
the preceding Accrual Period.
"REFERENCE BANKS" shall mean Bankers Trust Company, Barclay's Bank PLC,
The Bank of Tokyo and National Westminster Bank PLC; PROVIDED that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee 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, (iii) whose
quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee
after consultation with the Servicer.
"REIMBURSEMENT AMOUNT" shall mean, as of any Distribution Date, the sum
of (i) all Insured Payments previously paid by the Certificate Insurer and in
each case not previously repaid to the Certificate Insurer pursuant to Section
6.5(b)(vi) hereof plus (ii) interest accrued on such Insured Payments not
previously repaid calculated at the Late Payment Rate from the date such Insured
Payment was paid, plus (iii) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement, as certified to the Trustee by the
Certificate Insurer, plus (iv) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and the Depositor of the
amount of any Reimbursement Amount.
"RELEASED PROPERTY PROCEEDS" shall mean, as to any Loan, proceeds
received by the Servicer in connection with (i) a taking of an entire Property
by exercise of the power of eminent domain or condemnation or (ii) any release
of part of the Property from the lien of the related Mortgage or the
Manufactured Home Contract, as applicable, whether by partial condemnation, sale
or otherwise; which are not released to the Borrower in accordance with
applicable law, Accepted Servicing Practices and this Agreement.
"REMIC" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
"REMIC CHANGE OF LAW" shall mean any proposed, temporary or final
regulation, revenue ruling, revenue procedure or other official announcement or
interpretation relating to the Trust REMICs and the REMIC Provisions issued
after the Closing Date.
"REMIC I" shall mean the segregated asset pool of the Trust Fund
comprised of items (i)-(vii) of the definition of "Trust Fund."
"REMIC I REGULAR INTERESTS" shall mean any of the Class L1,
Class L2, Class L3 and Class L4N Interests, having the Class Principal Balances
or Notional Balances and Pass-Through Rates set forth in the Preliminary
Statement hereto.
"REMIC II" shall mean the segregated asset pool of the Trust Fund
comprised of the REMIC I Regular Interests and all amounts distributed thereon
and held in the Certificate Account.
"REMIC II REGULAR INTERESTS" shall mean any of the Class M1, Class M1N,
Class M2, Class M2N, Class M3, Class M3N and Class M4N Interests, having the
Class Principal Balances or Notional Balances and Pass-Through Rates set forth
in the Preliminary Statement hereto.
"REMIC II WEIGHTED AVERAGE RATE" shall mean the Reduced Weighted
Average Net Loan Rate times a fraction, the numerator of which is the aggregate
of the Class Principal Balances of the Class A Certificates and the denominator
of which is the Aggregate Principal Balance.
"REMIC II/III STRIP RATE" shall mean the Reduced Weighted Average Net
Loan Rate minus the REMIC II Weighted Average Rate.
"REMIC III" shall mean the segregated asset pool of the Trust Fund
comprised of the REMIC II Regular Interests and all amounts distributed thereon
and held in the Certificate Account.
"REMIC III REGULAR INTERESTS" shall mean any of the Class PA-1, Class
PA-2, Class PA-3, Class PA-4, Class PA-5, Class PA-6, Class P3N and Class P4N
Interests, having the Class Principal Balances or Notional Balances and
Pass-Through Rates set forth in the Preliminary Statement hereto.
"REMIC IV" shall mean the segregated asset pool of the Trust Fund
comprised of the REMIC III Regular Interests and all amounts distributed thereon
and held in the Certificate Account.
"REMIC IV REGULAR INTERESTS" shall mean any of the Class QA-1, Class
QA-1N, Class QA-2, Class QA-2N, Class QA-3, Class QA-3N, Class QA-4, Class
QA-4N, Class QA-5, Class QA-5N, Class QA-6, Class QA-6N, Class Q3N and Class Q4N
Interests, having the Class Principal Balances or Notional Balances and
Pass-Through Rates set forth in the Preliminary Statement hereto.
"REMIC PROVISIONS" shall mean provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
"REO DISPOSITION" shall mean the final sale by the Servicer of a
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO LOAN" shall mean any Loan that is not a Liquidated Loan and as to
which the indebtedness evidenced by the related Mortgage Note or Manufactured
Home Contract is discharged and the related Property is held as part of the
Trust Fund.
"REO PROCEEDS" shall mean proceeds received in respect of any REO Loan
(including, without limitation, proceeds from the rental of the related
Property).
"REO PROPERTY" shall have the meaning described in Section 5.12.
"REPRESENTATION LETTER" shall mean letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"REQUEST FOR RELEASE" shall mean a request for release in substantially
the form attached as Exhibit F hereto.
"RESIDENTIAL DWELLING" shall mean a one- to four-family dwelling, a
unit in a planned unit development, a unit in a condominium development, a
townhouse or a manufactured housing unit.
"RESIDUAL INTEREST" shall mean any of the Class R-I, Class R-II, Class
R-III, and Class R-IV Interests, or all of them.
"RESPONSIBLE OFFICER" shall mean, when used with respect to the
Trustee, any officer assigned to the Capital Markets Fiduciary Servicers
division (or any successor thereto), including any Vice President, Senior Trust
Officer, Trust Officer, Assistant Trust Officer, any Assistant Secretary, any
trust officer or any other officer of the Trustee having direct responsibility
for the administration of this Agreement customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Transferor or the Servicer, the President or any Vice
President, Assistant Vice President, or any Secretary or Assistant Secretary.
"S&P" shall mean Standard & Poor's Ratings Services, Inc. or any
successor thereto and if such corporation no longer for any reason performs the
services of a securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized statistical rating organization designated by the
Certificate Insurer.
"SERIES" shall mean the New South Home Equity Asset Backed
Certificates, Series 1999-1.
"SERVICER" shall mean New South Federal Savings Bank, a federal savings
bank, or any successor appointed as herein provided.
"SERVICER ACCOUNT" shall mean the account created and maintained
pursuant to Section 5.7.
"SERVICER EMPLOYEES" shall have the meaning as defined in Section 5.8
hereof.
"SERVICER REMITTANCE AMOUNT" shall mean, with respect to any
Determination Date, an amount equal to the sum of (i) all unscheduled
collections of principal and interest on the Loans (including Principal
Prepayments, Net REO Proceeds and Net Liquidation Proceeds, if any, and any
amounts deposited in the Collection Account or Certificate Account in connection
with a repurchase of the Loans) collected by the Servicer during the Due Period
and all scheduled Monthly Payments due on the Loans on the Due Date and received
by the Servicer on or prior to the Determination Date, plus (ii) all Periodic
Advances made by the Servicer with respect to interest payments due to be
received on the Loans on the related Due Date plus (iii) the amount of
Compensating Interest due with respect to Loans that prepay with respect to the
related Due Period, plus (iv) any other amounts required to be placed in the
Collection Account with respect to Loans by the Servicer pursuant to this
Pooling and Servicing Agreement but excluding, without duplication, the
following:
(A) amounts received on a particular Loan as late payments of
interest and respecting which the Servicer has previously made an
unreimbursed Periodic Advance;
(B) the portion of Liquidation Proceeds used to reimburse any
unreimbursed Periodic Advances by the Servicer;
(C) those portions of each payment of interest on a particular
Loan which represent the Servicing Fee;
(D) that portion of Liquidation Proceeds and REO Proceeds
which represents any unpaid Servicing Fee;
(E) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(F) all amounts in respect of late fees, assumption fees, fees
associated with prepayments, demand statement fees, reconveyance and
recording fees and other service related fees;
(G) all other amounts which are explicitly reimbursable to the
Servicer hereunder with respect to the Loans, including (1) as provided
in Section 5.4 hereof; and (2) any unreimbursed and accrued Liquidation
Expenses; and
(H) the portion of Net Foreclosure Profits representing any
unpaid Servicing Fee.
"SERVICER REMITTANCE DATE" shall mean the third day prior to a
Distribution Date, or if such day is not a Business Day, the preceding Business
Day.
"SERVICER TERMINATION DELINQUENCY RATE TRIGGER" shall have the meaning
assigned thereto in the Insurance Agreement.
"SERVICER TERMINATION LOSS TRIGGER" shall have the meaning assigned
thereto in the Insurance Agreement.
"SERVICING ADVANCES" shall mean all reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Property, (ii) any enforcement
proceedings, including foreclosures, (iii) expenditures relating to the purchase
or maintenance of a first lien not included in the Trust Fund on the Property,
(iv) the management and liquidation of the REO Property, including reasonable
fees paid to any independent contractor in connection therewith, (v) compliance
with the obligations (including indemnification obligations) under Sections 5.2
(limited solely to the reasonable and customary out-of-pocket expenses of the
Subservicer), 5.5, 5.6 or 5.9, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Servicer to the extent
provided in Section 5.4(a).
"SERVICING COMPENSATION" shall mean the Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 5.14.
"SERVICING FEE" shall mean, as to each Loan, the monthly fee payable to
the Servicer, which is calculated as an amount equal to the product of (i) 1/12
of the Servicing Fee Rate, and (ii) the Principal Balance thereof. Such fee
shall be calculated and payable only on amounts actually received in respect of
interest on such Loan and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Loan is computed. The Servicing Fee includes any servicing fees owed or payable
to any Subservicer.
"SERVICING FEE RATE" shall mean, as to each Loan, 0.50% per annum.
"SERVICING OFFICER" shall mean any officer or Responsible Officer of
the Servicer or the Transferor involved in, or responsible for, the
administration and servicing of the Loans whose name and specimen signature
appear on a list of servicing officers furnished to the Trustee and the
Certificate Insurer by the Servicer, as such list may from time to time be
amended.
"STARTUP DAY" shall mean the day designated as such pursuant to Section
2.6(e) hereof.
"SUBORDINATION DEFICIT" shall mean, with respect to any Distribution
Date, the excess, if any, of (i) the aggregate of the Class Principal Balances
of the Class A Certificates on such Distribution Date, after taking into account
the payment of the Principal Distribution Amount on such Distribution Date
(except for amounts payable under the Certificate Insurance Policy) but not any
Class A Turbo Amount on such Distribution Date over (ii) the Aggregate Principal
Balance as of the end of the related Due Period.
"SUBSERVICER" shall mean any Person with whom the Servicer has entered
into a Subservicing Agreement and who satisfies the requirements set forth in
Section 5.2(a) hereof in respect of the qualification of a Subservicer.
"SUBSERVICING AGREEMENT" shall mean any agreement between the Servicer
and any Subservicer relating to subservicing and/or administration of certain
Loans as provided in Section 5.2(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Certificate Insurer.
"SUBSTITUTION ADJUSTMENT" shall mean, as to any date on which a
substitution occurs pursuant to Section 2.4 or 3.5, the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution of any Qualified Substitute Loans
as of the date of substitution) are less than the aggregate of the Principal
Balances of the related Deleted Loans together with 30 days' interest thereon at
the Loan Interest Rate, and plus any unreimbursed Servicing Advances with
respect to such Deleted Loans as set forth in an Officer's Certificate of the
Servicer.
"TAX MATTERS PERSON" shall mean the Person or Persons appointed
pursuant to Section 10.15 from time to time to act as the "tax matters person"
(within the meaning of the REMIC Provisions) of each of the Trust REMICs.
"TAX RETURN" shall mean 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 each of the Trust REMICs due to their classification as
REMICs 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 provision of federal, state
or local tax laws.
"TELERATE PAGE 3750" shall mean the display page so designated on the
Bridge Telerate Service (or such other page as may replace page 3750 on such
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or such other page as may
replace such page on such service, or if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be selected by the
Issuer after consultation with the Trustee), the rate will be the Reference Bank
Rate.
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Loan Sale
Agreement, the Indemnification and Contribution Agreement, dated May 24, 1999
among the Depositor, New South and the Underwriters, and the Insurance
Agreement.
"TRANSFER" shall mean any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"TRANSFER AFFIDAVIT AND AGREEMENT" shall have the meaning as defined in
Section 4.2(i)(ii).
"TRANSFEREE" shall mean any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"TRANSFEROR" shall mean New South Federal Savings Bank, a federal
savings bank.
"TRUST" shall mean New South Home Equity Trust 1999-1, the trust
created hereunder.
"TRUST FUND" shall mean (i) each Loan transferred to the Trust pursuant
to the provisions hereof, (ii) such assets as from time to time are identified
as REO Property and collections thereon and proceeds thereof, (iii) all assets
deposited in the Accounts, including any amounts on deposit in the Collection
Account, and the Certificate Account and all amounts in the Accounts invested in
Permitted Investments, (iv) the Trustee's rights with respect to the Loans under
all insurance policies (other than the Certificate Insurance Policy) required to
be maintained pursuant to this Agreement and any Insurance Proceeds, (v) all
Liquidation Proceeds, (vi) all Released Property Proceeds, (vii) all rights
against the Transferor arising under the Loan Sale Agreement, (viii) the
Uncertificated Regular Interests and (ix) the Basis Risk Arrangements.
"TRUST REMIC" shall mean REMIC I, REMIC II, REMIC III, and REMIC IV, or
any of them.
"TRUSTEE" shall mean The Chase Manhattan Bank, a New York banking
corporation, or its successor in interest, or any successor trustee appointed as
herein provided.
"TRUSTEE FEE" shall mean, as to any Distribution Date, the fee payable
to the Trustee in respect of its services as Trustee and as agent for the Tax
Matters Person that accrues at a monthly rate equal to 1/12 of 0.0025% of the
Class Principal Balances of the Principal Balance Certificates as of first day
of the related Due Period, together with its out-of-pocket expenses for acting
as Trustee and as agent for the Tax Matters Person, including, without
limitation, any taxes imposed on the Trustee with respect to the Trust Fund
(other then as a result of its own negligence, bad faith, willful misfeasance
or other breach of duties under this Agreement) and costs or expenses associated
with the complete transfer of all servicing data and the completion, correction
or manipulation of such servicing data as may be required by the Trustee to
correct any errors or insufficiencies in the servicing data or otherwise enable
the Trustee to service the Loans properly and effectively in the event the
Trustee becomes successor servicer hereunder.
"TRUSTEE'S LOAN FILE" shall mean the documents delivered to the Trustee
or its designated agent pursuant to Section 2.3.
"TRUSTEE'S REPORT" shall have the meaning as defined in Section 6.7.
"UNCAPPED FIXED PASS-THROUGH RATE" shall mean with respect to any
Distribution Date and the Class A-3, Class A-4, Class A-5 and Class A-6
Certificates, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through Rate,
the Class A-5 Pass-Through Rate and the Class A-6 Pass-Through Rate,
respectively, in each case calculated without the imposition of the Fixed Rate
Available Funds Cap Rate.
"UNCAPPED PASS-THROUGH RATE" shall mean with respect to any
Distribution Date and (i) the Class A-1 Certificates, the Class A-1 LIBOR Rate,
(ii) the Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, the
applicable Uncapped Fixed Pass-Through Rate, and (iii) the Class A-2 and Class
A-6IO Certificates, the applicable Pass-Through Rate.
"UNCERTIFICATED REGULAR INTERESTS" shall mean any of the REMIC I
Regular Interests, REMIC II Regular Interests, REMIC III Regular Interests and
REMIC IV Regular Interests.
"UNDERWRITERS" shall mean PaineWebber Incorporated and First Union
Capital Markets Corp.
"UNDERWRITING GUIDELINES" shall mean the underwriting guidelines with
respect to the Loans, a copy of which is attached as Exhibit A to the Loan Sale
Agreement.
"UNITED STATES PERSON" shall mean a beneficial owner of a Certificate
that is for United States federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States, any state or the District of Columbia,
including any entity treated as a corporation or partnership for federal income
tax purposes (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations), (iii) an estate whose income
is subject to United States federal income tax regardless of its source or (iv)
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 such United
States Persons have the authority to control all substantial decisions of the
trust (or, to the extent provided in applicable Treasury regulations, certain
trusts in existence on August 20, 1996 which are eligible to elect to be treated
as United States Persons).
"UNPAID REO AMORTIZATION" shall mean, as to any REO Loan and any month,
the aggregate of the installments of principal and accrued interest deemed to be
due in such month and in any prior months that remain unpaid, calculated in
accordance with Section 5.12.
"WEIGHTED AVERAGE NET LOAN RATE" shall mean for any Distribution Date,
a per annum rate equal to the weighted average Net Loan Rates for the Loans
(based on the Loan Interest Rates applied with respect to payments due on the
Due Date in the related Due Period and weighted on the basis of their respective
unpaid Principal Balances immediately prior to such Due Dates (or, in the case
of the initial Distribution Date, as of the Cut-Off Date).
Section 1.2 PROVISIONS OF GENERAL APPLICATION.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles.
(b) The terms defined in this Article include the plural as well as the
singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest relating to the Class A-1 Certificates
(other than with respect to the Loans, or as otherwise specifically set forth
herein) provided for herein shall be made on the basis of actual days elapsed
divided by a year comprised of 360 days. All calculations of interest relating
to the Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates, Class A-6 Certificates or Class A-6IO Certificates
(other than with respect to the Loans, or as otherwise specifically set forth
herein) provided for herein, shall be made on the basis of an assumed year of
360 days consisting of twelve 30 day months. All calculations of interest with
respect to any Loan provided for herein shall be made in accordance with the
terms of the related Mortgage Note and Mortgage or Manufactured Home Contract,
as applicable, or, if such documents do not specify the basis upon which
interest accrues thereon, on the basis of dividing actual days elapsed by a 365
day year.
(f) Any Loan payment is deemed to be received on the date such payment
is actually received by the Servicer; PROVIDED, HOWEVER, that for purposes of
calculating distributions on the Certificates prepayments with respect to any
Loan are deemed to be received on the date they are applied in accordance with
customary servicing practices consistent with the terms of the related Mortgage
Note and Mortgage or the related Manufactured Home Contract, as applicable, to
reduce the outstanding principal balance of such Loan on which interest accrues.
ARTICLE II
ESTABLISHMENT OF THE TRUST;
SALE AND CONVEYANCE OF TRUST FUND
Section 2.1 SALE AND CONVEYANCE OF TRUST FUND; PRIORITY
AND SUBORDINATION OF OWNERSHIP INTERESTS; ESTABLISHMENT
OF THE TRUST.
(a) The Depositor does hereby sell, transfer, assign, set over and
convey to the Trust for the benefit of the Certificateholders and the
Certificate Insurer without recourse but subject to the provisions in this
Section 2.1 and the other terms and provisions of this Agreement, all of the
right, title and interest of the Depositor in and to the Trust Fund, exclusive
of the obligations of the Depositor, Transferor or any other party with respect
to the Loans.
(b) The rights of the Certificateholders to receive payments with
respect to the Loans in respect of the Certificates and all ownership interests
of the Certificateholders, shall be as set forth in this Agreement. In this
regard, all rights of the Class X-IO, Class Z-IO and Class R Certificateholders
to receive payments in respect of the Class X-IO, Class Z-IO and Class R
Certificates, are subject and subordinate to the preferential rights of the
Class A Certificateholders to receive payments in respect of the Class A
Certificates and to the Certificate Insurer's rights to receive the
Reimbursement Amount.
(c) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "NEW SOUTH HOME EQUITY TRUST 1999-1" and
does hereby appoint The Chase Manhattan Bank as Trustee in accordance with the
provisions of this Agreement.
Section 2.2 POSSESSION OF LOAN FILES; ACCESS TO LOAN FILES.
(a) Upon the issuance of the Certificates, the ownership of each
Mortgage Note, the Mortgage or the Manufactured Home Contract, as applicable,
and the contents of the related Loan File related to each Loan shall be vested
in the Trustee for the benefit of the Certificateholders and the Certificate
Insurer, as their respective interests may appear.
(b) Pursuant to Section 2.2 of the Loan Sale Agreement, New South
Federal Savings Bank has delivered or caused to be delivered the Trustee's Loan
File related to each Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement pursuant to which
the Trustee will appoint a custodian (a "CUSTODIAN") to hold the Trustee's Loan
Files in trust for the benefit of the Trustee; PROVIDED, HOWEVER, that the
custodian so appointed shall in no event be the Depositor, the Transferor or the
Servicer or any Person known to a Responsible Officer of the Trustee to be an
Affiliate of any of them. The Trustee shall be the initial Custodian.
(d) The Trustee and the Custodian shall afford the Depositor, the
Certificate Insurer and the Servicer reasonable access to all records and
documentation regarding the Loans relating to this Agreement, such access being
afforded at customary charges, upon reasonable request and during normal
business hours at the offices of the Trustee or the Custodian, as applicable.
Section 2.3 DELIVERY OF LOAN DOCUMENTS.
(a) In connection with each conveyance pursuant to Section 2.1 or 2.2
hereof, the Transferor has delivered or does hereby agree to deliver on or
before the Closing Date to the Trustee the Certificate Insurance Policy and each
of the following documents for each Loan sold by the Transferor to the Depositor
and sold by the Depositor to the Trust Fund:
(i) With respect to each Mortgage Loan:
(1) The original Mortgage Note, bearing, or accompanied by, all
prior and intervening endorsements or assignments showing a complete
chain of endorsement or assignment from the originator of the Loan to
Transferor and further endorsed without recourse in the following form:
"Pay to the order of ___________, without recourse" and signed by
manual or facsimile signature in the name of an authorized officer of
the Transferor;
(2) The original Mortgage with evidence of recording indicated
thereon; PROVIDED, HOWEVER, that if such Mortgage has not been returned
from the applicable recording office, then such recorded Mortgage shall
be delivered when so returned;
(3) An assignment of the original Mortgage, in suitable form for
recordation in the jurisdiction in which the related Mortgaged Property
is located, in the name of the holder of record of the Mortgage Loan by
an authorized officer (with evidence of submission for recordation of
such assignment in the appropriate real estate recording office for
such Mortgaged Property to be received by the Trustee within 60 days of
the Closing Date); PROVIDED, HOWEVER, that if the related Mortgage has
not been returned from the applicable recording office, then such
assignment shall be delivered when so returned (and a blanket
assignment with respect to each unrecorded Mortgage shall be delivered
on the Closing Date);
(4) Any recorded intervening assignments of the Mortgage with
evidence of recording thereon; and
(5) Any assumption, modification, consolidation or extension
agreements;
(6) the original or duplicate lender's title insurance policy and
all riders thereto, if applicable;
(ii) With respect to each Manufactured Home Loan:
(1) the original Manufactured Home Contract;
(2) either (1) the original title document for the related
Manufactured Home, a duplicate certified by the appropriate
governmental authority that issued the original thereof or, if such
original is not yet available, a copy of the application filed with the
appropriate governmental authority pursuant to which the original title
document will be issued, or (2) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the
issuance of title documents for manufactured housing units, other
evidence of ownership of the related Manufactured Home that is
customarily relied upon in such jurisdiction as evidence of title to a
manufactured housing unit;
(3) evidence of one or more of the following types of perfection
of the security interest of the Transferor in the related Manufactured
Home granted by such Manufactured Home Contract (or, if such evidence
is not yet available, a copy of the application or other filing used to
obtain such security interest, as appropriate in the applicable
jurisdiction): (1) notation of such security interest on the title
document, (2) a financing statement meeting the requirements of the
UCC, with evidence of recording indicated thereon, (3) a fixture filing
in accordance with the UCC, with evidence of filing indicated thereon,
or (4) such other evidence of perfection of a security interest in a
manufactured housing unit as is customarily relied upon in the
jurisdiction in which the related Manufactured Home is located;
(4) an original assignment of the Manufactured Home Contract from
the initial named payee thereunder to the Transferor (unless the
Transferor is the initial named payee for such Manufactured Home
Contract);
(5) originals of any assumption agreements relating to such
Manufactured Home Contract, together with originals of any surety or
guaranty agreement relating to such Manufactured Home Contract or to
any such assumption agreement, payable to the order of the Transferor,
or, if not so payable, endorsed to the order of, or assigned to, the
Transferor by the holder/payee thereunder without recourse;
(6) originals of any extension, modification or waiver
agreement(s) relating to such Manufactured Home Contract; and
(7) proof of maintenance of an Insurance Policy for the related
Manufactured Home.
PROVIDED, HOWEVER, that in the case of any Loans which have been prepaid in full
on or after the Cut-Off Date and prior to the date of the execution of this
Agreement, the Transferor, in lieu of delivering the above documents, hereby
delivers to the Trustee a certification of an officer of the Transferor of the
nature set forth in Exhibit J attached hereto; and PROVIDED, FURTHER, however,
that as to certain Mortgages or assignments thereof which have been delivered or
are being delivered to recording offices for recording and have not been
returned to the Transferor in time to permit their delivery hereunder at the
time of such transfer, in lieu of delivering such original documents, the
Transferor is delivering to the Trustee a true copy thereof with a certification
by the Transferor on the face of such copy substantially as follows: "certified
true and correct copy of original which has been transmitted for recordation."
The Transferor has agreed pursuant to the Loan Sale Agreement that it will
deliver such original documents on behalf of the Depositor to the Trustee
promptly after they are received, and, with respect to each such Mortgage not
delivered by the Closing Date, shall deliver to the Trustee on each date that is
30, 60 and 90 days after the Closing Date, an Officer's Certificate of the
Transferor setting forth the related Loan Number for each such Mortgage and the
reason for such delay and in no event later than 90 days after the Closing Date;
PROVIDED, HOWEVER, that in those instances where the public recording office
retains the original Mortgage or Assignment of Mortgage after it has been
recorded or such original document has been lost by the recording office, the
Transferor shall be deemed to have satisfied its obligations hereunder if it
shall have delivered to the Trustee a copy of such original Mortgage or
Assignment of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof. The Transferor agrees, at its own
expense, to record (or to provide the Trustee with evidence of recordation
thereof) each assignment within 60 days of the Closing Date in the appropriate
public office for real property records, PROVIDED, HOWEVER, that Assignments of
Mortgages shall not be required to be submitted for recording with respect to
any Mortgage Loan which relates to the Trustee's Loan File if the Trustee, each
of the Rating Agencies and the Certificate Insurer shall have received an
opinion of counsel satisfactory to the Trustee, each of the Rating Agencies and
the Certificate Insurer stating that, in such counsel's opinion, recordation of
such assignment is not necessary under applicable states law to preserve the
Trustee's interest in the related loan against the claim of any subsequent
transferee of such Loan or any successor to, or creditor of the Depositor or the
Transferee; PROVIDED, FURTHER, that any Assignment of Mortgage for which an
opinion has been delivered shall be recorded by the Servicer upon the earlier to
occur of (1) receipt by the Trustee of the Certificate Insurer's written
direction to record such Mortgage, (2) the occurrence of any Event of Default,
as such term is defined in this Agreement, or (3) a bankruptcy or insolvency
proceeding involving the Borrower is initiated or foreclosure proceedings are
initiated against the Mortgaged Property as a consequence of an event of default
under the Mortgage Loan.
On or prior to the Closing Date the Servicer, at its own expense shall
complete the endorsement of each Mortgage Note or Manufactured Home Contract, as
applicable, such that the final endorsement appears in the following form:
"Pay to the order of _________, without recourse, New South Federal
Savings Bank."
The Servicer, at its own expense shall also complete each Assignment of
Mortgage either in blank or such that the final Assignment of Mortgage appears
in the following form:
"The Chase Manhattan Bank, as Trustee for New South Home Equity Trust
1999-1 formed pursuant to the Pooling and Servicing Agreement dated as
of May 1, 1999, among PaineWebber Mortgage Acceptance Corporation IV as
Depositor, New South Federal Savings Bank, as Transferor and as
Servicer and The Chase Manhattan Bank, as Trustee."
(b) Without diminution of the requirements of Sections 2.2(c) and this
Section 2.3, all original documents relating to the Loans that are not delivered
to the Trustee are and shall be delivered to the Servicer by the Transferor on
behalf of the Depositor pursuant to the Loan Sale Agreement, and shall be held
by the Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.3 to be a
part of a Loan File, the Servicer shall promptly deliver such original document
to the Trustee. In acting as custodian of any such original document, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the Loans or the Loan Files. Promptly upon the
Depositor's and the Trust's acquisition thereof and the Servicer's receipt
thereof, the Servicer on behalf of the Trust shall mark conspicuously each
original document not delivered to the Trustee, and the Transferor's master data
processing records evidencing each Loan with a legend, acceptable to the Trustee
and the Certificate Insurer, evidencing that the Trust has purchased the Loans
and all right and title thereto and interest therein pursuant to the Loan Sale
Agreement and this Agreement.
(c) In the event that any Mortgage Note required to be delivered
pursuant to this Section 2.3 is conclusively determined by any of the Transferor
or the Servicer, to be lost, stolen or destroyed, the Transferor shall, on the
Closing Date or the later date upon which such Mortgage Note has been
conclusively determined to be lost, deliver to the Trustee a "lost note
affidavit" in form and substance acceptable to the Trustee, and shall further
agree to hold the Trustee and the Certificate Insurer harmless from any loss or
damage resulting from any action taken in reliance on the delivery and
possession by the Trustee of such lost note affidavit. Delivery by the
Transferor of such lost note affidavit shall not affect the obligations of the
Transferor under the Loan Sale Agreement with respect to the related Mortgage
Loan.
Section 2.4 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver to the Depositor, the
Certificate Insurer, the Servicer and the Transferor on or prior to the Closing
Date an acknowledgment of receipt of the Certificate Insurance Policy and, with
respect to each initial Loan, the original Mortgage Note or Manufactured Home
Contract, as applicable, (with any exceptions noted and the Original Assignment
of Mortgage as provided in Section 2.3(a)(i)(3)), in the form attached as
Exhibit D-1 hereto and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the definition of Trust Fund and delivered to the Trustee, as
Trustee in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders and the Certificate Insurer.
(b) The Trustee agrees, for the benefit of the Certificateholders and
the Certificate Insurer, to review (or cause to be reviewed) each Trustee's Loan
File within 45 Business Days after the Closing Date and to deliver to the
Transferor, the Servicer, the Depositor and the Certificate Insurer an interim
certification in the form attached hereto as Exhibit D-2 (with applicable
exceptions noted thereon) to the effect that, as to each Loan listed in Loan
Schedule (other than any Loan paid in full or any Loan specifically identified
in such certification as not covered by such certification), (1) all documents
required to be delivered to it pursuant to Section 2.3 hereof are in its
possession, (2) each such document has been reviewed by it, has been, to the
extent required, executed and has not been mutilated, damaged, torn or otherwise
physically altered (handwritten additions, changes or corrections shall not
constitute physical alteration if initialed by the Borrower), appears regular on
its face and relates to such Loan. The Trustee shall be under no duty or
obligation to (1) inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face or (2) determine whether any Trustee's Loan File
should contain any of the documents referred to in Section 2.3(a)(i)(5),
2.3(a)(ii)(5) and 2.3(a)(ii)(6) and with respect to each of Section
2.3(a)(iii)(2) and 2.3(a)(ii)(3), the Trustee shall not be required to determine
which document described in such Section is applicable.
Within 180 days of the Closing Date, the Trustee shall deliver (or
cause to be delivered) to the Servicer, the Transferor, the Depositor and the
Certificate Insurer a final certification in the form attached hereto as Exhibit
E to the effect that, as to each Loan listed in the Loan Schedule (other than
any Loan paid in full or any Loan specifically identified in such certification
as not covered by such certification), and as to any document noted in an
exception included in the Trustee's initial certifications, (i) all documents
required to be delivered to it pursuant to Section 2.3 hereof and the Loan Sale
Agreement are in its possession, (ii) each such document has been reviewed by
it, has been, to the extent required, executed and has not been mutilated,
damaged, torn or otherwise physically altered (handwritten additions, changes or
corrections shall not constitute physical alteration if initialed by the
Borrower), appears regular on its face and relates to such Loan.
(c) If the Certificate Insurer or the Trustee during the process of
reviewing the Trustee's Loan Files finds any document constituting a part of a
Trustee's Loan File which is not executed, has not been received, is unrelated
to the Loan identified in the related Loan Schedule, or does not conform to the
requirements of Section 2.3 or the description thereof as set forth in the
related Loan Schedule, the Trustee or the Certificate Insurer, as applicable,
shall promptly so notify the Servicer, the Transferor, the Certificate Insurer
and the Trustee. In performing any such review, the Trustee may conclusively
rely on the Transferor as to the purported genuineness of any such document and
any signature thereon. It is understood that the scope of the Trustee's review
of the Loan Files is limited solely to confirming that the documents listed in
Section 2.3 have been executed and received and relate to the Loan Files
identified in the related Loan Schedule. Pursuant to the Loan Sale Agreement,
the Transferor has agreed to use reasonable efforts to cause to be remedied a
material defect in a document constituting part of a Loan File of which it is so
notified by the Trustee or otherwise becomes aware. If, however, within 90 days
after the Trustee's or Certificate Insurer's, as applicable, notice to it
respecting such defect the Transferor has not caused to be remedied the defect
and the defect materially and adversely affects the value of the Loans or the
interest of the Certificateholders or the Certificate Insurer in such Loan (in
the reasonable determination of the Certificate Insurer), the Transferor shall
either (1) substitute in lieu of such Loan a Qualified Substitute Loan in the
manner and subject to the conditions set forth in Section 3.5 hereof or (2)
purchase such Loan at a purchase price equal to the outstanding Principal
Balance of such Loan as of the date of purchase, plus the greater of (x) all
accrued and unpaid interest to the Due Date for such Loan in the related Due
Period and (y) 30 days' interest thereon, computed at the related Loan Interest
Rate, plus the amount of any unreimbursed Servicing Advances made by the
Servicer with respect to such Loan, which purchase price shall be deposited in
the Certificate Account on the next succeeding Determination Date, after
deducting therefrom any amounts received in respect of such repurchased Loan or
Loans and being held in the Collection Account for future distribution to the
extent such amounts have not yet been applied to principal or interest on such
Loan (the "LOAN REPURCHASE PRICE").
(d) Upon receipt by the Trustee of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt of the related Trustee's Loan File, and the deposit of the amounts
described above into the Certificate Account (which certification shall be in
the form of Exhibit F hereto), the Trustee shall release to the Servicer for
release to the Transferor the related Trustee's Loan File and shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Transferor as may be necessary to transfer such Loan to the Transferor. The
Trustee shall notify the Certificate Insurer if the Transferor fails to
repurchase or substitute for a Loan in accordance with the foregoing.
Section 2.5 CREATION OF THE UNCERTIFICATED REGULAR INTERESTS AND
RESIDUAL INTERESTS; BASIS RISK ARRANGEMENTS; ISSUANCE OF
CERTIFICATES.
(a) Concurrently with the assignment to the Trustee of the assets
included in REMIC I, and in exchange therefor, at the direction of the
Depositor, the REMIC I Regular Interests and Class R-I Interest have been issued
hereunder. The interests evidenced by the REMIC I Regular Interests and Class
R-I Interest constitute the entire beneficial ownership of REMIC I. The rights
of the REMIC II and the Class R1 Certificateholders to receive distributions
from the proceeds of REMIC I in respect of the REMIC I Regular Interests and the
Class R-I Interest, respectively, and all ownership interests of REMIC II and
the Class R1 Certificateholders in and to such distributions, shall be as set
forth in this Agreement.
(b) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC I Regular
Interests to the Trustee for the benefit of the Holders of the REMIC II Regular
Interests and the Class R-II Interest. The Trustee acknowledges the assignment
to it 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
Holders of the REMIC II Regular Interests and the Class R-II Interest.
(c) Concurrently with the assignment to the Trustee of the REMIC I
Regular Interests, and in exchange therefor, at the direction of the Depositor,
the REMIC II Regular Interests and Class R-II Interest have been issued
hereunder. The rights of REMIC III and the Class R2 Certificateholders to
receive distributions from the proceeds of REMIC II in respect of the REMIC II
Regular Interests and the Class R-II Interest, respectively, and all ownership
interests of REMIC III and the Class R2 Certificateholders in and to such
distributions, shall be as set forth in this Agreement.
(d) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC II Regular
Interests to the Trustee for the benefit of the Holders of the REMIC III Regular
Interests and the Class R-III Interest. The Trustee acknowledges the assignment
to it 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
Holders of the REMIC III Regular Interests and the Class R-III Interest.
(e) Concurrently with the assignment to the Trustee of the REMIC II
Regular Interests, and in exchange therefor, at the direction of the Depositor,
the REMIC III Regular Interests and Class R-III Interest have been issued
hereunder. The rights of REMIC IV and the Class R2 Certificateholders to receive
distributions from the proceeds of REMIC III in respect of the REMIC III Regular
Interests and the Class R-III Interest, respectively, and all ownership
interests of REMIC IV and the Class R2 Certificateholders in and to such
distributions, shall be as set forth in this Agreement.
(f) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC III Regular
Interests to the Trustee for the benefit of the Holders of the REMIC IV Regular
Interests and the Class R-IV Interest. The Trustee acknowledges the assignment
to it of the REMIC III 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 Holders of the REMIC IV Regular Interests and the Class R-IV Interest.
(g) Concurrently with the assignment to the Trustee of the REMIC III
Regular Interests, and in exchange therefor, at the direction of the Depositor,
the REMIC IV Regular Interests and the Class R-IV Interest have been issued
hereunder. The rights of Certificateholders (other than the Class R
Certificateholders) and the Class R2 Certificateholders to receive distributions
from the proceeds of REMIC IV in respect of the REMIC IV Regular Interests and
the Class R-IV Interest, respectively, and all ownership interests of
Certificateholders (other than the Class R Certificateholders) and the Class R2
Certificateholders in and to such distribution, shall be as set forth in this
Agreement.
(h) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC IV Regular
Interests to the Trustee for the benefit of the Holders of the Certificates
(other than the Class R Certificates). The Holders of the Class X-IO
Certificates, as beneficial owners of the Class QA-1N, Class QA-2N, Class QA-3N,
Class QA-4N, Class QA-5N, Class QA-6N, and Class Q3N Interests, and the Holders
of the Class Z-IO Certificates, as beneficial owners of the Class Q4N Interest,
in each case on behalf of themselves and all successors, by acceptance of their
Certificates, as of the Closing Date, and concurrently with the execution and
delivery hereof, do hereby acknowledge that they have entered into the Basis
Risk Arrangements for the benefit of the Holders of the Principal Balance
Certificates and the Class A-6IO Certificates. The Trustee acknowledges the
assignment to it of the REMIC IV Regular Interests and the entering into of the
Basis Risk Arrangements and declares that it holds and will hold the same in
trust for the exclusive use and benefit of all present and future Holders of the
Certificates.
(i) Concurrently with the assignment to the Trustee of the REMIC IV
Regular Interests and the entering into of the Basis Risk Arrangements, and in
exchange therefor, at the direction of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class R Certificates) in Authorized Denominations
evidencing the entire beneficial ownership of the Grantor Trust. The rights of
the respective Classes of Holders of the Certificates (other than the Class R
Certificates) to receive distributions from the proceeds of REMIC IV and to
receive or pay amounts under the Basis Risk Arrangements in respect of their
Certificates, and all ownership interests of the respective Classes of Holders
of the Certificates in and to such distributions, shall be as set forth in this
Agreement.
Section 2.6 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF STARTUP
DAY AND LATEST POSSIBLE MATURITY DATE.
(a) The Class L1, Class L2, Class L3 and Class L4N Interests are hereby
designated as the "regular interests," and the Class R-I Interest is hereby
designated as the single Class of "residual interest" in REMIC I for purposes of
the REMIC Provisions.
(b) The Class M1, Class M1N, Class M2, Class M2N, Class M3, Class M3N
and Class M4N Interests are hereby designated as the "regular interests," and
the Class R-II Interest is hereby designated as the single Class of "residual
interest" in REMIC II for purposes of the REMIC Provisions.
(c) The Class PA-1, Class PA-2, Class PA-3, Class PA-4, Class PA-5,
Class PA-6, Class P3N and Class P4N Interests are hereby designated as the
"regular interests," and the Class R-III Interest is hereby designated as the
single Class of "residual interest" in REMIC III for purposes of the REMIC
Provisions.
(d) The Class QA-1, Class QA-1N, Class QA-2, Class QA-2N, Class QA-3,
Class QA-3N, Class QA-4, Class QA-4N, Class QA-5, Class QA-5N, Class QA-6, Class
QA-6N, Class Q-3N and Class Q-4N Interests are hereby designated as the "regular
interests," and the Class R-IV Interest is hereby designated as the single Class
of "residual interest" in REMIC III for purposes of the REMIC Provisions.
(e) The Closing Date will be the "startup day" of each of the Trust
REMICs within the meaning of Section 860G(a)(9) of the Code (the "STARTUP DAY").
(f) The "latest possible maturity date," within the meaning of Treasury
Regulations Section 1.860G-1(a)(4)(iii) will be October 25, 2029 with respect to
the Uncertificated Regular Interests.
Section 2.7 APPLICATION OF PRINCIPAL AND INTEREST. In the event that
Net Liquidation Proceeds on a Liquidated Loan are less than the outstanding
Principal Balance of the related Loan plus accrued interest thereon, or any
Borrower makes a partial payment of any Monthly Payment due on a Loan, such Net
Liquidation Proceeds or partial payment shall be applied to payment of the
related Loan as provided therein, and if not so provided, first to interest
accrued at the Loan Interest Rate, then to the principal owed on such Loan.
Section 2.8 GRANT OF SECURITY INTEREST.
(a) It is the intention of the parties hereto that the conveyance by
the Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Fund and not a loan. In the event,
however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Depositor shall be deemed
to have granted and hereby grants to the Trustee, on behalf of the Trust, a
first priority perfected security interest in all of the Depositor's right,
title and interest in, to and under the Trust Fund to secure a loan in an amount
equal to the purchase price of the Loans. The conveyance by the Depositor of the
Trust Fund to the Trustee on behalf of the Trust shall not constitute and are
not intended to result in an assumption by the Trustee, the Certificate Insurer
or any Certificateholder of any obligation of the Transferor or any other Person
in connection with the Trust Fund.
(b) The Depositor and the Servicer shall take no action inconsistent
with the Trust's ownership of the Trust Fund and shall indicate or shall cause
to be indicated in its records and records held on its behalf that ownership of
each Loan and the assets in the Trust Fund are held by the Trustee on behalf of
the Trust. In addition, the Depositor and the Servicer shall respond to any
inquiries from third parties with respect to ownership of a Loan or any other
asset in the Trust Fund by stating that it is not the owner of such asset and
that ownership of such Loan or other Trust Fund asset is held by the Trustee on
behalf of the Trust.
Section 2.9 FURTHER ASSURANCES; POWERS OF ATTORNEY.
(a) The Servicer agrees that, from time to time, at its expense, it
shall cause the Transferor, promptly to execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
appropriate, or that the Servicer or the Trustee may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of
the Trust Fund or to enable the Trustee to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, the Servicer and
the Depositor will, upon the request of the Servicer or of the Trustee execute
and file (or cause to be executed and filed) such real estate filings, financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate.
(b) In the event that the Depositor is unable to fulfill its
obligations in subsection (a) above, the Depositor hereby grants to the Servicer
powers of attorney to execute all documents on its behalf under this Agreement
and the Loan Sale Agreement as may be necessary or desirable to effectuate the
foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS OF THE SERVICER. The Servicer hereby
represents and warrants to the Trustee, the Depositor, the Certificate Insurer
and the Certificateholders as of the Closing Date and during the term of this
Agreement:
(a) the Servicer is a federally chartered savings bank duly organized,
validly existing and in good standing under the laws of the United States of
America, and has full power and authority to own its assets and to transact the
business in which it is currently engaged. The Servicer is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Servicer;
(b) the Servicer has full power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated hereunder,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement;
(c) the Servicer is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization or
registration or declaration as shall have been obtained or filed, as the case
may be;
(d) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by the Servicer will not violate any
material provision of any existing law or regulation or any order or decree of
any court applicable to the Servicer or any provision of the federal charter or
bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by
which it may be bound; and
(e) no suit in equity, action at law or other judicial or
administrative proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of the Servicer, threatened against
the Servicer or any of its properties or with respect to this Agreement or the
Securities that in the opinion of the Servicer has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by this
Agreement.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.1 shall survive the delivery of the respective Loan
Files to the Trustee or to a custodian, as the case may be, and inure to the
benefit of the Trustee and the Certificate Insurer.
Section 3.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee and the
Certificate Insurer that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Loans and to execute, deliver and perform, and to enter into and consummate
transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of, or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been received or obtained on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(1) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (i) the charter or bylaws of the Depositor, or (ii) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (2)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (3)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Loans or any documents or
instruments evidencing or securing the Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and
(g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that would materially and adversely affect its
performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.2 shall survive delivery of the respective
Loan Files to the Trustee or to a custodian, as the case maybe, and shall inure
to the benefit of the Trustee and the Certificate Insurer.
Section 3.3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR. The
Transferor hereby represents and warrants to the Trustee, the Certificate
Insurer, the Certificateholders and the Depositor that as of the Closing Date
(except as otherwise specifically provided herein):
(a) The Transferor is a federally chartered savings bank duly
organized, validly existing and in good standing under the laws of the United
States of America and has and had at all relevant times, full corporate power to
originate or purchase the Loans, to own its property, to carry on its business
as presently conducted and to enter into and perform its obligations under each
Transaction Document to which it is a party.
(b) The execution and delivery of each Transaction Document to which it
is a party by the Transferor and its performance of and compliance with the
terms of each Transaction Document to which it is a party will not violate the
Transferor's federal charter or by-laws 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 or acceleration of, any material contract, agreement or
other instrument to which the Transferor is a party or which may be applicable
to the Transferor or any of its assets.
(c) The Transferor has the full power and authority to enter into and
consummate all transactions contemplated by the Transaction Documents to which
it is a party, has duly authorized the execution, delivery and performance of
each Transaction Document to which it is a party and has duly executed and
delivered each Transaction Document to which it is a party. Each Transaction
Document to which the Transferor is a party, assuming due authorization,
execution and delivery by the other parties thereto, constitutes a valid, legal
and binding obligation of the Transferor, enforceable against it in accordance
with the terms thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(d) The Transferor is not in violation of, and the execution and
delivery of any Transaction Documents by the Transferor and its performance and
compliance with the terms thereof 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, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Transferor or its properties or materially and adversely
affect the performance of its duties hereunder or thereunder.
(e) There are no actions or proceedings against, or investigations of,
the Transferor currently pending with regard to which the Transferor has
received service of process and no action or proceeding against, or
investigation of, the Transferor is, to the knowledge of the Transferor,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into this Agreement or render the Certificates invalid, (B) seek to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement or (C) if determined adversely, would prohibit or
materially and adversely affect the sale of the Loans to the Depositor, the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by the Transferor of, or compliance by the Transferor with, this
Agreement, (2) the issuance of the Certificates, (3) the sale of the Loans under
the Loan Sale Agreement or (4) the consummation of the transactions required of
it by this Agreement, except such as shall have been obtained before the Closing
Date.
(g) The Transferor acquired title to the Loans in good faith, without
notice of any adverse claim.
(h) The collection practices used by the Transferor with respect to the
Loans have been, in all material respects, legal, proper, prudent and customary
in the servicing of loans of the same type as the Loans.
(i) No Officer's Certificate, statement, report or other document
prepared by the Transferor and furnished or to be furnished by it pursuant to
any Transaction Document or in connection with the transactions contemplated
hereby contains any untrue statement of material fact.
(j) The Transferor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
any Transaction Document or by the performance of its obligations hereunder; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against the Transferor prior to the date hereof.
(k) The Prospectus Supplement does not contain an untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that the Transferor makes no statement with
respect to: (1) the statements set forth in the final paragraph of the cover of
the Prospectus Supplement; and (2) statements set forth under the following
captions: (i) "SUMMARY--Tax Status," "--ERISA Considerations," and "--Legal
Investment"; (ii) "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," (iii) "ERISA
CONSIDERATIONS," (iv) "LEGAL INVESTMENT," and (v) "UNDERWRITING."
(l) The Transferor has transferred the Loans without any intent to
hinder, delay or defraud any of its creditors.
(m) The origination and collection practices used with respect to each
Loan have been in all material respects legal, proper, prudent and customary in
the mortgage origination and servicing business and in compliance with the
Transferor's underwriting criteria as described in the Prospectus Supplement.
(n) The transfer, assignment and conveyance of the Loans by the
Transferor pursuant to the Loan Sale Agreement are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction.
Section 3.4 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR REGARDING
INDIVIDUAL LOANS. The Transferor hereby represents and warrants to the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders, with
respect to each Loan as of the Closing Date, except as otherwise expressly
stated:
(a) LOAN SCHEDULE. The information with respect to each Loan
set forth in the Loan Schedule is complete, true and correct as of the
Cut-Off-Date.
(b) DELIVERY OF LOAN FILE. All of the original or certified
documentation required to be delivered by the Transferor on the Closing Date or
as otherwise provided herein or in the Loan Sale Agreement has or will be so
delivered as provided. The Loan File contains each of the documents and
instruments specified to be included therein duly executed and in due and proper
form, and each such document or instrument is in a form generally acceptable to
prudent loan lenders that regularly originate or purchase mortgage loans
comparable to the Loans for sale to prudent investors in the secondary market
that invest in mortgage loans or manufactured housing contracts such as the
Loans.
(c) NATURE OF MORTGAGED PROPERTY. Each Mortgaged Property consists of a
single parcel of residential real property, separately assessed for tax
purposes, owned by the related Borrower in fee simple absolute and is improved
by a one-to-four-family residential dwelling.
(d) SERVICING. Each Loan is being serviced by the Servicer.
(e) FIXED INTEREST RATE. The Debt Instrument related to all of the
Loans bears a fixed Loan Interest Rate. The Loan Interest Rate is not less than
6.25% nor more than 16.38% and as of the Cut-Off-Date, the weighted average Loan
Interest Rate on the Loans is approximately 9.73%.
(f) PRIORITY OF LIEN. Each Mortgage is a valid and subsisting first or
second lien of record on a single parcel of real estate constituting the
Mortgaged Property, subject in all cases to the exceptions to title set forth in
the title insurance policy, with respect to the related Loan, which exceptions
are generally acceptable to mortgage lending companies, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage.
(g) TITLE. Except with respect to liens released immediately prior to
the transfer herein contemplated, immediately prior to the transfer and
assignment herein contemplated the Transferor held good and marketable title to,
and was the sole owner of, each Loan, subject to no liens, charges, mortgages,
encumbrances or rights of others; and immediately upon the transfer and
assignment by the Depositor to the Trustee herein contemplated, the Trust will
hold good and marketable title to, and be the sole owner of, each Loan, subject
to no liens, charges, mortgages, encumbrances or rights of others.
(h) DELINQUENCIES. As of the Cut-Off Date, no more than 0.63% of the
Loans by Aggregate Principal Balance are 30 or more days delinquent; and no
Loans are more than 59 days delinquent.
(i) TAX LIENS; STATUS OF PROPERTY. There is no delinquent tax or
assessment lien on any Property, and each Property is free of material damage
and is in good repair.
(j) NO DEFENSES. The Loan is 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 Loan, or the exercise of any right
thereunder, render the Loan 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.
(k) NO MECHANICS LIEN. There is no mechanic's lien or claim for work,
labor or material affecting any Property which is or may be a lien prior to, or
equal to or on a parity with, the lien of such Mortgage or Manufactured Home
Contract, as applicable, except those which are insured against by the title
insurance policy referred to in clause (m) below.
(l) ORIGINATION IN COMPLIANCE WITH LAWS. Each Loan complies, at the
time it was made complied and at all times has complied in all material respects
with applicable local, state and federal laws and regulations, including,
without limitation, usury, truth-in-lending, real estate settlement procedure,
consumer credit protection, equal credit opportunity, disclosure and recording
laws and the Transferor has and shall maintain in its possession available for
inspection and shall deliver upon demand, evidence of compliance with all such
requirements; and, to the Transferor's knowledge, no fraud or misrepresentation
was committed by any person or entity in connection with the origination of each
Loan.
(m) TITLE INSURANCE. With respect to each Mortgage Loan other than any
second Mortgage Loans with a principal balance at origination of less than
$50,000 secured by a Mortgaged Property not located in the State of Illinois, a
written commitment for a lender's title insurance policy, issued in standard
American Land Title Association or California Land Title Association form, or
other form acceptable in a particular jurisdiction, by a title insurance company
authorized to transact business in the state in which the related Property is
situated, together with a condominium endorsement, if applicable, in an amount
at least equal to the original Principal Balance of such Loan insuring the
mortgagee's interest under the related Loan as the holder of a valid first lien
of record on the real property described in the Mortgage subject only to
exceptions of the character referred to in paragraph (g) above, was effective on
the date of the origination of such Loan, and, as of the Closing Date, such
commitment will be valid and thereafter the policy issued pursuant to such
commitment shall continue in full force and effect. The Transferor is the sole
named insured of such mortgage title insurance policy and the assignment to the
Trust of the Transferor's interest in such mortgage title insurance policy does
not require the consent of or notification to the insurer, and such mortgage
title insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Trust upon the consummation of the
transactions contemplated by this Agreement and the Loan Sale Agreement. No
claims have been made under such mortgage title insurance policy and no prior
holder of the related Mortgage, including the Transferor, has done, by act or
omission, anything that would impair the coverage of such mortgage title
insurance policy.
(n) HAZARD INSURANCE. The improvements upon each Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire and extended coverage representing coverage not
less than the least of (1) the outstanding principal balance of the related
Loan, (2) the minimum amount required to compensate for damage or loss on a
replacement cost basis or (3) the full insurable value of the Property. All
individual insurance policies (collectively, the "HAZARD INSURANCE POLICY") are
the valid and binding obligation of the insurer and contain a standard mortgagee
clause naming the Transferor, its successors and assigns, as mortgagee. All
premiums thereon have been paid. The Loan obligated the Borrower thereunder to
maintain all such insurance at the Borrower's cost and expense, and upon the
Borrower's failure to do so, authorizes the holder of the Loan to obtain and
maintain such insurance at the Borrower's cost and expense and to seek
reimbursement therefor from the Borrower.
(o) FLOOD INSURANCE. If any Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration is in effect with
respect to such Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the outstanding principal
balance of the related Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the National Flood Insurance Act of 1968, as
amended. The Mortgage or Manufactured Home Contract, as applicable, obligated
the Borrower thereunder to maintain all such insurance at the Borrower's cost
and expense, and upon the Borrower's failure to do so, authorizes the holder of
the Mortgage or Manufactured Home Contract, as applicable, to obtain and
maintain such insurance at the Borrower's cost and expense and to seek
reimbursement therefor from the Borrower.
(p) ENFORCEABILITY. Each Mortgage and Debt Instrument is genuine and is
the legal, valid and binding obligation of the maker thereof and is enforceable
in accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each Loan had full legal capacity to execute all
Loan documents and convey the estate therein purported to be conveyed and the
Mortgage and Debt Instrument have been duly and properly executed by such
parties; the Borrower is a natural person who is a party to the Debt Instrument
and the Mortgage in an individual capacity and not in the capacity of a trustee
or otherwise.
(q) [RESERVED].
(r) GEOGRAPHIC CONCENTRATION. No more than approximately 1.29% of the
Aggregate Principal Balance is secured by Properties located within any single
zip code area; no more than 31.27% of the Aggregate Principal Balance is located
in Alabama, no more than 16.33% of the Aggregate Principal Balance is located in
Louisiana, no more than 13.40% of the Aggregate Principal Balance is located in
Tennessee, and no more than 8.50% of the Aggregate Principal Balance is located
within any other single state.
(s) PRIMARY RESIDENCE. At the time of origination, at least 96.42% of
the Aggregate Principal Balance is secured by Properties as to which the related
Borrower represented that such property is maintained by the Borrower as such
Borrower's primary residence.
(t) NO MODIFICATION. The terms of the Debt Instrument and the Mortgage
have not been impaired, altered or modified in any material respect, except by a
written instrument which has been recorded or is in the process of being
recorded, if necessary, to protect the interest of the Certificateholders and
which has been or will be delivered to the Trustee or the Custodian. The
substance of any such alteration or modification is reflected on the Loan
Schedule.
(u) NO WAIVER. No instrument or release or waiver has been executed in
connection with the Loan, and no Borrower has been released, in whole or in
part.
(v) TAXES AND INSURANCE. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
(w) NO ADVANCES. Except for payments in the nature of escrow payments,
including without limitation, taxes and insurance payments, the Servicer has not
advanced funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Borrower, directly or indirectly, for the payment of
any amount required by the Loan, except for interest accruing from the date of
the Debt Instrument or date of disbursement of the Loan proceeds, whichever is
greater, to the day which precedes by one month the Due Date of the first
installment of principal and interest.
(x) CONDEMNATION; DAMAGE. There is no proceeding pending or threatened
for the total or partial condemnation of the Property, nor is such a proceeding
currently occurring. No Property is damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Property as security for the Loan or the use for which the
premises were intended.
(y) NO ENCROACHMENTS. All the improvements which were included for the
purpose of determining the appraised value of the Property lie wholly within the
boundaries and building restriction lines of such property, and no improvements
on adjoining properties encroach upon the Property.
(z) PROPERTY IN COMPLIANCE WITH LAW. No improvement located on or being
part of the Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Property is lawfully occupied under
applicable law.
(aa)NO FUTURE ADVANCES. The proceeds of the Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee or any person
to make, or option on the part of the Borrower to request, future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
satisfied. All costs, fees and expenses incurred in making or closing or
recording the Loans were paid.
(bb)SOLE SECURITY. The related Debt Instrument is not and has not been
secured by any collateral, pledged account or other security except the lien of
the corresponding Mortgage or Manufactured Home Contract.
(cc)NO-BUY-DOWN LOANS. No Loan was originated under a buydown plan.
(dd)NO TRANSFEROR PAYMENT OBLIGATIONS. There is no obligation on the
part of the Servicer or any other party to make payments in addition to those
made by the Borrower.
(ee)DEEDS OF TRUST. With respect to each Mortgage constituting a deed
of trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Certificateholders or
the Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Borrower.
(ff)NO SHARED APPRECIATION. No Loan has a shared appreciation feature,
or other contingent interest feature.
(gg)STATE QUALIFICATION. All parties which have had any interest in the
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state or exempt from such
qualifications or requirements, or (C) federal savings and loans associations or
national banks having principal offices in such state or (D) not doing business
in such state so as to require qualification or licensing.
(hh)DUE ON SALE. The Loan contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the Loan in the
event the related Property is sold without the prior consent of the lender
thereunder.
(ii)BORROWER BANKRUPTCY. No Borrower is a debtor in any state or
federal insolvency or bankruptcy proceeding.
(jj)ENFORCEMENT RIGHTS. The related Mortgage or Manufactured Home
Contract, as applicable, contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Property of the benefits of the security, including, (i)
in the case of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. There is no homestead or other exemption
available to the Borrower which would materially interfere with the right to
sell the Property at a trustee's sale or the right to foreclose upon the related
Mortgage or Manufactured Home Contract, as applicable.
(kk)NO DEFAULT. Other than delinquent Loans set forth in clause (h) of
this Section 3.4, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Debt Instrument or
Manufactured Home Contract 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 neither the Servicer
nor the Transferor has waived any default, breach, violation or event of
acceleration.
(ll)DEPOSIT OF PAYMENTS. All amounts received on and after the Cut-Off
Date with respect to the Loans to which the Transferor is not entitled to will
be deposited into the Collection Account.
(mm)UNDERWRITING. All of the Loans were originated and underwritten by
the Transferor, or purchased and re-underwritten by the Transferor, in each case
in accordance with the applicable Underwriting Guidelines.
(nn)CONFORMITY TO PROSPECTUS. Each Loan conforms, and all such Loans in
the aggregate conform, to the description thereof set forth in the Prospectus
and the Prospectus Supplement.
(oo)NO ADVERSE SELECTION. The Loans were not selected by the Transferor
for inclusion in the Trust on any basis intended to adversely affect the Trust.
(pp)APPRAISAL. If required pursuant to the Underwriting Guidelines,
full appraisal on forms approved by FNMA or FHLMC was performed in connection
with the origination of the related Loan. Each appraisal meets guidelines that
would be generally acceptable to prudent lenders that regularly originate or
purchase mortgage loans or manufactured home contracts comparable to the Loan
for sale to prudent investors in the secondary market that invest in loans such
as the Loans.
(qq)COMBINED LOAN-TO-VALUE. As of the Cut-Off Date, no Loan had a
Combined Loan-To-Value Ratio in excess of 100% and as of the Cut-Off Date, the
weighted average Combined Loan-To-Value Ratio is 80.08%.
(rr)ENVIRONMENTAL MATTERS. To the best of the Transferor's knowledge,
(i) no Property was, as of the Cut-Off Date, (A) located within a one-mile
radius of any site containing environmental or hazardous waste risks, and (B) in
violation of any environmental law or regulation; and (ii) no Property contained
any environmentally hazardous material, substance or waste.
(ss)TERM. No Loan has a remaining term in excess of 360 months.
(tt)MANUFACTURED HOMES. With respect to any Manufactured Home Loan, the
Transferor hereby represents:
(i) VALID SECURITY INTEREST. The Manufactured Home Contract relating to
any Manufactured Home Loan, together with any related security interest,
creates a valid, subsisting and enforceable first priority security
interest in favor of such Transferor in the Manufactured Home covered
thereby; such security interest has been assigned by the Transferor to the
Depositor, and upon the assignment by the Depositor to the Trust, the Trust
will have a valid and perfected first-priority security interest in such
Manufactured Home.
(ii) NOT REAL ESTATE. The related Manufactured Home is personal
property and is not considered or classified as part of the real estate on
which it is located under the laws of the jurisdiction in which it is
located and was personal property and was not considered or classified as
part of the real estate on which it was located under the laws of the
jurisdiction in which it was located at the time the Manufactured Home
Contract relating to the Manufactured Home Loan was executed by the parties
thereto, and such Manufactured Home is, to the best of such Transferor's
knowledge, free of damage and in good repair.
(iii) NOTATION OF SECURITY INTEREST. If the related Manufactured Home
is located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the
title document shows, or, if a new or replacement title document with
respect to such Manufactured Home is being applied for, such title document
will be issued within 180 days and will show, such Transferor as the holder
of a security interest in such Manufactured Home. If the related
Manufactured Home is located in a state in which the filing of a financing
statement or the making of a fixture filing under the UCC is required to
perfect a security interest in manufactured housing, such filings have been
duly made and show the Transferor as secured party. In each case, the Trust
and the Trustee have the same rights as the secured party of record would
have (if such secured party were still the owner of the Manufactured Home
Loan) against all Persons claiming an interest in such Manufactured Home.
(uu)REMIC QUALIFICATION. Each Loan is a Qualified Mortgage.
Section 3.5 PURCHASE AND SUBSTITUTION.
(a) It is understood and agreed that the representations and warranties
set forth in Sections 3.3 and 3.4 of this Agreement shall survive delivery of
the Certificates to the Certificateholders. With respect to any representation
or warranty contained in Section 3.3 or 3.4 of this Agreement that is made to
the best of the Transferor's knowledge, if it is discovered by the Servicer, the
Trustee, the Certificate Insurer or any Certificateholder that the substance of
such representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Loan, then
notwithstanding the Transferor's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by any of the Certificateholders, the Transferor, the Servicer, the
Trustee or the Certificate Insurer of a breach of any of such representations
and warranties as of the Closing Date which materially and adversely affects the
value of the Loans or the interest of the Certificateholders, or which
materially and adversely affects the interests of the Certificate Insurer or the
Certificateholders in the related Loan in the case of a representation and
warranty relating to a particular Loan (notwithstanding that such representation
and warranty was made to the Transferor's best knowledge), the party discovering
such breach shall give prompt written notice to the others. Subject to the last
paragraph of this Section 3.5, within 60 days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, the
Transferor shall be required to (1) promptly cure such breach in all material
respects, (2) purchase such Loan in the manner and at the price specified in
Section 2.4(c) (in which case the Loan shall become a Deleted Loan), or (3)
remove such Loan from the Trust Fund (in which case the Loan shall become a
Deleted Loan) and substitute one or more Qualified Substitute Loans; PROVIDED,
that, such substitution is effected not later than the date which is two years
after the Startup Day. Any such substitution shall be accompanied by payment by
the Transferor of the Substitution Adjustment, if any, to the Servicer to be
deposited in the Certificate Account.
(b) As to any Deleted Loan for which the Transferor substitutes a
Qualified Substitute Loan or Loans, the Transferor shall be required to effect
such substitution by delivering to the Trustee a certification in the form
attached hereto as Exhibit F, executed by a Servicing Officer and the documents
described in Sections 2.3(a) for such Qualified Substitute Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Loan or Loans after the
date of such substitution. Monthly Payments received with respect to Qualified
Substitute Loans on or before the date of substitution will be retained by the
Transferor. The Trust Fund will own all payments received on the Deleted Loan on
or before the date of substitution, and the Transferor shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Loan. The Servicer shall give written notice to the Trustee and the Certificate
Insurer that such substitution has taken place and shall amend the Loan Schedule
to reflect the removal of such Deleted Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Loan. Upon such substitution, such
Qualified Substitute Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(d) It is understood and agreed that the obligation of the Transferor
set forth in this Section 3.5 to cure, purchase, substitute or otherwise pay
amounts to the Trust or the Certificate Insurer for a defective Loan constitutes
the sole remedies of the Trustee, the Certificate Insurer and the
Certificateholders with respect to a breach of the representations and
warranties of the Transferor set forth in Sections 3.3 and 3.4 of this
Agreement. The Trustee shall give prompt written notice to the Certificate
Insurer of any repurchase or substitution made pursuant to Section 3.5 or
Section 2.4(b) hereof.
(e) Upon discovery by the Servicer, the Trustee, the Certificate
Insurer or any Certificateholder that any Loan does not constitute a Qualified
Mortgage, the Person discovering such fact shall promptly (and in any event
within 5 days of the discovery) give written notice thereof to the others of
such Persons. In connection therewith, the Transferor shall be required to
repurchase or substitute a Qualified Substitute Mortgage Loan for the affected
Mortgage Loan within 60 days of the earlier of such discovery by any of the
foregoing parties, or the Trustee's or the Transferor's receipt of notice, in
the same manner as it would a Loan for a breach of representation or warranty
contained in Section 3.3 or 3.4 of this Agreement. The Trustee shall reconvey to
the Transferor the Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would a Loan repurchased for breach of a
representation or warranty contained in Section 3.3 or 3.4 of this Agreement.
Section 3.6 SERVICER COVENANTS. The Servicer hereby covenants
to the Trustee, the Depositor and the Certificate Insurer and the
Certificateholders that as of the Closing Date and during the term of this
Agreement:
(a) The Servicer shall deliver on the Closing Date an opinion from the
general counsel or the corporate counsel of the Servicer as to general corporate
matters in form and substance reasonably satisfactory to Underwriters' counsel
and counsel to the Certificate Insurer; and
(b) The Servicer may in its discretion (1) waive any prepayment penalty
or other charge, assumption fee, late payment charge or other charge in
connection with a Loan, and (2) arrange a schedule, running for no more than 180
days after the Due Date for payment of any installment on any Mortgage Note or
Manufactured Home Contract, as applicable, for the liquidation of delinquent
items; PROVIDED, that the Servicer shall not agree to the modification or waiver
of any provision of a Loan at a time when such Loan is not in default or such
default is not imminent, if such modification or waiver would be treated as a
taxable exchange under Code Section 1001, unless such exchange would not be
considered a "prohibited transaction" under the REMIC Provisions.
It is understood and agreed that the covenants set forth in this Section 3.6
shall survive the delivery of the respective Trustee Loan Files to the Trustee
or to a custodian, as the case may be, and inure to the benefit of the Trustee
and the Certificate Insurer.
ARTICLE IV
THE CERTIFICATES
Section 4.1 THE CERTIFICATES. The Certificates shall be substantially
in the forms annexed hereto as, in the case of the Class A-1 Certificates,
Exhibit B-1, in the case of the Class A-2 Certificates, Exhibit B-2, in the case
of the Class A-3 Certificates, Exhibit B-3, in the case of the Class A-4
Certificates, Exhibit B-4, in the case of the Class A-5 Certificates, Exhibit
B-5, in the case of the Class A-6 Certificates, Exhibit B-6, in the case of the
Class A-6IO Certificates, Exhibit B-7, in the case of the Class X-IO
Certificates, Exhibit B-8, in the case of the Class Z-IO Certificates, Exhibit
B-9, in the case of the Class R1 Certificates, Exhibit B-10, and in the case of
the Class R2 Certificates, Exhibit B-11. All Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee by an authorized officer
and authenticated by the manual or facsimile signature of an authorized officer.
Any Certificates bearing the signatures of individuals who were at the time of
the execution thereof the authorized officers of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the delivery of such Certificates or did not hold
such offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication. The Certificates are issuable
only as registered Certificates without coupons in Authorized Denominations.
Section 4.2 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee, as registrar, shall cause to be kept a register (the
"CERTIFICATE REGISTER") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering and transferring
Certificates, as herein provided. The Certificate Insurer and the Servicer shall
be entitled to inspect and copy the Certificate Register and the records of the
Trustee relating to the Certificates during normal business hours upon
reasonable notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder or holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder or holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transferor
exchange shall be an expense of the Trust.
(e) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A-1 Certificates shall, except as otherwise provided in the
next paragraph, be initially issued in the form of a single fully registered
Class A-1 Certificate with a denomination equal to the Original Class Principal
Balance for such Class. The Class A-2 Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A-2 Certificate with a denomination equal to the Original
Class Principal Balance for such Class. The Class A-3 Certificates shall, except
as otherwise provided in the next paragraph, be initially issued in the form of
a single fully registered Class A-3 Certificate with a denomination equal to the
Original Class Principal Balance for such Class. The Class A-4 Certificates
shall, except as otherwise provided in the next paragraph, be initially issued
in the form of a single fully registered Class A-4 Certificate with a
denomination equal to the Original Class Principal Balance for such Class. The
Class A-5 Certificates shall, except as otherwise provided in the next
paragraph, be initially issued in the form of a single fully registered Class
A-5 Certificate with a denomination equal to the Original Class Principal
Balance for such Class. The Class A-6 Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A-6 Certificate with a denomination equal to the Original
Class Principal Balance for such Class. The Class A-6IO Certificates shall,
except as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Class A-6IO Certificate with a denomination
equal to the initial Class A-6IO Notional Amount specified in the Preliminary
Statement hereto. Upon initial issuance, the ownership of each such Class A
Certificate shall be registered in the Certificate Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository. The Depositor
and the Trustee are hereby authorized to execute and deliver the Representation
Letter with the Depository. With respect to Class A Certificates registered in
the Certificate Register in the name of Cede & Co., as nominee of the
Depository, the Depositor, the Transferor, the Servicer, the Trustee and the
Certificate Insurer shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds Class
A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Transferor, the Servicer, the
Trustee and the Certificate Insurer shall have no responsibility or obligation
with respect to (1) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to any Ownership Interest,
(2) the delivery to any Direct or Indirect Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A
Certificates or (3) the payment to any Direct or Indirect Participant or any
other Person, other than a Certificateholder, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a Certificateholder shall receive a certificate evidencing such Class
A Certificate. Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "CEDE &CO." in this Agreement shall refer to such new nominee of the
Depository.
(f) In the event that (1) the Depositor or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Servicer or the Depositor is unable to locate a
qualified successor or (2) the Servicer at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Certificate Register in the name
of Cede & Co. (or a successor nominee) as nominee of the Depository. At that
time, the Servicer may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
PROVIDED, HOWEVER, that any such reregistration shall be at the expense of the
Servicer.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates as the case may be and all notices with respect to
such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any Class X-IO,
Class Z-IO or Class R Certificate shall be made unless such disposition is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and effective registration or qualification under applicable
state securities laws or "Blue Sky" laws, or is made in a transaction that does
not require such registration or qualification. If a transfer (other than one by
the Depositor to an Affiliate thereof) of Class X-IO, Class-ZIO or Class R
Certificates is to be made in reliance upon an exemption from the Securities Act
of 1933, and under the applicable state securities laws, then either: (i) the
Trustee shall require that the transferee deliver to the Trustee an investment
representation letter (the "INVESTMENT REPRESENTATION LETTER") substantially in
the form of Exhibit H attached hereto, which Investment Representation Letter
shall certify, among other things, that the transferee is an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act (an "INSTITUTIONAL ACCREDITED INVESTOR")
or a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act (a "QUALIFIED INSTITUTIONAL BUYER"), and the Trustee may also
require that the transferee deliver to the Trustee an Opinion of Counsel if such
transferee is not a Qualified Institutional Buyer or (ii) if the certifications
described in the preceding clause (i) cannot be provided, (a) the Trustee shall
require an Opinion of Counsel reasonably satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from registration or
qualification under the Securities Act, applicable state securities laws and
other relevant laws, which Opinion of Counsel shall not be an expense of the
Trust Fund, the Depositor or the Trustee and (b) the Trustee shall require the
transferor to execute a certification in form and substance satisfactory to the
Trustee setting forth the facts surrounding such transfer; PROVIDED, HOWEVER,
that a transfer of a Class X-IO, Class Z-IO or Class R Certificate may be made
to a trust if the transferor provides to the Trustee a certification that
interests in such trust may only be transferred subject to requirements
substantially to the effect set forth in this Section 4.2. The Trustee will
furnish, or cause to be furnished, upon the request of any Holder of Class X-IO,
Class Z-IO or Class R Certificates to a prospective purchaser of such Class
X-IO, Class Z-IO or Class R Certificates who is a Qualified Institutional Buyer,
such information as is specified in paragraph (d)(4) of Rule 144A with respect
to the Trust Fund, unless, at the time of such request, the entity with respect
to which such information is to be provided is subject to the reporting
requirements of Section 15(d) of the Exchange Act. None of the Depositor, the
Trustee or the Servicer or the Certificate Insurer is obligated to register or
qualify any Class of Class X-IO, Class Z-IO or Class R Certificate under the
Securities Act of 1933, as amended, or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of any
Class X-IO, Class Z-IO or Class R Certificate without registration or
qualification. Any Holder of a Class X-IO, Class Z-IO or Class R Certificate
desiring to effect such a transfer shall, and does hereby agree to, indemnify
the Depositor, the Trustee and the Servicer and the Certificate Insurer 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. Promptly after receipt by an
indemnified party under this paragraph of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this paragraph, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this paragraph. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; PROVIDED, HOWEVER, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are in conflict with or contrary to the interests of the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (1) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(2) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (3) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
Unless the Class X-IO, Class Z-IO and Class R Certificates have been
registered under the Securities Act, each of the Class X-IO, Class Z-IO and
Class R Certificates shall bear a legend substantially to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS CERTIFICATE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE
SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE
EXCEPT IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS
AND (A) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG
AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY
THE TRANSFEROR TO THE CERTIFICATE REGISTRAR OF A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE OF THIS
CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT
PURCHASER OF THIS CERTIFICATE, BY PURCHASING THIS CERTIFICATE
OR AN INTEREST HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH
CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER
AN INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM
OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT IF SUCH
TRANSFEREE IS A QUALIFIED INSTITUTIONAL BUYER OR AN
INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
(i) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Servicer or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under subclause (vi) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and a United
States Person and shall promptly notify the Trustee of any change or
impending change in its status as either a United States Person or a
Permitted Transferee;
(ii) In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall require
delivery to it, and shall not register the Transfer of any Class R
Certificate until its receipt of, an affidavit and agreement (a
"TRANSFER AFFIDAVIT AND AGREEMENT") attached hereto as Exhibit G from
the proposed Transferee, representing and warranting, among other
things, that such Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Class R Certificate that is the
subject of the proposed Transfer as a nominee, trustee or agent for any
Person that is not a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 4.2(i) and agrees to be bound by them;
(iii) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (ii) above, if a
Responsible Officer of the Trustee has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed Transferee
shall be effected;
(iv) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (x) to require a Transfer
Affidavit and Agreement from any other Person to whom such Person
attempts to transfer its Ownership Interest in a Class R Certificate
and (y) not to transfer its Ownership Interest unless it provides a
certificate (attached hereto as Exhibit H) to the Trustee stating that,
among other things, it has no actual knowledge that such other Person
is not a Permitted Transferee;
(v) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement. In addition, no Transfer of a Class R Certificate shall be
made unless the Trustee shall have received a representation letter,
the form of which is attached hereto as Exhibit N from the Transferee
of such Certificate to the effect that such Transferee is a United
States Person and is not a "disqualified organization" (as defined in
Section 860E(e)(5) of the Code)(such Person, a "PERMITTED TRANSFEREE");
and
(vi) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 4.2 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the provisions
of this Section 4.2, then the last preceding Permitted Transferee shall
be restored to all rights as Holder thereof retroactive to the date of
registration of transfer of such Class R Certificate. The Trustee shall
notify the Servicer upon receipt of written notice or discovery by a
Responsible Officer that the registration of transfer of a Class R
Certificate was not in fact permitted by this Section 4.2. Knowledge
shall not be imputed to the Trustee with respect to an impermissible
transfer in the absence of such a written notice or discovery by a
Responsible Officer. The Trustee shall be under no liability to any
Person for any registration of transfer of a Class R Certificate that
is in fact not permitted by this Section 4.2 or for making any payments
due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt of the
related Transfer Affidavit and Transfer Certificate. The Trustee shall
be entitled, but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of such Certificate.
(j) With respect to the Class X-IO, Class Z-IO and Class R
Certificates, no sale, transfer, pledge or other disposition by any Holder of
any such Certificate shall be made unless the Trustee shall have received either
(i) a representation letter from the proposed purchaser or transferee of such
Certificate substantially in the form of Exhibit I attached hereto, to the
effect that such proposed purchaser or transferee is not (a) an employee benefit
plan subject to the fiduciary responsibility provisions of ERISA or Section 4975
of the Code, or a governmental plan (as defined in Section 3(32) of ERISA)
subject to any federal, state or local law ("SIMILAR LAW") which is, to a
material extent, similar to the foregoing provisions of ERISA or the Code (each
a "PLAN") or (b) a person acting on behalf of or using the assets of any such
Plan (including an entity whose underlying assets include Plan assets by reason
of investment in the entity by such Plan and the application of Department of
Labor Regulation ss. 2510.3-101), other than an insurance company using the
assets of its general account under circumstances whereby the purchase and
holding of such Certificates by such insurance company would be exempt from the
prohibited transaction provisions of ERISA and the Code under Prohibited
Transaction Class Exemption 95-60 or (ii) if such Certificate is presented for
registration in the name of a purchaser or transferee that is any of the
foregoing, an Opinion of Counsel in form and substance satisfactory to the
Trustee and the Depositor to the effect that the acquisition and holding of such
Certificate by such purchaser or transferee will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the fiduciary
responsibility provisions of ERISA, the prohibited transaction provisions of the
Code or the provisions of any Similar Law, will not constitute or result in a
"prohibited transaction" within the meaning of ERISA, Section 4975 of the Code
or any Similar Law, and will not subject the Trustee, the Certificate Insurer,
the Servicer, or the Depositor to any obligation or liability (including
obligations or liabilities under ERISA, Section 4975 of the Code or any such
Similar Law) in addition to those set forth in the Agreement. The Trustee shall
not register the sale, transfer, pledge or other disposition of any such
Certificate unless the Certificate Registrar has received either the
representation letter described in clause (i) above or the Opinion of Counsel
described in clause (ii) above. The costs of any of the foregoing representation
letters or Opinions of Counsel shall not be borne by any of the Depositor, the
Servicer, the Trustee, the Certificate Insurer, or the Trust Fund. Each Holder
of a Class X-IO, Class Z-IO and Class R Certificate shall be deemed to represent
that it is not a Person specified in clauses (a) or (b) above. Any transfer,
sale, pledge or other disposition of any such Certificates that would constitute
or result in a prohibited transaction under ERISA, Section 4975 of the Code or
any Similar Law, or would otherwise violate the provisions of this Section
4.02(j) shall be deemed absolutely null and void AB INITIO, to the extent
permitted under applicable law.
So long as any of the Class of Certificates remains outstanding, the
Servicer will make available, or cause to be made available, upon request, to
any Holder and any Person to whom any such Certificate of any such Class of
Certificates may be offered or sold, transferred, pledged or otherwise disposed
of by such Holder, information with respect to the Servicer, or the Loans which
(i) is necessary to the provision of an Opinion of Counsel described in this
Section 4.2(j) and (ii) pertains to the following: (A) whether the Servicer or
any Affiliate, is an Affiliate of the Trustee, (B) which of the Loans constitute
more than 5% of the aggregate unamortized principal balance of the Loans as of
the Closing Date, and (C) the amount of compensation paid to the Servicer and
any sub-servicer pursuant to the terms and provisions of this Agreement.
(k) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the Corporate Trust
Office of the Trustee accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the Holder or holder thereof or
his attorney duly authorized in writing and, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and evidencing, in the case of
a Class A-1 Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate, or Class A-5 Certificate, Class A-6 Certificate, Class A-6IO
Certificate, Class X-IO Certificate or Class Z-IO Certificate, the same
Percentage Interest, and in any other case, the equivalent undivided beneficial
ownership interest in the Trust Fund and dated the date of authentication by the
Trustee. At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of Authorized Denominations of a like aggregate undivided
beneficial ownership interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. No
service charge shall be made for any transfer or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. All Certificates surrendered for transfer and exchange
shall be canceled by the Trustee.
Section 4.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (i) If
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Servicer, the Certificate
Insurer and the Trustee such security or indemnity as may reasonably be required
by each of them to save each of them harmless, then, in the absence of notice to
the Servicer, the Certificate Insurer and the Trustee that such Certificate has
been acquired by a bona fide purchaser, the Trustee shall execute, authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like tenor and representing an
equivalent beneficial ownership interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.3, the Servicer and the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.3 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
Section 4.4 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.2 and Article X, the Servicer, the Depositor, the Transferor, the
Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.5 and for all other purposes
whatsoever, and the Servicer, the Depositor, the Transferor, the Certificate
Insurer and the Trustee shall not be affected by notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE LOANS
Section 5.1 APPOINTMENT OF THE SERVICER.
(a) New South Federal Savings Bank agrees to act as the Servicer and to
perform all servicing duties under this Agreement subject to the terms hereof.
(b) The Servicer shall service and administer the Loans on behalf of
the Trust, for the benefit of the Certificateholders and the Certificate
Insurer, and shall have full power and authority, acting alone or through one or
more Subservicers, to do 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 Servicer, in its own name or the name of a
Subservicer, may, and is hereby authorized and empowered by the Trustee to,
execute and deliver, on behalf of itself, the Certificateholders, the
Certificate Insurer and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Loans, the insurance policies
and accounts related thereto and the properties subject to the Mortgages or
Manufactured Home Contracts, as applicable. The Servicer shall also take such
reasonable steps, at the Servicer's expense, as are necessary to maintain
perfection of security interests in the Properties. Upon the execution and
delivery of this Agreement, and from time to time as may be required thereafter,
the Trustee shall furnish the Servicer or its Subservicers with any powers of
attorney and such other documents (that have been prepared by the Servicer for
execution by the Trustee) as may be necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
In servicing and administering the Loans, the Servicer shall employ
procedures consistent with Accepted Servicing Practices and in a manner
consistent with recovery under any insurance policy required to be maintained by
the Servicer pursuant to this Agreement.
Costs incurred by the Servicer in effectuating the timely payment of
taxes and assessments on the Property securing a Loan and foreclosure costs may
be added by the Servicer to the amount owing under such Loan where the terms of
such Loan so permit; PROVIDED, HOWEVER, that the addition of any such cost shall
not be taken into account for purposes of calculating the principal amount of
the Loan or distributions to be made to Certificateholders. Such costs shall be
recoverable by the Servicer pursuant to Section 5.4. Notwithstanding any other
provision of this Agreement, the Servicer shall at all times service the Loans
in a manner consistent with the provisions of Sections 5.1(b) and 5.1(c).
(c) It is intended that the Trust Fund formed hereunder shall
constitute, that the affairs of the Trust REMICs shall be conducted so as to
qualify them as, four separate REMICs in accordance with the REMIC Provisions
and that the affairs of the Grantor Trust be conducted so as to qualify it as a
grantor trust under Subpart E, Part I of Subchapter J of the Code. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not take any action or omit to take any action reasonably within the Servicer's
control and the scope of its duties as described in this Agreement that would
(1) result in a taxable event to the Holders of the Certificates or endanger the
REMIC status of any of the Trust REMICs or the grantor trust status of the
Grantor Trust, (2) result in the imposition on any of the Trust REMICs or the
Trust Fund of a tax on "prohibited transactions" (either clause (1) or (2) shall
be an "ADVERSE REMIC EVENT"). The Servicer shall not take any action or fail to
take any action (whether or not authorized hereunder) as to which the Trustee
has advised prior to the date such action was taken or omitted to be taken 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, and the Servicer shall have
no liability hereunder for any action taken by it in accordance with the written
instructions of the Trustee; PROVIDED, HOWEVER, the Trustee shall have no
obligation to monitor the duties or activities of the Servicer and the Trustee
shall only be required to advise the Servicer with respect to any action that
could result in an Adverse REMIC Event to the extent the Servicer requests such
advice from the Trustee. In addition, prior to taking any action with respect to
the Trust Fund that is not expressly permitted under the terms of this Agreement
(other than interest rate modifications referred to in the provision to the
second preceding sentence), the Servicer will consult with the Trustee or its
designee and the Certificate Insurer, in writing, with respect to whether such
action could cause an Adverse REMIC Event to occur. 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. At all times
as may be required by the Code, the Servicer shall use its best efforts to
ensure that substantially all of the assets of the Trust REMICs 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. In the
event any specified time period or other requirement set forth in this Agreement
in respect of compliance with the REMIC Provisions becomes inconsistent with the
REMIC Provisions as the same may be amended, such specified time period or other
requirement shall also be deemed amended to comply with the requirements of this
Section, unless such amended time period or other requirements shall be less
protective of the interests of the Certificateholders and the Certificate
Insurer, in which case, to the extent consistent with the REMIC Provisions, the
former time period or requirement shall continue in force.
(d) Subject to Section 5.13, the Servicer is hereby authorized and
empowered to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Loans and with respect to the Properties. If reasonably required
by the Servicer, each Certificateholder and the Trustee shall execute any powers
of attorney furnished to the Trustee by the Servicer and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
(e) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 5.23, after
receipt by the Trustee and the Certificate Insurer of the Opinion of Counsel
required pursuant to Section 5.23, the Trustee or its designee approved by the
Certificate Insurer shall, within a period not to exceed 90 days, assume all of
the rights and obligations of the Servicer, subject to Section 7.2 hereof. The
Servicer shall, upon request of the Trustee but at the expense of the Servicer,
deliver to the Trustee all documents and records relating to the Loans and an
accounting of amounts collected and held by the Servicer and otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming party.
(f) The Servicer shall deliver a list of Servicing Officers to the
Trustee and the Certificate Insurer by the Closing Date, which list may, from
time to time, be amended, modified or supplemented by the subsequent delivery to
the Trustee and the Certificate Insurer of any superseding list of Servicing
Officers.
Section 5.2 SUBSERVICING AGREEMENTS BETWEEN THE SERVICER AND
SUBSERVICERS.
(a) The Servicer may, subject to the prior written approval of the
Certificate Insurer, enter into Subservicing Agreements with Subservicers for
the servicing and administration of the Loans and for the performance of any and
all other activities of the Servicer hereunder. Each Subservicer shall be either
(1) a depository institution the accounts of which are insured by the FDIC or
(2) another entity that engages in the business of originating, acquiring or
servicing loans, and in either case shall be authorized to transact business in
the state or states where the related Properties it is to service are situated
if state law requires such authorization. In addition, each Subservicer will
obtain and preserve its qualifications 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 and
any of the Loans and to perform or cause to be performed its duties under the
related Subservicing Agreement which shall provide that the Subservicer's rights
shall automatically terminate upon the termination, resignation or other removal
of the Servicer under this Agreement. Each account used by any Subservicer for
the deposit of payments on any of the Loans shall be an Eligible Account.
(b) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Certificate Insurer and the Certificateholders for the servicing
and administering of the Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Loans. For purposes of
this Agreement, the Servicer shall be deemed to have received payments on Loans
when the Subservicer has received such payments.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee may, with the prior written consent of the Certificate Insurer, or
shall, at the direction of the Certificate Insurer, assume all of the rights and
obligations of the Servicer under each Subservicing Agreement that the Servicer
may have entered into.
Section 5.3 COLLECTION OF CERTAIN LOAN PAYMENTS; COLLECTION ACCOUNT.
(a) The Servicer shall use its reasonable efforts to collect all
payments called for under the terms and provisions of the Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and any
applicable primary mortgage insurance policy, follow such collection procedures
as shall constitute Accepted Servicing Practices.
The Servicer shall establish and maintain in the name of the Trustee
one or more Collection Accounts (collectively, the "COLLECTION ACCOUNT"), in
trust for the benefit of the Holders of the Certificates and the Certificate
Insurer. The Servicer shall promptly provide notice to the Certificate Insurer,
the Trustee and each Rating Agency of any creation and establishment of a
Collection Account hereunder. Each Collection Account shall be established and
maintained as an Eligible Account, and one Collection Account may be maintained
at New South Federal Savings Bank The Certificate Insurer, in its sole
discretion, may direct the Servicer to close such Collection Account and to
establish and maintain a replacement Collection Account that is an Eligible
Account.
(b) Within 3 Business Days of the Closing Date, the Servicer shall
deposit in the Collection Account any amounts representing the principal portion
of Monthly Payments on the Loans made in respect of any Due Date occurring after
May 1, 1999 that are received on or prior to the Cut-Off Date and were not
reflected in the Cut-Off Date Principal Balance of the related Loan. On the
Servicer Remittance Date prior to the first Distribution Date, the Servicer
shall have deposited into the Certificate Account all of the following
collections and payments received or made by the Servicer in respect of monies
due under the Loans (other than in respect of principal due and interest accrued
on Loans on or before the Cut-Off Date), and shall, on a daily basis thereafter
(except as otherwise provided herein), deposit such collections and payments
into the Collection Account:
(i) all unscheduled payments received after the Cut-Off
Date on account of principal on the Loans and all Principal
Prepayments, Curtailments and all Net REO Proceeds collected after the
Cut-Off Date;
(ii) all payments received after the Cut-Off Date on
account of interest on the Loans (other than payments of interest that
accrued on each Loan up to and including the Due Date immediately
preceding the Cut-Off Date);
(iii) all Net Liquidation Proceeds, to the extent such
proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Borrower in accordance with the
express requirements of law or in accordance with Accepted Servicing
Practices;
(iv) all Insurance Proceeds, to the extent such proceeds
are not to be applied to the restoration of the related Mortgaged
Property or released to the Borrower in accordance with the express
requirements of law or in accordance with Accepted Servicing Practices;
(v) all Released Property Proceeds;
(vi) any amounts payable in connection with the repurchase
of any Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.4 and 3.5 hereof;
(vii) all net revenues with respect to the Property held by
the Trust fund;
(viii) any amount expressly required to be deposited in the
Collection Account or Certificate Account in accordance with certain
provisions of this Agreement, including, without limitation amounts in
respect of the termination of the Trust Fund (which shall be deposited
in the Certificate Account), and amounts referenced in Sections 2.4(c),
3.5(a), 3.5(c), 5.6, and 6.6(b) of this Agreement;
PROVIDED, HOWEVER, that the Servicer shall be entitled, at its election, either
(a) to withhold and to pay to itself the applicable Servicing Fee from any
payment on account of interest or other recovery (including Net REO Proceeds) as
received and prior to deposit of such payments in the Collection Account or (b)
to withdraw the applicable Servicing Fee from the Collection Account after the
entire payment or recovery has been deposited therein; PROVIDED, FURTHER, that
with respect to any payment of interest received by the Servicer in respect of a
Loan (whether paid by the Borrower or received as Liquidation Proceeds,
Insurance Proceeds or otherwise) which is less than the full amount of interest
then due with respect to such Loan, only that portion of such payment that bears
the same relationship to the total amount of such payment of interest as the
rate used to determine the Servicing Fee bears to the Loan Interest Rate borne
by such Loan shall be allocated to the Servicing Fee with respect to such Loan.
All other amounts shall be deposited in the Collection Account not later than
two Business Days following the day of receipt and posting by the Servicer.
Notwithstanding any regularly scheduled transfer of funds to the Certificate
Account, the Servicer shall, not later than the Servicer Remittance Date
transfer to the Certificate Account all funds in each Collection Account that
are to be included in the Servicer Remittance Amount as of the Determination
Date immediately preceding the Distribution Date.
The Servicer shall direct, in writing, the institution maintaining each
Collection Account to invest the funds in the Collection Account only in
Permitted Investments which mature, unless payable on demand, no later than the
Business Day preceding the related Servicer Remittance Date. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has obtained an Opinion of Counsel (at the Servicer's expense) that
such sale or disposition will not cause the Trust Fund to be subject to the tax
on income from prohibited transactions imposed by Code Section 860F(a)(1),
otherwise subject the Trust Fund to tax or cause any of the Trust REMICs to fail
to qualify as a REMIC. All income (other than any gain from a sale or
disposition of the type referred to in the preceding sentence) realized from any
such Permitted Investment shall be for the benefit of the Servicer as additional
servicing compensation. The amount of any losses incurred in respect of any such
investments shall be deposited in the Collection Account by the Servicer out of
its own funds immediately as realized. In no event whatsoever shall the
institution maintaining the Collection Account be liable for any loss on
Permitted Investments invested at the direction of the Servicer (except to the
extent the Servicer is one and the same).
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
last paragraph of Section 5.14 and payments in the nature of prepayment charges,
late payment charges or assumption fees need not be deposited by the Servicer in
the Collection Account. Notwithstanding any provision herein to the contrary,
the Servicer shall not deposit in any Collection Account any amount other than
amounts required to be deposited therein in accordance with the terms of this
Agreement, and the Servicer shall have the right at all times to transfer funds
from the Collection Account to the Certificate Account. All funds deposited by
the Servicer in the Collection Account and the Certificate Account shall be held
therein for the account of the Trustee in trust for the Certificateholders and
the Certificate Insurer until disbursed in accordance with Section 6.2 or
withdrawn in accordance with Section 5.4.
(c) Prior to the time of their required deposit in the Collection
Account, all amounts required to be deposited therein may be deposited in an
account in the name of Servicer, PROVIDED that such account is an Eligible
Account. All such funds shall be held by the Servicer in trust for the benefit
of the Certificateholders and the Certificate Insurer pursuant to the terms
hereof.
(d) The Collection Account may, upon written notice by the Servicer to
the Certificate Insurer and the Trustee, be transferred to a different
depository so long as such transfer is to an Eligible Account.
Section 5.4 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT. The
Servicer is hereby authorized by the Trustee (such authorization to be revocable
by the Trustee at any time), from time to time, to make withdrawals from the
Collection Account, but only for the following purposes:
(a) to reimburse itself from any funds in the Collection Account for
any accrued unpaid Servicing Fees and for unreimbursed Periodic Advances and
Servicing Advances. The Servicer's right to reimbursement for unpaid Servicing
Fees and unreimbursed Servicing Advances shall be limited to late collections on
the related Loan, including Liquidation Proceeds, Released Property Proceeds,
Insurance Proceeds and such other amounts on deposit in the Collection Account
as may be collected by the Servicer from the related Borrower or otherwise
relating to the Loan in respect of which such unreimbursed amounts are owed. The
Servicer's right to reimbursement for unreimbursed Periodic Advances shall be
limited to late collections of interest on any Loan and to Liquidation Proceeds
and Insurance Proceeds on related Loans;
(b) to reimburse itself for any Periodic Advances determined in good
faith to have become Nonrecoverable Advances, such reimbursement to be made from
any funds in the Collection Account;
(c) to withdraw from the Collection Account any Preference Amount
received from a Borrower;
(d) to withdraw any funds deposited in the Collection Account that were
mistakenly deposited therein;
(e) to withdraw from the Collection Account any funds needed to pay
itself Servicing Compensation pursuant to Section 5.14 hereof to the extent not
retained or paid pursuant to Section 5.3, 5.4 or 5.14;
(f) to withdraw from the Collection Account to pay to the Transferor
with respect to each Loan or property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 2.4 or 3.5 or to pay to itself with
respect to each Loan or property acquired in respect thereof that has been
purchased pursuant to Section 8.1 all amounts received thereon and not required
to be deposited into the Collection Account as a result of such repurchase or
replacement;
(g) subject to the provisions of Section 5.20, to reimburse itself from
the Collection Account for (1) Nonrecoverable Advances that are not, with
respect to aggregate Servicing Advances on any single Loan or REO Property, in
excess of the Principal Balance thereof and (2) for amounts to be reimbursed to
the Servicer pursuant to Section 5.21;
(h) to withdraw from the Collection Account to pay to the Transferor
with respect to each Loan the excess, if any, of (1) interest accrued and unpaid
on such Loan on the Cut-Off Date, over (2) interest on such Loan from the Due
Date for such Loan immediately preceding the Cut-Off Date to the Cut-Off Date;
(i) to withdraw funds from the Collection Account necessary to make
deposits to the Certificate Account (which shall include the Trustee Fee) in the
amounts and in the manner provided for in Section 6.1 hereof;
(j) to pay itself any interest earned on or investment income earned
with respect to funds in the Collection Account; or
(k) to clear and terminate the Collection Account upon the termination
of this Agreement.
The Servicer shall keep and maintain a separate accounting for each
Loan for the purpose of accounting for withdrawals from the Collection Account
pursuant to subclause (a).
Section 5.5 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES. With respect
to each Loan, the Servicer shall maintain accurate records reflecting casualty
insurance coverage.
With respect to each Loan as to which the Servicer maintains escrow
accounts in an account separate from the Collection Account, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Property and the status of primary mortgage guaranty insurance premiums, if
any, and casualty insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date and
at a time appropriate for securing maximum discounts allowable, employing for
such purpose deposits of the Borrower in any escrow account which shall have
been estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage or the Manufactured Home
Contract, as applicable. To the extent that a Mortgage or a Manufactured Home
Contract, as applicable, does not provide for escrow payments, the Servicer
shall, if it has received notice of a default or deficiency, monitor such
payments to determine if they are made by the Borrower.
Section 5.6 MAINTENANCE OF CASUALTY INSURANCE. For each Loan, the
Servicer shall maintain or cause to be maintained in accordance with the
Servicer's loan servicing policies and procedures and to the extent required by
the related Loan to be maintained by the Borrower, fire and casualty insurance
with a standard mortgagee clause and extended coverage in an amount which is not
less than the replacement value of the improvements securing such Loan or the
unpaid principal balance of such Loan, whichever is less. If, upon origination
of the Loan, the Property was 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 Servicer will cause to be
maintained in accordance with the Servicer's loan servicing policies and
procedures and to the extent required by the related Loan to be maintained by
the Borrower, a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the unpaid principal balance of the Loan, (ii) the full insurable value of
the Property or (iii) the maximum amount of insurance available under the Flood
Disaster Protection Act of 1973. With respect to each Loan, the Servicer shall
in accordance with the Servicer's loan servicing policies and procedures also
maintain fire insurance with extended coverage and, if applicable, flood
insurance on REO Property in an amount which is at least equal to the lesser of
(i) the full insurable value of the improvements which are a part of such
property and (ii) the principal balance owing on such Loan at the time of such
foreclosure, deed in lieu of foreclosure or repossession plus accrued interest
and related Liquidation Expenses. Such insurance on an REO Property may not,
however, be less than the minimum amount required to fully compensate for any
loss or damage on a replacement cost basis. It is understood and agreed that
such insurance shall be with insurers approved by the Servicer and that no
earthquake or other additional insurance is to be required of any Borrower or to
be maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. The parties acknowledge
that the Servicer does not monitor maintenance of insurance with respect to
every Loan. Pursuant to Section 5.3, any amounts collected by the Servicer under
any insurance policies maintained pursuant to this Section 5.6 (other than
amounts to be applied to the restoration or repair of the related Property or
released to the Borrower in accordance with Accepted Servicing Practices) shall
be deposited into the Collection Account, subject to withdrawal pursuant to
Section 5.4. Any cost incurred by the Servicer in maintaining any such insurance
shall be added to the amount owing under the Loan where the terms of the Loan so
permit; PROVIDED, HOWEVER, that the addition of any such cost shall not be taken
into account for purposes of calculating the principal amount of the Loan or the
distributions to be made to the Certificateholders. Such costs shall be
recoverable by the Servicer pursuant to Section 5.4. In the event that the
Servicer shall obtain and maintain a blanket policy issued by an insurer that is
acceptable to FNMA or FHLMC, insuring against hazard losses on all of the Loans,
it shall conclusively be deemed to have satisfied its obligation as set forth in
the first sentence of this Section 5.6, it being understood and agreed that such
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related mortgaged or
acquired property an insurance policy complying with the first sentence of this
Section 5.6 and there shall have been a loss which would have been covered by
such a policy had it been maintained, be required to deposit from its own funds
into the Collection Account the amount not otherwise payable under the blanket
policy because of such deductible clause.
Section 5.7 SERVICER ACCOUNT. In addition to the Collection Account,
the Servicer shall be permitted to establish and maintain one or more Servicer
Accounts (collectively, the "SERVICER ACCOUNT"), each of which shall be an
Eligible Account, in which the Servicer may deposit all payments by, and
collections from, the Borrowers received in connection with the Loans prior to
the Servicer's deposit of all such funds required to be deposited into the
Collection Account. Withdrawals may be made out of such collections in the
Servicer Account to reimburse the Servicer for any advances not otherwise
required to be made from the Collection Account or for any refunds made by the
Servicer of any sums determined to be overages, or to pay any interest owed to
Borrowers on such account to the extent required by law, and in order to
terminate and clear the Servicer Account upon the termination of this Agreement
upon the termination of the Trust Fund.
Section 5.8 FIDELITY BOND; ERRORS AND OMISSIONS POLICY.
(a) The Servicer shall maintain with a responsible company, and at its
own expense, a blanket fidelity bond (a "FIDELITY BOND") and an errors and
omissions insurance policy (an "ERRORS AND OMISSIONS Policy"), in a minimum
amount acceptable to FNMA or otherwise in an amount as is commercially available
at a cost that is not generally regarded as excessive by industry standards,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Loans ("SERVICER EMPLOYEES"). Any such fidelity bond and errors
and omissions insurance shall protect and insure the Servicer against losses,
including losses resulting from forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such Servicer Employees. Such fidelity bond
shall also protect and insure the Servicer against losses in connection with the
release or satisfaction of a Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 5.8 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
the request of the Trustee, the Certificate Insurer or any Certificateholder,
the Servicer shall cause to be delivered to the Trustee, such Certificateholder
or the Certificate Insurer a certified true copy of such fidelity bond and
insurance policy. On the Closing Date, such bond and insurance is maintained
with certain underwriters as may be specified in writing to the Certificate
Insurer and the Trustee, from time to time. Any such fidelity bond or insurance
policy shall not be canceled or modified in a materially adverse manner without
written notice to the Trustee and the Certificate Insurer.
(b) The Servicer shall be deemed to have complied with this provision
if one of its respective Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such fidelity bond and errors and omission
policy, the coverage afforded thereunder extends to the Servicer. The Servicer
shall cause each and every Subservicer for it to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet the
requirements of Section 5.8(a) hereof. Any such Fidelity Bond and Errors and
Omissions Policy shall not be canceled or modified in a materially adverse
manner without written notice to the Certificate Insurer.
Section 5.9 COLLECTION OF TAXES, ASSESSMENTS AND OTHER ITEMS. The
Servicer shall deposit all payments by Borrowers for taxes, assessments, primary
mortgage or hazard insurance premiums or comparable items in the escrow accounts
in accordance with Section 5.5 hereof. Withdrawals from such escrow accounts may
be made to effect payment of taxes, assessments, primary mortgage or hazard
insurance premiums or comparable items, to reimburse the Servicer out of related
collections for any advances made in the nature of any of the foregoing, to
refund to any Borrowers any sums determined to be overages, or to pay any
interest owed to Borrowers on such account to the extent required by law. The
Servicer shall advance the payments referred to in the first sentence of this
Section 5.9 that are not timely paid by the Borrowers on the date when the tax,
premium or other cost for which such payment is intended is due, but the
Servicer shall be required to so advance only to the extent that such advances
will be recoverable by the Servicer pursuant to Section 5.4 out of Liquidation
Proceeds, Insurance Proceeds or otherwise.
Section 5.10 PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the Current Report on Form
8-K to be filed by the Depositor in connection with computational materials and
the initial Current Report on Form 8-K to be filed by the Depositor in
connection with the issuance of the Certificates) any and all reports,
statements and information respecting the Trust Fund and/or the Certificates
required to be filed with the Commission pursuant to the Securities Exchange Act
of 1934, and shall solicit any and all proxies of the Certificateholders
whenever such proxies are required to be solicited pursuant to the Securities
Exchange Act of 1934. The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. Fees and expenses incurred by
the Depositor in connection with this Section shall not be reimbursable from the
Trust Fund.
The Servicer and the Depositor each agree to promptly furnish the
Trustee, from time to time upon request, such further information, reports and
financial statements within their respective control related to this Agreement
and the Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission.
Section 5.11 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
In any case in which a Property has been or is about to be conveyed by the
Borrower (whether by absolute conveyance or by contract of sale, and whether or
not the Borrower remains liable thereon) and the Servicer has knowledge of such
prospective conveyance, the Servicer shall exercise its rights to accelerate the
maturity of the related Loan in accordance with the terms of any due-on-sale
provision contained in the related Mortgage Note, Mortgage or Manufactured Home
Contract. The Servicer shall enforce any due-on-sale provision contained in such
Mortgage Note, Mortgage or Manufactured Home Contract to the extent the
requirements thereunder for an assumption of the Loan have not been satisfied to
the extent permitted under the terms of the related Mortgage Note or the related
Manufactured Home Contract, as applicable, unless such provision is not
exercisable under applicable law and governmental regulations or in the
Servicer's judgment, such exercise is reasonably likely to result in legal
action by the Borrower, or such conveyance is in connection with a permitted
assumption of the related Loan. Subject to the foregoing, the Servicer is
authorized to take or enter into an assumption agreement from or with the Person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the related Mortgage Note or the related
Manufactured Home Contract, as applicable, and, unless prohibited by applicable
state law, the Borrower remains liable thereon, PROVIDED that the Loan Interest
Rate with respect to such Loan shall remain unchanged. The Servicer is also
authorized to release the original Borrower from liability upon the Loan and
substitute the new Borrower as obligor thereon. In connection with such
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual for
mortgage loans or manufactured home contracts similar to the Loans and as it
applies to mortgage loans or manufactured home contracts owned solely by it. The
Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Trustee to the related Loan File and shall, for all purposes, be considered a
part of such Loan File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption or
substitution agreement, the Loan Interest Rate of the related Mortgage Note or
the related Manufactured Home Contract, as applicable, and the payment terms
shall not be changed. Any fee collected by the Servicer for entering into an
assumption or substitution of liability agreement will be retained by the
Servicer as servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any conveyance by the
Borrower of the property subject to the Mortgage or the Manufactured Home
Contract, as applicable, or any assumption of a Loan by operation of law which
the Servicer in good faith determines it may be restricted by law from
preventing, for any reason whatsoever, or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance policy
or, in the Servicer's judgment, be reasonably likely to result in legal action
by the Borrower.
Section 5.12 REALIZATION UPON DEFAULTED LOANS. Except as provided in
the last two paragraphs of this Section 5.12, the Servicer shall, on behalf of
the Trust, foreclose upon or otherwise comparably convert the ownership of
properties securing such of the 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 5.3. In connection with such foreclosure
or other conversion, the Servicer shall follow Accepted Servicing Practices. The
foregoing is subject to the proviso that the Servicer shall not be required to
expend its own funds in connection with any foreclosure or to restore any
damaged property unless it shall determine that (i) such foreclosure and/or
restoration will increase the proceeds of liquidation of the Loan to
Certificateholders after reimbursement to itself for such expenses and (ii) such
expenses will be recoverable to it through Liquidation Proceeds (respecting
which it shall reimburse itself for such expense prior to the deposit in the
Collection Account of such proceeds). The Servicer shall be entitled to
reimbursement of the Servicing Fee and other amounts due it, if any, to the
extent, but only to the extent, that withdrawals from the Collection Account
with respect thereto are permitted under Section 5.4.
The Servicer may foreclose against the Property securing a defaulted
Loan either by foreclosure, by sale or by strict foreclosure, and, in the case
of Manufactured Homes repossession, and in the event a deficiency judgment is
available against the Borrower or any other person, may proceed for the
deficiency. The Servicer shall comply with the information reporting
requirements of Section 6050J of the Code with respect to Property that is
foreclosed or abandoned, at the time and in the manner required by the Code.
In the event that title to any Property is acquired in foreclosure or
by deed in lieu of foreclosure (an "REO PROPERTY"), the deed or certificate of
sale shall be issued to the Trustee, or to the Servicer on behalf of the
Trustee, the Certificate Insurer and the Certificateholders. Notwithstanding any
such acquisition of title and cancellation of the related Loan, such REO Loan
shall be considered to be a Loan held in REMIC I until such time as the related
Property shall be sold and such REO Loan becomes a Liquidated Loan. Consistent
with the foregoing, for purposes of all calculations hereunder, so long as such
REO Loan shall be considered to be an Outstanding Loan:
(a) Notwithstanding that the indebtedness evidenced by the related
Mortgage Note or the related Manufactured Home Contract, as applicable, shall
have been discharged, such Mortgage Note or the related Manufactured Home
Contract, as applicable, and the related amortization schedule in effect at the
time of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) shall be
assumed to remain in effect, except that such schedule shall be adjusted to
reflect the application of Net REO Proceeds received in any month pursuant to
the succeeding clause.
(b) Net REO Proceeds (after payment of Servicer's expenses related to
disposition) from such Property received in any month shall be deemed to have
been received first in payment of the accrued interest that remained unpaid on
the date that title to the related REO Property was acquired by the REMIC I,
with the excess thereof, if any, being deemed to have been received in respect
of the delinquent principal installments that remained unpaid on such date.
Thereafter, Net REO Proceeds for such Property received in any month shall be
applied to the payment of installments of principal and accrued interest on such
Loan deemed to be due and payable in accordance with the terms of such Mortgage
Note or Manufactured Home Contract, as applicable, and such amortization
schedule. If such Net REO Proceeds exceed the then Unpaid REO Amortization, the
excess shall be treated as a Curtailment received in respect of such Loan.
(c) The Net REO Proceeds allocated to the payment of a related
Servicing Fee shall be limited to an amount equal to the product of (x) the
total amount of Net REO Proceeds allocable to interest multiplied by (y) the
fraction, the numerator of which is the interest rate at which the Servicing Fee
is determined and the denominator of which is the Loan Interest Rate borne by
such Loan.
In the event that REMIC I acquires any Property as aforesaid or
otherwise in connection with a default or imminent default on a Loan, such
Property shall be disposed of by or on behalf of such REMIC prior to the close
of the third calendar year following the year of its acquisition unless (i) the
Servicer shall have provided to the Trustee and the Certificate Insurer an
Opinion of Counsel to the effect that the holding by such REMIC of such Property
subsequent to such period (and specifying the period beyond such period for
which the Property may be held) will not cause any of the Trust REMICs to be
subject to the tax on prohibited transactions imposed by Code Section
860F(a)(1), otherwise subject any of the Trust REMICs or the Trust Fund to tax
or cause any of the Trust REMICs to fail to qualify as a REMIC at any time that
any Certificates are outstanding, or (ii) the Servicer or the Trustee (at the
Servicer's expense) shall have applied for, at least 60 days prior to the
expiration of the close of such third calendar year, an extension of such period
in the manner contemplated by Code Section 856(e)(3), in which case the initial
period shall be extended by the applicable extension period. The Servicer shall
further ensure that the Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times, that the sale of such property does not result in the receipt by REMIC I
of any income from non-permitted assets as described in Code Section
860F(a)(2)(B), and that REMIC I does not derive any "net income from foreclosure
property" within the meaning of Code Section 860G(c)(2) with respect to such
property.
In lieu of foreclosing upon any defaulted Loan, the Servicer may, in
its discretion, permit the assumption of such Loan if, in the Servicer's
judgment, such default is unlikely to be cured and if the assuming borrower
satisfies the Servicer's underwriting guidelines with respect to mortgage loans
or manufactured home contacts, as applicable, owned by the Servicer. In
connection with any such assumption, the Loan Interest Rate of the related
Mortgage Note or Manufactured Home Contract, as applicable, and the payment
terms shall not be changed. Any fee collected by Servicer for entering into an
assumption agreement will be retained by the Servicer as servicing compensation.
Alternatively, the Servicer may encourage the refinancing of any defaulted Loan
by the Borrower.
Notwithstanding the foregoing, prior to instituting foreclosure
proceedings or accepting a deed-in-lieu of foreclosure with respect to any
Property, the Servicer shall make, or cause to be made, inspection of the
Property in accordance with the Accepted Servicing Practices and, with respect
to environmental hazards, substantially comparable to such procedures as are
required by the provisions of the FNMA's selling and servicing guide applicable
to single-family homes or manufactured homes, as applicable, and in effect on
the date hereof. The Servicer shall be entitled to rely upon the results of any
such inspection made by others. In cases where the inspection reveals that such
Property is potentially contaminated with or affected by hazardous wastes or
hazardous substances, the Servicer shall promptly give written notice of such
fact to the Certificate Insurer, the Trustee and the Certificateholders. The
Servicer shall not commence foreclosure proceedings or accept a deed-in-lieu of
foreclosure for such Property without obtaining the consent of the Certificate
Insurer.
Section 5.13 TRUSTEE TO COOPERATE; RELEASE OF LOAN FILES. Upon the
payment in full of any Loan, or the receipt by the Servicer of a notification
that payment in full will be escrowed in a manner customary for such purposes,
the Servicer shall (i) immediately deliver to the Trustee two copies of a notice
substantially in the form of the Request for Release attached hereto as Exhibit
F (which request shall include a statement to the effect that all amounts
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 5.3 have been or shall be so
deposited) and executed by a Servicing Officer and (ii) request delivery to it
of the Loan File. Upon receipt of such Request for Release, the Trustee, or the
Custodian on its behalf, shall promptly (and in no event later than 5 Business
Days) release the related Loan File to the Servicer. Upon any such payment in
full, the Servicer is authorized to give, as agent for the Trustee and the
mortgagee under the Mortgage or the lender under the Manufactured Home Contract,
as applicable, which secured the Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the property subject to such
Mortgage or Manufactured Home Contract, as applicable, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In connection therewith, the Trustee shall
execute and return to the Servicer any required power of attorney provided to
the Trustee by the Servicer and other required documentation in accordance with
Section 5.1(d). From time to time and as appropriate for the servicing or
foreclosure of any Loan and in accordance with Accepted Servicing Practices, the
Trustee shall, upon request of the Servicer and delivery to the Trustee of a
Request for Release signed by a Servicing Officer, release, or cause the
Custodian to release, the related Loan File to the Servicer and shall execute
such documents as shall be necessary to the prosecution of any such proceedings.
Such Request for Release shall obligate the Servicer to return the Loan File to
the Trustee when the need therefor by the Servicer no longer exists unless the
Loan shall be liquidated, in which case, upon receipt of a certificate of a
Servicing Officer similar to the Request for Release herein above specified, the
Loan File shall be delivered by the Trustee to the Servicer.
Section 5.14 SERVICING FEE; SERVICING COMPENSATION.
(a) The Servicer shall be entitled, at its election, either (1) to pay
itself the Servicing Fee out of any Borrower payment on account of interest or
Net REO Proceeds actually collected prior to the deposit of such payment in the
Collection Account or (2) to withdraw from the Collection Account such Servicing
Fee pursuant to Section 5.4. The Servicer shall also be entitled, at its
election, either (i) to pay itself the Servicing Fee in respect of each
delinquent Loan out of Liquidation Proceeds in respect of such Loan or other
recoveries with respect thereto to the extent permitted in Section 5.3(b) or
(ii) to withdraw from the Collection Account the Servicing Fee in respect of
each such Loan to the extent of such Liquidation Proceeds or other recoveries,
to the extent permitted by Section 5.4(a).
The aggregate Servicing Fee is reserved for the administration of the
Trust Fund and, in the event of replacement of the Servicer as Servicer of the
Loans, for the payment of other expenses related to such replacement. The
aggregate Servicing Fee shall be offset as provided in Section 5.19. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including maintenance of the hazard
insurance required by Section 5.6) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
(b) Servicing compensation in the form of assumption fees, late payment
charges, prepayment penalties (other than as set forth in Section 5.19 hereof)
tax service fees, fees for statement of account or payoff of the Loan (to the
extent permitted by applicable law) or otherwise shall be retained by the
Servicer and are not required to be deposited in the Collection Account.
Section 5.15 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS. Not
later than 15 days after each Distribution Date, the Servicer shall provide to
the Trustee and the Certificate Insurer a statement, certified by a Servicing
Officer, setting forth the status of the Collection Account as of the close of
business on the related Determination Date, stating that all distributions
required by this Agreement to be made by the Servicer on behalf of the Trustee
have been made (or if any required distribution has not been made by the
Servicer, specifying the nature and status thereof) and showing, for the period
covered by such statement, the aggregate of deposits into and withdrawals from
the Collection Account for each category of deposit specified in Section 5.3 and
each category of withdrawal specified in Section 5.4, the allocation of such
amounts between principal and interest collected on the Loans and the aggregate
of deposits into the Certificate Account as specified in Section 6.1(c). Such
statement shall also state the aggregate unpaid Principal Balance of all the
Loans as of the close of business on the last day of the month preceding the
month in which such Distribution Date occurs. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request.
Section 5.16 ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer will
deliver to the Trustee, the Certificate Insurer not later than the last day of
the third month (as of the Closing Date, March 31st) subsequent to the end of
the Servicer's fiscal year, an Officers' Certificate stating as to each signer
thereof, that (i) a review of the activities of the Servicer during the
preceding calendar year and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof including the steps being taken by the
Servicer to remedy such default. The first such Officers' Certificate shall be
delivered in March 2000. Such Officers' Certificate shall be accompanied by the
statement described in Section 5.17 of this Agreement. Copies of such statement
shall, upon request, be provided to any Certificateholder by the Servicer, or by
the Trustee at the Servicer's expense if the Servicer shall fail to provide such
copies.
Section 5.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
Not later than the last day of the third month (as of the Closing Date, March
31, 2000) subsequent to the end of the Servicer's fiscal year, the Servicer, at
its expense, shall cause a firm of nationally recognized independent public
accountants (who may also render services to the Servicer) to furnish a
statement to the Trustee, the Certificate Insurer, to the effect that, on the
basis of an examination of certain documents and records relating to the
servicing of the mortgage loans or manufactured home contracts, being serviced
by the Servicer under pooling and servicing agreements similar to this Agreement
(which agreements shall be described in a schedule to such statement) during the
preceding year (or such longer period from the Closing Date to the end of the
following calendar year), conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that such servicing has been conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers and that such examination has disclosed
no exceptions or errors relating to the servicing activities of the Servicer
(including servicing of Loans subject to this Agreement) that, in the opinion of
such firm, are material, except for such exceptions as shall be set forth in
such statement. The first such statement shall be delivered in March 31, 2000.
Copies of such statement shall, upon request, be provided to Certificateholders
by the Servicer, or by the Trustee at the Servicer's expense if the Servicer
shall fail to provide such copies. For purposes of such statement, such firm may
conclusively presume that any pooling and servicing agreement which governs
asset-backed pass-through certificates offered by the Depositor (or any
predecessor or successor thereto) in a registration statement under the
Securities Act of 1933, as amended, is similar to this Agreement, unless such
other pooling and servicing agreement expressly states otherwise. In the event
such firm requires the Trustee to agree to the procedures performed by such
firm, the Servicer shall direct the Trustee in writing to agree; it being
understood and agreed that the Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Trustee shall
not make any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures. Delivery of such reports, information and documents to the
Trustee is for informational purposes only, and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from the information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on the Officer's Certificates).
Section 5.18 REPORTS TO BE PROVIDED BY THE SERVICER.
(a) In connection with the transfer of the Certificates, the Trustee on
behalf of any Certificateholder may request that the Servicer make available to
any prospective Certificateholder annual audited financial statements of the
Servicer (or, upon request, audited annual financial statements of the
Servicer's ultimate parent corporation) for one or more of the most recently
completed fiscal years for which such statements are available, which request
shall not be unreasonably denied or unreasonably delayed. Such annual audited
financial statements also shall be made available to the Certificate Insurer
upon request. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, the Servicer shall direct the Trustee in
writing to agree; it being understood and agreed that the Trustee will deliver
such letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Trustee shall not make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures. Delivery of such
reports, information and documents to the Trustee is for informational purposes
only, and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from the information
contained therein, including the Servicer's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on the
Officer's Certificates).
(b) The Servicer also agrees to make available on a reasonable basis to
the Certificate Insurer, the Trustee or any prospective Certificateholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or any prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer, the Trustee or such prospective Certificateholder that the
Servicer has the ability to service the Loans in accordance with this Agreement.
(c) On the 15th calendar day of each month, and if such day is not a
Business Day, the next succeeding Business Day, the Servicer shall deliver to
the Trustee, the Depositor (if so requested) and to a certain financial market
publisher (which initially shall be Bloomberg, L.P.), a computer tape in ASCII
file format that includes the "loan level" information with respect to the Loans
as of the end of the related Due Period for the loan data fields required
pursuant to Exhibit K hereof and those additional loan data fields as reasonably
required by the Trustee, the Certificate Insurer, the Depositor or the
Certificate Insurer from time to time.
(d) The Servicer shall, in each year beginning after the Cut-Off Date,
make the reports of foreclosures and abandonments of any Mortgaged Property as
required by Code Section 6050J. In order to facilitate this reporting process,
the Servicer shall, on or before January 15th of each year, provide to the
Internal Revenue Service, reports relating to each instance occurring during the
previous calendar year in which such Servicer (i) on behalf of the Trustee
acquires an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan
serviced by such Servicer, or (ii) knows or has reason to know that a Mortgaged
Property has been abandoned. Reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by Code Section
6050J. In addition, the Servicer shall, for each year ending after the Cut-Off
Date, provide, or cause to be provided, to the Internal Revenue Service and the
related Mortgagors such information as is required under Code Sections 6050H
(regarding payment of interest) and 6050P (regarding cancellation of
indebtedness).
Section 5.19 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT OF PREPAID
LOANS. The aggregate amount of the Servicing Fees that the Servicer shall be
entitled to receive with respect to all of the Loans and each Distribution Date
shall be offset on such Distribution Date by an amount equal to the aggregate
Prepayment Interest Shortfall with respect to all Loans which were subjects of
Principal Prepayments during the Due Period applicable to such Distribution
Date. The amount of any offset against the aggregate Servicing Fee with respect
to any Distribution Date under this Section 5.19 shall be limited to the
aggregate amount of the Servicing Fees otherwise payable to the Servicer
(without adjustment on account of Prepayment Interest Shortfalls) with respect
to (i) scheduled payments having the Due Date occurring in the Due Period
applicable to such Distribution Date received by the Servicer prior to the
Determination Date, and (ii) Principal Prepayments, Curtailments and Liquidation
Proceeds received in the Due Period applicable to such Distribution Date, and
the rights of the Certificateholders to the offset of the aggregate Prepayment
Interest Shortfalls shall not be cumulative.
Section 5.20 PERIODIC ADVANCES. If, on the Business Day immediately
following any Determination Date, the Servicer determines that the interest
portion of any Monthly Payments due on the Due Date immediately preceding such
Determination Date have not been received as of the close of business on the
Business Day preceding such Determination Date, the Trustee shall determine the
amount of any Periodic Advance required to be made with respect to such unpaid
interest portion of all Monthly Payments on the related Servicer Remittance
Date. The Servicer, on the Business Day immediately following such Determination
Date, shall certify and deliver a magnetic tape or diskette to the Trustee and
the Depositor indicating the payment status of each Loan as of the close of
business on the Determination Date and shall cause an amount equal to the
Periodic Advance for the related Determination Date to be deposited in the
Certificate Account in accordance with Section 6.1(c) hereof, which deposit may
be made in whole or in part from funds in the Collection Account being held for
future distribution or withdrawal on or in connection with Distribution Dates in
subsequent months. Any funds being held for future distribution to
Certificateholders and so used shall be replaced by the Servicer from its own
funds by deposit into the Collection Account on or before the Determination Date
corresponding to any such future Determination Date to the extent that funds in
the Collection Account for such future Determination Date shall otherwise be
less than the amount required to be transferred to the Certificate Account in
respect of payments to Certificateholders required to be made on the
Distribution Date related to such future Determination Date.
The Trustee shall designate on its records the specific Loans and
related installments (or portions thereof) as to which such Periodic Advance
shall be deemed to have been made, such designation, except in cases of manifest
error, being conclusive for purposes of withdrawals from the Collection Account
pursuant to Section 5.4.
Section 5.21 INDEMNIFICATION; THIRD PARTY CLAIMS.
New South, as Transferor and Servicer (solely for the purpose of this
Section 5.21, the "INDEMNIFYING PARTY") agrees to indemnify and to hold each of
the Depositor, the Trustee, the Certificate Insurer and each Certificateholder
(solely for the purpose of this Section 5.21, the "INDEMNIFIED PARTIES")
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Indemnified Parties may, respectively, sustain in any way related to
the failure of the Indemnifying Party to materially perform its respective
duties in compliance with the terms of this Agreement. Each Indemnified Party
and the Servicer shall promptly notify the other Indemnified Parties if a claim
is made by a third party with respect to this Agreement, and the Servicer shall
with the consent of the Certificate Insurer, such consent not to be unreasonably
withheld, assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees approved by the
Certificate Insurer, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Indemnified Parties in respect of such
claim. The Trustee shall, out of the assets of the Trust Fund, reimburse the
Servicer in accordance with Section 5.14 hereof for all amounts advanced by it
pursuant to the preceding sentence except when the claim relates directly to the
failure of the Servicer to service and administer the Loans in material
compliance with the terms of this Agreement; PROVIDED, that the Servicer's
indemnity hereunder shall not be in any manner conditioned on the availability
of funds for such reimbursement.
Section 5.22 MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER OR
CONSOLIDATION OF THE SERVICER.
(a) The Servicer will keep in full effect its existence, rights and
franchises as a corporation, will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Loans and to perform
its duties under this Agreement and will otherwise operate its business so as to
cause the representations and warranties under Section 3.1 to be true and
correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution
acceptable to the Certificate Insurer that has a net worth of at least
$15,000,000 and is a Permitted Transferee, and in all events shall be the
successor of the Servicer 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. The Servicer shall send notice of any such merger or
consolidation to the Trustee and the Certificate Insurer.
Section 5.23 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT TO
RESIGN. The Servicer shall not assign its obligations and duties under this
Agreement nor resign from the obligations and duties hereby imposed on it except
by mutual written consent of the Certificate Insurer, the Depositor and the
Trustee or upon the determination that the Servicer's duties hereunder are no
longer permissible under applicable law and that such incapacity cannot be cured
by the Servicer without the incurrence, in the reasonable judgment of the
Certificate Insurer, of unreasonable expense. Any such determination that the
Servicer's duties hereunder are no longer permissible under applicable law
permitting the resignation of the Servicer shall be evidenced by a written
Opinion of Counsel (who may be counsel for the Servicer) to such effect
delivered to the Trustee, the Transferor, the Depositor and the Certificate
Insurer. No such resignation shall become effective until the Trustee or another
successor appointed in accordance with the terms of this Agreement has assumed
in writing the Servicer's responsibilities and obligations hereunder in
accordance with Section 7.2. The Servicer shall provide the Trustee, Moody's and
S&P and the Certificate Insurer with 30 days prior written notice of its
intention to resign pursuant to this Section 5.23.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.1 ESTABLISHMENT OF CERTIFICATE ACCOUNT, DEPOSITS TO THE
CERTIFICATE ACCOUNT.
(a) The Trustee shall establish and maintain the Certificate Account
which shall be titled "Certificate Account, The Chase Manhattan Bank, as trustee
for the registered holders of New South Home Equity Asset Backed Certificates,
Series 1999-1" and which shall be an Eligible Account. Notice of the
establishment of the Certificate Account shall be promptly provided in writing
to each of the Servicer, the Rating Agencies and the Certificate Insurer.
(b) The Trustee shall control and receive the income from the
investment of funds in the Certificate Account. The Trustee shall deposit the
amount of any losses incurred in respect of any such investments in the
Certificate Account out of its own funds immediately as realized.
(c) On each Servicer Remittance Date, the Servicer shall cause to be
deposited in the Certificate Account (i) from funds on deposit in the Collection
Account, an amount equal to the Servicer Remittance Amount (net of the amount to
be deposited pursuant to clause (ii) below), and (ii) from funds on deposit in
the Collection Account, the Net Foreclosure Profits, if any with respect to the
related Distribution Date, minus any portion thereof payable to the Servicer
pursuant to Section 5.3.
Section 6.2 PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT. The
Trustee shall, in accordance with the Servicer's written directions (in the case
of (a), (b), (d) or (e) below) to the Trustee as described in Section 6.5,
withdraw or cause to be withdrawn funds from the Certificate Account for the
following purposes:
(a) to effect the distributions described in Section 6.5(b) and 6.5(d);
(b) to pay to or upon the direction of the Transferor with respect to
each Loan or Property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2.4 or 3.5 or to pay to the Servicer with respect
to each Loan or Property acquired in respect thereof that has been purchased all
amounts received thereon deposited in the Certificate Account that do not
constitute property of the Trust Fund;
(c) to pay the Trustee any interest earned on or investment income
earned with respect to funds in the Certificate Account;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination of
the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (e) listed above.
Section 6.3 COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including, but not limited to, (i) all payments due from the Servicer or any
Subservicer on the Loans in accordance with the respective terms and conditions
of such Loans and required to be paid over to the Trustee by the Servicer or by
any Subservicer and (ii) Insured Payments from the Certificate Insurer. The
Trustee shall hold all such money and property received by it as part of the
Trust Fund and shall apply it as provided in this Agreement.
Section 6.4 THE CERTIFICATE INSURANCE POLICY.
(a) Not later than one Business Day prior to the Distribution Date, the
Trustee shall determine with respect to the immediately following Distribution
Date the amount to be on deposit in the Certificate Account reduced by (x) the
sum of the amounts described in clauses (i) and (ii) of Section 6.5(b) for the
related Distribution Date, and further not including (y) any Insured Payment.
(b) Not later than 12:00 noon New York City time on the Business Day
preceding each Distribution Date, the Trustee shall, if the Trustee determines
that an Insured Payment is required to be made in accordance with the
Certificate Insurance Policy complete a Notice in the form of Exhibit A to the
Certificate Insurance Policy, and submit such notice to the Certificate Insurer
and such notice shall serve as a claim for an Insured Payment in an amount equal
to the Insured Payment due with respect to the Class A Certificates for and on
such Distribution Date. The Insured Payment shall be deposited directly into the
Certificate Account in accordance with the Notice and the Certificate Insurance
Policy.
(c) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(d) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any amount distributed on the Class A
Certificates, including any amounts represented by an Insured Payment, has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided amount distributed, and shall, at the time it
provides notice to the Certificate Insurer, notify, by mail to
Certificateholders of the affected Certificates that, in the event any
Certificateholder's amount distributed is so recovered, such Certificateholder
will be entitled to payment pursuant to the Certificate Insurance Policy, a copy
of which shall be made available through the Trustee, the Certificate Insurer or
the Certificate Insurer's fiscal agent, if any, and the Trustee shall furnish to
the Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Trustee and subsequently recovered from
Certificateholders, and dates on which such payments were made.
(e) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"PREFERENCE CLAIM") of any distribution made with respect to the Certificates.
Each Class A Certificateholder, by its purchase of Class A Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (1) the direction of any
appeal of any order relating to such Preference Claim and (2) the posting of any
surety, supersedes or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to, and each Class A Certificateholder, the Servicer and the Trustee hereby
delegate and assign to the Certificate Insurer, to the fullest extent permitted
by law, the rights of the Servicer, the Trustee and each Class A
Certificateholder in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to any adversary proceeding or
action with respect to any court order issued in connection with any such
Preference Claim.
Section 6.5 DISTRIBUTIONS.
(a) No later than 12:00 noon New York time on the Business Day
following each Determination Date, the Servicer shall calculate and deliver to
the Trustee and the Certificate Insurer a report in a mutually agreed upon
format specifying (x) the outstanding Principal Balances of each of the Loans as
of the close of business on the Determination Date, (y) such of the information
included in Section 6.7(c) as to the Loans as the Certificate Insurer or the
Trustee may reasonably request and (z) such information as to each Loan as of
the Record Date immediately preceding such Determination Date and such other
information as the Certificate Insurer or the Trustee may reasonably request.
The Trustee shall calculate, based on such information delivered by the
Servicer, and shall deliver to the Certificate Insurer on the Business Day
preceding the Distribution Date, a remittance report specifying the following
information (which need not be in computer-readable form): (i) the Servicer
Remittance Amount, (ii) the Net Foreclosure Profits (net of any portion payable
to the Servicer) and (iii) the Periodic Advances for the related Distribution
Date; (iv) an itemization of the amounts to be distributed pursuant to Sections
6.5(b)(i)-(xiv). The information with respect to the Distribution Date provided
by the Trustee to the Certificate Insurer on the Business Day preceding each
Distribution Date shall also include the Premium Percentage, the Uncapped
Pass-Through Rates, the Class A-1 Pass-Through Rate, the Class A-1 Available
Funds Cap Rate, the Class A-1 Principal Balance, the Class A-2 Pass-Through
Rate, the Class A-2 Principal Balance, the Class A-3 Pass-Through Rate, the
Class A-3 Principal Balance, the Class A-4 Pass-Through Rate, the Class A-4
Principal Balance, the Class A-5 Pass-Through Rate, the Class A-5 Uncapped
Pass-Through Rate, the Class A-5 Principal Balance, the Class A-6 Pass-Through
Rate, the Class A-6 Principal Balance, the Class A-6IO Notional Amount, the
Class A-6IO Pass-Through Rate, the Aggregate Principal Balance of the Loans, the
Overcollateralization Deficiency Amount, the Overcollateralization Amount, the
Overcollateralization Target Amount, the Available Turbo Amount, the Class A
Turbo Amount and the Subordination Deficit. The Trustee shall also calculate and
provide the Available Distribution Amount and the amount of any Insured Payment.
With respect to the Trust REMICs, the Trustee shall also calculate the Class
Principal Balance or Notional Balance of each Class of Uncertificated Regular
Interests, the Reduced Weighted Average Net Loan Rate, the REMIC II Remittance
Rate, the REMIC II/III Strip Rate, each other Pass-Through Rate with respect to
the Uncertificated Regular Interests, the Class X-IO REMIC Amount and the Class
Z-IO REMIC Amount. Simultaneously with the delivery of the foregoing information
to the Certificate Insurer, the Trustee shall also provide to the Certificate
Issuer with a report including information specified in each of Sections
6.7(a)(i)-(xx).
(b) With respect to the Certificate Account (including, if deposited
into such Certificate Account, any Insured Payments), on each Distribution Date,
the Trustee shall make the following allocations, disbursements and transfers in
the following order of priority, in accordance with the information received
pursuant to the immediately preceding paragraph and each such allocation,
transfer and disbursement shall be treated as having occurred only after all
preceding allocations, transfers and disbursements have occurred:
(i) from the Servicer Remittance Amount and so long as no
Certificate Insurer Default exists, to the Certificate Insurer, the
Certificate Insurance Premium Amount, payable from REMIC I;
(ii) from the Servicer Remittance Amount, to the Trustee,
the Trustee Fees then due to it, payable from REMIC I;
(iii) from the Available Distribution Amount plus any
Insured Payment, to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-6I Certificates up to an amount equal
to the Distributable Certificate Interest for each such Class,
allocated, pro rata as among such Classes in accordance with their
respective amounts of Distributable Certificate Interest;
(iv) from the Available Distribution Amount plus any
Insured Payment remaining after clause (iii) above, to distribute as
principal on the Class A-6 Certificates, in the amount up to the lesser
of (A) the Principal Distribution Amount and (B) the Class A-6 Lock Out
Distribution Amount until the Class A-6 Principal Balance has been
reduced to zero,
(v) from the Available Distribution Amount and any Insured
Payment remaining after clause (iv) above, to distribute as principal
on the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class
A-6 Certificates, in that order, up to an amount equal to the remaining
Principal Distribution Amount after distribution pursuant to clause
(iv) above until the Class Principal Balance of each such Class has
been reduced to zero, such that no amount will be distributed on any
Class of Certificates pursuant to this clause (v) while any Principal
Balance Certificate having a lower numerical designation remains
outstanding;
(vi) from the Available Turbo Amount, to the Certificate
Insurer the amount of all Insured Payments and other payments made by
the Certificates Insurer pursuant to the Insurance Agreement which have
not been previously repaid together with interest accrued thereon at
the rate set forth in the Insurance Agreement as of such Distribution
Date;
(vii) from the Class A Turbo Amount, to the Class A-6
Certificate, an amount up to the Class A-6 Lockout Turbo Amount;
(viii) from the Class A Turbo Amount remaining after
distribution pursuant to clause (vii) above, to the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, in
that order, until the Class Principal Balance of each such Class has
been reduced to zero, such that no amount will be distributed on any
Class of Certificates pursuant to this clause (viii) while any
Principal Balance Certificate having a lower numerical designation
remains outstanding;
(ix) from the Available Distribution Amount after all
distributions in clauses (iii) through (viii) above are made, to the
Class A-1, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates,
any Class A-1 LIBOR Interest Carryover or Fixed Rate Interest Carryover
with respect to such Certificates, as applicable, for such Distribution
Date, pro rata in accordance with their respective entitlements to such
amounts of each such Class of Certificates;
(x) from any remaining Available Distribution Amount, to
the Class X-IO Certificates the Class X-IO Distribution Amount;
(xi) from any remaining Available Distribution Amount, to
Class X-IO Certificates the Class X-IO Carryover Amount;
(xii) from any remaining Available Distribution Amount, to
the Class Z-IO Certificates the Class Z-IO Distribution Amount;
(xiii) from any remaining Available Distribution Amount, to
the Class Z-IO Certificates the Class Z-IO Carryover Amount; and
(xiv) from any remaining Available Distribution Amount, to
the Holders of the Class R1 Certificates in respect of REMIC I to the
Class R-I Interest, and to the Holders of the Class R2 Certificates in
respect of REMIC II to the Class R-II Interest, in respect of REMIC III
to the Class R-III Interest and in respect of REMIC IV to the Class
R-IV Interest.
Notwithstanding the priorities set forth above, if the Certificate
Insurer has defaulted under the Certificate Insurance Policy, then on any
Distribution Date on which the Overcollateralization Amount has been reduced to
zero, any amounts payable to the holders of the Class A Certificates in respect
of principal on such Distribution Date will be distributed pro rata in
proportion to the Class Principal Balance of such Certificates, and not pursuant
to the priorities set forth in clauses (iv), (v), (vii) and (viii) above.
(c) On each Distribution Date, Net Prepayment Interest Shortfalls will
be allocated to reduce the amount of interest otherwise distributable on the
Class A, Class X-IO and Class Z-IO Certificates. Such allocation will be made
based on the Distributable Certificate Interest for such Distribution Date for
the Class A Certificates (determined using Uncapped Pass-Through Rates in the
case of the Class A-1, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates), and the Class X-IO Distribution Amount and the Class Z-IO
Distribution Amount for such Distribution Date.
(d) With respect to the Certificate Account (including, if deposited
into the Certificate Account, any Insured Payments), on each Distribution Date,
the Trustee shall make the following allocations, disbursements and transfers in
the following order of priority, in accordance with the information received
pursuant to Section 6.5(a), in respect of the Trust REMICs:
(i) REMIC IV. For each Distribution Date, the principal
amounts, interest distributions and timing of distributions on each
REMIC IV Regular Interest to the Grantor Trust shall be as follows: (A)
such items with respect to the Class QA-1, Class QA-2, Class QA-3,
Class QA-5 and Class QA-6 Certificates shall be identical to the
principal amounts, interest distributions and timing of distributions
on the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class
A-6 Certificates, except that all calculations of interest on such
Classes of REMIC IV Regular Interests shall be made at (I) with respect
to the Class QA-1 Interest, the lesser of (1) the Reduced Weighted
Average Net Loan Rate and (2) the lesser of the Class A-1 Pass-Through
Rate and 3.5%, and (II) with respect to the Class QA-2, Class QA-3,
Class QA-4, Class QA-5 and Class QA-6 Interests, the lesser of the
Reduced Weighted Average Net Loan Rate and 3.5%, in each case reduced
pro rata, based on the amount of interest accrued pursuant to this
clause (A) and the following clauses (B) and (C), by Net Prepayment
Interest Shortfalls for such Distribution Date; (B) the Class QA-1N,
Class QA-2N, Class QA-3N, Class QA-4N, Class QA-5N, Class QA-6N and
Class Q-3N Interests shall receive distributions of interest at their
respective Pass-Through Rates on their Notional Balances, reduced (I)
pro rata, based on the interest so accrued for each such Class, by the
excess of the aggregate of such interest accrued over the Class X-IO
Distribution Amount, and (II) pro rata, based on the amount of interest
accrued pursuant to this clause (B) and the preceding clause (A) and
following clause (C), by any Net Prepayment Interest Shortfalls for
such Distribution Date, and increased by any Class X-IO Carryover
Amounts, pro rata based on reductions previously allocated under
subclause I of this clause (B), and (C) the Class Q4N Interest shall
receive the Class Z-IO REMIC Amount (as reduced by Net Prepayment
Interest Shortfalls) and any Class Z-IO Carryover Amounts. To the
extent that less than the full amounts distributable pursuant to
clauses (A) and (B) were distributed on any Distribution Date based on
interest accrued, such amounts shall be distributed on successive
Distribution Dates after the distributions for the current Distribution
Date pursuant to clauses (A) and (B) and prior to the distributions in
clause (C) until paid in full.
(ii) REMIC III. For each Distribution Date, the principal
amounts, rates of interest and timing of distributions on each REMIC
III Regular Interest to REMIC IV shall be as follows: (A) such items
with respect to the Class PA-1, Class PA-2, Class PA-3, Class PA-4
Class PA-5 and Class PA-6 Interests shall be identical to the principal
amounts, interest distributions and timing of distributions on the
Class QA-1, Class QA-2, Class QA-3, Class QA-4, Class QA-5 and Class
QA-6 Interests, except that all calculations of interest on such
Classes of REMIC III Regular Interests shall be made at the Reduced
Weighted Average Net Loan Rate, reduced (I) pro rata, based on interest
accrued on the Class QA-1N, Class QA-2N, Class QA-3N, Class QA-4N,
Class QA-5N, Class QA-6N and Class Q3N Interests pursuant to clause
(i)(B) above by the amount of the reduction in (I) of such clause
(i)(B), and (II) pro rata, based on the amount of interest accrued
pursuant to this clause (A) and the following clauses (B) and (C), by
Net Prepayment Interest Shortfalls for such Distribution Date, and
increased by any class X-IO Carryover Amounts, pro rata based on
reductions previously allocated pursuant subclause (I) of this clause
(A), (B) the Class P3N Interest shall receive distributions of interest
equal to the amount distributable on the Class Q3N Interest (including
Class X-IO Carryover Amounts allocable thereto), reduced pro rata,
based on the amount of interest accrued pursuant to this clause (B) and
the preceding clause (A) and following clause (C), by Net Prepayment
Interest Shortfalls for such Distribution Date; and (C) the Class Q4N
Interest shall receive the Class Z-IO REMIC Amount (as reduced by Net
Prepayment Interest Shortfalls) and any Class Z-IO Carryover Amounts.
To the extent that less than the full amounts distributable pursuant to
clauses (A) and (B) were distributed on any Distribution Date based on
interest accrued, such amounts shall be distributed on successive
Distribution Dates after the distributions for the current Distribution
Date in clauses (A) and (B) and prior to the distributions in clause
(C), until paid in full. For the avoidance of doubt, Insured Payments
shall be treated as part of the distributable amount in REMIC III.
(iii) REMIC II. On each Distribution Date, the Available
Distribution Amount (but not any Insured Payments) shall be distributed
in respect of the REMIC II Regular Interests to REMIC III as follows:
(A) the Principal Distribution Amount shall be distributed pro rata
among the Class M1, M2 and M3 Interests, based on their Uncertificated
Principal Balances, such that their Uncertificated Principal Balances
remain in the ratio of 98% of the Aggregate Principal Balance, 1% of
the excess of the Aggregate Principal Balance over the
Overcollateralization Amount and 1% of the sum of the Aggregate
Principal Balance and the Overcollateralization Amount, respectively,
(B) the portion of the Available Distribution Amount representing
interest collections on or with respect to the Loans shall be
distributed, first, to the Class MI, Class M1N, Class M2, Class M2N,
Class M3 and Class M3N Interests up to the amount distributable at
their respective Pass-Through Rates on their Uncertificated Principal
Balances or Notional Balances, pro rata based on interest accrued and,
second, to the Class M4N Interest up to its Pass-Through Rate on its
Notional Balance. Any recoveries of principal losses or prior
shortfalls in interest shall be distributed to the REMIC II
Uncertificated Interests in the proportions in which such losses or
shortfalls were previously incurred.
(iv) REMIC I. On each Distribution Date, the Available
Distribution Amount (but not any Insured Payments) shall be deemed
distributed in respect of the REMIC I Regular Interests to REMIC II as
follows: (A) the Principal Distribution Amount shall be distributed pro
rata among the Class L1, Class L2 and Class L3 Interests, based on
their Uncertificated Principal Balances, such that their Uncertificated
Principal Balances remain in the ratio of 98% of the Aggregate
Principal Balance, 1% of the excess of the Aggregate Principal Balance
over the Overcollateralization Amount and 1% of the sum of the
Aggregate Principal Balance and the Overcollateralization Amount,
respectively, and (B) the portion of the Available Distribution Amount
representing interest collections on or with respect to the Loans shall
be distributed, first, to the Class L1, Class L2 and Class L3 Interests
up to the amount distributable at their respective Pass-Through Rates
on their Uncertificated Principal Balances, pro rata based on interest
accrued and, second, to the Class L4N Interest up to its Pass-Through
Rate on its Notional Balance. Any recoveries of principal losses or
prior shortfalls in interest shall be distributed to the REMIC I
Uncertificated Interests in the proportions in which such losses or
shortfalls were previously incurred.
Section 6.6 INVESTMENT OF ACCOUNTS.
(a) So long as no Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any funds on deposit in the Certificate Account held by the Trustee may be
invested and reinvested by and for the benefit of the Trustee, in one or more
Permitted Investments bearing interest or sold at a discount and maturing not
later than the next Distribution Date. Notwithstanding anything to the contrary
in this Section 6.6(a), all amounts received under the Certificate Insurance
Policy shall remain uninvested.
If any amounts are needed for disbursement from any Certificate Account
held by the Trustee and sufficient uninvested funds are not available to make
such disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Certificate Account. The
Trustee shall be liable for any investment loss or other charge resulting
therefrom.
(b) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Collection Account shall be for the benefit
of the Servicer as servicing compensation (in addition to the Servicing Fee).
The Servicer shall deposit in the related Account the amount of any loss
incurred in respect of any Permitted Investment held therein which is in excess
of the income and gain thereon immediately upon realization of such loss,
without any right to reimbursement therefor from its own funds.
Section 6.7 REPORTS BY TRUSTEE.
(a) On each Distribution Date the Trustee shall forward the report
prepared by the Trustee on the Business Day preceding each Distribution Date, as
described in Section 6.5 hereof, to each Holder, to the Certificate Insurer, to
the Depositor, to the Servicer, to Moody's and to S&P (the "TRUSTEE REPORT").
Such report shall set forth the following information:
(i) the amount of the distributions made on such
Distribution Date with respect to the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates,
the Class A-6IO Certificates, the Class X-IO Certificates and the Class
Z-IO Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included
therein;
(iii) the amount of such distributions allocable to
interest;
(iv) the amount of any Net Liquidation Proceeds included in
such distributions and the calculation thereof;
(v) the principal amount of the Class A-1 Certificates
(based on a Certificate in an original principal amount of $1,000), the
principal amount of the Class A-2 Certificates (based on a Certificate
in an original principal amount of $1,000), the principal amount of the
Class A-3 Certificates (based on a Certificate in an original principal
amount of $1,000), the principal amount of the Class A-4 Certificates
(based on a Certificate in an original principal amount of $1,000), the
principal amount of the Class A-5 Certificates (based on a Certificate
in an original principal amount of $1,000) and the principal amount of
the Class A-6 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, the notional amount of
the Class A-6IO Certificates (based on a Certificate in an original
notional amount of $1,000) and the outstanding amount of the aggregate
Class Principal Balances of all Principal Balance Certificates, in each
case, after giving effect to any principal payments made on such
Distribution Date;
(vi) the amount of any Insured Payment included in the
amounts distributed to the Class A Certificateholders on such
Distribution Date;
(vii) (a) the amount of the Overcollateralization Amount
and the Overcollateralization Target Amount and (b) any Subordination
Deficit on such Distribution Date;
(viii) the total of any Substitution Adjustments and any
Loan Repurchase Price amounts included in each such distribution;
(ix) the amounts, if any, of any related Liquidation Loan
Losses for the related Due Period;
(x) the Net Loan Rate for such Distribution Date;
(xi) the Weighted Average Net Loan Rate for such
Distribution Date;
(xii) the Reduced Weighted Average Net Loan Rate for such
Distribution Date;
(xiii) for each Class A Certificate, the Uncapped
Pass-Through Rate for such Distribution Date;
(xiv) for each Class A Certificate, the Pass-Through Rate
for such Distribution Date;
(xv) the Class A-1 LIBOR Carryover for such Distribution
Date;
(xvi) the Class A-1 Available Funds Capped Rate for such
Distribution Date;
(xvii) for each Class A Certificate, the Fixed Rate
Available Funds Capped Rate for such Distribution Date;
(xviii) for each Class A Certificate, the Fixed Rate
Interest Carryover for such Distribution Date;
(xix) the Class X-IO Carryover Amount for such Distribution
Date and all prior Distribution Dates; and
(xx) the Class Z-IO Carryover Amount for such Distribution
Date and all prior Distribution Dates.
Items (i), (ii) and (iii) above shall, with respect to the Class A Certificates,
be presented on the basis of a Certificate having a $1,000 denomination. In
addition, by May 1 of each calendar year following any year during which the
Certificates are outstanding, the Trustee shall furnish a report to each Holder
of record if so requested in writing at any time during each calendar year as to
the aggregate of amounts reported pursuant to (i), (ii) and (iii) with respect
to the Certificates for such calendar year.
(b) All distributions made to the Certificateholders according to Class
or type of Certificate on each Distribution Date will be made on a PRO RATA
basis among the Certificateholders as of the next preceding Record Date based on
the proportional beneficial ownership interest in the Trust Fund as are
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if, in the case of
a Class A Certificateholder, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have provided
complete wiring instructions at least five Business Days prior to the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will distribute
to each Holder, to the Certificate Insurer, to the Underwriters, to the
Depositor, to Moody's and to S&P, together with the information described in
subsection (a) preceding, the following information with respect to the Loans as
of the close of business on the last Business Day of the prior calendar month
(except as otherwise provided in clause (v) below), which is hereby required to
be prepared by the Servicer and furnished to the Trustee for such purpose on or
prior to the related Determination Date:
(i) the total number of Loans and the aggregate Principal
Balances thereof, together with the number, aggregate principal
balances of such Loans and the percentage (based on the aggregate
Principal Balances of the Loans) of the aggregate Principal Balances of
such Loans to the aggregate Principal Balance of all Loans (A) one
month Delinquent, (B) two or more months Delinquent and (C) as to which
repossession or foreclosure proceedings have been commenced;
(ii) the number, aggregate Principal Balances of all Loans
and percentage (based on the aggregate Principal Balances of the Loans)
of the aggregate Principal Balances of such Loans to the aggregate
Principal Balance of all Loans in foreclosure proceedings and the
number, aggregate Principal Balances of all Loans and percentage (based
on the aggregate Principal Balances of the Loans) of any such Loans
also included in any of the statistics described in the foregoing
clause (i);
(iii) the number, aggregate Principal Balances of all Loans
and percentage (based on the aggregate Principal Balances of the Loans)
of the aggregate Principal Balances of such Loans to the aggregate
Principal Balance of all Loans relating to Borrowers in bankruptcy
proceedings and the number, aggregate Principal Balances of all Loans
and percentage (based on the aggregate Principal Balances of the Loans)
of any such Loans are also included in any of the statistics described
in the foregoing clause (i);
(iv) the number, aggregate Principal Balances of all Loans
and percentage (based on the aggregate Principal Balances of the Loans)
of the aggregate Principal Balances of such Loans to the aggregate
Principal Balance of all Loans relating to REO Loans and the number,
aggregate Principal Balances of all Loans and percentage (based on the
aggregate Principal Balances of the Loans) of any such Loans that are
also included in any of the statistics described in the foregoing
clause (i);
(v) the weighted average of the Loan Interest Rate for the
Loans on the Due Date occurring in the Due Period related to such
Distribution Date;
(vi) the weighted average remaining term to stated maturity
of all Loans; and
(vii) the book value of any REO Property as of the close of
business on the last day of the calendar month preceding the
Distribution Date.
Section 6.8 ADDITIONAL REPORTS BY TRUSTEE AND BY SERVICER.
(a) The Trustee shall report to the Depositor, the Servicer and the
Certificate Insurer with respect to the amount then held in the Certificate
Account held by the Trustee and the identity of the investments included
therein, as the Depositor, the Servicer or the Certificate Insurer may from time
to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to the actual
knowledge of a Responsible Officer of the Trustee, without independent
investigation, of any breach of any of the representations or warranties
relating to individual Loans set forth in the Loan Sale Agreement or in Section
3.4 hereof.
(c) On each Distribution Date, the Trustee shall forward to Bloomberg
Financial Markets, L.P. ("BLOOMBERG") and the Underwriters information prepared
by the Trustee with respect to the Loans and the Certificates as of such
Distribution Date, using a format and media mutually acceptable to the Trustee,
the Underwriters and Bloomberg.
Section 6.9 COMPENSATING INTEREST. Not later than the close of business
on the Servicer Remittance Date, the Servicer shall remit to the Trustee
(without right or reimbursement therefor) for deposit into the Certificate
Account an amount equal to the lesser of (i) the aggregate of the Prepayment
Interest Shortfalls for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (ii) its aggregate Servicing Fees
received in the related Due Period (the "COMPENSATING INTEREST").
Section 6.10 EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy shall
not be considered payment of the Certificates from the Trust. The Depositor, the
Servicer and the Trustee acknowledge, and each Holder by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (i) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (ii) the Certificate Insurer shall be
paid such amounts but only from the sources and in the manner provided herein
for the payment of such amounts. The Trustee and the Servicer shall cooperate in
all respects with any reasonable request by the Certificate Insurer for action
to preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Holders
as otherwise set forth herein.
ARTICLE VII
DEFAULT
Section 7.1 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Trustee any
payment required to be made by the Servicer under the terms of this
Agreement (which continues unremedied beyond any grace period permitted
by the Certificate Insurer, if any) or to deliver the report required
by Section 6.5 of this Agreement;
(ii) the failure by the Servicer to make any required
Servicing Advance or Periodic Advance;
(iii) any failure on the part of the Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Servicer contained in this Agreement,
or the breach of any representation and warranty made pursuant to
Section 3.1 to be true and correct which continues unremedied for a
period of 30 days after the date on which written notice of such
failure or breach, requiring the same to be remedied, shall have been
given to the Servicer by the Depositor or the Trustee, or to the
Servicer and the Trustee by any Certificateholder or the Certificate
Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force, undischarged or unstayed for a
period of 60 days;
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property;
(vi) the Servicer shall admit in writing its inability to
pay its debts 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;
(vii) the continuation of a Servicer Termination
Delinquency Rate Trigger or a Servicer Termination Loss Trigger;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied with respect to clauses (i) - (vii) above, the Trustee shall,
but only at the direction of the Certificate Insurer or the Majority
Certificateholders with the consent of the Certificate Insurer (in the case of
any direction of the Majority Certificateholders), by notice in writing to the
Servicer, (x) remove the Servicer, (y) terminate all the rights and obligations
of the Servicer under this Agreement and in and to the Loans and the proceeds
thereof, as Servicer; and (z) with respect to clause (vii) above, the Trustee
shall, but only at the direction of the Certificate Insurer, after notice in
writing to the Servicer, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Loans and the proceeds thereof,
as Servicer. Upon receipt by the Servicer and the Trustee of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Loans or otherwise, shall, subject to Section 7.2, pass to
and be vested in the Trustee or its designee approved by the Certificate Insurer
and the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, at the expense of the
Servicer, any and all documents and other instruments and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Loans and related documents. The Servicer
agrees to cooperate (and pay any related costs and expenses) with the Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee or its
designee for administration by it of all amounts which shall at the time be
credited by the Servicer to the Collection Account or thereafter received with
respect to the Loans. The Trustee shall promptly notify the Certificate Insurer,
Moody's and S&P upon receiving notice of, or its discovery of, the occurrence of
an Event of Default.
Section 7.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.1, or the Trustee and the Certificate Insurer receive the
resignation of the Servicer evidenced by an Opinion of Counsel pursuant to
Section 5.23, or the Servicer is removed as Servicer pursuant to Article VII, in
which event the Trustee shall promptly notify the Certificate Insurer and
Moody's and S&P, except as otherwise provided in Section 7.1, the Trustee or its
designee shall be the successor in all respects to the Servicer in its capacity
as Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof
arising on or after the date of succession (except that if the Trustee is
prohibited by law from obligating itself to make advances regarding delinquent
Loans, then the Trustee will not be obligated to do so); PROVIDED, HOWEVER, that
the Trustee shall not be liable for any actions or the representations and
warranties of any Servicer prior to it and including, without limitation, the
obligations of the Servicer set forth in Sections 2.4 and 3.5. The parties
hereto acknowledge that during a period not to exceed 90 days, the successor
Servicer will not be able to fully service the Loans until the transition of
servicing is complete. Such 90-day period shall be extended as necessary in the
event that the Servicer does not cooperate with such successor or the data
provided by the Servicer is incomplete or faulty. The Trustee, as Successor
Servicer, or any other successor Servicer shall be obligated to pay Compensating
Interest pursuant to Section 6.9 hereof; the Trustee, as Successor Servicer is
obligated to make advances pursuant to Section 5.20 unless, and only to the
extent the Trustee, as Successor Servicer determines reasonably and in good
faith that such advances would not be recoverable pursuant to Sections 5.4(a),
5.4(b) or 5.4(j), such determination to be evidenced by a certification of a
Responsible Officer of the Trustee, as Successor Servicer delivered to the
Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, the Trustee shall
appoint, pursuant to the provisions set forth in paragraph (d) below, or
petition a court of competent jurisdiction to appoint, subject to the approval
of the Certificate Insurer, any established mortgage loan servicing institution
acceptable to the Certificate Insurer that has a net worth of not less than
$15,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder.
(c) Any Successor Servicer shall be entitled to the same reimbursement
for Advances and to the Servicing Compensation (including a fee not to exceed
the Servicing Fee) and other funds pursuant to Section 5.14 hereof as the
Servicer if the Servicer had continued to act as Servicer hereunder.
(d) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Loans. Any collections received by the
Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor Servicer. Neither the Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (1) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (2) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. No appointment of a successor to the
Servicer hereunder shall be effective until the Trustee and the Certificate
Insurer shall have consented thereto, and written notice of such proposed
appointment shall have been provided by the Trustee to the Certificate Insurer
and to each Certificateholder. The Trustee shall not resign as Servicer until a
successor Servicer reasonably acceptable to the Certificate Insurer has been
appointed.
(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as herein above provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Loans as it and such successor
shall agree; PROVIDED, HOWEVER, that no such compensation shall be in excess of
that permitted the Servicer pursuant to Section 5.14, together with other
Servicing Compensation. The Servicer, the Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
Section 7.3 WAIVER OF DEFAULTS. The Certificate Insurer or the Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
consent of the Certificate Insurer, waive any events permitting removal of the
Servicer as Servicer pursuant to this Article VII; PROVIDED, HOWEVER, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to Moody's and S&P.
Section 7.4 LOANS, TRUST FUND AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE HOLDERS AND CERTIFICATE INSURER.
(a) The Trustee shall hold the Trust Fund and the Trustee Loan Files
for the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates to the benefit of Holders
of the Certificates shall be deemed to include the Certificate Insurer. The
Trustee shall cooperate in all reasonable respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement and the Certificates unless,
as stated in an Opinion of Counsel addressed to the Trustee and the Certificate
Insurer, such action is adverse to the interests of the Certificateholders or
diminishes the rights of the Certificateholders or imposes additional burdens or
restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall service
the Loans for the benefit of the Certificateholders and for the benefit of the
Certificate Insurer, and all references in this Agreement to the benefit of or
actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION.
(a) This Agreement shall terminate upon written notice to the Trustee
of either: (1) the later of the distribution to Certificateholders of the final
payment or collection with respect to the last Loan (or Periodic Advances of
same by the Servicer), or the disposition of all funds with respect to the last
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer and the Trustee or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing; PROVIDED, HOWEVER, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
survivor of the descendants of John D. Rockefeller, alive as of the date hereof.
(b) In addition, the Servicer may, at its option and at its sole cost
and expense (or, if the Servicer does not exercise this option, the Certificate
Insurer may, at its option and at its sole cost and expense), repurchase all of
the Loans on any Distribution Date on or after the Optional Termination Date at
a price equal to the sum of (1) the greater of (i) 100% of the Principal Balance
of each related outstanding Loan and each related REO Loan, and (ii) the fair
market value (disregarding accrued interest) of the Loans and REO Properties,
determined as the average of three written bids (copies of which shall be
delivered to the Trustee and the Certificate Insurer by the Servicer and the
reasonable cost of which may be deducted from the final purchase price) made by
nationally recognized dealers and based on a valuation process which would be
used to value comparable mortgage loans or manufactured home contracts, as
applicable, and REO property, plus (2) the greater of (i) the aggregate amount
of accrued and unpaid interest on the Principal Balances of the Loans through
the related Due Period and (ii) 30 days' accrued interest thereon at a rate
equal to the Loan Interest Rates for the Loans, plus (3) any unreimbursed
amounts due to the Certificate Insurer under this Agreement or the Insurance
Agreement (the "TERMINATION PRICE"). Any such purchase shall be accomplished by
deposit into the Certificate Account the Termination Price. No such termination
is permitted without the prior written consent of the Certificate Insurer (i) if
it would result in a draw on the Certificate Insurance Policy, or (ii) unless
the Servicer shall have delivered to the Certificate Insurer an Opinion of
Counsel reasonably satisfactory to the Certificate Insurer stating that no
amounts paid hereunder are subject to recapture as preferential transfers under
the United States Bankruptcy Code, 11 U.S.C. Sections 101 ET SEQ., as amended.
(c) If with respect to any Distribution Date, the Servicer determines
that there are no outstanding Loans and no other funds or assets in the Trust
Fund other than funds in the Certificate Account, the Servicer shall instruct
the Trustee to send a final distribution notice promptly to each such
Certificateholder in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution Date upon
which the Trust Fund and the Trust REMICs will terminate and the
Certificateholders shall surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to each of the Certificateholders of record as of the most
recent Record Date, and shall be mailed during the month of such final
distribution before the Distribution Date in such month, specifying (1) the
Distribution Date upon which final payment of such Certificates will be made
upon presentation and surrender of Certificates at the office of the Trustee
therein designated, (2) the amount of any such final payment and (3) 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 Trustee therein specified. The Trustee shall give such notice
to the Servicer at the time such notice is given to Certificateholders. The
obligations of the Certificate Insurer hereunder shall terminate upon the
deposit by the Servicer with the Trustee of a sum sufficient to purchase all of
the Loans and REO Properties as set forth above and when the aggregate of the
Class Principal Balances of the Principal Balance Certificates has been reduced
to zero.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the affected Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the affected
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look only to the Class R Certificateholders for payment. Such funds shall remain
uninvested.
Section 8.2 ADDITIONAL TERMINATION REQUIREMENTS.
In the event that the Servicer exercises its purchase option as
provided in Section 8.1, each of the Trust REMICs shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been furnished with an Opinion of Counsel (which shall not be an expense of the
Trustee) to the effect that the failure of the Trust REMICs to comply with the
requirements of this Section 8.2 will not (1) result in the imposition of taxes
on "prohibited transactions" of any of the Trust REMICs as defined in Section
860F of the Code or (2) cause any such Trust REMIC to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(i) The Trustee shall treat the first date of mailing of
the notice of termination specified in Section 8.1(d) as the date of
adoption of the plan of complete liquidation of each of the Trust
REMICs under Section 860F of the Code and applicable regulations
thereunder and shall specify such date as the date of adoption of such
plan of complete liquidation in the final Tax Returns of each of the
Trust REMICs; and
(ii) within 89 days of such date of adoption of the plans
of complete liquidation, the Trustee shall distribute or credit, or
cause to be distributed or credited all amounts distributable to the
Trustee as holder of the Uncertificated Regular Interests pursuant to
Section 6.5(d)(i) and to the Holders of Certificates pursuant to
Section 6.5(b), and the Trust REMICs shall terminate at such time.
Section 8.3 ACCOUNTING UPON TERMINATION OF SERVICER. Upon termination
of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been appointed,
to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Trustee all Loan Files and related documents and statements held by it
hereunder and a Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed,
to the Trustee a full accounting of all funds, including a statement showing the
Monthly Payments collected by it and a statement of monies held in trust by it
for the payments or charges with respect to the Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Loans to its successor and to more fully and definitively vest
in such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the "SERVICER" under this Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.1 DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and power vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; PROVIDED, HOWEVER,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer or the Transferor hereunder. If any such
instrument is found not to conform on its face to the requirements of this
Agreement, the Trustee shall take action as it deems appropriate to have the
instrument corrected and, if the instrument is not corrected to the Trustee's
satisfaction, the Trustee will, at the expense of the Servicer notify the
Certificate Insurer and request written instructions as to the action the
Certificate Insurer deems appropriate to have the instrument corrected, and if
the instrument is not so corrected, the Trustee will provide notice thereof to
the Certificate Insurer who shall then direct the Trustee as to the action, if
any, to be taken.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Default of which
a Responsible Officer of the Trustee has actual knowledge, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Certificate Insurer
or with the consent of the Certificate Insurer or, any Class of the
Class A Certificateholders holding Class A Certificates evidencing
Percentage Interests of such Class of at least 25%, relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising or omitting to exercise any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or actual knowledge of any default or Event of
Default (except an Event of Default with respect to the nonpayment of
any amount described in Section 7.1(a)), unless a Responsible Officer
of the Trustee shall have received written notice thereof. In the
absence of receipt of such notice, the Trustee may conclusively assume
that there is no default or Event of Default (except a failure to make
a Periodic Advance);
(v) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it and none of the provisions contained in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement except during such time, if any, as
the Trustee shall be the successor to, and be vested with the rights,
duties powers and privileges of, the Servicer in accordance with the
terms of this Agreement; and
(vi) Subject to the other provisions of this Agreement and
without limiting the generality of this Section, the Trustee shall have
no duty (a) to see to any recording, filing, or depositing of this
Agreement or any agreement referred to herein or any financing
statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing
or to any rerecording, refiling or redepositing of any thereof, (b) to
see to any insurance, (c) to see to the payment or discharge of any
tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, the Trust Fund, the Certificateholders
or the Loans, (d) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be genuine and to have been signed
or presented by the proper party or parties.
(d) It is intended that each of the Trust REMICs formed hereunder shall
constitute, and that the affairs of each such REMIC shall be conducted so as to
qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as agent)
and as Tax Matters Person on behalf of each of the Trust REMICs, and that in
such capacities it shall:
(i) prepare, sign and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066) and any other Tax Return required
to be filed by each of the Trust REMICs, using a calendar year as the
taxable year for the each such REMIC;
(ii) make, or cause to be made, an election, on behalf of
each of the Trust REMICs, to be treated as a REMIC on the federal tax
return of each such REMIC for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal
Revenue Service and any other relevant governmental taxing authority
all information returns or reports as and when required to be provided
to them in accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust REMICs are
within its control, conduct such affairs of each of the Trust REMICs at
all times that any Certificates are outstanding so as to maintain the
status of each of the Trust REMICs as a REMIC under the REMIC
Provisions and any other applicable federal, state and local laws,
including, without limitation, information reports relating to
"original issue discount," as defined in the Code, based upon the
Prepayment Assumption and calculated by using the issue price of the
Certificates;
(v) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status
of any of the Trust REMICs;
(vi) pay the amount of any and all federal, state, and
local taxes imposed on any of the Trust REMICs, prohibited transaction
taxes as defined in Section 860F of the Code, other than any amount due
as a result of a transfer or attempted or purported transfer in
violation of Section 4.2, imposed on the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent
the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings). The Trustee shall be entitled to withdraw
funds from the Certificate Account in accordance with Sections 9.1(c)
and 9.5 hereof;
(vii) ensure that any such returns or reports filed on
behalf of each of the Trust REMICs by the Trustee are properly executed
by the appropriate person and submitted in a timely manner;
(viii) represent the Trust Fund and the Trust REMICs (at
the sole cost and expense of the Trust) in any administrative or
judicial proceedings relating to an examination or audit by any
governmental taxing authority with respect thereto, request an
administrative adjustment as to any taxable year of the Trust Fund or
the Trust REMICs, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating
to any item of the Trust Fund or the Trust REMICs and otherwise act on
behalf of the Trust Fund and the Trust REMICs in relation to any tax
matter involving the Trust Fund and the Trust REMICs;
(ix) as provided in Section 5.18 hereof, make available
information necessary for the computation of any tax imposed (1) on
transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will cooperate with the Servicer in the
foregoing matters and that it will sign, as Trustee, any and all Tax
Returns required to be filed by the Trust REMICs. Notwithstanding the
foregoing, at such time as the Trustee becomes the successor Servicer,
the holder of the largest percentage of the Class R1 Certificates (with
respect to REMIC I) and the Class R2 Certificates (with respect to
REMIC II, REMIC III and REMIC IV) shall serve as Tax Matters Person
until such time as an entity is appointed to succeed the Trustee as
Servicer;
(x) make available to the Internal Revenue Service and
those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of
an Ownership Interest in a Class R Certificate to any Person who is not
a Permitted Transferee, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to
the "excess inclusions" of any of the Class R-I Interest (in the case
of the Class R1 Certificates) and, Class R-II, Class R-III and Class
R-IV Interests (in the case of REMIC II, REMIC III, and REMIC IV) and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an
Ownership Interest in a Class R Certificate having as among its record
holders at anytime any Person that is not a Permitted Transferee.
Reasonable compensation for providing such information may be accepted
by the Trustee;
(xi) pay out of its own funds, without any right of
reimbursement from the assets of the Trust Fund, tax return preparation
and filing expenses and payout of the assets of the Trust Fund all
other tax related expenses of the Trust Fund, including, but not
limited to professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust Fund
that involve the Internal Revenue Service or state tax authorities, the
expense of obtaining any Opinion of Counsel required pursuant to
Sections 3.5, 5.12 and 8.2 and taxes impased on any Trust REMIC or the
Trust Fund except as specified herein, which shall be expenses of REMIC
I;
(xii) upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class R Certificates the
Form 1066s and each Form 1066Q with respect to the respective Trust
REMICs and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with
respect to the following matters:
(1) the original issue discount (or, in the case of
the Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to the
regular or residual interests of the respective Trust REMICs
created hereunder and with respect to the Loans, together with
each constant yield to maturity used in computing the same;
(2) the treatment of losses realized with respect to
the Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of
indebtedness income of any of the Trust REMICs with respect to
such regular interests or bad debt deductions claimed with
respect to the Loans;
(3) the amount and timing of any non-interest
expenses of the Trust REMICs; and
(4) any taxes (including penalties and interest)
imposed on any of the Trust REMICs, including, without
limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or
state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
any of the Trust REMICs as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of REMIC I as defined in Section 860G(c)
of the Code, on any contribution to any of the Trust REMICs after the Startup
Day pursuant to Section 860G(d) of the Code, or any other tax is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement, or otherwise (iii) the holders of
the Class R1 or Class R2 Certificates in proportion to their undivided
beneficial ownership interest in the related REMIC as are represented by such
Class R Certificates. To the extent such tax is chargeable against the holders
of the Class R1 or Class R2 Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the Class R1 or Class R2
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has paid the tax and
not been previously reimbursed or indemnified therefor).
(e) The Trustee shall not vary the investments of the Grantor Trust and
shall otherwise administer the Grantor Trust in compliance with the provisions
of Subpart E, Part I, Subchapter J of the Code and applicable Treasury
regulations thereunder. The Trustee shall file Form 1041 annually with the
Internal Revenue Service (providing the name and address of the Trust and signed
by the Trustee, but otherwise completed in blank) and shall attach thereto and
shall furnish to the respective Certificateholders (other than the Class R
Certificateholders) their pro rata shares of the income and deductions of the
Grantor Trust for each of the accrual periods or portions thereof for the
preceding calendar year, including (i) in the case of the Principal Balance
Certificates, the amount of interest and OID income with respect to the related
Class of REMIC IV Regular Interests, the amount accrued as income under the
related Basis Risk Arrangements, and the amortized amount of the initial
purchase price paid for the respective Class of Certificates that was allocated
to the respective Basis Risk Arrangement, (ii) in the case of the Class A-6IO
Certificates, the amount accrued as income thereon and the amortized amount of
the initial purchase price paid for the Basis Risk Arrangement represented by
the Class A-6IO Certificates, and (iii) in the case of the Class X-IO and Class
Z-IO Certificates, the amount of OID income with respect to the related Class of
REMIC IV Regular Interests, the amortized amount of income with respect to the
purchase price deemed received from the Principal Balance Certificates and the
Class A-6IO Certificates, and the periodic payments deemed made under the
respective Basis Risk Arrangements. In computing the amounts of interest or OID,
the amount accrued as income (for the Principal Balance Certificates and Class
A-6IO Certificates) or as expense (for the Class X-IO or Class Z-IO
Certificates) under the related Basis Risk Arrangements, and the amortization of
the purchase price for the Basis Risk Arrangements as an expense (for the
Principal Balance Certificates and Class A-IO Certificates) or as income (for
the Class X-IO Certificates and the Class Z-IO Certificates), unless and until
required otherwise by applicable Treasury Regulations or other authority, the
Trustee shall use the level yield method and shall treat the original yields for
the REMIC IV Regular Interests and the related Basis Risk Arrangements as
corresponding to the overall yields for the related Classes of Certificates.
Section 9.2 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 9.1:
(i) the Trustee (acting as Trustee or as agent for the Tax
Matters Person) may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee (acting as Trustee or as agent for the Tax
Matters Person) 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) the Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend litigation hereunder or in relation hereto
at the request, or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by the Certificate Insurer or Holders of any Class of Class A
Certificates evidencing Percentage Interests aggregating not less than
25% of such class; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
(vi) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
(b) Following the Startup Day, the Trustee shall not knowingly accept
any contribution of assets to the Trust Fund, unless the Trustee shall have
received an Opinion of Counsel (at the expense of the Servicer) to the effect
that the inclusion of such assets in the Trust Fund will not cause any of the
Trust REMICs to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject any such REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances. The
Trustee agrees to indemnify the Trust Fund and the Servicer for any taxes and
costs, including any attorney's fees, imposed or incurred by the Trust Fund or
the Servicer as a result of the breach of the Trustee's covenants set forth
within this subsection (b).
Section 9.3 NOT LIABLE FOR CERTIFICATES OR LOANS. The recitals
contained herein (other than the certificate of authentication on the
Certificates) shall be taken as the statements of the Transferor or the
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement, the Certificates, or of any Loan or related
document. The Trustee shall not be accountable for the use or application of any
funds paid to the Servicer in respect of the Loans or deposited in or withdrawn
from the Collection Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 9.4 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual
or any other capacity may become the owner or pledgor of Certificates with the
same rights it would have if it were not Trustee, and may otherwise deal with
the parties hereto.
Section 9.5 TRUSTEE'S FEES AND EXPENSES; INDEMNITY.
(a) The Trustee acknowledges that in consideration of the performance
of its duties hereunder it is entitled to receive the Trustee Fee which shall
not be limited by any law in regard to the compensation of a trustee of an
expense trust, in accordance with the provision of Section 6.5(b) and Section
6.5(d). The Trustee shall not be entitled to compensation for any expense,
disbursement or advance as may arise from its negligence or bad faith, and,
prior to the occurrence of an Event of Default, the Trustee shall have no lien
on the Trust Fund for the payment of its fees and expenses.
(b) The Trust Fund, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust or the Trustee, in connection with this Agreement, the Insurance
Agreement, the Certificate Insurance Policy or any other related document or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance by the Trustee
of its duties hereunder. The Trustee and any director, officer, employee or
agent of the Trustee shall also be indemnified by the Holders of the Class R1
and Class R2 Certificates and held harmless against any loss, liability or
reasonable expenses incurred by the Trustee in performing its duties as agent
for the Tax Matters Person for each of the Trust REMICs under this Agreement,
other than any loss, liability or expense incurred by reason of (i) the acts of
the Trustee not authorized or required pursuant to this Agreement or taken
pursuant to written instructions received from the Servicer, the Certificate
Insurer or the Majority Certificateholders, or (ii) by reason of the Trustee's
reckless disregard of obligations and duties hereunder. The obligation of the
Servicer under this Section 9.5 arising prior to any resignation or termination
of the Servicer hereunder shall survive termination of the Servicer and payment
of the Certificates, and shall extend to any co-trustee appointed pursuant to
this Article IX.
Section 9.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee hereunder
shall at all times be (a) a banking association organized and doing business
under the laws of any state or the United States of America subject to
supervision or examination by federal or state authority, (b) authorized under
such laws to exercise corporate trust powers, including taking title to the
Trust Fund assets on behalf of the Certificateholders (c) having a combined
capital and surplus of at least $50,000,000, (d) whose long-term deposits, if
any, shall be rated at least BBB by S&P and Baa2 by Moody's (except as provided
herein) or such lower long-term deposit rating as may be approved in writing by
the Certificate Insurer, and (e) reasonably acceptable to the Certificate
Insurer as evidenced in writing. If such banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 9.7.
Section 9.7 RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the
Certificate Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor trustee or trustees
by written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Depositor, the Certificateholders, the Certificate Insurer
and the Transferor by the Servicer, and upon acceptance of appointment by a
successor trustee, in accordance with Section 9.8, the Servicer will give notice
thereof to the Certificateholders. Unless a successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.6 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Certificate Insurer or the Servicer with the consent of
the Certificate Insurer may remove the Trustee, and shall, within 30 days after
such removal, appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Transferor by
the Servicer.
(c) If the Trustee fails to perform in accordance with the terms of
this Agreement, the Certificate Insurer or the Servicer, with the consent of the
Certificate Insurer, may remove the Trustee and appoint a successor trustee
acceptable to the Certificate Insurer 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 Servicer, one
complete set to the Trustee so removed and one complete set to the successor
Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 9.8.
Section 9.8 SUCCESSOR TRUSTEE. Any successor trustee appointed as
provided in Section 9.7 shall execute, acknowledge and deliver to the Depositor,
the Certificate Insurer, the Transferor, the Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all Loan
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor trustee 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 all such rights,
powers, duties and obligations. No successor trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 9.6. Upon acceptance
of appointment by a successor trustee as provided in this Section, the Servicer
shall mail notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and to
Moody's and S&P. If the Servicer fails to mail such notice within 10 days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Servicer.
Section 9.9 MERGER OR CONSOLIDATION OF TRUSTEE. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated or
any corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
trustee, shall be the successor of the Trustee hereunder, PROVIDED such
corporation or national banking association shall be eligible under the
provisions of Section 9.6, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.6 hereunder, and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.8 hereof.
(a) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10, 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 (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund 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.
(b) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(c) 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. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee, PROVIDED
that the Trustee appointed such separate trustee or co-trustee with due care. If
any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 9.11 TAX RETURNS; OID INTEREST REPORTING. The Servicer and the
Depositor, as applicable, upon request, will promptly furnish the Trustee with
all such information as may be reasonably required in connection with the
Trustee's preparation of all Tax Returns of the Trust REMICs and the Grantor
Trust (including all such loan level information as the Trustee may reasonably
request) or for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters. Within 10
days of the Closing Date, the Depositor shall furnish to the Trustee the portion
of the issue prices of the Certificates allocable to the related REMIC IV
Regular Interests and to the respective Basis Risk Arrangements, the yields on
the Certificates and the Prepayment Assumption with respect to the Loans. Upon
request, within seven (7) Business Days after its receipt thereof, the Servicer
shall (i) sign on behalf of the Trust Fund any Tax Return (not including Form
1066) that the Servicer is required to sign pursuant to applicable federal,
state or local tax laws, and (ii) cause such Tax Return to have been returned to
the Trustee for filing and for distribution to Certificateholders if required.
Section 9.12 RETIREMENT OF CERTIFICATES. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 LIMITATION ON LIABILITY OF THE DEPOSITOR AND THE SERVICER.
Neither the Depositor nor the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust, the Certificateholders or the Certificate Insurer 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 or the Servicer or any such
Person against any breach of warranties or representations made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
Section 10.2 ACTS OF CERTIFICATEHOLDERS; CERTIFICATEHOLDERS' RIGHTS.
(a) Except with respect to Section 10.3 and as otherwise specifically
provided herein, whenever Certificateholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Certificateholders if the Majority Certificateholders or the Certificate Insurer
agrees to take such action or give such consent or approval.
(b) 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 heir 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.
(c) 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 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 or thereof.
(d) The rights of the Certificateholders of Series 1999-1 will be
determined pursuant to this Agreement. The rights of the Holders of any
certificates or other instruments which may be issued by the Trustee pursuant to
Section 4.2 of this Agreement shall be determined by a supplement with respect
thereto. Such supplement may provide for any other agreements between the
parties hereto as long as such agreements do not violate, as to any Certificate,
certificates or other instruments, Section 10.3.
(e) Wherever Certificateholder action, consent or approval is required
under this Agreement, such action, consent or approval by the Holder of a
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of a Certificate and of any Certificate issued upon the transfer thereof
or in exchange therefor or in lieu thereof whether or not notation of such
consent is made upon any Certificate.
(f) 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 or any Loan,
unless, with respect to any suit, action or proceeding upon or under or with
respect to this Agreement, such Holder previously shall have given to the
Trustee a written notice of default hereunder, and of the continuance thereof,
as herein before provided, and unless also (except in the case of a default by
the Trustee) the Holders of Certificates of any Class evidencing not less than
25% of the related Percentage Interests in such Class shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. The Trustee shall be under no
obligation to exercise any of the trusts or powers vested in it hereunder or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Holders of Certificates unless
such Holders have offered to the Trustee reasonable security against the costs,
expenses and liabilities which may be incurred therein or hereby. 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, which priority or
preference is not otherwise provided for herein, 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 10.2(e), each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.3 AMENDMENT OR SUPPLEMENT.
(a) This Agreement may be amended or supplemented from time to time by
the Servicer, the Depositor and the Trustee by written agreement, upon the prior
written consent of the Certificate Insurer (which consent shall not be
unreasonably withheld if, in the Opinion of Counsel addressed to the Trustee and
the Certificate Insurer, failure to amend would adversely affect the interests
of the Certificateholders and such consent would not adversely affect the
interests of the Certificate Insurer), without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel, at
the expense of the party requesting the change, delivered to the Trustee and the
Certificate Insurer, adversely affect in any material respect the interests of
any Certificateholder, adversely affect the status of any of the Trust REMICs as
a REMIC or cause a tax to be imposed on such REMIC or adversely affect the
grantor trust status of the Grantor Trust; and PROVIDED, FURTHER, that no such
amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other party hereto without the consent of such
party; and PROVIDED, FINALLY, that any such amendment shall, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the Trustee and the Certificate Insurer, comply with the terms of this
Agreement. The Trustee shall give prompt written notice to Moody's and S&P of
any amendment made pursuant to this Section 10.3 or if the Trustee shall have
actual knowledge of any such amendment, pursuant to Section 7.1 of the Loan Sale
Agreement.
(b) This Agreement may be amended or supplemented from time to time by
the Servicer, the Depositor and the Trustee with the consent of the Certificate
Insurer (which consent shall not be unreasonably withheld if, in the Opinion of
Counsel addressed to the Trustee and the Certificate Insurer, failure to amend
would adversely affect the interests of the Certificateholders and such consent
would not adversely affect the interests of the Certificate Insurer), and the
Majority Certificateholders 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; PROVIDED, HOWEVER, that no
such amendment shall be made unless the Trustee and the Certificate Insurer
receive an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not adversely affect the status of any of the
Trust REMICs as a REMIC or cause a tax to be imposed on any such REMIC or
adversely affect the grantor trust status of the Grantor Trust; and PROVIDED,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate or reduce the percentage for the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of
Certificates affected thereby; and PROVIDED, FINALLY, that any such amendment
shall, as evidenced by an Opinion of Counsel, at the expense of the party
requesting the change, delivered to the Trustee and the Certificate Insurer,
comply with the terms of this Agreement.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
(d) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement.
Section 10.4 RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages or Manufactured
Home Contracts are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer at the
Certificateholders' expense on direction and at the expense of Majority
Certificateholders requesting such recordation, but only when accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary for
the administration or servicing of the Loans.
Section 10.5 DURATION OF AGREEMENT. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 10.6 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (i) in the case of the Servicer or Transferor, New South Federal Savings
Bank, 1900 Crestwood Boulevard, Birmingham, Alabama 35210, with copies to the
Transferor, (ii) in the case of the Trustee, The Chase Manhattan Bank, 450 West
33rd Street, 15th Floor, New York, New York 10001-2697, Attention: Capital
Markets Fiduciary Services New South Home Equity Trust 1999-1, (iii) in the case
of the Certificateholders, as set forth in the Certificate Register, (iv) in the
case of in the case of Moody's, 99 Church Street, New York, New York 10007
Attention: Residential Mortgage Pass-Through Monitoring Group, (v) in the case
of in the case of S&P, 26 Broadway, New York, New York 10004 Attention:
Residential Mortgage Surveillance Group, (vi) in the case of the Certificate
Insurer, One State Street Plaza, New York, NY 10004, Attention: Stuctured
Finance, (vii) in the case of PaineWebber Mortgage Acceptance Corporation IV,
1285 Avenue of the Americas, 18th Floor, New York, New York 10019, Attention:
John Fearey, Esq. Any such notices shall be deemed to be effective with respect
to any party hereto upon the receipt of such notice by such party, except that
notices to the Certificateholders shall be effective upon mailing or personal
delivery.
Section 10.7 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of this
Agreement.
Section 10.8 NO PARTNERSHIP. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor and not as agent for the Certificateholders.
Section 10.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 10.10 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Depositor, the Trustee and the
Certificateholders and their respective successors and permitted assigns.
Section 10.11 HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 10.12 THE CERTIFICATE INSURER DEFAULT. Any right conferred to
the Certificate Insurer shall be suspended during any period in which a
Certificate Insurer Default exists. At such time as the Certificates are no
longer outstanding hereunder, and no amounts owed to the Certificate Insurer
hereunder remain unpaid, the Certificate Insurer's rights hereunder shall
terminate.
Section 10.13 THIRD PARTY BENEFICIARY. The parties agree that the
Certificate Insurer is intended and shall have all rights of a third-party
beneficiary of this Agreement.
Section 10.14 INTENT OF THE PARTIES. It is the intent of the Depositor
and Certificateholders that, for federal income taxes, state and local income or
franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC and, if applicable, a Basis Risk Arrangement. The parties to this
Agreement and the holder of each Certificate, by acceptance of its Certificate,
and each beneficial owner thereof, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates in accordance with the
preceding sentence for purposes of federal income taxes, state and local income
and franchise taxes and other taxes imposed on or measured by income.
Section 10.15 APPOINTMENT OF TAX MATTERS PERSON. The Holders of the
Class R1 and Class R2 Certificates hereby appoint the Trustee to act as the Tax
Matters Person for REMIC I and REMIC II, REMIC III and REMIC IV, respectively
for all purposes of the Code. The Tax Matters Person will perform, or cause to
be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Holders of the Class R1 and Class R2 Certificates hereby appoint the Trustee as
their agent to perform all the duties of the Tax Matters Person of each of the
Trust REMICs.
Section 10.16 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
NEW YORK.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Transferor, the Servicer and the
Trustee have caused their names to be signed by their respective officers
thereunto duly authorized, as of the day and year first above written, to this
Pooling and Servicing Agreement.
PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV,
as Depositor
By: ________________________
Name: Barbara J. Dawson
Title: Vice President
NEW SOUTH FEDERAL SAVINGS BANK,
in its capacity as Transferor
and Servicer
By: ______________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By: ______________________________
Name:
Title:
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this _____
day of _______, 1999 personally appeared _______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, as the Depositor, and that she executed the same as
the act of such corporation for the purpose and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, this the ____ day of _______, 1999.
________________________________________
Notary Public, State of ________________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __ day
of ______, 1999 personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said THE CHASE MANHATTAN
BANK, a New York banking corporation, as the Trustee, and that he/she executed
the same as the act of such entity for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF THE CHASE MANHATTAN BANK, this the __
day of ______, 1999.
______________________________________
Notary Public, State of ______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __ day
of ______, 1999 personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said NEW SOUTH FEDERAL
SAVINGS BANK, in its capacity as the Transferor and the Servicer, and that
he/she executed the same as the act of such entity for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF NEW SOUTH FEDERAL SAVINGS BANK, this
the __ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
EXHIBIT A
Ambac
Certificate Guaranty Insurance Policy Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street,
Madison Wisconsin 53703
Administrative Office:
One State Street Plaza,
New York, New York 10004
Telephone: (212) 668-0340
Insured Obligations: $432,734,027 Policy Number: ABO261BE
New South Home Equity Trust
1999-1, Home Equity Asset
Backed Certificates Series 1999-1
Premium: Calculated as set
forth the Certificate Guaranty
Insurance Policy Endorsement
attached hereto
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
President Secretary
[SEAL]
Effective Date: May 27, 1999 Authorized Representative
<PAGE>
EXHIBIT B-1
(FORM OF CLASS A-1 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-1-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: LIBOR + 0.09%
per annum, subject to adjustment as described herein.
Initial Certificate Principal Balance
of this Certificate ("Denomination"): $105,701,000
Initial Certificate Principal Balances of
all Certificates of this Class: $ 105,701,000
CUSIP: 64880M AA 0
ISIN: US64880MAA09
COMMON CODE: 9827927
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-1
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%, subject to an available funds cap described in the
Agreement. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer or the Trustee or any
of their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
--------------------------------------
Signature by or on behalf of assignor
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 _____________________.
Statements should be mailed to _________________________________________________
- -------------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of ______________, 19__ before me, a notary public in and for said
State, personally appeared ___________________________________, known to me who,
being by me duly sworn, did depose and say that he executed the foregoing
instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-2
(FORM OF CLASS A-2 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-2-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 6.21%, subject
to adjustment as described herein.
Initial Certificate Principal Balance of
this Certificate ("Denomination"): $ 104,998,000
Initial Certificate Principal Balances of
all Certificates of this Class: $ 104,998,000
CUSIP: 64880M AB 8
ISIN: US64880MAB81
COMMON CODE: 9827978
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-2
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%. This Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Servicer or the Trustee
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
(other than the initial Distribution Date) is the close of business on the last
Business Day of the calendar month immediately preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Each Class A Certificateholder, by its purchase of Class A Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a claim seeking the avoidance of characterization as
a preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law, direct all matters relating to such Preference Claim.
The Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Certificates to the
Holders of such Certificates, the Certificate Insurer will be fully subrogated
to, and each Certificateholder, the Servicer and the Trustee hereby delegate and
assign to the Certificate Insurer, to the fullest extent permitted by law, the
rights of such Holders to receive such principal and interest from the Trust
Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-3
(FORM OF CLASS A-3 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-3-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 6.39%, subject
to adjustment as described herein.
Initial Certificate Principal Balance of
this Certificate ("Denomination"): $ 104,428,000
Initial Certificate Principal Balances of
all Certificates of this Class: $ 104,428,000
this Class:
CUSIP: 64880M AC 8
ISIN: 64880MAC84
COMMON CODE: 9828028
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-3
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%, subject to an available funds cap described in the
Agreement. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer or the Trustee or any
of their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_________________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
(other than the initial Distribution Date) is the close of business on the last
Business Day of the calendar month immediately preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Each Class A Certificateholder, by its purchase of Class A Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a claim seeking the avoidance of characterization as
a preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law, direct all matters relating to such Preference Claim.
The Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Certificates to the
Holders of such Certificates, the Certificate Insurer will be fully subrogated
to, and each Certificateholder, the Servicer and the Trustee hereby delegate and
assign to the Certificate Insurer, to the fullest extent permitted by law, the
rights of such Holders to receive such principal and interest from the Trust
Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-4
(FORM OF CLASS A-4 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-4-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 6.75%, subject
to adjustment as described herein.
Initial Certificate Principal Balance of
this Certificate ("Denomination"): $ 44,884,203
Initial Certificate Principal Balances of
all Certificates of this Class: $ 44,884,203
this Class:
CUSIP: 64880M AD 4
ISIN: US64880MAD48
COMMON CODE: 9828133
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-4
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as
Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%, subject to an available funds cap described in the
Agreement. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer or the Trustee or any
of their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-5
(FORM OF CLASS A-5 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-5-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 7.21%, subject to adjustment as defined herein
Initial Certificate Principal Balance of
this Certificate ("Denomination"): $ 50,722,824
Initial Certificate Principal Balances of
all Certificates of this Class: $ 50,722,824
CUSIP: 64880M AE 2
ISIN: 64880MAE21
COMMON CODE: 9828176
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-5
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%, subject to an available funds cap described in the
Agreement. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer or the Trustee or any
of their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-6
(FORM OF CLASS A-6 CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-6-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 6.73%, subject
to adjustment as described herein.
Initial Certificate Principal Balance
of this Certificate ("Denomination"): $ 22,000,000
Initial Certificate Principal Balances
of all Certificates of this Class: $ 22,000,000
CUSIP: 64880M AF 9
ISIN: 64880MAF95
COMMON CODE: 9828214
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class A-6
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Certificate Principal Balance at any time may
be less than the Certificate Principal Balance as set forth herein. Interest
will be distributed monthly on this Certificate, as set forth in the Agreement,
at the rate per annum set forth above; provided that on and after the first day
of the related Accrual Period during which the Optional Termination Date occurs,
the rate of interest paid on this Certificate shall be increased by a per annum
rate equal to 0.50%, subject to an available funds cap described in the
Agreement. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer or the Trustee or any
of their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary. On the first date
on which the Aggregate Principal Balance is less than 10% of the Aggregate
Principal Balance as of the Cut-Off Date of the Loans, the Servicer or the
Certificate Insurer in certain circumstances will have the option to repurchase,
in whole, from the Trust Fund all remaining Loans at the Termination Price as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon either (1) the later of the maturity or other liquidation (or any
advance with respect thereto) of the last Loan remaining in the Trust Fund or
the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed and remittance of
all funds due and payment of all amounts due and payable to the Certificate
Insurer and the Trustee pursuant to the Agreement or (2) mutual consent of the
Servicer, the Certificate Insurer and all Certificateholders in writing. In no
event, however, will the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living at the date of the Agreement of a certain person named in the Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-7
(FORM OF CLASS A-6IO CERTIFICATE)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Trustee or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY
DISTRIBUTIONS IN RESPECT OF PRINCIPAL.
Certificate No.: A-6IO-[_]
Cut-Off Date: May 1, 1999
First Distribution Date: June 25, 1999
Pass-Through Rate: 8.00%
Initial Notional Balance of this
Certificate ("Denomination"): $ 22,000,000.00
Initial Notional Balance of all
Certificates of this Class: $ 22,000,000.00
CUSIP: 64880 AG 7
ISIN: US6488AG78
COMMON CODE: 9828303
NEW SOUTH HOME EQUITY TRUST
Home Equity Asset Backed Certificates, Series 1999-1
Class A-6IO
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Interest will be distributed monthly on this Certificate, as set forth in the
Agreement, at the rate per annum set forth above, on the Class A-6IO National
Amount outstanding from time to time (and may be less than initial National
Balance as set forth herein; provided that commencing with the Accrual Period
for the Distribution Date in June 2001, the rate of interest paid on this
Certificate shall be 0%. This Certificate does not evidence an obligation of, or
an interest in, and is not guaranteed by the Depositor, the Servicer or the
Trustee or any of their respective affiliates. Neither this Certificate nor the
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "AGREEMENT") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "SERVICER"), and
The Chase Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(i) and
860D of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
-------------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-8
(FORM OF CLASS X-IO CERTIFICATE)
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE TRUSTEE SHALL
HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER FROM THE PROPOSED
PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND SUBSTANCE SATISFACTORY
TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE EFFECT THAT SUCH PROPOSED
PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN (AS DEFINED IN SECTION
3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") WHICH
IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE
CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF
ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF INVESTMENT IN THE ENTITY BY SUCH PLAN AND THE APPLICATION OF
DEPARTMENT OF LABOR REGULATION ss. 2510.3-101), OTHER THAN AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE
AND HOLDING OF SUBORDINATE CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE
EXEMPT FROM THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS
PRESENTED FOR REGISTRATION IN THE NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR
(ii) ABOVE, an opinion of counsel in form and substance satisfactory to the
TRUSTEE and the depositor to the effect that SUCH acquisition and holding of
such certificate BY SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE
OR RESULT IN A "PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION
4975 OF THE CODE OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS
OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN
ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING AGREEMENT. THE
TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A BOOK-ENTRY
CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN
CLAUSES (i) OR (ii) ABOVE.
THIS CERTIFICATE HAS NO PRINCIPAL OR NOTIONAL BALANCE, AND IS ENTITLED TO
DISTRIBUTIONS IN ACCORDANCE WITH THE AGREEMENT.
Certificate No.: X-IO-[_]
Cut-Off Date: May 1, 1999
Percentage Interest: 100%
First Distribution Date: June 25, 1999
<PAGE>
NEW SOUTH HOME EQUITY TRUST
Home Equity Asset Backed Certificates, Series 1999-1
Class X-IO
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate specified above in certain monthly
distributions as set forth in the Agreement with respect to a Trust Fund
consisting primarily of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "DEPOSITOR"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of Cut-Off Date specified above (the
"AGREEMENT") among the Depositor, New South Federal Savings Bank, as transferor
and servicer (the "SERVICER"), and The Chase Manhattan Bank, as trustee (the
"TRUSTEE"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in a "regular interest" in a "real estate mortgage investment conduit,"
as those terms are defined in Sections 860G(a)(i) And 860D of the Code, subject
to the Basis Risk Arrangements as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-9
(FORM OF CLASS Z-IO CERTIFICATE)
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE CERTIFICATE REGISTRAR OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE LAST PAGE OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE TRUSTEE SHALL
HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER FROM THE PROPOSED
PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE DEPOSITOR, TO THE EFFECT THAT SUCH PROPOSED PURCHASER OR
TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF
ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH
A "PLAN") OR (ii) A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH
PLAN (INCLUDING AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF INVESTMENT IN THE ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF
LABOR REGULATION ss. 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE
ASSETS OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND
HOLDING OF SUBORDINATE CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT
FROM THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS
PRESENTED FOR REGISTRATION IN THE NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR
(ii) ABOVE, an opinion of counsel in form and substance satisfactory to the
TRUSTEE and the depositor to the effect that SUCH acquisition and holding of
such certificate BY SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE
OR RESULT IN A "PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION
4975 OF THE CODE OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS
OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN
ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING AGREEMENT. THE
TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A BOOK-ENTRY
CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN
CLAUSES (i) OR (ii) ABOVE.
THIS CERTIFICATE HAS NO PRINCIPAL OR NOTIONAL BALANCE, AND IS ENTITLED TO
DISTRIBUTIONS IN ACCORDANCE WITH THE AGREEMENT.
Certificate No.: Z-IO-_
Cut-Off Date: May 1, 1999
Percentage Interest: 100%
First Distribution Date: June 25, 1999
<PAGE>
NEW SOUTH HOME EQUITY TRUST
Home Equity Asset Backed Certificates, Series 1999-1
Class Z-IO
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to a
Trust Fund consisting primarily of a pool of closed-end, fixed-rate
loans (the "LOANS") secured primarily by first or second mortgages
or deeds of trust on residential one- to four-family properties and
security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate specified above in certain monthly
distributions as set forth in the Agreement with respect to a Trust Fund
consisting primarily of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "DEPOSITOR"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of Cut-Off Date specified above (the
"AGREEMENT") among the Depositor, New South Federal Savings Bank, as transferor
and servicer (the "SERVICER"), and The Chase Manhattan Bank, as trustee (the
"TRUSTEE"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in a "regular interest" in a "real estate mortgage investment conduit,"
as those terms are defined in Sections 860 G(a)(i) And 860 D of the Code,
subject to the Basis Risk Arrangements as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "CERTIFICATES"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer or the Certificate Insurer in certain circumstances will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans at the
Termination Price as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon either (1) the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed and
remittance of all funds due and payment of all amounts due and payable to the
Certificate Insurer and the Trustee pursuant to the Agreement or (2) mutual
consent of the Servicer, the Certificate Insurer and all Certificateholders in
writing. In no event, however, will the trust created by the Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee, to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on this
Certificate to the Holders of this Certificate, the Certificate Insurer will be
fully subrogated to, and the Certificateholder delegates and assigns to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Holders to receive such principal and interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-10
(FORM OF CLASS R1 CERTIFICATE)
FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE CERTIFICATE REGISTRAR OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE LAST PAGE OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
CODE, OR A GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii)
A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN
THE ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION
ss. 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL
ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE
CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE
NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, an opinion of counsel
in form and substance satisfactory to the Certificate Registrar and the
depositor to the effect that SUCH acquisition and holding of such certificate BY
SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
"PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR,
THE SERVICER, THE SPECIAL SERVICER, THE PLACEMENT AGENTS OR THE DEPOSITOR TO ANY
OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA,
SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO THOSE SET FORTH
IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST
IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT
THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
Certificate No.: R1-[_]
Cut-Off Date: May 1, 1999
Percentage Interest: 100%
First Distribution Date: June 25, 1999
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class R1
evidencing the distributions allocable to the Class R1 Certificates
with respect to a Trust Fund consisting primarily of a pool of
closed-end, fixed-rate loans (the "LOANS") secured primarily by
first or second mortgages or deeds of trust on residential one- to
four-family properties and security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer, or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that is the registered owner of the Percentage Interest as
specified on the face hereof of the Class R-1 Interest with respect to a Trust
Fund consisting of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "DEPOSITOR"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "AGREEMENT") among the Depositor, New South Federal Savings Bank, as
transferor and servicer (the "SERVICER"), and The Chase Manhattan Bank, as
trustee (the "TRUSTEE"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund will
be made only upon presentment and surrender of this Class R1 Certificate at the
Office of the Trustee or the office or agency maintained by the Trustee in New
York, New York.
No transfer of a Class R1 Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Class R1
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to the effect that the purchase or holding of such Class R1
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class R1 Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the opinion of counsel satisfactory to the Trustee as described above shall be
void and of no effect.
Each Holder of this Class R1 Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Class R1 Certificate must be a Permitted Transferee and a United States
Person, (ii) no Ownership Interest in this Class R1 Certificate may be
transferred without delivery to the Trustee of (a) a transfer affidavit of the
proposed transferee and (b) a transfer certificate of the transferor, each of
such documents to be in the form described in the Agreement, (iii) each person
holding or acquiring any Ownership Interest in this Class R1 Certificate must
agree to require a transfer affidavit and to deliver a transfer certificate to
the Trustee as required pursuant to the Agreement, (iv) each person holding or
acquiring an Ownership Interest in this Class R1 Certificate must agree not to
transfer an Ownership Interest in this Class R1 Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Class R1
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
New South Home Equity Trust, Home Equity Asset Backed Certificates, of the
Series specified on the face hereof (herein collectively called the
"CERTIFICATES"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the Business Day
immediately following (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed by
first class mail to the address of such Certificateholder 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
Office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Trustee and
the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Office of the Trustee or the office or agency maintained by the
Trustee in New York, New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, and the Trustee and any agent of the Depositor or
the Trustee may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
any such agent shall be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer will have the option to repurchase, in whole, from the Trust Fund all
remaining Loans and all property acquired in respect of the Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of the maturity or other liquidation (or
any advance with respect thereto) of the last Loan remaining in the Trust Fund
or the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT B-11
(FORM OF CLASS R2 CERTIFICATE)
FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE "RESIDUAL
INTEREST" IN THREE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860 G AND 860 D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE CERTIFICATE REGISTRAR OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE LAST PAGE OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
CODE, OR A GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii)
A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN
THE ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION
ss. 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL
ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE
CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE
NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, an opinion of counsel
in form and substance satisfactory to the Certificate Registrar and the
depositor to the effect that SUCH acquisition and holding of such certificate BY
SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
"PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR,
THE SERVICER, THE SPECIAL SERVICER, THE PLACEMENT AGENTS OR THE DEPOSITOR TO ANY
OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA,
SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO THOSE SET FORTH
IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST
IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT
THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
Certificate No.: R2-[_]
Cut-Off Date: May 1, 1999
Percentage Interest: 100%
First Distribution Date: June 25, 1999
<PAGE>
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
Class R2
evidencing the distributions allocable to the Class R2 Certificates
with respect to a Trust Fund consisting primarily of a pool of
closed-end, fixed-rate loans (the "LOANS") secured primarily by
first or second mortgages or deeds of trust on residential one- to
four-family properties and security interests in manufactured homes.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer, or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that is the registered owner of the Percentage Interest as
specified on the face hereof of the Class R-II, Class R-III and Class R-IV
Interests with respect to a Trust Fund consisting of the Loans deposited by
PaineWebber Mortgage Acceptance Corporation IV (the "Depositor"). The Trust Fund
was created pursuant to a Pooling and Servicing Agreement dated as of the
Cut-Off Date specified above (the "AGREEMENT") among the Depositor, New South
Federal Savings Bank, as transferor and servicer (the "SERVICER"), and The Chase
Manhattan Bank, as trustee (the "TRUSTEE"). To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund will
be made only upon presentment and surrender of this Class R2 Certificate at the
Office of the Trustee or the office or agency maintained by the Trustee in New
York, New York.
No transfer of a Class R2 Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Class R2
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to the effect that the purchase or holding of such Class R2
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class R2 Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the opinion of counsel satisfactory to the Trustee as described above shall be
void and of no effect.
Each Holder of this Class R2 Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Class R2 Certificate must be a Permitted Transferee and a United States
Person, (ii) no Ownership Interest in this Class R2 Certificate may be
transferred without delivery to the Trustee of (a) a transfer affidavit of the
proposed transferee and (b) a transfer certificate of the transferor, each of
such documents to be in the form described in the Agreement, (iii) each person
holding or acquiring any Ownership Interest in this Class R2 Certificate must
agree to require a transfer affidavit and to deliver a transfer certificate to
the Trustee as required pursuant to the Agreement, (iv) each person holding or
acquiring an Ownership Interest in this Class R2 Certificate must agree not to
transfer an Ownership Interest in this Class R2 Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Class R2
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
<PAGE>
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______ __, 1999
THE CHASE MANHATTAN BANK, as Trustee
By:_________________________________________
Countersigned:
By:_________________________________
Authorized Signatory of
THE CHASE MANHATTAN BANK,
as Trustee
<PAGE>
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-1
Home Equity Asset Backed Certificates, Series 1999-1
This Certificate is one of a duly authorized issue of Certificates designated as
New South Home Equity Trust, Home Equity Asset Backed Certificates, of the
Series specified on the face hereof (herein collectively called the
"CERTIFICATES"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the Business Day
immediately following (the "DISTRIBUTION DATE"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed by
first class mail to the address of such Certificateholder 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
Office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Trustee and
the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Office of the Trustee or the office or agency maintained by the
Trustee in New York, New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, and the Trustee and any agent of the Depositor or
the Trustee may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
any such agent shall be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Aggregate Principal Balance as of the Cut-Off Date of the Loans, the
Servicer will have the option to repurchase, in whole, from the Trust Fund all
remaining Loans and all property acquired in respect of the Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of the maturity or other liquidation (or
any advance with respect thereto) of the last Loan remaining in the Trust Fund
or the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
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 __________________________.
Statements should be mailed to _______________________________________________
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________________, as
its agent.
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19 before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT C
LOAN SCHEDULE
INFORMATION IS ON FILE WITH THE INDENTURE TRUSTEE AT
THE CHASE MANHATTAN BANK
450 WEST 33RD STREET, 15TH FLOOR
NEW YORK, NY 10001-2697
<PAGE>
EXHIBIT D-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
1285 Avenue of the Americas
New York, NY 10019
New South Federal Savings Bank
1900 Crestwood Boulevard
Birmingham, AL 35210
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Chase Manhattan Bank, as Trustee, New
South Home Equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
----------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.3 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), the undersigned, as
Trustee, hereby certifies that, (i) it has received the Certificate Insurance
Policy and (ii) as to each Loan listed in the Loan Schedule, it has received the
original Mortgage Note or Manufactured Home Contract, as applicable, and the
original Assignment of Mortgage as provided in Section 2.3(a)(i)(C) of the
Pooling and Servicing Agreement, subject to the exceptions set forth on the
attached.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Loan File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________________________
Name:
Title:
<PAGE>
EXHIBIT D-2
FORM OF UPDATED INITIAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
1285 Avenue of the Americas
New York, NY 10019
New South Federal Savings Bank
1900 Crestwood Boulevard
Birmingham, AL 35210
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Chase Manhattan Bank, as Trustee, New
South Home Equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
----------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.4 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), the undersigned, as
Trustee, hereby certifies that, as to each Loan listed in Loan Schedule, (1) all
documents required to be delivered to it pursuant to Section 2.3 of the Pooling
and Servicing Agreement and (2) each such document has been reviewed by it, has
been, to the extent required, executed and has not been mutilated, damaged, torn
or otherwise physically altered, appears regular on its face and relates to such
Loan, subject to the exceptions set forth on the attached.
The Trustee has made no independent examination of any documents
contained in each Loan File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________________________
Name:
Title:
<PAGE>
EXHIBIT E
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
1285 Avenue of the Americas
New York, NY 10019
New South Federal Savings Bank
1900 Crestwood Boulevard
Birmingham, AL 35210
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Chase Manhattan Bank, as Trustee, New
South Home Equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
----------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.4 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), the undersigned, as
Trustee, hereby certifies that as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or any exceptions listed on the attached
document exception report) it has received the Loan File.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents
contained in each Loan File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:___________________________________________
Name:
Title:
<PAGE>
EXHIBIT F
FORM OF REQUEST FOR RELEASE OF LOAN FILES
To: The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention:
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Chase Manhattan Bank, as Trustee, New
South Home Equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
----------------------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by
you as Trustee for PaineWebber Mortgage Acceptance Corporation IV, we request
the release of the Loan File for the Loan(s) described below, for the reason
indicated.
FT Account #: Pool #:
Borrower's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full ([Servicer] hereby certifies that all
amounts have been received.)
2. Loan Liquidated ([Servicer] hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation
have been finally received.)
3. Loan in Foreclosure.
4. Other (explain):
<PAGE>
If item 1 or 2 above is checked, and if all or part of the Loan File
was previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above-specified Loan. If item 3 or 4 is checked, upon return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
NEW SOUTH FEDERAL SAVINGS BANK
1900 Crestwood Boulevard
Birmingham, AL 35210
By:_______________________________________________________
Name:_____________________________________________________
Title:____________________________________________________
Date:_____________________________________________________
TRUSTEE CONSENT TO RELEASE
AND ACKNOWLEDGMENT OF RECEIPT
By:_______________________________________________________
Name:_____________________________________________________
Title:____________________________________________________
Date:_____________________________________________________
<PAGE>
EXHIBIT G-1
FORM OF TRANSFER AFFIDAVIT
AFFIDAVIT PURSUANT TO SECTION 860E(E)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED
STATE OF )
) SS:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That [he] [she] is [Title of Officer] of [Name of Transferee] (the
"TRANSFEREE"), a [description of type of entity] duly organized and existing
under the laws of the [State of __________] [United States], on behalf of which
he makes this affidavit.
2. That the Transferee's Taxpayer Identification Number is [ ].
3. That the Transferee of a Transfer of PaineWebber Mortgage
Acceptance Corporation IV, New South Home Equity Trust 1999-1, Home Equity Asset
Backed Certificates, SERIES 1999-1, Class [R1] [R2] Certificate (the CLASS [R1]
[R2] CERTIFICATE") is not a Disqualified Organization (as defined below) or an
agent thereof (including nominee, middleman or other similar person) (an
"AGENT"), an ERISA Prohibited Holder or a Non-U.S. Person (as defined below).
For these purposes, a "DISQUALIFIED ORGANIZATION" means any of (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 of its activities are subject to
tax and, majority of its board of directors is not selected by such governmental
unit), (ii) a 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 and (v) any other Person so designated by the Servicer based upon an
Opinion of Counsel that the holding of an Ownership Interest in a Residual
Certificate by such Person may cause either any REMIC to fail to qualify as a
REMIC 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. For these purposes,
"ERISA PROHIBITED HOLDER" means an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
section 4975 of the Code or any governmental plan (as defined in Section 3(32)
of ERISA) subject to any federal, state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (each, a
"PLAN") or a person acting on behalf of or investing the assets of such a Plan.
For these purposes, "NON-U.S. PERSON" means any person other than a U.S. Person,
unless, with respect to the Transfer of a Residual Certificate, (i) such person
holds such Residual Certificate in connection with the conduct of a trade or
business within the United States and furnishes the Transferor and the
Certificate Registrar with an effective Internal Revenue Service Form 4224 or
(ii) the Transferee delivers to both the Transferor and the Certificate
Registrar an opinion of a nationally recognized tax counsel to the effect that
such Transfer is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such Transfer of the Residual
Certificate will not be disregarded for federal income tax purposes.
4. That the Transferee historically has paid its debts as they have
come due and intends to pay its debts as they come due in the future and the
Transferee intends to pay taxes associated with holding the Class [R1] [R2]
Certificate as they become due.
5. That the Transferee understands that it may incur tax liabilities
with respect to the Class [R1] [R2] Certificate in excess of any cash flow
generated by the Class [R1] [R2] Certificate.
6. That the Transferee agrees not to transfer the Class [R1] [R2]
Certificate to any Person or entity unless (a) the Transferee has received from
such Person or entity an affidavit substantially in the form of this Transfer
Affidavit and (b) the Transferee provides to the Certificate Registrar a letter
substantially in the form of Exhibit G-2 to the Pooling and Servicing Agreement
certifying that it has no actual knowledge that such Person or entity is a
Disqualified Organization or an Agent thereof, an ERISA Prohibited Holder or a
Non-U.S. Person and that it has no reason to know that such Person or entity
does not satisfy the requirements set forth in paragraph 4 hereof.
7. That the Transferee agrees to such amendments of Pooling and
Servicing Agreement dated as of May 1, 1999 (the "POOLING AND SERVICING
AGREEMENT"), by and among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, New South Federal Savings Bank, as Servicer and Transferor and The
Chase Manhattan Bank, as Trustee (the "POOLING AND SERVICING AGREEMENT"), as may
be required to further effectuate the restrictions on transfer of the Class [R1]
[R2] Certificate to such a Disqualified Organization or an Agent thereof, an
ERISA Prohibited Holder or a Non-U.S. Person. To the extent not defined herein,
the capitalized terms used herein shall have the meanings assigned thereto in
the Pooling and Servicing Agreement.
8. That, if a "tax matters person" is required to be designated with
respect to the [REMIC I] [REMIC II, REMIC III or REMIC IV], the Transferee
agrees to act as "tax matters person" and to perform the functions of "tax
matters person" of the [REMIC I] [REMIC II, REMIC III, REMIC IV] pursuant to
Section 10.15 of the Pooling and Servicing Agreement, and agrees to the
irrevocable designation of the Servicer as the Transferee's agent in performing
the function of "tax matters person."
9. The Transferee has reviewed, and agrees to be bound by and to abide
by, the provisions of Section 4.02(d) of the Pooling and Servicing Agreement
concerning registration of the transfer and exchange of Class [R1] [R2]
Certificates.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, by its [Title of Officer] this _____ day of __________,
19__.
[NAME OF TRANSFEREE]
By:____________________________________
[Name of Officer]
[Title of Officer]
<PAGE>
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Transferee, 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 Transferee.
Subscribed and sworn before me this ___ day of __________, 19__.
________________________________________
NOTARY PUBLIC
COUNTY OF ______________________________
STATE OF _______________________________
My commission expires the ___ day of __________, 19__.
<PAGE>
EXHIBIT G-2
FORM OF TRANSFEROR LETTER
[Date]
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street
Structured Finance Services (MBS)
New York, NY 10001
Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV, New South
Home Equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
---------------------------------------------------------------------
Ladies and Gentlemen:
[Transferor] has reviewed the attached affidavit of [Transferee], and
has no actual knowledge that such affidavit is not true and has no reason to
know that the requirements set forth in paragraphs 3 and 4 thereof are not
satisfied or that the information contained in paragraphs 3 and 4 thereof is not
true.
Very truly yours,
[Transferor]
___________________________________________
<PAGE>
EXHIBIT H
FORM OF INVESTMENT REPRESENTATION LETTER
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street
Structured Finance Services (MBS)
15th Floor
New York, New York 10001
Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV,
New South Home Equity Trust 1999-1, Home Equity Asset Backed
Certificates, Series 1999-1
------------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.2 of the Pooling and
Servicing Agreement, dated as of May 1, 1999 (the "POOLING AND SERVICING
AGREEMENT"), by and among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, New South Federal Savings Bank, as Servicer and Transferor, and The
Chase Manhattan Bank, as Trustee on behalf of the holders of Transfer of
PaineWebber Mortgage Acceptance Corporation IV, New South Home Equity Trust
1999-1, Home Equity Asset Backed Certificates, Series 1999-1 (the
"CERTIFICATES") in connection with the transfer by _________________ (the
"SELLER") to the undersigned (the "PURCHASER") of ____% aggregate Percentage
Interest of Class ___ Certificates (the "CERTIFICATE"). Capitalized terms used
and not otherwise defined herein shall have the respective meanings ascribed to
such terms in the Pooling and Servicing Agreement.
In connection with such transfer, the Purchaser hereby represents and
warrants to you and the addressees hereof as follows:
1. Check one of the following:*
/ / The Purchaser is an institutional "accredited investor" (an
entity meeting the requirements of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act of 1933, as amended
(the "1933 ACT")) and has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Certificates, and the
Purchaser and any accounts for which it is acting are each able
to bear the economic risk of the Purchaser's or such account's
investment. The Purchaser is acquiring the Certificates purchased
by it for its own account or for one or more accounts (each of
which is an "institutional accredited investor") as to each of
which the Purchaser exercises sole investment discretion. The
Purchaser hereby undertakes to reimburse the Trust Fund for any
costs incurred by it in connection with this transfer.
_____________________
* Purchaser must include one of the following two certifications.
/ / The Purchaser is a "qualified institutional buyer" within the
meaning of Rule 144A ("RULE 144A") promulgated under the
Securities Act of 1933, as amended (the "1933 ACT") The Purchaser
is aware that the transfer is being made in reliance on Rule
144A, and the Purchaser has had the opportunity to obtain the
information required to be provided pursuant to paragraph
(d)(4)(i) of Rule 144A.
2. The Purchaser's intention is to acquire the Certificate (a) for
investment for the Purchaser's own account or (b) for resale to (i) "qualified
institutional buyers" in transactions under Rule 144A, and not in any event with
the view to, or for resale in connection with, any distribution thereof or (ii)
to institutional "accredited investors" meeting the requirements of Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act,
pursuant to any other exemption from the registration requirements of the 1933
Act, subject in the case of this clause (ii) to (w) the receipt by the
Certificate Registrar of a letter substantially in the form hereof, (x) the
receipt by the Certificate Registrar of an opinion of counsel acceptable to the
Certificate Registrar that such reoffer, resale, pledge or transfer is in
compliance with the 1933 Act, (y) the receipt by the Certificate Registrar of
such other evidence acceptable to the Certificate Registrar that such reoffer,
resale, pledge or transfer is in compliance with the 1933 Act and other
applicable laws and (z) a written undertaking to reimburse the Trust for any
costs incurred by it in connection with the proposed transfer. The Purchaser
understands that the Certificate (and any subsequent Certificate) has not been
registered under the 1933 Act, by reason of a specified exemption from the
registration provisions of the 1933 Act which depends upon, among other things,
the bona fide nature of the Purchaser's investment intent (or intent to resell
to only certain investors in certain exempted transactions) as expressed herein.
3. The Purchaser acknowledges that the Certificate (and any
Certificate issued on transfer or exchange thereof) has not been registered or
qualified under the 1933 Act or the securities laws of any State or any other
jurisdiction, and that the Certificate cannot be resold unless it is registered
or qualified thereunder or unless an exemption from such registration or
qualification is available.
4. The Purchaser hereby undertakes to be bound by the terms and
conditions of the Pooling and Servicing Agreement in its capacity as an owner of
a Certificate or Certificates, as the case may be (each, a "CERTIFICATEHOLDER"),
in all respects as if it were a signatory thereto. This undertaking is made for
the benefit of the Trust, the Certificate Registrar and all Certificateholders
present and future.
5. The Purchaser will not sell or otherwise transfer any portion of
the Certificate or Certificates, except in compliance with Section 4.02 of the
Pooling and Servicing Agreement.
6. Check one of the following:*
/ / The Purchaser is a U.S. Person (as defined below) and it has
attached hereto an Internal Revenue Service ("IRS") Form W-9 (or
successor form).
/ / The Purchaser is not a U.S. Person and under applicable law in
effect on the date hereof, no taxes will be required to be
withheld by the Trustee (or its agent) with respect to
distributions to be made on the Certificate. The Purchaser has
attached hereto either (i) a duly executed IRS Form W-8 (or
successor form), which identifies such Purchaser as the
beneficial owner of the Certificate and states that such
Purchaser is not a U.S. Person or (ii) two duly executed copies
of IRS Form 4224 (or successor form), which identify such
Purchaser as the beneficial owner of the Certificate and state
that interest and original issue discount on the Certificate and
Permitted Investments is, or is expected to be, effectively
connected with a U.S. trade or business. The Purchaser agrees to
provide to the Certificate Registrar updated IRS Forms W-8 or IRS
Forms 4224, as the case may be, any applicable successor IRS
forms, or such other certifications as the Certificate Registrar
may reasonably request, on or before the date that any such IRS
form or certification expires or becomes obsolete, or promptly
after the occurrence of any event requiring a change in the most
recent IRS form of certification furnished by it to the
Certificate Registrar.
For this purpose, "U.S. PERSON" means a citizen or resident of the United States
for U.S. federal income tax purposes, a corporation, partnership (except to the
extent provided in applicable Treasury regulations) or other entity created or
organized in or under the laws of the United States or any of its political
subdivisions, an estate the income of which is subject to U.S. federal income
taxation regardless of its source or a trust if a court within the United States
is able to exercise primary supervision over the administration of such trust,
and one or more United States fiduciaries have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which were
eligible to elect to be treated as U.S. persons).
8. Please make all payments due on the Certificates:**
____________________
* Each Purchaser must include one of the two alternative certifications.
** Only to be filled out by Purchasers of Definitive Certificates. Please select
(a) or (b). For holders of Definitive Certificates, wire transfers are only
available if such holder's Definitive Certificates have an aggregate Certificate
Balance or Notional Amount, as applicable, of at least U.S. $5,000,000.
/ / (a) by wire transfer to the following account at a bank or
entity in New York, New York, having appropriate facilities
therefor:
Bank: ____________________________________________________
ABA#: ____________________________________________________
Account #: ________________________________________________
Attention: _______________________________________________
(b) by mailing a check or draft to the following address:
Very truly yours,
--------------------------------------
[The Purchaser]
By: _________________________________
Name:
Title:
Dated:
<PAGE>
EXHIBIT I
FORM OF ERISA REPRESENTATION LETTER
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street
Structured Finance Services (MBS)
15th Floor
New York, New York 10001
Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV, New South
Home equity Trust 1999-1, Home Equity Asset Backed Certificates,
Series 1999-1
----------------------------------------------------------------------
Ladies and Gentlemen:
The undersigned (the "PURCHASER") proposes to purchase ____%
initial Percentage Interest of Transfer of PaineWebber Mortgage Acceptance
Corporation IV, New South Home Equity Trust 1999-1, Home Equity Asset Backed
Certificates, Series 1999-1, Class __ (the "CERTIFICATE") issued pursuant to
that certain Pooling and Servicing Agreement, dated as of May 1, 1999 (the
"POOLING AND SERVICING AGREEMENT"), by and among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as Servicer and
Transferor, and The Chase Manhattan Bank, as Trustee (the "TRUSTEE").
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to such terms in the Pooling and Servicing Agreement.
In connection with such transfer, the undersigned hereby represents
and warrants to you as follows:
1. The Purchaser is not (a) an employee benefit plan subject to the
fiduciary responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "CODE"), or a governmental plan (as defined in Section
3(32) of ERISA) subject to any federal, state or local law ("SIMILAR LAW") which
is, to a material extent, similar to the foregoing provisions of ERISA or the
Code (each a "PLAN") or (b) a person acting on behalf of or using the assets of
any such Plan (including an entity whose underlying assets include Plan assets
by reason of investment in the entity by such Plan and the application of
Department of Labor Regulation ss. 2510.3-101), other than an insurance company
using the assets of its general account under circumstances whereby the purchase
and holding of Offered Private Certificates by such insurance company would be
exempt from the prohibited transaction provisions of ERISA and the Code under
Prohibited Transaction Class Exemption 95-60.
2. The Purchaser understands that if the Purchaser is a Person
referred to in 1(a) or (b) above, such Purchaser is required to provide to the
Certificate Registrar an opinion of counsel in form and substance satisfactory
to the Certificate Registrar and the Depositor to the effect that the
acquisition and holding of such Certificate by such purchaser or transferee will
not result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the fiduciary responsibility provisions of ERISA, the prohibited
transaction provisions of the Code or the provisions of any Similar Law,
(without regard to the identity or nature of the other Holders of Certificates
of any Class) will not constitute or result in a "prohibited transaction" within
the meaning of ERISA, Section 4975 of the Code or any similar law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation or
liability (including obligations or liabilities under ERISA, Section 4975 of the
Code or any such Similar Law) in addition to those set forth in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be at the expense of the
Depositor, the Servicer, the Trustee or the Trust Fund.
IN WITNESS WHEREOF, the Purchaser hereby executes this ERISA
Representation Letter on the ___th day of _____, ____.
Very truly yours,
-----------------------------------------
[The Purchaser]
By: _____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT J
FORM OF OFFICER'S CERTIFICATE OF THE TRANSFEROR: PREPAID LOANS
To: The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention:
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Chase Manhattan Bank, as Trustee,
New South Home Equity Trust 1999-1, Home Equity Asset Backed
Certificates, Series 1999-1
----------------------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as
Trustee for PaineWebber Mortgage Acceptance Corporation IV, we hereby certify
that Loan # __________ had been paid in full. We provide this certification in
lieu of the contents of the Loan File. If all or part of the Loan File have been
previously released to you, we request that the same along with any related
documents be returned to us immediately.
NEW SOUTH FEDERAL SAVINGS BANK
1900 Crestwood Boulevard
Birmingham, AL 35210
By:_______________________________________________________
Name:_____________________________________________________
Title:____________________________________________________
Date:_____________________________________________________
TRUSTEE CONSENT TO RELEASE
AND ACKNOWLEDGMENT OF RECEIPT
By:_______________________________________________________
Name:_____________________________________________________
Title:____________________________________________________
Date:_____________________________________________________
<PAGE>
EXHIBIT K
[Form of Servicer Remittance Report]
<TABLE>
<CAPTION>
Beginning Gross Service Ending
Deal ID Loan Nbr Prin Balance Note Rate Fee Rate Net Yield P&I Amt Status Payoff Date Prin Balance
------- -------- ------------ --------- -------- --------- ------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Actual Actual Loan Loan
Deal ID Prin Collected Int Collected LPI Date Due Date WAM
------- -------------- ------------- -------- -------- ---
