SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
January 28, 2000
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the Trust
Agreement, dated as of January 1, 2000, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2000-1)
Structured Asset Securities Corporation
---------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-68513-09 74-2440850
- ---------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
- ------------------------------- ---------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Act"), by a Registration Statement on Form S-3 (Registration File No.
333-68513) (the "Registration Statement"). Pursuant to the Registration
Statement, the Registrant issued $449,370,670 in aggregate principal amount of
Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5, Class 1-A6, Class
1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5,
Class 2-AP, Class 3-A, Class 3-AP, Class AX, Class B1, Class B1X, Class B2,
Class B2X, Class B3 and Class R Certificates of its Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 2000-1 on
January 28, 2000. This Current Report on Form 8-K is being filed to satisfy an
undertaking, contained in the definitive Prospectus dated January 15, 1999, as
supplemented by the Prospectus Supplement dated January 21, 2000 (the
"Prospectus Supplement"), to file a copy of the Trust Agreement (as defined
below) executed in connection with the issuance of the Certificates, a form of
which was filed as an exhibit to the Registration Statement.
The Certificates were issued pursuant to a Trust Agreement (the "Trust
Agreement"), attached hereto as Exhibit 4.1, dated as of January 1, 2000,
among Structured Asset Securities Corporation, as depositor (the "Depositor"),
Aurora Loan Services Inc., as master servicer, and U.S. Bank National
Association, as trustee (the "Trustee"). The "Certificates" consist of the
following classes: Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5,
Class 1-A6, Class 1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class
2-A4, Class 2-A5, Class 2-AP, Class 3-A, Class 3-AP, Class AX, Class B1, Class
B1X, Class B2, Class B2X, Class B3, Class B4, Class B5, Class B6 and Class R.
The Certificates evidence all the beneficial ownership interest in a trust
fund (the "Trust Fund") that consists primarily of three pools of certain
fixed rate, conventional, first lien residential mortgage loans (the "Mortgage
Loans") with an aggregate outstanding principal balance of $319,661,640 as of
January 1, 2000 and mortgage pass-through certificates (the "Underlying
Security") with a principal balance of $134,027,728 as of January 28, 2000,
together with certain other assets. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Trust
Agreement.
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated January 21, 2000, between Structured Asset
Securities Corporation, as Depositor, and Lehman Brothers Inc., as
the Underwriter.
4.1 Trust Agreement, dated as of January 1, 2000, between Structured
Asset Securities Corporation, as Depositor, Aurora Loan Services
Inc., as Master Servicer, and U.S. Bank National Association, as
Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of January 1,
2000, between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as Seller, and Structured Asset Securities Corporation, as
Purchaser.
99.2 Servicing Agreement, dated as of January 1, 2000, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., as Seller, and
Aurora Loan Services Inc., as Servicer.
99.3 Reconstituted Servicing Agreement, dated as of January 1, 2000,
between Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
as Seller, and Impac Funding Corporation, as Servicer, and related
Seller's Purchase, Warranties and Servicing Agreement, dated as of
September 1, 1999, between Lehman Brothers Bank, FSB, as Purchaser,
and Impac Funding Corporation, as Seller and Servicer.
99.4 Insurance Agreement, dated as of January 1, 2000, between MBIA
Insurance Corporation, as Insurer, Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as Seller, Structured Asset
Securities Corporation, as Depositor, and U.S. Bank National
Association, as Trustee.
99.5 Security Purchase Agreement, dated January 28, 2000, between Lehman
Brothers Inc., as Seller, and Structured Asset Securities
Corporation, as Depositor.
99.6 Certificate Guarantee Insurance Policy, dated January 28, 2000,
issued by MBIA Insurance Corporation, as Insurer, in connection with
the Class 2-A3 Certificates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Ellen Kiernan
---------------------
Name: Ellen Kiernan
Title: Vice President
Dated: February 10, 2000
5
56372
EXHIBIT INDEX
Exhibit
No. Description Page No.
- -------- ----------- --------
1.1 Terms Agreement, dated January 21, 2000, between
Structured Asset Securities Corporation, as Depositor,
and Lehman Brothers Inc., as the Underwriter.
4.1 Trust Agreement, dated as of January 1, 2000, between
Structured Asset Securities Corporation, as Depositor,
Aurora Loan Services Inc., as Master Servicer, and U.S.
Bank National Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of
January 1, 2000, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as Seller, and Structured
Asset Securities Corporation, as Purchaser.
99.2 Servicing Agreement, dated as of January 1, 2000, between
Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as Seller, and Aurora Loan Services Inc., as
Servicer.
99.3 Reconstituted Servicing Agreement, dated as of January 1,
2000, between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., as Seller, and Impac Funding
Corporation, as Servicer, and related Seller's Purchase,
Warranties and Servicing Agreement, dated as of September
1, 1999, between Lehman Brothers Bank, FSB, as Purchaser,
and Impac Funding Corporation, as Seller and Servicer.
99.4 Insurance Agreement, dated as of January 1, 2000, between
MBIA Insurance Corporation, as Insurer, Lehman Capital, A
Division of Lehman Brothers Holdings Inc., as Seller,
Structured Asset Securities Corporation, as Depositor, and
U.S. Bank National Association, as Trustee.
99.5 Security Purchase Agreement, dated January 28, 2000,
between Lehman Brothers Inc., as Seller, and Structured
Asset Securities Corporation, as Depositor.
99.6 Certificate Guarantee Insurance Policy, dated January 28,
2000, issued by MBIA Insurance Corporation, as Insurer, in
connection with the Class 2-A3 Certificates.
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-1
TERMS AGREEMENT
---------------
Dated: January 21, 2000
To: Structured Asset Securities Corporation, as Depositor under the Trust
Agreement dated as of January 1, 2000 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996 (the
"Standard Terms," and together with this Terms Agreement, the "Agreement").
Series Designation: Series 2000-1.
- ------------------
Terms of the Series 2000-1 Certificates: Structured Asset Securities
Corporation, Series 2000-1 Mortgage Pass-Through Certificates, Class 1-A1, Class
1-A2, Class 1-A3, Class 1-A4, Class 1-A5, Class 1-A6, Class 1-A7, Class 1-AP,
Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class 2-AP, Class
3-A, Class 3-AP, Class AX, Class B1, Class B1X, Class B2, Class B2X, Class B3,
Class B4, Class B5, Class B6 and Class R (the "Certificates") will evidence, in
the aggregate, the entire beneficial ownership interest in a trust fund (the
"Trust Fund"). The primary assets of the Trust Fund consist of three pools of
fixed rate, conventional, first lien, residential mortgage loans (the "Mortgage
Loans") and a mortgage-backed certificate (the "Underlying Certificate"). Only
the Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5, Class 1-A6,
Class 1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class
2-A5, Class 2-AP, Class 3-A, Class 3-AP, Class AX, Class B1, Class B1X, Class
B2, Class B2X, Class B3 and Class R Certificates (the "Offered Certificates")
are being sold pursuant to the terms hereof.
Registration Statement: File Number 333-68513.
- ----------------------
Certificate Ratings: It is a condition of Closing that at the Closing Date: the
Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5, Class 1-A6, Class
1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5,
Class 2-AP, Class 3-A, Class 3-AP and Class AX Certificates be rated "AAA" by
each of Duff & Phelps Credit Rating Co. ("DCR") and Moody's Investors Service,
Inc. ("Moody's," together with DCR, the "Rating Agencies"); the Class R
Certificates be rated "AAA" by DCR; the Class B1 and B1X Certificates be rated
"AA" by DCR; the Class B2 and B2X Certificates be rated "A" by DCR; and the
Class B3 Certificates be rated "BBB" by DCR.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to Lehman
Brothers Inc. (the "Underwriter") and the Underwriter agrees to purchase from
the Depositor, the Offered Certificates in the principal amounts and prices set
forth on Schedule 1 annexed hereto. The purchase price for the Offered
Certificates shall be the Purchase Price Percentage set forth in Schedule 1 plus
accrued interest at the initial interest rate per annum from and including the
Cut-off Date up to, but not including, the Closing Date.
The Underwriter will offer the Offered Certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale.
Cut-off Date: January 1, 2000.
Closing Date: 10:00 A.M., New York time, on or about January 28, 2000. On the
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/ Joseph J. Kelly
-----------------------
Name: Joseph J. Kelly
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Ellen Kiernan
---------------------
Name: Ellen Kiernan
Title: Vice President
Schedule 1
----------
Initial Certificate Certificate Purchase Price
Class Principal Amount(1) Interest Rate Percentage
----- ---------------- ------------- ----------
1-A1 $50,650,000 7.60% 100.09375%
1-A2 75,600,000 Adjustable(2) 99.96875%
1-A3(3) (4) Adjustable(2) 3.00000%
1-A4 5,524,000 8.00% 96.87500%
1-A5(3) (4) 9.00% 22.65625%
1-A6(3) (4) 9.00% 41.18750%
1-A7 30,000,000 7.85% 98.57813%
1-AP(5) 7,339,244 0.00% 60.12500%
2-A1 90,408,000 7.50% 99.76563%
2-A2 81,000,000 7.50% 98.65625%
2-A3 40,000,000 7.75% 100.00000%
2-A4(5) 1,500,000 0.00% 33.12500%
2-A5(5) 4,467,590 0.00% 65.10938%
2-AP(5) 248,737 0.00% 50.12500%
3-A 40,210,858 7.25% 98.46875%
3-AP(5) 1,166,141 0.00% 68.00000%
AX(3) (6) 8.00% 19.95313%
B1 12,626,000 Adjustable(2) 98.00000%
B1X(3) (4) Adjustable(2) 35.00000%
B2 5,594,000 Adjustable(2) 96.07813%
B2X(3) (4) Adjustable(2) 34.00000%
B3 3,036,000 Adjustable(2) 71.04688%
R 100 9.00% 100.00000%
- ----------
(1) These balances are approximate, as described in the prospectus supplement.
(2) The Class 1-A2, 1-A3, B1, B1X, B2, B2X and B3 Certificates accrue interest
based on variable interest rates, as described in the prospectus
supplement. The initial interest rates on these classes of certificates
will be Class 1-A2, 6.55%; Class 1-A3, 2.45%; Class B1, 8.25%; Class B1X,
8.25%; Class B2, 8.25%; Class B2X, 8.25%; and Class B3, approximately
8.33%.
(3) The Class 1-A3, 1-A5, 1-A6, AX, B1X and B2X Certificates will be
interest-only certificates; they will not be entitled to payments of
principal.
(4) The Class 1-A3, 1-A5, 1-A6, B1X and B2X Certificates will have no
principal amount; they will accrue interest on a notional amount, as
described in the prospectus supplement.
(5) The Class 1-AP, 2-A4, 2-A5, 2-AP and 3-AP Certificates will be
principal-only certificates; they will not be entitled to payments of
interest.
(6) The Class AX Certificates will have no principal amount; they will accrue
interest on the sum of the notional amounts of the AX(1) Component and AX
(2) Component, as described in the prospectus supplement.
EXECUTION
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
AURORA LOAN SERVICES INC., as Master Servicer,
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of January 1, 2000
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.01. Definitions.........................................................................................6
Section 1.02. Calculations Respecting Mortgage Loans.............................................................41
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans and Underlying
Security.......................................................................................41
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation for Trust Fund........................45
Section 2.03. Representations and Warranties of the Depositor....................................................46
Section 2.04. Discovery of Breach................................................................................48
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.............................................48
Section 2.06. Grant Clause.......................................................................................49
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates...................................................................................50
Section 3.02. Registration.......................................................................................51
Section 3.03. Transfer and Exchange of Certificates..............................................................51
Section 3.04. Cancellation of Certificates.......................................................................54
Section 3.05. Replacement of Certificates........................................................................54
Section 3.06. Persons Deemed Owners..............................................................................54
Section 3.07. Temporary Certificates.............................................................................54
Section 3.08. Appointment of Paying Agent........................................................................55
Section 3.09. Book-Entry Certificates............................................................................55
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account.................................................................................56
Section 4.02. Application of Funds in the Collection Account.....................................................58
Section 4.03. Reports to Certificateholders......................................................................60
Section 4.04. Certificate Account................................................................................63
Section 4.05. Determination of LIBOR.............................................................................64
Section 4.06. The Class 2-A3 Reserve Fund........................................................................65
Section 4.07. The Securities Account.............................................................................66
Section 4.08. Liability of the Securities Intermediary...........................................................68
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally............................................................................68
Section 5.02. Distributions from the Certificate Account.........................................................69
Section 5.03. Allocation of Realized Losses......................................................................76
Section 5.04. Advances by Master Servicer and Trustee............................................................79
Section 5.05. Compensating Interest Payments.....................................................................80
Section 5.06. Distributions of Principal on Redemption Certificates..............................................80
Section 5.07. The Class 2-A3 Certificate Insurance Policy........................................................84
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee..................................................................................87
Section 6.02. Certain Matters Affecting the Trustee..............................................................89
Section 6.03. Trustee Not Liable for Certificates................................................................90
Section 6.04. Trustee May Own Certificates.......................................................................91
Section 6.05. Eligibility Requirements for Trustee...............................................................91
Section 6.06. Resignation and Removal of Trustee.................................................................91
Section 6.07. Successor Trustee..................................................................................92
Section 6.08. Merger or Consolidation of Trustee.................................................................93
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian...........................................93
Section 6.10. Authenticating Agents..............................................................................94
Section 6.11. Indemnification of Trustee.........................................................................95
Section 6.12. Fees and Expenses of Trustee.......................................................................96
Section 6.13. Collection of Monies...............................................................................96
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor........................................96
Section 6.15. Additional Remedies of Trustee Upon Event of Default...............................................99
Section 6.16. Waiver of Defaults................................................................................100
Section 6.17. Notification to Holders...........................................................................100
Section 6.18. Directions by Certificateholders and Duties of Trustee During Event of Default....................100
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon Event of Default.....................101
Section 6.20. Preparation of Tax Returns and Other Reports......................................................101
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of All Mortgage Loans and the
Underlying Security...........................................................................102
Section 7.02. Procedure Upon Termination of Trust Fund..........................................................102
Section 7.03. Additional Trust Fund Termination Requirements....................................................103
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders...................................................................104
Section 8.02. Access to List of Holders.........................................................................105
Section 8.03. Acts of Holders of Certificates...................................................................105
Section 8.04. Rights of Certificateholders as Holders of the Underlying Security................................106
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer.....................................................................106
Section 9.02. Master Servicer Fidelity Bond and Master Servicer Errors and Omissions Insurance Policy...........106
Section 9.03. Master Servicer's Financial Statements and Related Information....................................107
Section 9.04. Power to Act; Procedures..........................................................................107
Section 9.05. Servicing Agreements Between the Master Servicer and Servicers; Enforcement of Servicers'
Obligations...................................................................................109
Section 9.06. Collection of Taxes, Assessments and Similar Items................................................109
Section 9.07. Termination of Servicing Agreements; Successor Servicers..........................................110
Section 9.08. Master Servicer Liable for Enforcement............................................................110
Section 9.09. No Contractual Relationship Between Servicers and Trustee or Depositor............................111
Section 9.10. Assumption of Servicing Agreement by Trustee......................................................111
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements......................................................111
Section 9.12. Release of Mortgage Files.........................................................................111
Section 9.13. Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee..............112
Section 9.14. Representations and Warranties of the Master Servicer.............................................114
Section 9.15. Closing Certificate and Opinion...................................................................116
Section 9.16. Standard Hazard and Flood Insurance Policies......................................................116
Section 9.17. Presentment of Claims and Collection of Proceeds..................................................116
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies............................................116
Section 9.19. Trustee To Retain Possession of Certain Insurance Policies and Documents..........................117
Section 9.20. Realization Upon Defaulted Mortgage Loans.........................................................117
Section 9.21. Compensation to the Master Servicer...............................................................117
Section 9.22. REO Property......................................................................................118
Section 9.23. [Omitted].........................................................................................119
Section 9.24. Reports to the Trustee............................................................................119
Section 9.25. Annual Officer's Certificate as to Compliance.....................................................119
Section 9.26. Annual Independent Accountants' Servicing Report..................................................120
Section 9.27. Merger or Consolidation...........................................................................120
Section 9.28. Resignation of Master Servicer....................................................................120
Section 9.29. Assignment or Delegation of Duties by the Master Servicer.........................................121
Section 9.30. Limitation on Liability of the Master Servicer and Others.........................................121
Section 9.31. Indemnification; Third-Party Claims...............................................................122
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration.............................................................................122
Section 10.02. Prohibited Transactions and Activities...........................................................124
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status...........................124
Section 10.04. REO Property.....................................................................................124
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment..........................................................125
Section 11.02. Entire Agreement.................................................................................125
Section 11.03. Amendment........................................................................................125
Section 11.04. Voting Rights....................................................................................127
Section 11.05. Provision of Information.........................................................................127
Section 11.06. Governing Law....................................................................................127
Section 11.07. Notices..........................................................................................127
Section 11.08. Severability of Provisions.......................................................................128
Section 11.09. Indulgences; No Waivers..........................................................................128
Section 11.10. Headings Not To Affect Interpretation............................................................128
Section 11.11. Benefits of Agreement............................................................................128
Section 11.12. Special Notices to the Rating Agencies...........................................................128
Section 11.13. Counterparts.....................................................................................129
Section 11.14. Transfer of Servicing............................................................................129
Section 11.15. Matters Relating to the Class 2-A3 Certificate Insurance Policy..................................130
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreements
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreement
Exhibit L Insurance Agreement
Exhibit M Class 2-A3 Certificate Insurance Policy
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
Schedule C Underlying Security Schedule
Schedule D Pool 1 AX Loans
Schedule E Pool 2 AX Loans
</TABLE>
This TRUST AGREEMENT, dated as of January 1, 2000 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation,
as depositor (the "Depositor"), AURORA LOAN SERVICES INC., as master servicer
(the "Master Servicer"), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller") and the Underlying
Security from Lehman Brothers Inc., and at the Closing Date is the owner of
the Mortgage Loans, the Underlying Security and the other property being
conveyed by it to the Trustee for inclusion in the Trust Fund. On the Closing
Date, the Depositor will acquire the Certificates from the Trust Fund, as
consideration for its transfer to the Trust Fund of the Mortgage Loans, the
Underlying Security and the other property constituting the Trust Fund. The
Depositor has duly authorized the execution and delivery of this Agreement to
provide for the conveyance to the Trustee of the Mortgage Loans, the
Underlying Security and the other property constituting the Trust Fund. All
covenants and agreements made by the Depositor, the Master Servicer and the
Trustee herein with respect to the Mortgage Loans, the Underlying Security and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and the Class 2-A3 Certificate
Insurer. The Depositor and the Master Servicer are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, the Lower Tier
REMIC and the Upper Tier REMIC, respectively). Each Certificate, other than
the Class R Certificate, represents ownership of a regular interest in the
Upper Tier REMIC for purposes of the REMIC Provisions. The Class R Certificate
represents ownership of the sole class of residual interest in each of the
Lower Tier REMIC and the Upper Tier REMIC for purposes of the REMIC
Provisions. The Upper Tier REMIC shall hold as assets the several classes of
uncertificated Lower Tier Interests, other than the Class LTR Interest, set
out below. Each such Lower Tier Interest, other than the Class LTR Interest,
is hereby designated as a regular interest in the Lower Tier REMIC.
Corresponding
Lower Tier Class Certificate Initial Class Class of
Designation Interest Rate Principal Amount Certificate(s)
----------- ------------- ---------------- --------------
Class LT1-A1 9.00% $50,650,000.00 Class 1-A1
Class LT1-A2 9.00% 75,600,000.00 Class 1-A2
(1) Class 1-A3
Class LT1-A4 9.00% 5,524,000.00 Class 1-A4
(2) Class 1-A5
(3) Class 1-A6
Class LT1-A7 9.00% 30,000,000.00 Class 1-A7
Class LT1-AP 0.00% 7,339,244.00 Class 1-AP
Class LT2-A1 7.50% 90,408,000.00 Class 2-A1
Class LT2-A2 7.50% 81,000,000.00 Class 2-A2
Class LT2-A3 7.50% 41,500,000.00 Class 2-A3
(4) Class 2-A4
Class LT2-A5 0.00% 4,467,590.00 Class 2-A5
Class LT2-AP 0.00% 248,737.00 Class 2-AP
Class LT3-A 7.25% 40,210,858.00 Class 3-A
Class LT3-AP 0.00% 1,116,141.00 Class 3-AP
Class LTAX1 (5) (6) Class AX
Class LTAX2 (5) (6) Class AX
Class LTB1 (7) 12,626,000.00 Class B1
(8) Class B1X
Class LTB2 (7) 5,594,000.00 Class B2
(9) Class B2X
Class LTB3 (7) 3,036,000.00 Class B3
Class LTB4 (7) Class B4
Class LTB5 (7) Class B5
Class LTB6 (7) Class B6
Class LTR (10) (10) Class R
Class LT1-Q 9.00% 100 Class R
- ---------------------
(1) The Class 1-A3 Certificates are entitled to receive on each Distribution
Date a specified portion of the interest payable on the Class LT1-A2
Interest.
(2) The Class 1-A5 Certificates are entitled to receive on each Distribution
Date a specified portion of the interest payable on the Class LT1-A1 and
Class LT1-A4 Interests.
(3) The Class 1-A6 Certificates are entitled to receive on each Distribution
Date a specified portion of the interest payable on the Class LT1-A7
Interest.
(4) The Class 2-A3 Certificates are entitled to receive on each Distribution
Date a specified portion of the principal payable on the Class LT2-A3
Interest.
(5) The Class LTAX1 Interest have a notional principal balance that will at
all times equal the Scheduled Principal Balance of the Pool 1 AX Loans.
The Class LTAX2 Interest have a notional principal balance that will at
all times equal the Scheduled Principal Balance of the Pool 2 AX Loans.
(6) For any Accrual Period, the interest rate on the Class LTAX1 Interest
will equal the excess of (a) the weighted average (by Scheduled Principal
Balance) of the Net Mortgage Rates on the Pool 1 AX Loans over (b) 9.00%.
For any Accrual Period, the interest rate on the Class LTAX2 Interest
will equal the excess of (a) the weighted average (by Scheduled Principal
Balance) of the Net Mortgage Rates on the Pool 2 AX Loans over (b) 7.50%.
(7) Each of the Class LTB1, Class LTB2, Class LTB3, Class LTB4, Class LTB5
and Class LTB6 Interests are entitled to receive interest at the Average
Rate.
(8) The Class B1X Certificates are entitled to receive on each Distribution
Date a specified portion of the interest payable on the Class LTB1
Interest.
(9) The Class B2X Certificates are entitled to receive on each Distribution
Date a specified portion of the interest payable on the Class LTB2
Interest.
(10) The Class LTR Interest is the sole class of residual interest in the
Lower Tier REMIC. It does not have a stated principal amount or a stated
interest rate. Ownership of the Class LTR Interest is evidenced by the
Class R Certificate.
The Lower Tier REMIC shall hold as assets all assets included in the
Trust Fund other than the uncertificated Lower Tier Interests, the Class 2-A3
Reserve Fund, the Class 2-A3 Certificate Insurance Policy, the Class 2-A3
Policy Payments Account, and the Class 2-A3 Rounding Account.
Distributions of interest and principal on each class of Lower Tier
Interest for any Distribution Date shall correspond to the interest and
principal distributions required to be made on the Corresponding Class of
Certificates on such Distribution Date. Realized Losses and Net Prepayment
Interest Shortfalls as of any Distribution Date shall be allocated among the
classes of Lower Tier Interests in the same manner that such items are
allocated among the Corresponding Classes of Certificates.
The following table sets forth the Class designation, Certificate
Interest Rate, initial Class Principal Amount and minimum denomination for
each Class of Certificates comprising the interests in the Trust Fund created
hereunder.
<TABLE>
<CAPTION>
Certificate Initial Class Principal
Class Designation Interest Rate Amount Minimum Denomination
- ----------------- ------------- ----------------------- --------------------
<S> <C> <C> <C>
Class 1-A1 7.60% $50,650,000.00 $ 25,000
Class 1-A2 (1) 75,600,000.00 $ 25,000
Class 1-A3 (2) (3) $ 2,000,000
Class 1-A4 8.00% 5,524,000.00 $ 25,000
Class 1-A5 9.00% (4) 25%
Class 1-A6 9.00% (5) 20%
Class 1-A7 7.85% 30,000,000.00 $ 25,000
Class 1-AP 0.00% 7,339,244.00 $ 25,000
Class 2-A1 7.50% 90,408,000.00 $ 25,000
Class 2-A2 7.50% 81,000,000.00 $ 25,000
Class 2-A3 7.75% 40,000,000.00 $ 1,000
Class 2-A4 0.00% 1,500,000.00 $ 25,000
Class 2-A5 0.00% 4,467,590.00 $ 25,000
Class 2-AP 0.00% 248,737.00 $ 25,000
Class 3-A 7.25% 40,210,858.00 $ 25,000
Class 3-AP 0.00% 1,116,141.00 $ 25,000
Class AX 8.00% (6) 30%
Class B1 (7) 12,626,000.00 $ 100,000
Class B1X (7) (8) 100%
Class B2 (7) 5,594,000.00 $ 100,000
Class B2X (7) (9) 100%
Class B3 (10) 3,036,000.00 $ 100,000
Class B4 (10) 1,918,000.00 $ 250,000
Class B5 (10) 800,000.00 $ 250,000
Class B6 (10) 1,600,699.12 $ 250,000
Class R 9.00% 100.00 $ 100
</TABLE>
- ---------------------------
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class 1-A2 Certificates is the per
annum rate equal to (a) 6.55%, with respect to the first Distribution
Date, and (b) thereafter, the lesser of (i) LIBOR plus 0.75% and (ii)
9.00%, subject to a minimum rate of 0.75%.
(2) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class 1-A3 Certificates is the per
annum rate equal to (a) 2.45%, with respect to the first Distribution
Date, and (b) thereafter, 8.25% minus LIBOR subject to a minimum rate of
0.00%.
(3) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class 1-A3 Certificates will equal the
Class Principal Amount of the Class 1-A2 Certificates immediately
preceding such Distribution Date.
(4) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class 1-A5 Certificates will equal the
product of (i) the fraction, the numerator of which is 9.00% minus the
weighted average (by Class Principal Amount immediately prior to such
Distribution Date) of the Certificate Interest Rates of the Class 1-A1
and Class 1-A4 Certificates, and the denominator of which is 9.00% and
(ii) the sum of the Class Principal Amounts of the Class 1-A1 and Class
1-A4 Certificates immediately preceding such Distribution Date.
(5) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class 1-A6 Certificates will equal the
product of (i) 12.7777777778% and (ii) the Class Principal Amount of the
Class 1-A7 Certificates immediately preceding such Distribution Date.
(6) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class AX Certificates will equal the sum
of the Component Notional Amounts of the AX(1) Component and AX(2)
Component. The initial Class Notional Amount of the Class AX Certificates
will be approximately $3,234,787.
(7) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B1, Class B1X, Class B2 and
Class B2X Certificates is the per annum rate equal to (a) 8.25%, with
respect to the first Distribution Date, and (b) thereafter, the lesser of
(i) the Average Rate for such Distribution Date and (ii) 8.25%.
(8) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class B1X Certificates will equal the
product of (i) the fraction, the numerator of which is the Average Rate
for such Distribution Date minus the Certificate Interest Rate for the
Class B1 Certificates for such date, and the denominator of which is the
Certificate Interest Rate for the Class B1 Certificates for such date and
(ii) the Class Principal Amount of the Class B1 Certificates immediately
preceding such Distribution Date.
(9) The Class Notional Amount with respect to any Distribution Date (and the
related Accrual Period) of the Class B2X Certificates will equal the
product of (i) the fraction, the numerator of which is the Average Rate
for such Distribution Date minus the Certificate Interest Rate for the
Class B2 Certificates for such date, and the denominator of which is the
Certificate Interest Rate for the Class B2 Certificates for such date and
(ii) the Class Principal Amount of the Class B2 Certificates immediately
preceding such Distribution Date.
(10) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B3, Class B4, Class B5 and
Class B6 Certificates will equal the Average Rate for such Distribution
Date.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $319,661,640.54 and as of the Closing Date the Underlying
Security had a Security Principal Balance of $134,027,728.58.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
Article I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that service or master service mortgage loans
of the same type and quality as such Mortgage Loan in the jurisdiction where
the related Mortgaged Property is located, to the extent applicable to the
Trustee or the Master Servicer or (y) as provided in the applicable Servicing
Agreement, to the extent applicable to the Servicer.
Account Property: All amounts and investments held from time to time in
the Securities Account (whether in the form of deposit accounts, physical
property, book-entry securities, uncertificated securities, securities
entitlements, investment property or otherwise), and all proceeds of the
foregoing.
Accountant: A person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accretion Directed Certificate: None.
Accretion Termination Date: The first Distribution Date following the
Credit Support Depletion Date.
Accrual Amount: As to any Class of Accrual Certificates and each
Distribution Date through the Credit Support Depletion Date, the sum of (x)
any amount of Accrued Certificate Interest allocable to such Class pursuant to
Section 5.02(a)(iii) on such Distribution Date and (y) any Interest Shortfall
allocable to such Class pursuant to Section 5.02(a)(iv) on such Distribution
Date. As to any Class of Accrual Certificates and each Distribution Date after
the Credit Support Depletion Date, zero.
Accrual Certificate: None.
Accrual Component: None.
Accrual Period: With respect to any Distribution Date and any Class of
Certificates (other than any Class of Principal Only Certificates and any
LIBOR Certificates), the one-month period beginning immediately following the
end of the preceding Accrual Period (or from the Cut-off Date, in the case of
the first Accrual Period) and ending on the last day of the month preceding
the month in which such Distribution Date occurs. With respect to any
Distribution Date and any Class of LIBOR Certificates, the period beginning on
the Distribution Date in the calendar month preceding the month in which the
related Distribution Date occurs (or from the Closing Date, in the case of the
first Accrual Period) and ending on the day immediately preceding the related
Distribution Date.
Accrued Certificate Interest: As to any Class of Certificates (other than
the Class AX Certificates and any Principal Only Certificates) and any
Component, and any Distribution Date, the product of the Certificate Interest
Rate for such Class of Certificates (or the Component Interest Rate for such
Component) and the Class Principal Amount (or Class Notional Amount) of such
Class of Certificates (or the Component Notional Amount of such Component)
immediately preceding such Distribution Date, as reduced by such Class's or
Component's share of the interest portion of any Relief Act Reduction, in each
case allocable among the Class A Certificates and, if applicable, the related
Component, of the related Certificate Group pro rata based on the Accrued
Certificate Interest otherwise distributable thereto, and allocable to the
Subordinate Certificates pro rata based on interest accrued on their
respective Apportioned Principal Balances. As to the Class AX Certificates and
any Distribution Date, Accrued Certificate Interest shall be the sum of
Accrued Certificate Interest on each Component thereof. Interest shall be
calculated for such Certificates and Components on the basis of a 360-day year
consisting of twelve 30-day months.
Act: As defined in Section 3.03(c).
Additional Collateral: None.
Adjustable Rate Mortgage Loan: None.
Advance: An advance of the aggregate of payments of principal and
interest (net of the Master Servicing Fee and the Servicing Fee) on one or
more Mortgage Loans that were due on the Due Date in the related Due Period
and not received as of the close of business on the related Determination
Date, required to be made by or on behalf of the Master Servicer and any
Servicer (or by the Trustee) pursuant to Section 5.04.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Class 2-A3 Certificate Insurance Premium: As to any
Distribution Date, the sum of (a) the Class 2-A3 Certificate Insurance Premium
for such Distribution Date and (b) the amount of any Class 2-A3 Certificate
Insurance Premium that was not distributed to the Class 2-A3 Certificate
Insurer on any prior Distribution Date.
Aggregate Master Servicing Compensation: As to any Distribution Date, the
sum of (x) the aggregate of the Master Servicing Fees payable to the Master
Servicer in respect of such Distribution Date and (y) all income and gain
realized from the investment of funds in the Collection Account during the
period from and including the Deposit Date in the calendar month immediately
preceding the month in which such Distribution Date occurs, to but excluding
the Deposit Date relating to such Distribution Date.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at any date of determination.
Aggregate Subordinate Percentage: With respect to any Distribution Date,
the sum of the Class Principal Amounts of the Subordinate Certificates
immediately prior to such date divided by the sum of the Non-AP Pool Balances
for all Mortgage Pools for the immediately preceding Distribution Date.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of a fraction, the numerator of which is the applicable Designated
Rate minus the Net Mortgage Rate of such Discount Mortgage Loan and the
denominator of which is the applicable Designated Rate. As to any Non-Discount
Mortgage Loan in any Mortgage Pool, 0.00%.
AP Principal Distribution Amount: For any Distribution Date and for each
Certificate Group, the sum of the following amounts:
(i) the applicable AP Percentage of the principal portion of each
Scheduled Payment on each Mortgage Loan in the related Mortgage Pool due
during the related Due Period;
(ii) the applicable AP Percentage of each of the following amounts:
(1) each Principal Prepayment collected on a Mortgage Loan in the related
Mortgage Pool during the applicable Prepayment Period, (2) each other
unscheduled collection, including Insurance Proceeds and Net Liquidation
Proceeds (other than with respect to any Mortgage Loan in the related
Mortgage Pool that was finally liquidated during the applicable
Prepayment Period), representing or allocable to recoveries of principal
of such Mortgage Loan in the related Mortgage Pool received during the
applicable Prepayment Period and (3) the principal portion of all
proceeds of the purchase of any Mortgage Loan in the related Mortgage
Pool (or, in the case of a permitted substitution, amounts representing a
principal adjustment) actually received by the Trustee with respect to
the applicable Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the applicable AP
Percentage of the related net Liquidation Proceeds allocable to
principal; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Apportioned Principal Balance: As to any Class of Subordinate
Certificates and any Distribution Date, the Class Principal Amount of such
Class immediately prior to such Distribution Date multiplied by a fraction,
the numerator of which is the applicable Group Subordinate Amount for such
date and the denominator of which is the sum of the Group Subordinate Amounts
for all Mortgage Pools for such date.
Appraised Value: With respect to any Mortgage Loan, the amount set forth
in an appraisal made in connection with the origination of such Mortgage Loan
as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the
same jurisdiction, if permitted by law; provided, however, that the Trustee
shall not be responsible for determining whether any such assignment is in
recordable form.
Aurora: Aurora Loan Services Inc. or its successor in interest, in its
capacity as a Servicer.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: As to each Mortgage Pool and on any
Distribution Date, the sum of the following amounts:
(i) the total amount of all cash received by the Master Servicer
through the Remittance Date applicable to each Servicer and deposited by
the Master Servicer by the Deposit Date for such Distribution Date on the
Mortgage Loans of such Mortgage Pool (including proceeds of any Insurance
Policy and any other credit support relating to such Mortgage Loans),
plus all Advances made by the Master Servicer or any Servicer (or the
Trustee) for such Distribution Date, any Compensating Interest Payment
for such date and Mortgage Pool and any amounts paid by any Servicer in
respect of Prepayment Interest Shortfalls in respect of the related
Mortgage Loans for such date, but not including:
(A) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(B) all Scheduled Payments of principal and interest collected
but due on a date subsequent to the related Due Period;
(C) all Principal Prepayments received or identified by the
applicable Servicer after the applicable Prepayment Period (together
with any interest payments received with such prepayments to the
extent that they represent the payment of interest accrued on the
related Mortgage Loans for the period subsequent to the applicable
Prepayment Period);
(D) any other unscheduled collection, including Net Liquidation
Proceeds and Insurance Proceeds, received by the Master Servicer
after the applicable Prepayment Period;
(E) all fees and amounts due or reimbursable to the Master
Servicer or any Servicer pursuant to the terms of this Agreement or
the applicable Servicing Agreement;
(F) any Prepayment Penalty Amounts;
(G) any Prepayment Interest Excess; and
(H) such portion of each payment in respect of interest
representing Retained Interest.
(ii) with respect to Pool 2, any Security Payments received on the
Underlying Security by the Trustee for the related Underlying
Distribution Date; and
(iii) any other payment made by the Master Servicer, any Servicer,
the Seller, the Depositor, or any other Person with respect to such
Distribution Date (including the Purchase Price with respect to any
Mortgage Loan repurchased by the Seller, the Depositor or any other
Person).
Average Rate: With respect to any Distribution Date, the weighted average
of the Designated Rates for all Mortgage Pools, weighted on the basis of the
Group Subordinate Amount for each Mortgage Pool.
Balloon Mortgage Loan: Any Mortgage Loan having an original term to
maturity that is shorter than its amortization schedule, and a final Scheduled
Payment that is disproportionately large in comparison to other Scheduled
Payments.
Balloon Payment: The final Scheduled Payment in respect of a Balloon
Mortgage Loan.
Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication
as a bankrupt or insolvent, the entry of an order for relief in a bankruptcy
or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator, dissolution, or termination, as the case may be, of
such Person pursuant to the provisions of either the United States Bankruptcy
Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: Not applicable.
Bankruptcy Loss Limit: Not applicable.
Bankruptcy Losses: Not applicable.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificates: Beneficial interests in Certificates designated
as "Book-Entry Certificates" in this Agreement, ownership and transfers of
which shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5,
Class 1-A6, Class 1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class
2-A4, Class 2-A5, Class 2-AP, Class 3-A, Class 3-AP, Class AX, Class B1, Class
B1X, Class B2, Class B2X and Class B3.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day
on which banking institutions in New York, New York or, if other than New
York, the city in which the Class 2-A3 Certificate Insurer is located or the
city in which the Corporate Trust Office of the Trustee is located, the State
of Minnesota, or the State of Colorado, or (iii) with respect to any
Remittance Date or any Servicer reporting date, the States specified in the
definition of "Business Day" in the applicable Servicing Agreement, are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates signed and countersigned by the
Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in accordance
with the provisions of Section 4.04.
Certificate Group: The Group 1 Certificates, Group 2 Certificates or the
Group 3 Certificates, as applicable.
Certificate Interest Rate: With respect to each Class of Certificates,
the applicable per annum rate specified or determined as provided in the
Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other than
a Notional Certificate, at the time of determination, the maximum specified
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth
on the face of such Certificate (plus, in the case of any Negative
Amortization Certificate, any Deferred Interest allocated thereto on previous
Distribution Dates, and plus, in the case of any Accrual Certificate, its
Percentage Interest of any related Accrual Amount for each previous
Distribution Date), less the amount of all principal distributions previously
made with respect to such Certificate, all Realized Losses allocated to such
Certificate, and, in the case of a Subordinate Certificate, any Subordinate
Certificate Writedown Amount allocated to such Certificate. For purposes of
Article V hereof, unless specifically provided to the contrary, Certificate
Principal Amounts shall be determined as of the close of business of the
immediately preceding Distribution Date, after giving effect to all
distributions made on such date. Notional Certificates are issued without
Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class 1-A7 Percentage: As to any Distribution Date, the lesser of (i)
100% and (ii) the percentage equivalent of the fraction, the numerator of
which is equal to the sum of (a) the Class Principal Amount of the Class 1-A7
Certificates immediately prior to such date and (b) $16,500,000, and the
denominator of which is equal to the Group 1 Non-AP Pool Balance for the
immediately preceding Distribution Date.
Class 1-A7 Prepayment Shift Percentage: As to any Distribution Date
occurring during the five years beginning on the first Distribution Date, 0%.
As to any Distribution Date occurring on or after the fifth anniversary of the
first Distribution Date, the following percentage for each applicable
Distribution Date: for any Distribution Date in the first year after such
fifth anniversary, 30%; for any Distribution Date in the second year
thereafter, 40%; for any Distribution Date in the third year thereafter, 60%;
for any Distribution Date in the fourth year thereafter, 80%; and for any
subsequent Distribution Date, 100%.
Class 1-A7 Priority Amount: As to any Distribution Date, an amount equal
to the lesser of (i) the sum of (x) the product of the Class 1-A7 Percentage
for such date, the Class 1-A7 Scheduled Principal Percentage for such date and
the Group 1 Scheduled Principal Amount for such date and (y) the product of
the Class 1-A7 Percentage for such date, the Class 1-A7 Prepayment Shift
Percentage for such date and the Group 1 Unscheduled Principal Amount for such
date, and (ii) the Class Principal Amount of the Class 1-A7 Certificates
immediately prior to such date.
Class 1-A7 Scheduled Principal Percentage: As to any Distribution Date
occurring during the five years beginning on the first Distribution Date, 0%.
As to any Distribution Date occurring on or after the fifth anniversary of the
first Distribution Date, 100%.
Class 2-A3 Certificate Insurance Policy: The Certificate Guaranty
Insurance Policy No. 31312 dated the Closing Date issued by the Class 2-A3
Certificate Insurer to the Trustee for the benefit of the Holders of the Class
2-A3 Certificates, a copy of which is attached as Exhibit M hereto.
Class 2-A3 Certificate Insurance Premium: With respect to any
Distribution Date and with respect to the Class 2-A3 Certificate Insurance
Policy, an amount equal to 1/12th of the product of (a) the Class Principal
Amount of the Class 2-A3 Certificates as of such Distribution Date (prior to
giving effect to any distribution thereon on such Distribution Date) and (b)
the Class 2-A3 Premium Percentage.
Class 2-A3 Certificate Insurer: MBIA Insurance Corporation, or any
successor thereto, as issuer of the Class 2-A3 Certificate Insurance Policy.
Class 2-A3 Certificate Insurer Default: The occurrence and continuance of
any of the following events:
(a) the Class 2-A3 Certificate Insurer shall have failed to make a
payment required to be made under the Class 2-A3 Certificate Insurance Policy
in accordance with its terms;
(b) the Class 2-A3 Certificate Insurer shall have (i) filed a petition or
commenced a case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii)
made a general assignment for the benefit of its creditors, or (iii) had an
order for relief entered against it under the United States Bankruptcy Code or
any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization that is final and nonappealable;
or
(c) a court of competent jurisdiction, the Office of the Commissioner of
Insurance of the State of New York or other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, agent or receiver for the Class 2-A3
Certificate Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Class 2-A3 Certificate Insurer (or the taking of possession of
all or any material portion of the property of the Class 2-A3 Certificate
Insurer).
Class 2-A3 Guaranteed Distributions: (a) With respect to any Distribution
Date, (i) the Accrued Certificate Interest for the Class 2-A3 Certificates for
such Distribution Date, including the amount of any Net Prepayment Interest
Shortfalls relating to prepayments and any Relief Act Reductions allocable to
the Class 2-A3 Certificates on such Distribution Date that are not covered by
the Class 2-A3 Reserve Fund and (ii) the amount of any Realized Loss allocated
to the Class 2-A3 Certificates on such Distribution Date and (b) for the Final
Scheduled Distribution Date, the Class Principal Amount of the Class 2-A3
Certificates to the extent unpaid on the Final Scheduled Distribution Date.
Class 2-A3 Policy Payments Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 5.07(c) in the name of the
Trustee for the benefit of the Class 2-A3 Certificateholders and designated
"U.S. Bank National Association, Class 2-A3 Policy Payments Account in trust
for registered holders of Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 2000-1, Class 2-A3." Funds in the Class 2-A3
Policy Payments Account shall be held in trust for the benefit of the Class
2-A3 Certificateholders for the uses and purposes set forth in this Agreement.
Class 2-A3 Premium Percentage: The meaning assigned to such term in the
Insurance Agreement.
Class 2-A3 Reserve Fund: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 with a depository
institution in the name of the Trustee for the benefit of the Class 2-A3
Certificateholders and designated "U.S. Bank National Association, Class 2-A3
Reserve Fund in trust for registered holders of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2000-1, Class 2-A3."
The Class 2-A3 Reserve Fund shall not be a part of any REMIC and, for all
federal and state income tax purposes, shall be beneficially owned by Lehman
Brothers Inc.
Class 2-A3 Rounding Account: The separate Eligible Account established
and maintained by the Trustee pursuant to Section 5.06(e) in the name of the
Trustee for the benefit of the Class 2-A3 Certificateholders and designated
"U.S. Bank National Association, Class 2-A3 Rounding Account in trust for
registered holders of Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 2000-1, Class 2-A3." Funds in the Rounding
Account shall be held in trust for the benefit of the Class 2-A3
Certificateholders for the uses and purposes set forth in this Agreement. The
Class 2-A3 Rounding Account shall not be a part of any REMIC and, for all
federal and state income tax purposes, shall be beneficially owned by Lehman
Brothers Inc.
Class A Certificate: Any Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4,
Class 1-A5, Class 1-A6, Class 1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class
2-A3, Class 2-A4, Class 2-A5, Class 2-AP, Class 3-A or Class 3-AP Certificate.
Class AP Deferred Amount: As to any Distribution Date on or prior to the
Credit Support Depletion Date, (i) with respect to each Class of the Class
1-AP, Class 2-AP and Class 3-AP Certificates, the aggregate of the applicable
AP Percentage of the principal portion of each Realized Loss on a Discount
Mortgage Loan in the related Mortgage Pool, and (ii) with respect to the Class
2-A5 Certificates, 3.3333333333% of the principal portion of each Realized
Loss in respect of the Underlying Security, to be allocated to such Class of
Certificates on such Distribution Date or previously allocated to such Class
of Certificates and not yet paid to the Holders of such Class of Certificates
pursuant to Section 5.02(a)(vi).
Class AP Certificate: Any Class 1-AP, Class 2-AP or Class 3-AP
Certificate.
Class B Certificate: Any Class B1, Class B1X, Class B2, Class B2X, Class
B3, Class B4, Class B5 or Class B6 Certificate.
Class LTR Interest: The sole residual interest in the Lower Tier REMIC.
Class Notional Amount: With respect to each Class of Notional
Certificates, the applicable class notional amount calculated as provided in
the Preliminary Statement hereto.
Class Principal Amount: With respect to each Class of Certificates other
than any Class of Notional Certificates, the aggregate of the Certificate
Principal Amounts of all Certificates of such Class at the date of
determination. With respect to each Class of Notional Certificates, zero.
Class Percentage: With respect to each Class of Subordinate Certificates,
for each Distribution Date, the percentage obtained by dividing the Class
Principal Amount of such Class immediately prior to such Distribution Date by
the aggregate Certificate Principal Amount of all Certificates immediately
prior to such date.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust
Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Closing Date: January 28, 2000.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: A separate account established and maintained by the
Master Servicer pursuant to Section 4.01.
Compensating Interest Payment: With respect to each Mortgage Pool and any
Distribution Date, an amount equal to the excess of (x) the aggregate of any
Prepayment Interest Shortfalls with respect to such Mortgage Pool and such
Distribution Date over (y) the aggregate of any amounts required to be paid by
any Servicer in respect of such shortfalls but not paid; provided that such
amount, to the extent payable by the Master Servicer, shall not exceed the
Aggregate Master Servicing Compensation that would be payable to the Master
Servicer in respect of such Mortgage Pool and such Distribution Date without
giving effect to any Compensating Interest Payment.
Component: Each of the components having the designations and initial
Component Notional Amounts as follows:
Initial Component
Designation Notional Amount
----------- ---------------
AX(1) Component $1,992,730
AX(2) Component $1,242,057
Component Certificate: Any Class AX Certificate.
Component Interest Rate: None.
Component Notional Amount: With respect to any Distribution Date and the
AX(1) Component, the product of (i) the fraction, the numerator of which is
the amount by which the weighted average (by Scheduled Principal Balance) of
the Net Mortgage Rates of the Pool 1 AX Loans exceeds 9.00%, and the
denominator of which 8.00%, and (ii) the aggregate Scheduled Principal Balance
of the Pool 1 AX Loans as of the first day of the related Accrual Period; with
respect to any Distribution Date and the AX(1) Component, the product of (i)
the fraction, the numerator of which is the amount by which the weighted
average (by Scheduled Principal Balance) of the Net Mortgage Rates of the Pool
2 AX Loans exceeds 7.50%, and the denominator of which 8.00%, and (ii) the
aggregate Scheduled Principal Balance of the Pool 2 AX Loans as of the first
day of the related Accrual Period.
Component Principal Amount: Not applicable.
Control: The meaning specified in Section 8-106 of the UCC.
Conventional Loan: A Mortgage Loan that is not insured by the United
States Federal Housing Administration or guaranteed by the United States
Veterans Administration.
Converted Mortgage Loan: None.
Convertible Mortgage Loan: None.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Loan Documents: As to any Cooperative Loan, (i) the
Cooperative Shares, together with a stock power in blank; (ii) the original
executed Security Agreement and the assignment of the Security Agreement
endorsed in blank; (iii) the original executed Proprietary Lease and the
assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon,
which has been filed in all places required to perfect the security interest
in the Cooperative Shares and the Proprietary Lease; and (vi) executed UCC-3
financing statements (or copies thereof) or other appropriate UCC financing
statements required by state law, evidencing a complete and unbroken line from
the mortgagee to the Trustee with evidence of recording thereon (or in a form
suitable for recordation).
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
Corresponding Class: With respect to any class of Lower Tier Interests,
the Class of Certificates or Component so designated in the Preliminary
Statement hereto. With respect to any Class of Certificates or Component, the
class or classes of Lower Tier Interests so designated in the Preliminary
Statement hereto.
Corresponding Component: None.
Credit Score: With respect to any Mortgage Loan, a numerical assessment
of default risk with respect to the Mortgagor under such Mortgage Loan,
determined on the basis of a methodology developed by Fair, Isaac & Co., Inc.
Credit Support Depletion Date: The Distribution Date on which, giving
effect to all distributions on such date, the aggregate Certificate Principal
Amount of the Subordinate Certificates is reduced to zero.
Credit Support Percentage: As to any Class of Subordinate Certificates
and any Distribution Date, the sum of the Class Percentages of all Classes of
Certificates that rank lower in priority than such Class.
Custodial Agreement: Each custodial agreement attached as Exhibit K
hereto, and any custodial agreement subsequently executed by the Trustee
substantially in the form thereof.
Custodian: Each custodian appointed by the Trustee pursuant to a
Custodial Agreement, and any successor thereto.
Cut-off Date: January 1, 2000.
Cut-off Date Aggregate Principal Balance: With respect to the Mortgage
Loans in the Trust Fund on the Closing Date, the Aggregate Principal Balance
for all such Mortgage Loans as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction of
the Scheduled Payment that the related Mortgagor is obligated to pay on any
Due Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.
Deceased Holder: With respect to a Holder of a Redemption Certificate, as
defined in Section 5.06(b).
Deferred Interest: With respect to any Class of Negative Amortization
Certificates and any Distribution Date, the lesser of (x) the applicable
Interest Distribution Amount for such date (without giving effect to any
Deferred Interest) and (y) the aggregate Mortgage Loan Negative Amortization,
if any, for the related Due Period.
Deficiency Amount: The meaning assigned to such term in the Class 2-A3
Certificate Insurance Policy.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, which
valuation results from a proceeding under Bankruptcy law or any similar
proceeding.
Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Deposit Date: With respect to each Distribution Date, the Business Day
immediately preceding such Distribution Date.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation having its principal place of business in New York, or its
successors in interest.
Designated Rate: With respect to Pool 1, 9.00% per annum; with respect to
Pool 2, 7.50% per annum; and with respect to Pool 3, 7.25% per annum.
Determination Date: With respect to each Distribution Date, the day of
the latest Remittance Date immediately preceding such Distribution Date.
Discount Mortgage Loan: With respect to Pool 1, any Mortgage Loan with a
Net Mortgage Rate less than 9.00% per annum; with respect to Pool 2, any
Mortgage Loan with a Net Mortgage Rate less than 7.50% per annum; and with
respect to Pool 3, any Mortgage Loan with a Net Mortgage Rate less than 7.25%
per annum.
Disqualified Organization: Either (i) the United States, (ii) any state
or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative
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, (vii) any organization described in section
1381(a)(2)(C) of the Code, (viii) any "electing large partnership" described
in section 775 of the Code, or (ix) any other entity designated as a
Disqualified Organization by relevant legislation amending the REMIC
Provisions and in effect at or proposed to be effective as of the time of the
determination. In addition, a corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month, or, if such 25th day is
not a Business Day, the next succeeding Business Day commencing in February
2000.
Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period commencing
on the second day of the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which
such Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an
account at a depository institution or trust company whose commercial paper or
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trustee or any other federal or state chartered
depository institution or trust company, acting in its fiduciary capacity, in
a manner acceptable to the Trustee and the Rating Agencies. Eligible Accounts
may bear interest.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America
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 ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories and the Trustee or any agent of the Trustee, acting in its
respective commercial capacity) incorporated or organized under the laws
of the United States of America or any state thereof and subject to
supervision and examination by federal or state banking authorities, so
long as at the time of investment or the contractual commitment providing
for such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the
case of a depository institution or trust company which is the principal
subsidiary of a holding company, the commercial paper or other short-term
debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in
its highest short-term rating category or one of its two highest
long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by each Rating Agency in its highest short-term rating
category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America
or any state thereof which have a credit rating from each Rating Agency,
at the time of investment or the contractual commitment providing for
such investment, at least equal to one of the two highest short-term
credit ratings of each Rating Agency; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to
the extent that investment therein will cause the then outstanding
principal amount of securities issued by such corporation and held as
part of the Trust Fund to exceed 20% of the sum of the Aggregate
Principal Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such
securities will not be Eligible Investments if they are published as
being under review with negative implications from either Rating Agency;
(v) commercial paper (including both non interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof)
rated by each Rating Agency in its highest short-term ratings;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the
United States of America or its agencies or instrumentalities (which
obligations are backed by the full faith and credit of the United States
of America) held by a custodian in safekeeping on behalf of the holders
of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or
investment, (A) rated in the highest rating category by each Rating
Agency or (B) that would not adversely affect the then current rating by
either Rating Agency of any of the Certificates (in the case of the Class
2-A3 Certificates, determined without regard to the Class 2-A3
Certificate Insurance Policy). Such investments in this subsection (viii)
may include money market mutual funds, including, without limitation, the
VISTA U.S. Government Money Market Fund or any other fund for which U.S.
Bank National Association (the "Bank"), the Trustee or an affiliate
thereof serves as an investment advisor, administrator, shareholder
servicing agent, and/or custodian or subcustodian, notwithstanding that
(i) the Bank or an affiliate thereof charges and collects fees and
expenses from such funds for services rendered, (ii) the Bank or an
affiliate thereof charges and collects fees and expenses for services
rendered pursuant to this Agreement, and (iii) services performed for
such funds and pursuant to this Agreement may converge at any time. The
Trustee specifically authorizes the Bank or an affiliate thereof to
charge and collect from the Trustee such fees as are collected from all
investors in such funds for services rendered to such funds (but not to
exceed investment earnings thereon);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the
UCC.
Entitlement Order: The meaning specified in Section 8-102(a)(8) of the
UCC (i.e., generally, an order directing the transfer or redemption of any
Financial Asset).
ERISA-Restricted Certificate: Any Subordinate Certificate.
Escrow Account: Any account established and maintained by the applicable
Servicer pursuant to the applicable Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 6.14(a).
Excess Loss: Not applicable.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Scheduled Distribution Date: In the case of each Class of
Certificates other than the Class 3-A and Class 3-AP Certificates, February
25, 2030, and in the case of the Class 3-A and Class 3-AP Certificates,
February 25, 2015.
Financial Asset: The meaning specified in Section 8-102(a)(9) of the UCC.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
Fitch: Fitch IBCA, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Fraud Loss: Not applicable.
Fraud Loss Limit: Not applicable.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4,
Class 1-A5, Class 1-A6, Class 1-A7, Class 1-AP, Class R Certificate or the
AX(1) Component.
Group 1 Scheduled Principal Amount: With respect to any Distribution Date
and each Pool 1 Mortgage Loan, the amount described in clause (i)(a) (without
application of the related Senior Percentage) of the definition of Senior
Principal Distribution Amount for Group 1.
Group 1 Unscheduled Principal Amount: With respect to any Distribution
Date and each Pool 1 Mortgage Loan, the sum of the amounts described in
clauses (ii) and (iii) (without application of the related Senior Prepayment
Percentage) of the definition of Senior Principal Distribution Amount
hereunder for Group 1.
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: Any Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4,
Class 2-A5, Class 2-AP Certificate or the AX(2) Component.
Group 3: All of the Group 3 Certificates.
Group 3 Certificate: Any Class 3-A or Class 3-AP Certificate.
Group Subordinate Amount: As to any Mortgage Pool and any Distribution
Date, the excess of (i) the Non-AP Pool Balance of such Mortgage Pool for the
immediately preceding Distribution Date over (ii) the sum of the aggregate of
the Certificate Principal Amounts of the Non-AP Senior Certificates of the
related Certificate Group immediately prior to the related Distribution Date
less, with respect to Group 2, 96.6666666667% of the Security Principal
Balance of the Underlying Security immediately prior to the related Underlying
Distribution Date.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor, the
Trustee, the Master Servicer, any Servicer or any Affiliate thereof shall be
deemed not to be outstanding in determining whether the requisite percentage
necessary to effect any such consent has been obtained, except that, in
determining whether the Trustee shall be protected in relying upon any such
consent, only Certificates which a Responsible Officer of the Trustee knows to
be so owned shall be disregarded. The Trustee may request and conclusively
rely on certifications by the Depositor, the Master Servicer and any Servicer
in determining whether any Certificates are registered to an Affiliate of the
Depositor, the Master Servicer or such Servicer.
Impac: Impac Funding Corporation or its successor in interest, in its
capacity as a Servicer.
Individual Redemption Certificate: A Redemption Certificate with a $1,000
Certificate Principal Amount.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and
Exchange Commission's Regulation S-X. When used with respect to any other
Person, a Person who (a) is in fact independent of another specified Person
and any Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
and (c) is not connected with such other Person or any Affiliate of such other
Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Insurance Agreement: The Insurance Agreement dated as of January 1, 2000,
among the Depositor, the Seller, the Trustee and the Class 2-A3 Certificate
Insurer, a copy of which is attached as Exhibit L hereto.
Insurance Policy: Any Primary Mortgage Insurance Policy and any standard
hazard insurance policy, earthquake insurance policy or title insurance policy
relating to the Mortgage Loans or the Mortgaged Properties, to be in effect as
of the Closing Date or thereafter during the term of this Agreement.
Initial LIBOR Rate: 5.80%.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy, other than amounts (i) to cover expenses incurred by or on behalf of
the Servicer in connection with procuring such proceeds, (ii) to be applied to
restoration or repair of the related Mortgaged Property or (iii) required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note.
Insured Payment: The meaning assigned to such term in the Class 2-A3
Certificate Insurance Policy.
Interest Distribution Amount: Not applicable.
Interest Shortfall: With respect to any Class of Certificates (other than
a Principal Only Certificate) and any Distribution Date, any Accrued
Certificate Interest not distributed (or added to principal) with respect to
any previous Distribution Date, other than any Net Prepayment Interest
Shortfalls.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: February 25, 2033.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
Inc., or any successor in interest.
LIBOR: With respect to the first Accrual Period, the Initial LIBOR Rate.
With respect to each subsequent Accrual Period, the per annum rate determined
pursuant to Section 4.05 on the basis of London interbank offered rate
quotations for one-month Eurodollar deposits, as such quotations may appear on
the display designated as page "LIUS01M" on the Bloomberg Financial Markets
Commodities News (or such other page as may replace such page on that service
for the purpose of displaying London interbank offered quotations of major
banks).
LIBOR Certificate: Any Class 1-A1 or Class 1-A3 Certificate.
LIBOR Component: None.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period with respect to any LIBOR
Certificates other than the first such Accrual Period.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer or the applicable Servicer has determined that all amounts
that it expects to recover on behalf of the Trust Fund from or on account of
such Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Master Servicer
or a Servicer in connection with the liquidation of any defaulted Mortgage
Loan and are not recoverable under the applicable Primary Mortgage Insurance
Policy, including, without limitation, foreclosure and rehabilitation
expenses, legal expenses and unreimbursed amounts expended pursuant to
Sections 9.06, 9.16 or 9.22.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan, including any amounts remaining in the
related Escrow Account.
Living Holder: Any Holder of a Redemption Certificate other than a
Deceased Holder.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of the
principal balance of such Mortgage Loan at origination, or such other date as
is specified, to the Original Value thereof.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Lower Tier Interest: Any one of the classes of lower tier interests
described in the Preliminary Statement hereto.
Lower Tier Interest Rate: As to each Lower Tier Interest, the applicable
interest rate, if any, as described in the Preliminary Statement hereto.
Lower Tier REMIC: One of the two separate REMICs as described in the
Preliminary Statement hereto.
Maintenance: With respect to any Cooperative Unit, the rent or fee paid
by the Mortgagor to the Cooperative Corporation pursuant to the Proprietary
Lease.
Master Servicer: Aurora Loan Services Inc., or any successor in interest,
or if any successor master servicer shall be appointed as herein provided,
then such successor master servicer.
Master Servicing Fee: As to any Distribution Date and each Mortgage Loan,
an amount equal to the product of the Master Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the
related Due Period. The Master Servicing Fee for any Mortgage Loan shall be
payable in respect of any Distribution Date solely from the interest portion
of the Scheduled Payment or other payment or recovery with respect to such
Mortgage Loan.
Master Servicing Fee Rate: 0.02% per annum.
Material Defect: As defined in Section 2.02(c) hereof.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
Corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of
MERS, as agent for the holder from time to time of the Mortgage Note.
Moody's: Moody's Investors Service, Inc., or any successor in interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan required to be delivered to the
Trustee or a Custodian pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold,
assigned to or deposited with the Trustee pursuant to Section 2.01 or Section
2.05, including without limitation, each Mortgage Loan listed on the Mortgage
Loan Schedule, as amended from time to time.
Mortgage Loan Sale Agreement: The agreement, dated as of January 1, 2000,
for the sale of the Mortgage Loans by Lehman Capital to the Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended from time
to time pursuant to Section 2.02.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Any of Pool 1, Pool 2 or Pool 3.
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan.
Mortgaged Property: Either of (x) the fee simple interest in real
property, together with improvements thereto including any exterior
improvements to be completed within 120 days of disbursement of the related
Mortgage Loan proceeds, or (y) in the case of a Cooperative Loan, the related
Cooperative Shares and Proprietary Lease, securing the indebtedness of the
Mortgagor under the related Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization Certificate: None.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds net of unreimbursed expenses incurred in
connection with liquidation or foreclosure and unreimbursed Advances,
Servicing Advances, Servicing Fees and Retained Interest, if any, received and
retained in connection with the liquidation of such Mortgage Loan.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage Rate
thereof reduced by the sum of the applicable Servicing Fee Rate, the Master
Servicing Fee Rate, the Trustee Fee Rate, the Retained Interest Rate, if any,
and, if applicable, any premium rate on the related Pool PMI Policy.
Net Prepayment Interest Shortfall: With respect to each Mortgage Pool and
any Distribution Date, the excess, if any, of any Prepayment Interest
Shortfalls with respect to the Mortgage Loans in such Mortgage Pool for such
date over the sum of any amounts paid by the Servicers with respect to such
shortfalls and any amount that is required to be paid by the Master Servicer
in respect of such shortfalls pursuant to this Agreement.
Non-AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of the fraction, the numerator of which is the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is the applicable
Designated Rate. As to any Non-Discount Mortgage Loan in any Mortgage Pool,
100%.
Non-AP Pool Balance: As to each Mortgage Pool and any Distribution Date,
the sum of the applicable Non-AP Percentage of the Scheduled Principal Balance
of each Mortgage Loan included in such Mortgage Pool.
Non-AP Senior Certificate: Any Class 1-A1, Class 1-A2, Class 1-A3, Class
1-A4, Class 1-A5, Class 1-A6, Class 1-A7, Class 2-A1, Class 2-A2, Class 2-A3,
Class 2-A4, Class 3-A, Class AX or Class R Certificate.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-Discount Mortgage Loan: With respect to Pool 1, any Mortgage Loan
with a Net Mortgage Rate equal to or greater than 9.00% per annum; with
respect to Pool 2, any Mortgage Loan with a Net Mortgage Rate equal to or
greater than 7.50% per annum; and with respect to Pool 3, any Mortgage Loan
with a Net Mortgage Rate equal to or greater than 7.25% per annum.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Non-U.S. Person: Any person other than (i) a citizen or resident of the
United States; (ii) a corporation (or entity treated as a corporation for tax
purposes) created or organized in the United States or under the laws of the
United States or of any state thereof, including, for this purpose, the
District of Columbia; (iii) a partnership (or entity treated as a partnership
for tax purposes) organized in the United States or under the laws of the
United States or of any state thereof, including, for this purpose, the
District of Columbia (unless provided otherwise by future Treasury
regulations); (iv) an estate whose income is includible in gross income for
United States income tax purposes regardless of its source; or (v) 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 U.S. Persons have authority to
control all substantial decisions of the trust. Notwithstanding the last
clause of the preceding sentence, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
U.S. Persons prior to such date, may elect to continue to be U.S. Persons.
Notice of Nonpayment: The notice to be delivered by the Trustee to the
Class 2-A3 Certificate Insurer with respect to any Distribution Date pursuant
to Section 5.07(a), which shall be in the form attached to the Class 2-A3
Certificate Insurance Policy.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class
Notional Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: Any Class 1-A3, Class 1-A5, Class 1-A6, Class AX,
Class B1X or Class B2X Certificate.
Notional Component: None.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the Board,
any Vice Chairman, the President, any Vice President or any Assistant Vice
President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, and who may be in-house or outside
counsel to the Depositor, the Master Servicer or a Servicer but which must be
Independent outside counsel with respect to any such opinion of counsel
concerning the transfer of any Residual Certificate or concerning certain
matters with respect to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the taxation, or the federal income tax status, of
each REMIC.
Original Credit Support Percentage: With respect to each Class of
Subordinate Certificates, the Credit Support Percentage for such Class of
Certificates on the Closing Date.
Original Group Subordinate Amount: As to any Mortgage Pool, the Group
Subordinate Amount for such Mortgage Pool on the Closing Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate and the related
Class, such Certificate's percentage interest in the undivided beneficial
ownership interest in the Trust Fund evidenced by all Certificates of the same
Class as such Certificate. With respect to any Certificate other than a
Notional Certificate, the Percentage Interest evidenced thereby shall equal
the initial Certificate Principal Amount thereof divided by the initial Class
Principal Amount of all Certificates of the same Class. With respect to any
Notional Certificate, the Percentage Interest evidenced thereby shall be as
specified on the face thereof.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Placement Agent: Lehman Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth in
29 C.F.R. 2510.3-101.
Pool 1: The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool 1.
Pool 1 AX Loans: The Pool 1 Mortgage Loans identified on Schedule D
hereto.
Pool 1 Mortgage Loan: Any Mortgage Loan in Pool 1.
Pool 2: The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool 2 and the Underlying Security.
Pool 2 AX Loans: The Pool 2 Mortgage Loans identified on Schedule E
hereto.
Pool 2 Mortgage Loan: Any Mortgage Loan in Pool 2.
Pool 3: The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool 3.
Pool 3 Mortgage Loan: Any Mortgage Loan in Pool 3.
Pool PMI Policy: An insurance policy issued by a pool insurer on a pool
of Mortgage Loans, including certain of the Mortgage Loans.
Preference Amount: The meaning assigned to such term in the Class 2-A3
Certificate Insurance Policy.
Prepayment Interest Excess: With respect to any Principal Prepayment in
full received on Mortgage Loans serviced by Aurora from the first day through
the sixteenth day of any month, all amounts paid in respect of interest at the
applicable Net Mortgage Rate on such Principal Prepayment.
Prepayment Interest Shortfall: With respect to any Distribution Date and
(x) any Principal Prepayment in part and, with respect to Mortgage Loans
serviced by Impac, any Principal Prepayment in full (in each case, other than
any such prepayment received on the first of the month) and (y) any Principal
Prepayment in full with respect to Mortgage Loans serviced by Aurora received
on or after the seventeenth day of the month immediately preceding the month
of such Distribution Date, but on or before the last day of the month
immediately preceding the month of such Distribution Date, the difference
between (i) one full month's interest at the applicable Mortgage Rate (giving
effect to any applicable Relief Act Reduction), as reduced by the Master
Servicing Fee Rate, the applicable Servicing Fee Rate and the Retained
Interest Rate, on the outstanding principal balance of such Mortgage Loan
immediately prior to such prepayment and (ii) the amount of interest actually
received with respect to such Mortgage Loan in connection with such Principal
Prepayment.
Prepayment Penalty Amounts: With respect to any Distribution Date, all
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Distribution Date and any
Principal Prepayment in part and, with respect to Mortgage Loans serviced by
Impac, any Principal Prepayment in full (including any liquidation), the
period from the second day of the month immediately preceding the month of
such Distribution Date to the first day of the month of such Distribution
Date. With respect to any Distribution Date and a Principal Prepayment in full
(including any liquidation) with respect to Mortgage Loans serviced by Aurora,
the period from the seventeenth day of the month immediately preceding the
month of such Distribution Date to the sixteenth day of the month of such
Distribution Date.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any,
on an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedules: Not applicable.
Principal Only Certificate: Any Class 1-AP, Class 2-A4, Class 2-A5, Class
2-AP or Class 3-AP Certificate.
Principal Prepayment: Any Mortgagor payment of principal (other than a
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled
Due Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note or the applicable Servicing
Agreement.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated January 21, 2000, together
with the accompanying prospectus dated January 15, 1999, relating to the Class
1-A1, Class 1-A2, Class 1-A3, Class 1-A4, Class 1-A5, Class 1-A6, Class 1-A7,
Class 1-AP, Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4, Class 2-A5, Class
2-AP, Class 3-A, Class 3-AP, Class AX, Class B1, Class B1X, Class B2, Class
B2X, Class B3 and Class R Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan
pursuant to this Agreement, an amount equal to the sum of (a) 100% of the
unpaid principal balance of such Mortgage Loan, (b) accrued interest thereon
at the Mortgage Rate, from the date as to which interest was last paid to (but
not including) the Due Date immediately preceding the related Distribution
Date and (c) any unreimbursed Servicing Advances with respect to such Mortgage
Loan. The Class 2-A3 Certificate Insurer shall be reimbursed from the Purchase
Price for any unpaid Reimbursement Amount due to the Class 2-A3 Certificate
Insurer with respect to such repurchased Mortgage Loan. The Master Servicer or
the applicable Servicer (or the Trustee, if applicable) shall be reimbursed
from the Purchase Price for any Mortgage Loan or related REO Property for any
Advances made with respect to such Mortgage Loan that are reimbursable to the
Master Servicer or such Servicer under this Agreement or the related Servicing
Agreement, as well as any unreimbursed Servicing Advances and accrued and
unpaid Master Servicing Fees or Servicing Fees, as applicable.
QIB: As defined in Section 3.03(c).
Qualified GIC: A guaranteed investment contract or surety bond providing
for the investment of funds in the Collection Account or the Certificate
Account and insuring a minimum, fixed or floating rate of return on
investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two highest
rating categories or, if such insurance company has no long-term debt, whose
claims paying ability is rated by each Rating Agency in one of its two highest
rating categories, and whose short-term debt is rated by each Rating Agency in
its highest rating category;
(b) provide that the Trustee may exercise all of the rights under
such contract or surety bond without the necessity of taking any action by any
other Person;
(c) provide that if at any time the then current credit standing of
the obligor under such guaranteed investment contract is such that continued
investment pursuant to such contract of funds would result in a downgrading of
any rating of the Certificates (which in the case of the Class 2-A3
Certificates is determined without regard to the Class 2-A3 Certificate
Insurance Policy), the Trustee shall terminate such contract without penalty
and be entitled to the return of all funds previously invested thereunder,
together with accrued interest thereon at the interest rate provided under
such contract to the date of delivery of such funds to the Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder; and
(e) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Collection Account or the Certificate
Account, as the case may be, not later than the Business Day prior to any
Distribution Date.
Qualified Insurer: An insurance company duly qualified as such under the
laws of the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability
is rated by each Rating Agency in its highest rating category or whose
selection as an insurer will not adversely affect the rating of the
Certificates (which in the case of the Class 2-A3 Certificates is determined
without regard to the Class 2-A3 Certificate Insurance Policy).
Qualifying Substitute Mortgage Loan: In the case of a Mortgage Loan
substituted for a Deleted Mortgage Loan, a Mortgage Loan that, on the date of
substitution, (i) has a Scheduled Principal Balance (together with that of any
other mortgage loan substituted for the same Deleted Mortgage Loan) as of the
Due Date in the month in which such substitution occurs not in excess of the
Scheduled Principal Balance of the related Deleted Mortgage Loan, provided,
however, that, to the extent that the Scheduled Principal Balance of such
Mortgage Loan is less than the Scheduled Principal Balance of the related
Deleted Mortgage Loan, then such differential in principal amount, together
with interest thereon at the applicable Mortgage Rate net of the Master
Servicing Fee and the applicable Servicing Fee from the date as to which
interest was last paid through the end of the Due Period in which such
substitution occurs, shall be paid by the party effecting such substitution to
the Trustee for deposit into the Certificate Account, and shall be treated as
a Principal Prepayment hereunder; (ii) has a Net Mortgage Rate not lower than
the Net Mortgage Rate of the related Deleted Mortgage Loan; (iii) has a
remaining stated term to maturity not longer than, and not more than one year
shorter than, the remaining term to stated maturity of the related Deleted
Mortgage Loan; (iv) (A) has a Loan-to-Value Ratio as of the date of such
substitution of not greater than 80%, provided, however, that if the related
Deleted Mortgage Loan has a Loan-to-Value Ratio of greater than 80%, then the
Loan-to-Value Ratio of such substitute Mortgage Loan may be greater than 80%
but shall not be greater than the Loan-to-Value Ratio of the related Deleted
Mortgage Loan and (B) the addition of such substitute Mortgage Loan does not
increase the weighted average Loan-to-Value Ratio of the related Mortgage Pool
by more than 5%; (v) will comply with all of the representations and
warranties relating to Mortgage Loans set forth herein, as of the date as of
which such substitution occurs; (vi) is not a Cooperative Loan unless the
related Deleted Mortgage Loan was a Cooperative Loan; (vii) if applicable, has
the same index as and a margin not less than that of the related Deleted
Mortgage Loan; (viii) has not been delinquent for a period of more than 30
days more than once in the twelve months immediately preceding such date of
substitution; (ix) is covered by a Primary Mortgage Insurance Policy if the
related Deleted Mortgage Loan is so covered, and the Loan-to-Value Ratio of
such Mortgage Loan is greater than 80%; and (x) has a Credit Score not greater
than 20 points lower than the Credit Score of the related Deleted Mortgage
Loan, provided, however, that if the Deleted Mortgage Loan does not have a
Credit Score, then such substitute Mortgage Loan shall have a Credit Score
equal to or greater than 700. In the event that either one mortgage loan is
substituted for more than one Deleted Mortgage Loan or more than one mortgage
loan is substituted for one or more Deleted Mortgage Loans, then (a) the
Scheduled Principal Balance referred to in clause (i) above shall be
determined such that the aggregate Scheduled Principal Balance of all such
substitute Mortgage Loans shall not exceed the aggregate Scheduled Principal
Balance of all Deleted Mortgage Loans and (b) each of (1) the rate referred to
in clause (ii) above, (2) the remaining term to stated maturity referred to in
clause (iii) above, (3) the Loan-to-Value Ratio referred to in clause (iv)
above and (4) the Credit Score referred to in clause (x) above shall be
determined on a weighted average basis, provided that the final scheduled
maturity date of any Qualifying Substitute Mortgage Loan shall not exceed the
Final Scheduled Distribution Date of any Class of Certificates. Whenever a
Qualifying Substitute Mortgage Loan is substituted for a Deleted Mortgage Loan
pursuant to this Agreement, the party effecting such substitution shall
certify such qualification in writing to the Trustee.
Rating Agency: Each of DCR and Moody's.
Realized Loss: (a) with respect to each Liquidated Mortgage Loan, an
amount equal to (i) the unpaid principal balance of such Mortgage Loan as of
the date of liquidation, plus (ii) interest at the applicable Net Mortgage
Rate from the date as to which interest was last paid up to the last day of
the month of such liquidation, minus (iii) Liquidation Proceeds received, net
of amounts that are reimbursable to the Master Servicer or any Servicer with
respect to such Mortgage Loan (other than Advances of principal and interest)
including expenses of liquidation, (b) with respect to each Mortgage Loan that
has become the subject of a Deficient Valuation, the difference between the
unpaid principal balance of such Mortgage Loan immediately prior to such
Deficient Valuation and the unpaid principal balance of such Mortgage Loan as
reduced by the Deficient Valuation, and (c) with respect to the Underlying
Security, any "Realized Loss" (as such term is defined in the Underlying
Agreement) of interest or principal allocated thereto. In determining whether
a Realized Loss on a Liquidated Mortgage Loan is a Realized Loss of interest
or principal, Liquidation Proceeds shall be allocated, first, to payment of
expenses related to such Liquidated Mortgage Loan, then to accrued unpaid
interest and finally to reduce the principal balance of the Mortgage Loan.
Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the related Cooperative Corporation and the originator of such
Mortgage Loan to establish the rights of such originator in the related
Cooperative Property.
Record Date: With respect to any Distribution Date and each Class of
Certificates other than any LIBOR Certificates, the close of business on the
last Business Day of the month immediately preceding the month in which such
Distribution Date occurs; with respect to any Distribution Date and any LIBOR
Certificates, the day immediately preceding the related Distribution Date.
Redemption Certificate: Any Class 2-A3 Certificate.
Reference Banks: As defined in Section 4.05.
Reimbursement Amount: As defined in Section 5.02(a)(vii).
Relevant UCC: The Uniform Commercial Code as in effect in the applicable
jurisdiction.
Relief Act Reduction: With respect to any Mortgage Loan as to which there
has been a reduction in the amount of interest collectible thereon as a result
of application of the Solders' and Sailors' Civil Relief Act of 1940, as
amended, any amount by which interest collectible on such Mortgage Loan for
the Due Date in the related Due Period is less than interest accrued thereon
for the applicable one-month period at the Mortgage Rate without giving effect
to such reduction.
REMIC: Each of the Lower Tier REMIC and the Upper Tier REMIC, as
described in the Preliminary Statement hereto.
REMIC Provisions: The provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at sections 860A
through 86OG of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations, including proposed regulations and rulings, and
administrative pronouncements promulgated thereunder, as the foregoing may be
in effect from time to time.
Remittance Date: The day in each month on which each Servicer is required
to remit payments to the account maintained by the Master Servicer, as
specified in the related Servicing Agreement, which in the case of Aurora is
the 18th day of each month (or if such 18th day is not a Business Day, the
next succeeding Business Day) and, in the case of Impac is the 19th day of
each month (or if such 19th day is not a Business Day, the immediately
preceding Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the
REMIC Provisions.
Reserve Interest Rate: As defined in Section 4.05.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary,
the Treasurer, or any assistant treasurer, working in its corporate trust
department and having direct responsibility for the administration of this
Agreement.
Restricted Certificate: Any Class B4, Class B5 or Class B6 Certificate.
Retained Interest: Interest in respect of each Pool 1 Mortgage Loan other
than the Pool 1AX Loans, each Pool 2 Mortgage Loan other than the Pool 2AX
Loans and each Pool 3 Mortgage Loan retained by the Retained Interest Holder
at the Retained Interest Rate.
Retained Interest Holder: The Depositor or any successor in interest by
assignment or otherwise.
Retained Interest Rate: With respect to each Pool 1 Mortgage Loan other
than the Pool 1AX Loans, each Pool 2 Mortgage Loan other than the Pool 2AX
Loan and each Pool 3 Mortgage Loan, the excess of the Mortgage Rate of such
Mortgage Loan over the applicable Trust Rate.
Rounding Account: The Class 2-A3 Rounding Account.
S&P: Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., or any successor in interest.
Scheduled Amount: Not applicable.
Scheduled Certificate: None.
Scheduled Component: None.
Scheduled Payment: Each scheduled payment of principal and interest (or
of interest only, if applicable) to be paid by the Mortgagor on a Mortgage
Loan, as reduced (except where otherwise specified herein) by the amount of
any related Debt Service Reduction (excluding all amounts of principal and
interest that were due on or before the Cut-off Date whenever received) and,
in the case of an REO Property, an amount equivalent to the Scheduled Payment
that would have been due on the related Mortgage Loan if such Mortgage Loan
had remained in existence. In the case of any bi-weekly payment Mortgage Loan,
all payments due on such Mortgage Loan during any Due Period shall be deemed
collectively to constitute the Scheduled Payment due on such Mortgage Loan in
such Due Period.
Scheduled Principal Amount: As to any Distribution Date, an amount equal
to the amount described in clause (i)(b) of the definition of Senior Principal
Distribution Amount.
Scheduled Principal Balance: With respect to (i) any Mortgage Loan as of
any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal
payments due on or before the Cut-off Date, whether or not received, less an
amount equal to principal payments due after the Cut-off Date and on or before
the Due Date in the related Due Period, whether or not received from the
Mortgagor or advanced by any Servicer or the Master Servicer, and all amounts
allocable to unscheduled principal payments (including Principal Prepayments,
Net Liquidation Proceeds, Insurance Proceeds and condemnation proceeds, in
each case to the extent identified and applied prior to or during the
applicable Prepayment Period) and (ii) any REO Property as of any Distribution
Date, the Scheduled Principal Balance of the related Mortgage Loan on the Due
Date immediately preceding the date of acquisition of such REO Property by or
on behalf of the Trustee (reduced by any amount applied as a reduction of
principal on the Mortgage Loan). With respect to any Mortgage Loan and the
Cut-off Date, as specified in the Mortgage Loan Schedule.
Securities Account: A separate account established pursuant to Section
4.07.
Securities Intermediary: The Person acting as Securities Intermediary
under this Agreement (which is U.S. Bank National Association), its successor
in interest, and any successor Securities Intermediary appointed pursuant to
Section 4.07.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note that defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Security Entitlement: The meaning specified in Section 8-102(a)(17) of the
UCC.
Security Payment: Any interest or principal payments made on the
Underlying Security on any Underlying Distribution Date after the January 2000
Underlying Distribution Date.
Security Principal Balance: With respect to any date of determination, the
outstanding principal balance of the Underlying Security immediately following
the January 2000 Underlying Distribution date, reduced by all payments or
losses allocated to principal on the Underlying Security on or before such
date of determination.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or
any successor in interest.
Senior Certificate: Any Class 1-A1, Class 1-A2, Class 1-A3, Class 1-A4,
Class 1-A5, Class 1-A6, Class 1-A7, Class 1-AP, Class 2-A1, Class 2-A2, Class
2-A3, Class 2-A4, Class 2-A5, Class 2-AP, Class 3-A, Class 3-AP, Class AX or
Class R Certificate.
Senior Percentage: With respect to each Mortgage Pool and any Distribution
Date, the percentage equivalent of the fraction, the numerator of which is the
aggregate of the Certificate Principal Amounts of the Class 1-A1, Class 1-A2,
Class 1-A4, Class 1-A7 and Class R Certificates, in the case of Pool 1, the
Class 2-A1, Class 2-A2, Class 2-A3 and Class 2-A4 Certificates less
96.666666667% of the Security Principal Balance of the Underlying Security
(immediately prior to the related Underlying Distribution Date), in the case
of Pool 2, and the Class 3-A and Class 3-AP Certificates, in the case of Pool
3, immediately prior to such Distribution Date and the denominator of which is
the related Non-AP Pool Balance for the immediately preceding Distribution
Date.
Senior Prepayment Percentage: With respect to each Mortgage Pool and any
Distribution Date occurring during the five years beginning on the first
Distribution Date, 100%. With respect to each Mortgage Pool and for any
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, the related Senior Percentage plus the following percentage
of the related Subordinate Percentage for such Distribution Date: for any
Distribution Date in the first year thereafter, 70%; for any Distribution Date
in the second year thereafter, 60%; for any Distribution Date in the third
year thereafter, 40%; for any Distribution Date in the fourth year thereafter,
20%; and for any subsequent Distribution Date, 0%; provided, however, that if
on any of the foregoing Distribution Dates the Senior Percentage for any
Mortgage Pool exceeds the initial Senior Percentage for such Mortgage Pool,
the Senior Prepayment Percentage for each Mortgage Pool on such Distribution
Date will once again equal 100% for such Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage for any Mortgage Pool below the level in effect for the most recent
prior period set forth in the paragraph above shall be effective on any
Distribution Date if, as of the first Distribution Date as to which any such
decrease applies, (i) the average outstanding principal balance on such
Distribution Date and for the preceding five Distribution Dates of all
Mortgage Loans that were delinquent 60 days or more (including for this
purpose any Mortgage Loans in foreclosure and the Scheduled Payments that
would have been due on Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust Fund if the related Mortgage
Loan had remained in existence) is greater than or equal to 50% of the
applicable Group Subordinate Amount immediately prior to such Distribution
Date or (ii) cumulative Realized Losses with respect to the Mortgage Loans in
any Mortgage Pool exceed (a) with respect to the Distribution Date on the
fifth anniversary of the first Distribution Date, 30% of the related Original
Group Subordinate Amount, (b) with respect to the Distribution Date on the
sixth anniversary of the first Distribution Date, 35% of the related Original
Group Subordinate Amount, (c) with respect to the Distribution Date on the
seventh anniversary of the first Distribution Date, 40% of the related
Original Group Subordinate Amount, (d) with respect to the Distribution Date
on the eighth anniversary of the first Distribution Date, 45% of the related
Original Group Subordinate Amount, and (e) with respect to the Distribution
Date on the ninth anniversary of the first Distribution Date or thereafter,
50% of the related Original Group Subordinate Amount.
Senior Principal Distribution Amount: For each Certificate Group and any
Distribution Date, the sum of the following amounts:
(i) the sum of (a) the product of (1) the related Senior Percentage
for such date and (2) the principal portion (multiplied by the applicable
Non-AP Percentage) of each Scheduled Payment, on each Mortgage Loan in the
related Mortgage Pool due during the related Due Period and (b) with
respect to Pool 2, 96.6666666667% of the principal portion of Security
Payments received for the related Underlying Distribution Dates;
(ii) the product of (a) the related Senior Prepayment Percentage for
such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the related
Prepayment Period, (2) each other unscheduled collection, including
Insurance Proceeds and Net Liquidation Proceeds (other than with respect
to any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period) representing or allocable
to recoveries of principal received during the related Prepayment Period,
and (3) the principal portion of all proceeds of the purchase of any
Mortgage Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the lesser of (a) the
related net Liquidation Proceeds allocable to principal (multiplied by the
applicable Non-AP Percentage) and (b) the product of the related Senior
Prepayment Percentage for such date and the Scheduled Principal Balance
(multiplied by the applicable Non-AP Percentage) of such related Mortgage
Loan at the time of liquidation; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Servicer: Any Servicer that has entered into any of the Servicing
Agreements attached as Exhibit E hereto, or any successors in interest.
Initially, the Servicers are Aurora Loan Services Inc. and Impac Funding
Corporation.
Servicing Advances: Expenditures incurred by the Servicer in connection
with the liquidation or foreclosure of a Mortgage Loan which are eligible for
reimbursement under the Servicing Agreement.
Servicing Agreement: The Servicing Agreement between Aurora and the
Seller, dated as of January 1, 2000, attached hereto in Exhibit E, the
Reconstituted Servicing Agreement between Impac and the Seller dated as of
January 1, 2000, attached hereto in Exhibit E, and any other servicing
agreement entered into between a successor servicer and the Seller or the
Trustee pursuant to the terms hereof.
Servicing Fee: The Servicing Fee specified in the applicable Servicing
Agreement (which shall include any Prepayment Interest Excess).
Servicing Fee Rate: With respect to any Servicer, as specified in the
applicable Servicing Agreement.
Servicing Officer: Any officer of the Master Servicer involved in or
responsible for the administration and servicing or master servicing of the
Mortgage Loans whose name appears on a list of servicing officers furnished by
the Master Servicer to the Trustee, as such list may from time to time be
amended.
Special Hazard Loss: Not applicable.
Special Hazard Loss Limit: Not applicable.
Specified Rating: A rating of Aaa by Moody's or AAA by DCR.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Subordinate Certificate: Any Class B Certificate.
Subordinate Certificate Writedown Amount: As to any Distribution Date, the
amount by which (i) the sum of the Class Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
application of Realized Losses in reduction of the Certificate Principal
Amounts of the Certificates on such Distribution Date) exceeds (ii) the sum of
the Security Principal Balance of the Underlying Security after giving effect
to distributions on the related Underlying Distribution Date and the aggregate
Scheduled Principal Balance of the Mortgage Loans for such Distribution Date.
Subordinate Class Percentage: With respect to any Distribution Date and
any Class of Subordinate Certificates, the percentage obtained by dividing the
Class Principal Amount of such Class immediately prior to such Distribution
Date by the aggregate Certificate Principal Amount of all Subordinate
Certificates immediately prior to such Distribution Date.
Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior
Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to each Mortgage Pool and
any Distribution Date, the difference between 100% and the related Senior
Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: For each Certificate Group and
any Distribution Date, the sum of the following:
(i) the sum of (a) the product of (1) the related Subordinate
Percentage for such date and (2) the principal portion (multiplied by the
applicable Non-AP Percentage) of each Scheduled Payment on each Mortgage
Loan in the related Mortgage Pool due during the related Due Period and
(b) if the Class Principal Amounts of (a) all Group 2 Certificates other
than the Class 2-A5 Certificates have been reduced to zero, 96.6666666667%
of the principal portion of the Security Payments received for the related
Underlying Distribution Date or (b) all Group 2 Certificates have been
reduced to zero, 100% of the principal portion of the Security Payments
received for the related Underlying Distribution Date;
(ii) the product of (a) the related Subordinate Prepayment Percentage
for such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the related
Prepayment Period, (2) each other unscheduled collection, including
Insurance Proceeds and Net Liquidation Proceeds (other than with respect
to any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period) representing or allocable
to recoveries of principal received during the related Prepayment Period,
and (3) the principal portion of all proceeds of the purchase of any
Mortgage Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the related net
Liquidation Proceeds allocable to principal (multiplied by the applicable
Non-AP Percentage) less any related amount paid pursuant to subsection
(iii) of the definition of Senior Principal Distribution Amount for the
related Certificate Group; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
TAC Amount: Not applicable.
TAC Certificate: None.
TAC Component: None.
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions.
Termination Price: As defined in Section 7.01 hereof.
Title Insurance Policy: A title insurance policy maintained with respect
to a Mortgage Loan.
Transfer Agreement: As defined in the Mortgage Loan Sale Agreement.
Transferor: Each seller of Mortgage Loans to Lehman Capital pursuant to a
Transfer Agreement.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans (other than any Retained Interest), the
assignment of the Depositor's rights under the Mortgage Loan Sale Agreement
(other than any Retained Interest), the Underlying Security, such amounts as
shall from time to time be held in the Collection Account, the Certificate
Account, any Escrow Account, the Securities Account, any Account Property, the
Insurance Policies, any REO Property, the Class 2-A3 Certificate Insurance
Policy, the Class 2-A3 Reserve Fund, the Class 2-A3 Rounding Account, the
Class 2-A3 Policy Payments Account and the other items referred to in, and
conveyed to the Trustee under, Section 2.01(a).
Trust Rate: With respect to Pool 1 and each Pool 1 Mortgage Loan, the sum
of (i) 9.00%, (ii) the applicable Servicing Fee Rate, (iii) the Master
Servicing Fee Rate, (iv) the Trustee Fee Rate and (v) the premium rate on the
related Pool PMI Policy, if applicable; with respect to Pool 2 and each Pool 2
Mortgage Loan, the sum of (i) 7.50%, (ii) the applicable Servicing Fee Rate,
(iii) the Master Servicing Fee Rate and (iv) the Trustee Fee Rate; and with
respect to Pool 3 and each Pool 3 Mortgage Loan, the sum of (i) 7.25%, (ii)
the applicable Servicing Fee Rate, (iii) the Master Servicing Fee Rate and
(iv) the Trustee Fee Rate.
Trustee: U.S. Bank National Association, not in its individual capacity
but solely as Trustee, or any successor in interest, or if any successor
trustee or any co-trustee shall be appointed as herein provided, then such
successor trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the product
of the Trustee Fee Rate and the aggregate Scheduled Principal Balance of the
related Mortgage Loans as of the first day of the related Due Period. The
Trustee Fee shall be calculated separately, by Mortgage Pool.
Trustee Fee Rate: 0.0065% per annum.
UCC: The Uniform Commercial Code as adopted in the State of New York.
Undercollateralization Distribution: As defined in Section 5.02(f)(ii).
Undercollateralized Group: With respect to any Distribution Date, the
Non-AP Senior Certificates of any Certificate Group as to which the aggregate
Certificate Principal Amount thereof, less, with respect to Group 2, the
Security Principal Balance of the Underlying Security (after giving effect to
distributions on the related Underlying Distribution Date), after giving
effect to distributions pursuant to Sections 5.02(a) and (b) on such date is
greater than the Non-AP Pool Balance of the related Mortgage Pool for such
Distribution Date.
Underlying Agreement: The Trust Agreement among the Depositor, the Master
Servicer and the Trustee, dated as of August 1, 1999, as amended from time to
time, relating to the Underlying Trust Fund.
Underlying Distribution Date: The date on which Security Payments are
required to be made on the Underlying Security pursuant to the Underlying
Agreement, which will be the 25th day of each month, or if that day is not a
business day, the next business day after the 25th day of the month.
Underlying Distribution Date Statement: The report made available to
Certificateholders of the Underlying Trust Fund on the related Underlying
Distribution Date.
Underlying Mortgage Loans: The mortgage loans in the Underlying Trust Fund
relating to the Underlying Security.
Underlying Security: The Class 2-NC Certificate issued by the Underlying
Trust Fund.
Underlying Trust Fund: The Trust Fund formed by the Underlying Agreement.
Underlying Trustee: The trustee of the Underlying Trust Fund.
Unscheduled Principal Amount: As to any Distribution Date, the sum of the
amounts described in clauses (ii)(b) and (iii) (without regard to the
reference in clause (iii) to the "Senior Prepayment Percentage") of the
definition of Senior Principal Distribution Amount.
Upper Tier REMIC: One of the two separate REMICs as described in the
Preliminary Statement hereto.
Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 99% of all
Voting Interests shall be allocated to the Certificates other than the
Notional Certificates and 1% of all Voting Interests shall be allocated to the
Notional Certificates. Voting Interests allocated to the Notional Certificates
shall be allocated among the Classes of such Certificates (and among the
Certificates of each such Class) in proportion to their Class Notional Amounts
(or Notional Amounts). Voting Interests shall be allocated among the other
Classes of Certificates (and among the Certificates of each such Class) in
proportion to their Class Principal Amounts (or Certificate Principal
Amounts); provided, however, that on and after the date, if any, on which the
Class 2-A3 Certificate Insurer has paid a claim under the Class 2-A3
Certificate Insurance Policy in respect of the Class 2-A3 Certificates, the
Class 2-A3 Certificate Insurer shall be entitled to exercise all consent,
voting and related rights of such class.
Section 1.02. Calculations Respecting Mortgage Loans. Calculations
required to be made pursuant to this Agreement with respect to any Mortgage
Loan in the Trust Fund shall be made based upon current information as to the
terms of the Mortgage Loans and reports of payments received from the
Mortgagor on such Mortgage Loans and payments to be made to the Trustee as
supplied to the Trustee by the Master Servicer. The Trustee shall not be
required to recompute, verify or recalculate the information supplied to it by
the Master Servicer.
Article II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans and Underlying Security. (a) Concurrently with the execution
and delivery of this Agreement, the Depositor does hereby transfer, assign,
set over, deposit with and otherwise convey to the Trustee, without recourse,
subject to Sections 2.02, 2.04, 2.05 and 2.06, in trust, all the right, title
and interest of the Depositor in and to the Mortgage Loans and the Underlying
Security. Such conveyance includes, without limitation, the right to all
distributions of principal and interest received on or with respect to the
Underlying Security payable in and after February 2000 and the right to all
distributions of principal and interest received on or with respect to the
Mortgage Loans on and after the Cut-off Date other than, with respect to the
Mortgage Loans, (i) any amounts representing Retained Interest and (ii)
payments of principal and interest due on or before such date, and all such
payments due after such date but received prior to such date and intended by
the related Mortgagors to be applied after such date, together with all of the
Depositor's right, title and interest in and to the Collection Account and all
amounts from time to time credited to and the proceeds of the Collection
Account, the Certificate Account and all amounts from time to time credited to
and the proceeds of the Certificate Account, any Escrow Account established
pursuant to Section 9.06 hereof and all amounts from time to time credited to
and the proceeds of any such Escrow Account, all of the Depositor's right,
title and interest in the Securities Account and all amounts from time to time
credited thereto and the proceeds of the Securities Account, any Account
Property and proceeds thereof, any REO Property and the proceeds thereof, the
Depositor's rights under any Insurance Policies related to the Mortgage Loans,
and the Depositor's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral, and any proceeds of the foregoing, to have and to hold, in trust;
and the Trustee declares that, subject to the review provided for in Section
2.02, it has received and shall hold the Trust Fund, as trustee, in trust, for
the benefit and use of the Holders of the Certificates and for the purposes
and subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, has caused to be executed, authenticated and
delivered to or upon the order of the Depositor, in exchange for the Trust
Fund, Certificates in the authorized denominations evidencing the entire
ownership of the Trust Fund. In addition, the Depositor has caused the Class
2-A3 Certificate Insurer to deliver the Class 2-A3 Certificate Insurance
Policy for the benefit of the Class 2-A3 Certificateholders and has made an
initial deposit to the Class 2-A3 Reserve Fund of $37,500.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest
under the Mortgage Loan Sale Agreement (other than any right to receive
Retained Interest), including all rights of the Seller under the Servicing
Agreements with Aurora and Impac to the extent assigned under the Mortgage
Loan Sale Agreement, and delegates its obligations thereunder. The Trustee
hereby accepts such assignment and delegation, and shall be entitled to
exercise all rights of the Depositor under the Mortgage Loan Sale Agreement as
if, for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto except as
specifically set forth herein.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Trustee, and/or any custodian acting on the Trustee's behalf, if
applicable, the following documents or instruments with respect to each
Mortgage Loan (each a "Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage Note
endorsed without recourse in proper form to the order of the Trustee, or
in blank (in each case, with all necessary intervening endorsements as
applicable);
(ii) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Trustee;
(iii) with respect to each Mortgage Loan other than a Cooperative
Loan, the original recorded Mortgage with evidence of recording indicated
thereon. If, in connection with any Mortgage Loan, the Depositor cannot
deliver the Mortgage with evidence of recording thereon on or prior to the
Closing Date because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation or because such
Mortgage has been lost, the Depositor shall deliver or cause to be
delivered to the Trustee (or its custodian), in the case of a delay due to
recording, a true copy of such Mortgage, pending delivery of the original
thereof, together with an Officer's Certificate of the Depositor
certifying that the copy of such Mortgage delivered to the Trustee (or its
custodian) is a true copy and that the original of such Mortgage has been
forwarded to the public recording office, or, in the case of a Mortgage
that has been lost, a copy thereof (certified as provided for under the
laws of the appropriate jurisdiction) and a written Opinion of Counsel
acceptable to the Trustee and the Depositor that an original recorded
Mortgage is not required to enforce the Trustee's interest in the Mortgage
Loan;
(iv) The original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans, or, as to any
assumption, modification or substitution agreement which cannot be
delivered on or prior to the Closing Date because of a delay caused by the
public recording office where such assumption, modification or
substitution agreement has been delivered for recordation, a photocopy of
such assumption, modification or substitution agreement, pending delivery
of the original thereof, together with an Officer's Certificate of the
Depositor certifying that the copy of such assumption, modification or
substitution agreement delivered to the Trustee (or its custodian) is a
true copy and that the original of such agreement has been forwarded to
the public recording office;
(v) with respect to each Non-MERS Mortgage Loan other than a
Cooperative Loan, the original Assignment of Mortgage for each Mortgage
Loan;
(vi) If applicable, such original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument (each, an
"Intervening Assignment"), as may be necessary to show a complete chain of
assignment from the originator, or, in the case of an Intervening
Assignment that has been lost, a written Opinion of Counsel acceptable to
the Trustee that such original Intervening Assignment is not required to
enforce the Trustee's interest in the Mortgage Loans;
(vii) the original Primary Mortgage Insurance Policy or certificate,
if private mortgage guaranty insurance is required;
(viii) with respect to each Mortgage Loan other than a Cooperative
Loan, the original mortgagee title insurance policy or attorney's opinion
of title and abstract of title;
(ix) the original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage or as to any security
agreement, chattel mortgage or their equivalent that cannot be delivered
on or prior to the Closing Date because of a delay caused by the public
recording office where such document has been delivered for recordation, a
photocopy of such document, pending delivery of the original thereof,
together with an Officer's Certificate of the Depositor certifying that
the copy of such security agreement, chattel mortgage or their equivalent
delivered to the Trustee (or its custodian) is a true copy and that the
original of such document has been forwarded to the public recording
office;
(x) with respect to any Cooperative Loan, the Cooperative Loan
Documents; and
(xi) in connection with any pledge of Additional Collateral, the
original additional collateral pledge and security agreement executed in
connection therewith, assigned to the Trustee.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-4 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) (i) Assignments of Mortgage with respect to each Non-MERS Mortgage
Loan other than a Cooperative Loan shall be recorded; provided, however, that
such Assignments need not be recorded if, in the Opinion of Counsel (which
must be Independent counsel) acceptable to the Trustee and the Rating
Agencies, recording in such states is not required to protect the Trustee's
interest in the related Non-MERS Mortgage Loans. Subject to the preceding
sentence, as soon as practicable after the Closing Date (but in no event more
than 3 months thereafter except to the extent delays are caused by the
applicable recording office), the Trustee, at the expense of the Depositor and
with the cooperation of the Servicer, shall cause to be properly recorded by
the Servicer in each public recording office where the related Mortgages are
recorded each Assignment of Mortgage referred to in subsection (b)(v) above
with respect to a Non-MERS Mortgage Loan. With respect to each Cooperative
Loan, the Trustee, at the expense of the Depositor and with the cooperation of
the Servicer, shall cause to be taken such actions as are necessary under
applicable law in order to perfect the interest of the Trustee in the related
Mortgaged Property.
(ii) With respect to each MERS Mortgage Loan, the Trustee, at the
expense of the Depositor and at the direction and with the cooperation of
the Servicer, shall cause to be taken such actions as are necessary to
cause the Trustee to be clearly identified as the owner of each such
Mortgage Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by
MERS.
(d) In instances where a Title Insurance Policy is required to be
delivered to the Trustee, or to the applicable Custodian on behalf of the
Trustee, under clause (b)(viii) above and is not so delivered, the Depositor
will provide a copy of such Title Insurance Policy to the Trustee, or to the
applicable Custodian on behalf of the Trustee, as promptly as practicable
after the execution and delivery hereof, but in any case within 180 days of
the Closing Date.
(e) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Trustee, or to the
applicable Custodian on behalf of the Trustee, an Officer's Certificate which
shall include a statement to the effect that all amounts received in
connection with such prepayment that are required to be deposited in the
applicable Collection Account pursuant to Section 4.01 have been so deposited.
All original documents that are not delivered to the Trustee shall be held by
the Master Servicer or the applicable Servicer in trust for the benefit of the
Trustee and the Certificateholders.
(f) In connection with the assignment of the Underlying Security, the
Depositor shall have caused the Underlying Security to be registered in the
name of, or endorsed to the order of, U.S. Bank National Association, as
trustee, or in the name of a nominee of the Trustee, and to be delivered or
transferred to the Trustee. The Depositor shall cooperate with the Trustee in
providing any required transfer documentation with respect to such conveyance.
Any payment received by the Depositor which shall be due to the Trust Fund
hereunder shall be paid immediately to the Trustee on or prior to the Closing
Date.
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation
for Trust Fund. (a) The Trustee, by execution and delivery hereof,
acknowledges receipt of the Underlying Security, the Mortgage Files pertaining
to the Mortgage Loans listed on the Mortgage Loan Schedule, subject to review
thereof by the Trustee, or by the applicable Custodian on behalf of the
Trustee, under this Section 2.02. The Trustee, or the applicable Custodian on
behalf of the Trustee, will execute and deliver to the Depositor and the
Master Servicer on the Closing Date an Initial Certification in the form
annexed hereto as Exhibit B-1 (or in the form annexed to the applicable
Custodial Agreement as Exhibit B-1, as applicable).
(b) Within 45 days after the Closing Date, the applicable Custodian will,
on behalf of the Trustee and for the benefit of Holders of the Certificates,
review each Mortgage File to ascertain that all required documents set forth
in Section 2.01 have been received and appear on their face to contain the
requisite signatures by or on behalf of the respective parties thereto, and
shall deliver to the Depositor and the Master Servicer an Interim
Certification in the form annexed hereto as Exhibit B-2 (or in the form
annexed to the applicable Custodial Agreement as Exhibit B-2, as applicable)
to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan prepaid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all of the applicable documents specified in Section
2.01(b) are in its possession and (ii) such documents have been reviewed by it
and appear to relate to such Mortgage Loan. The Trustee, or the applicable
Custodian on behalf of the Trustee, shall make sure that the documents are
executed and endorsed, but shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other
papers to determine that the same are valid, binding, legally effective,
properly endorsed, genuine, enforceable or appropriate for the represented
purpose or that they have actually been recorded or are in recordable form or
that they are other than what they purport to be on their face. Neither the
Trustee nor any Custodian shall have any responsibility for verifying the
genuineness or the legal effectiveness of or authority for any signatures of
or on behalf of any party or endorser.
(c) If in the course of the review described in paragraph (b) above the
Trustee or the applicable Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear
regular on its face (i.e., is mutilated, damaged, defaced, torn or otherwise
physically altered) or appears to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule (each, a "Material Defect"), the
Trustee, or the applicable Custodian on behalf of the Trustee, shall promptly
identify the Mortgage Loan to which such Material Defect relates in the
Interim Certificate delivered to the Depositor or the Master Servicer (and to
the Trustee). Within 90 days of its receipt of such notice, the Depositor
shall be required to cure such Material Defect (and, in such event, the
Depositor shall provide the Trustee with an Officer's Certificate confirming
that such cure has been effected). If the Depositor does not so cure such
Material Defect, it shall, if a loss has been incurred with respect to such
Mortgage Loan that would, if such Mortgage Loan were not purchased from the
Trust Fund, constitute a Realized Loss, and such loss is attributable to the
failure of the Depositor to cure such Material Defect, repurchase the related
Mortgage Loan from the Trust Fund at the Purchase Price. A loss shall be
deemed to be attributable to the failure of the Depositor to cure a Material
Defect if, as determined by the Depositor, upon mutual agreement acting in
good faith, absent such Material Defect, such loss would not have been
incurred. Within the two year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02,
substitute for such Mortgage Loan a Qualifying Substitute Mortgage Loan
subject to the provisions of Section 2.05. The failure of the Trustee or the
applicable Custodian to give the notice contemplated herein within 45 days
after the Closing Date shall not affect or relieve the Depositor of its
obligation to repurchase any Mortgage Loan pursuant to this Section 2.02 or
any other Section of this Agreement requiring the repurchase of Mortgage Loans
from the Trust Fund.
(d) Within 180 days following the Closing Date, the Trustee, or the
applicable Custodian, shall deliver to the Depositor and the Master Servicer a
Final Certification substantially in the form annexed hereto as Exhibit B-3
(or in the form annexed to the applicable Custodial Agreement as Exhibit B-3,
as applicable) evidencing the completeness of the Mortgage Files in its
possession or control, with any exceptions noted thereto.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, the Certificateholders or the Class
2-A3 Certificate Insurer of any unsatisfied duty, claim or other liability on
any Mortgage Loan or to any Mortgagor.
(f) Each of the parties hereto acknowledges that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications thereof as provided in this Section 2.02.
Section 2.03. Representations and Warranties of the Depositor. (a) The
Depositor hereby represents and warrants to the Trustee, for the benefit of
Certificateholders, to the Class 2-A3 Certificate Insurer, and to the Master
Servicer, as of the Closing Date or such other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry
on its business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of,
or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Depositor or its properties or the certificate of incorporation or bylaws
of the Depositor;
(iii) the execution, delivery and performance by the Depositor of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any state, federal or other governmental authority or agency, except such
as has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee and the Master Servicer, constitutes a valid and binding
obligation of the Depositor enforceable against it in accordance with its
terms except as such enforceability may be subject to (A) applicable
bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally and (B) general
principles of equity regardless of whether such enforcement is considered
in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against or
affecting the Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the judgment of the Depositor will be determined
adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect its
ability to perform its obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the Mortgage
Loans to the Trustee, the Depositor was the sole owner of record and
holder of each Mortgage Loan, and the Depositor had good and marketable
title thereto, and had full right to transfer and sell each Mortgage Loan
to the Trustee free and clear, subject only to (1) liens of current real
property taxes and assessments not yet due and payable and, if the related
Mortgaged Property is a condominium unit, any lien for common charges
permitted by statute, (2) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the date of
recording of such Mortgage acceptable to mortgage lending institutions in
the area in which the related Mortgaged Property is located and
specifically referred to in the lender's Title Insurance Policy or
attorney's opinion of title and abstract of title delivered to the
originator of such Mortgage Loan, and (3) such other matters to which like
properties are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security intended
to be provided by the Mortgage, of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan
pursuant to this Agreement;
(vii) immediately prior to the sale thereof to the Trustee, the
Depositor owned the Underlying Security, had good and marketable title
thereto, free and clear of any pledge, lien, security interest, charge,
claim, equity, or encumbrance of any kind, and upon the delivery or
transfer of the Underlying Security to the Trustee as contemplated herein,
the Trustee will receive good and marketable title to the Underlying
Security, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind.
(b) The representations and warranties of each Transferor with respect to
the related Mortgage Loans in the applicable Transfer Agreement, which have
been assigned to the Trustee hereunder, were made as of the date specified in
the applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes
a breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty
of Lehman Capital under the Mortgage Loan Sale Agreement, the only right or
remedy of the Trustee or of any Certificateholder shall be the Trustee's right
to enforce the obligations of the applicable Transferor under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale Agreement are applicable only to facts or conditions that
arise or events that occur subsequent to the date as of which the
representations and warranties with respect to the related Mortgage Loans in
the Transfer Agreements were made, and which do not constitute a breach of any
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement. The Trustee acknowledges that Lehman Capital shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition
or event constituting such breach also constitutes a breach of a
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement, without regard to whether such Transferor fulfills its
contractual obligations in respect of such representation or warranty. The
Trustee further acknowledges that the Depositor shall have no obligation or
liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 2.03(a)(vi))
under any circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that the
representations and warranties (i) set forth in Section 2.03, (ii) of Lehman
Capital set forth in the Mortgage Loan Sale Agreement and assigned to the
Trustee by the Depositor hereunder and (iii) of each Transferor, assigned by
Lehman Capital to the Depositor pursuant to the Mortgage Loan Sale Agreement
and assigned to the Trustee by the Depositor hereunder shall each survive
delivery of the Underlying Security, the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Trustee and shall continue throughout
the term of this Agreement. Upon discovery by either the Depositor, the Master
Servicer, the Trustee or the Class 2-A3 Certificate Insurer of a breach of any
of such representations and warranties that adversely and materially affects
the value of the related Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties. Within 90 days of the
discovery of a breach of any representation or warranty given to the Trustee
and the Class 2-A3 Certificate Insurer by the Depositor or given by Lehman
Capital and assigned to the Trustee, the Depositor or Lehman Capital, as
applicable, shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Trustee at the Purchase Price or (c) within the two year period following
the Closing Date, substitute a Qualifying Substitute Mortgage Loan for the
affected Mortgage Loan. In the event of discovery of a breach of any
representation and warranty of any Transferor assigned to the Trustee, the
Trustee may enforce its rights under the applicable Transfer Agreement for the
benefit of Certificateholders.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans. (a)
With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement, by Lehman Capital pursuant to the Mortgage Loan Sale Agreement
or by any Transferor pursuant to the applicable Transfer Agreement, the
principal portion of the funds received by the Trustee in respect of such
repurchase of a Mortgage Loan will be considered a Principal Prepayment and
shall be deposited in the Collection Account. The Trustee, upon receipt of the
full amount of the Purchase Price for a Deleted Mortgage Loan, or upon receipt
of the Mortgage File for a Qualifying Substitute Mortgage Loan substituted for
a Deleted Mortgage Loan (and any applicable Substitution Amount), shall
release or cause to be released and reassign to the Depositor, Lehman Capital
or the applicable Transferor, as applicable, the related Mortgage File for the
Deleted Mortgage Loan and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, representation or
warranty, as shall be necessary to vest in such party or its designee or
assignee title to any Deleted Mortgage Loan released pursuant hereto, free and
clear of all security interests, liens and other encumbrances created by this
Agreement, which instruments shall be prepared by the Trustee (or its
custodian), and the Trustee shall have no further responsibility with respect
to the Mortgage File relating to such Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or its custodian) pursuant to the terms of this
Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor, the
applicable Transferor or Lehman Capital, as applicable, must deliver to the
Trustee (or its custodian) the Mortgage File for the Qualifying Substitute
Mortgage Loan containing the documents set forth in Section 2.01(b) along with
a written certification certifying as to the delivery of such Mortgage File
and containing the granting language set forth in Section 2.01(a); and (ii)
the Depositor will be deemed to have made, with respect to such Qualified
Substitute Mortgage Loan, each of the representations and warranties made by
it with respect to the related Deleted Mortgage Loan. As soon as practicable
after the delivery of any Qualifying Substitute Mortgage Loan hereunder, the
Trustee, at the expense of the Depositor and at the direction and with the
cooperation of the Servicer, shall (i) with respect to a Qualifying Substitute
Mortgage Loan that is a Non-MERS Mortgage Loan, cause the Assignment of
Mortgage to be recorded by the Servicer if required pursuant to Section
2.01(c)(i), or (ii) with respect to a Qualifying Substitute Mortgage Loan that
is a MERS Mortgage Loan, cause to be taken such actions as are necessary to
cause the Trustee to be clearly identified as the owner of each such Mortgage
Loan on the records of MERS if required pursuant to Section 2.01(c)(ii).
(c) Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Qualifying Substitute
Mortgage Loan for a Deleted Mortgage Loan shall be made unless the Trustee has
received an Opinion of Counsel (at the expense of the party seeking to make
the substitution) that, under current law, such substitution will not (A)
affect adversely the status of any REMIC established hereunder as a REMIC, or
of the related "regular interests" as "regular interests" in any such REMIC,
or (B) cause any such REMIC to engage in a "prohibited transaction" or
prohibited contribution pursuant to the REMIC Provisions.
Section 2.06. Grant Clause. It is intended that the conveyance of the
Depositor's right, title and interest in and to property constituting the
Trust Fund pursuant to this Agreement shall constitute, and shall be construed
as, a sale of such property and not a grant of a security interest to secure a
loan. However, if such conveyance is deemed to be in respect of a loan, it is
intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) the Depositor hereby
grants to the Trustee for the benefit of the Holders of the Certificates and
the Class 2-A3 Certificate Insurer a first priority security interest in all
of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates;
and (3) this Agreement shall constitute a security agreement under applicable
law. If such conveyance is deemed to be in respect of a loan and the Trust
created by this Agreement terminates prior to the satisfaction of the claims
of any Person holding any Certificate, the security interest created hereby
shall continue in full force and effect and the Trustee shall be deemed to be
the collateral agent for the benefit of such Person, and all proceeds shall be
distributed as herein provided.
Article III
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable in
registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Principal
Amount, as applicable, or in the Percentage Interests, specified herein. Each
Class of Book-Entry Certificates shall be issued in the minimum denominations
in Certificate Principal Amount (or Notional Amount) or Percentage Interest
specified in the Preliminary Statement hereto and in integral multiples of $1
or 5% (in the case of Certificates issued in Percentage Interests) in excess
thereof. Each Class of Non-Book Entry Certificates other than the Residual
Certificate shall be issued in definitive, fully registered form in the
minimum denominations in Certificate Principal Amount (or Notional Amount)
specified in the Preliminary Statement hereto and in integral multiples of $1
in excess thereof. The Residual Certificate shall be issued as a single
Certificate and maintained in definitive, fully registered form in a minimum
denomination equal to 100% of the Percentage Interest of such Class. The
Certificates may be issued in the form of typewritten certificates. One
Certificate of each Class of Certificates other than any Class of Residual
Certificates may be issued in any denomination in excess of the minimum
denomination.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the
Depositor upon receipt by the Trustee of the Mortgage Files described in
Section 2.01. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or the
Authenticating Agent, if any, by manual signature, and such certification upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Depositor to the Trustee or
the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in
this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
accepts its appointment as, Certificate Registrar in respect of the
Certificates and shall maintain books for the registration and for the
transfer of Certificates (the "Certificate Register"). The Trustee may appoint
a bank or trust company to act as Certificate Registrar. A registration book
shall be maintained for the Certificates collectively. The Certificate
Registrar may resign or be discharged or removed and a new successor may be
appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Trustee and the appointment of a successor Trustee. The
Certificate Registrar may appoint, by a written instrument delivered to the
Holders and the Master Servicer, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any registration of transfer of
Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing
in the aggregate the same Certificate Principal Amount as the Certificate
surrendered, upon surrender of the Certificate to be exchanged at the office
of the Certificate Registrar duly endorsed or accompanied by a written
instrument of transfer duly executed by such Holder or his duly authorized
attorney in such form as is satisfactory to the Certificate Registrar.
Certificates delivered upon any such exchange will evidence the same
obligations, and will be entitled to the same rights and privileges, as the
Certificates surrendered. No service charge shall be made to a
Certificateholder for any exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any exchange of
Certificates. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, and the Trustee or the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth
thereon and agrees that it will transfer such a Certificate only as provided
herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that
takes delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the Depositor
or the Placement Agent, an affiliate (as defined in Rule 144(a)(1) under
the 1933 Act) of the Depositor or the Placement Agent or (y) being made to
a "qualified institutional buyer" (a "QIB") as defined in Rule 144A under
the Securities Act of 1933, as amended (the "Act") by a transferor who has
provided the Trustee with a certificate in the form of Exhibit F hereto;
and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the Act
by a transferor who furnishes to the Trustee a letter of the transferee
substantially in the form of Exhibit G hereto.
(d) (i) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and
the Depositor to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund
being deemed to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken in
the Agreement; provided, however, that the Trustee will not require such
certificate or opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee has rendered an opinion to the
effect that the purchase and holding of an ERISA-Restricted Certificate by a
Plan or a Person that is purchasing or holding such a Certificate with the
assets of a Plan will not constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code. The preparation and delivery of the
certificate and opinions referred to above shall not be an expense of the
Trust Fund, the Trustee or the Depositor. Notwithstanding the foregoing, no
opinion or certificate shall be required for the initial issuance of the
ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of Certificate.
(f) Notwithstanding anything to the contrary contained herein, no Residual
Certificate may be owned, pledged or transferred, directly or indirectly, by
or to (i) a Disqualified Organization or (ii) an individual, corporation or
partnership or other person unless such person is (A) not a Non-U.S. Person or
(B) is a Non-U.S. Person that holds a Residual Certificate in connection with
the conduct of a trade or business within the United States and has furnished
the transferor and the Trustee with an effective Internal Revenue Service Form
4224 or successor form at the time and in the manner required by the Code (any
such person who is not covered by clause (A) or (B) above is referred to
herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto
as Exhibit D-1 representing and warranting, among other things, that such
transferee is (i) neither a Disqualified Organization, an agent or nominee
acting on behalf of a Disqualified Organization, nor a Non-permitted Foreign
Holder (any such transferee, a "Permitted Transferee") and (ii) a QIB or
either the Depositor or an affiliate (as defined in Rule 405 under the Act)
thereof and the proposed transferor shall deliver to the Trustee an affidavit
in substantially the form attached hereto as Exhibit D-2. In addition, the
Trustee may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Depositor and the Trustee satisfactory in
form and substance to the Depositor, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
not a Disqualified Organization, agent or nominee thereof, or Non-permitted
Foreign Holder. Notwithstanding the registration in the Certificate Register
of any transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization, an agent or nominee thereof, or Non-permitted
Foreign Holder, such registration shall be deemed to be of no legal force or
effect whatsoever and such Disqualified Organization, agent or nominee
thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to,
the receipt of distributions on such Residual Certificate. The Trustee shall
not be under any liability to any person for any registration or transfer of a
Residual Certificate to a Disqualified Organization, agent or nominee thereof,
or Non-permitted Foreign Holder or for the maturity of any payments due on
such Residual Certificate to the Holder thereof or for taking any other action
with respect to such Holder under the provisions of the Agreement, so long as
the transfer was effected in accordance with this Section 3.03(f), unless the
Trustee shall have actual knowledge at the time of such transfer or the time
of such payment or other action that the transferee is a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder. The
Trustee shall be entitled to recover from any Holder of a Residual Certificate
that was a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder at the time it became a Holder or any subsequent
time it became a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder, all payments made on such Residual Certificate
at and after either such times (and all costs and expenses, including but not
limited to attorneys' fees, incurred in connection therewith). Any payment
(not including any such costs and expenses) so recovered by the Trustee shall
be paid and delivered to the last preceding Holder of such Residual
Certificate.
If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f),
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of such registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to any
Person for any registration of transfer of a Residual Certificate that is in
fact not permitted by this Section 3.03(f), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action
with respect to such Holder under the provisions of this Agreement so long as
the transfer was registered upon receipt of the affidavit described in the
preceding paragraph of this Section 3.03(f).
(g) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions
of this section.
Section 3.04. Cancellation of Certificates. Any Certificate surrendered
for registration of transfer or exchange shall be cancelled and retained in
accordance with normal retention policies with respect to cancelled
certificates maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or
(ii) the Trustee or any Authenticating Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and there
is delivered to the Trustee or the Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Depositor and any Authenticating Agent that such
destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and the Trustee or any Authenticating
Agent shall 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 Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee and Authenticating Agent may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or the Authenticating Agent)
connected therewith. Any replacement Certificate issued pursuant to this
Section 3.05 shall constitute complete and indefeasible evidence of ownership
in the applicable Trust Fund, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of Section
3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the
books of the Certificate Registrar as the owner of such Certificate for the
purpose of receiving distributions pursuant to Sections 5.01 and 5.02 and for
all other purposes whatsoever, and neither the Depositor, the Master Servicer,
the Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in
exchange therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same
Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
Paying Agent (which may be the Trustee) for the purpose of making
distributions to Certificateholders hereunder. The Trustee shall cause such
Paying Agent to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums held by it for the payment to Certificateholders in an Eligible Account
in trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to the Certificateholders. All funds remitted by the
Trustee to any such Paying Agent for the purpose of making distributions shall
be paid to Certificateholders on each Distribution Date and any amounts not so
paid shall be returned on such Distribution Date to the Trustee. If the Paying
Agent is not the Trustee, the Trustee shall cause to be remitted to the Paying
Agent on or before the Business Day prior to each Distribution Date, by wire
transfer in immediately available funds, the funds to be distributed on such
Distribution Date. Any Paying Agent shall be either a bank or trust company or
otherwise authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
Certificates, upon original issuance, shall be issued in the form of one or
more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Book-Entry
Certificates, except as provided in Section 3.09(c). Unless Definitive
Certificates have been issued to Certificate Owners of Book-Entry Certificates
pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Depositor, the Master Servicer, the Paying Agent, the
Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate Owners
and the Clearing Agency shall be responsible for crediting the amount of
such distributions to the accounts of such Persons entitled thereto, in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09 conflict
with any other provisions of this Agreement, the provisions of this
Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants. Unless and until Definitive Certificates are issued pursuant
to Section 3.09(c), the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal of and interest on the Book-Entry Certificates
to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Principal Amount of a
Class of Book-Entry Certificates identified as such to the Trustee by an
Officer's Certificate from the Clearing Agency advise the Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Trustee shall notify or cause the Certificate Registrar to
notify the Clearing Agency to effect notification to all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Book-Entry Certificates by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue the Definitive Certificates.
Neither the Transferor nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable, with respect to such
Definitive Certificates and the Trustee shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder.
Article IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account. (a) On the Closing Date, the Master
Servicer shall open and shall thereafter maintain an account held in trust
(the "Collection Account"), entitled "Aurora Loan Services Inc., as Master
Servicer, in trust for the benefit of the Holders of Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 2000-1." The
Collection Account shall relate solely to the Certificates issued by the Trust
Fund hereunder, and funds in such Collection Account shall not be commingled
with any other monies.
(b) The Collection Account shall be an Eligible Account. If an existing
Collection Account ceases to be an Eligible Account, the Master Servicer shall
establish a new Collection Account that is an Eligible Account within 30 days
and transfer all funds on deposit in such existing Collection Account into
such new Collection Account.
(c) The Master Servicer shall give to the Trustee prior written notice of
the name and address of the depository institution at which the Collection
Account is maintained and the account number of such Collection Account. On
each Deposit Date, the entire amount on deposit in the Collection Account
(subject to permitted withdrawals set forth in Section 4.02), excluding such
amounts not included in the Available Distribution Amount for such
Distribution Date pursuant to clauses (a) through (g) of paragraph (1) of the
definition thereof, shall be remitted to the Trustee for deposit into the
Certificate Account by wire transfer in immediately available funds. The
Master Servicer, at its option, may choose to make daily remittances from the
Collection Account to the Trustee for deposit into the Certificate Account.
(d) The Master Servicer shall deposit or cause to be deposited into the
Collection Account, no later than the Business Day following the Closing Date,
any amounts representing Scheduled Payments on the Mortgage Loans due after
the Cut-off Date and received by the Master Servicer on or before the Closing
Date. Thereafter, the Master Servicer shall deposit or cause to be deposited
in the Collection Account on the applicable Remittance Date the following
amounts received or payments made by it (other than in respect of principal of
and interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) all payments on account of principal, including Principal
Prepayments and late collections, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans (other
than payments due prior to the Cut-off Date), net of the premium rate on
any related Pool PMI Policy, if any, the Servicing Fee and Master
Servicing Fee with respect to each such Mortgage Loan, but only to the
extent of the amount permitted to be withdrawn or withheld from the
Collection Account in accordance with Sections 5.04 and 9.21;
(iii) any unscheduled payment or other recovery with respect to a
Mortgage Loan not otherwise specified in this paragraph (d), including all
Net Liquidation Proceeds with respect to the Mortgage Loans and REO
Property, and all amounts received in connection with the operation of any
REO Property, net of any unpaid Servicing Fees and Master Servicing Fees
with respect to such Mortgage Loans, but only to the extent of the amount
permitted to be withdrawn or withheld from the Collection Account in
accordance with Sections 5.04 and 9.21; provided that if a Servicer is
also the Retained Interest Holder with respect to any Mortgage Loan,
payments on account of interest on the Mortgage Loans as to which such
Servicer is the Retained Interest Holder may also be made net of the
Retained Interest with respect to each such Mortgage Loan.
(iv) all Insurance Proceeds;
(v) all Advances made by the Master Servicer or any Servicer pursuant
to Section 5.04 or the applicable Servicing Agreement; and
(vi) all proceeds of any Mortgage Loan purchased by any Person.
(e) Funds in the Collection Account may be invested in Eligible
Investments (selected by and at the written direction of the Master Servicer)
which shall mature not later than the earlier of (a) the Deposit Date (except
that if such Eligible Investment is an obligation of the Trustee or the Paying
Agent, if other than the Trustee, and such Collection Account is maintained
with the Trustee or the Paying Agent, if other than the Trustee, then such
Eligible Investment shall mature not later than such applicable Distribution
Date) or (b) the day on which the funds in such Collection Account are
required to be remitted to the Trustee for deposit into the Certificate
Account, and any such Eligible Investment shall not be sold or disposed of
prior to its maturity. All such Eligible Investments shall be made in the name
of the Trustee (in its capacity as such) or its nominee. All income and gain
realized from any such investment shall be for the benefit of the Master
Servicer and shall be subject to its withdrawal or order from time to time,
subject to Section 5.05, and shall not be part of the Trust Fund. The amount
of any losses incurred in respect of any such investments shall be deposited
in such Collection Account by the Master Servicer out of its own funds,
without any right of reimbursement therefor, immediately as realized. The
foregoing requirements for deposit in the Collection Account are exclusive, it
being understood and agreed that, without limiting the generality of the
foregoing, payments of interest on funds in the Collection Account and
payments in the nature of late payment charges or assumption fees need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer or the applicable Servicer as additional servicing
compensation. If the Master Servicer deposits in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from such Collection Account. In the event the Master Servicer does not
provide written direction to the Trustee pursuant to this Section, all funds
on deposit in the Collection Account shall remain uninvested.
Section 4.02. Application of Funds in the Collection Account. The Master
Servicer may, from time to time, make, or cause to be made, withdrawals from
the Collection Account for the following purposes:
(i) to reimburse itself or any Servicer for Advances made by it or by
such Servicer pursuant to Section 5.04 or the applicable Servicing
Agreement; the Master Servicer's right to reimburse itself pursuant to
this subclause (i) is limited to amounts received on or in respect of
particular Mortgage Loans (including, for this purpose, Liquidation
Proceeds and amounts representing Insurance Proceeds with respect to the
property subject to the related Mortgage) which represent late recoveries
(net of the applicable Servicing Fee and the Master Servicing Fee) of
payments of principal or interest respecting which any such Advance was
made, it being understood, in the case of any such reimbursement, that the
Master Servicer's or Servicer's right thereto shall be prior to the rights
of the Certificateholders;
(ii) to reimburse itself or any Servicer for any Servicing Advances
made by it or by such Servicer that it determines in good faith will not
be recoverable from amounts representing late recoveries of payments of
principal or interest respecting the particular Mortgage Loan as to which
such Servicing Advance was made or from Liquidation Proceeds or Insurance
Proceeds with respect to such Mortgage Loan, it being understood, in the
case of any such reimbursement, that such Master Servicer's or Servicer's
right thereto shall be prior to the rights of the Certificateholders;
(iii) to reimburse itself or any Servicer from Liquidation Proceeds
for Liquidation Expenses and for amounts expended by it pursuant to
Sections 9.20 and 9.22(a) or the applicable Servicing Agreement in good
faith in connection with the restoration of damaged property and, to the
extent that Liquidation Proceeds after such reimbursement exceed the
unpaid principal balance of the related Mortgage Loan, together with
accrued and unpaid interest thereon at the applicable Mortgage Rate less
the applicable Servicing Fee and the Master Servicing Fee for such
Mortgage Loan to the Due Date next succeeding the date of its receipt of
such Liquidation Proceeds, to pay to itself out of such excess the amount
of any unpaid assumption fees, late payment charges or other Mortgagor
charges on the related Mortgage Loan and to retain any excess remaining
thereafter as additional servicing compensation, it being understood, in
the case of any such reimbursement or payment, that such Master Servicer's
or Servicer's right thereto shall be prior to the rights of the
Certificateholders;
(iv) in the event it has elected not to pay itself the Master
Servicing Fee out of any Mortgagor payment on account of interest or other
recovery with respect to a particular Mortgage Loan prior to the deposit
of such Mortgagor payment or recovery in the Collection Account, to pay to
itself the Master Servicing Fee for each Distribution Date and any unpaid
Master Servicing Fees for prior Distribution Dates, as reduced pursuant to
Section 5.05, from any Mortgagor payment as to interest or such other
recovery with respect to that Mortgage Loan, as is permitted by this
Agreement;
(v) to reimburse itself or any Servicer for expenses incurred by and
recoverable by or reimbursable to it or such Servicer pursuant to Section
9.04, 9.06, 9.16 or 9.22(a) or pursuant to the applicable Servicing
Agreement, and to reimburse itself for any expenses reimbursable to it
pursuant to Section 10.01(c);
(vi) to pay to the applicable Person, with respect to each Mortgage
Loan or REO Property acquired in respect thereof that has been repurchased
by such Person pursuant to this Agreement, all amounts received thereon
and not distributed on the date on which the related repurchase was
effected;
(vii) subject to Section 5.04, to pay to itself income earned on the
investment of funds deposited in the Collection Account;
(viii) to make payments to the Trustee for deposit into the
Certificate Account in the amounts and in the manner provided for in
Section 4.04;
(ix) to make distributions of the Retained Interest to the Retained
Interest Holder on each Distribution Date (other than any Retained
Interest not deposited into the Collection Account in accordance with
Section 4.01(d)(iii));
(x) to make payment to itself and others pursuant to any provision of
this Agreement;
(xi) to withdraw funds deposited in error in the Collection Account;
(xii) to clear and terminate any Collection Account pursuant to
Section 7.02;
(xiii) to reimburse a successor Master Servicer (solely in its
capacity as successor Master Servicer), for any fee or advance occasioned
by a termination of the Master Servicer, and the assumption of such duties
by the Trustee or a successor Master Servicer appointed by the Trustee
pursuant to Section 6.14, in each case to the extent not reimbursed by the
terminated Master Servicer, it being understood, in the case of any such
reimbursement or payment, that the right of the Master Servicer or the
Trustee thereto shall be prior to the rights of the Certificateholders;
and
(xiv) to reimburse any Servicer for such amounts as are due thereto
under the applicable Servicing Agreement and have not been retained by or
paid to such Servicer to the extent provided in such Servicing Agreement.
Each Servicer shall be entitled to retain as additional servicing
compensation any Prepayment Penalty Amounts or Prepayment Interest Excess.
In connection with withdrawals pursuant to subclauses (i), (iii), (iv) and
(vi) above, the Master Servicer's or Servicer's entitlement thereto is limited
to collections or other recoveries on the related Mortgage Loan. The Master
Servicer shall therefore keep and maintain a separate accounting for each
Mortgage Loan it master services for the purpose of justifying any withdrawal
from the Collection Account it maintains pursuant to such subclause (i),
(iii), (iv) and (vi).
Section 4.03. Reports to Certificateholders. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail
to each Certificateholder and the Class 2-A3 Certificate Insurer a written
report setting forth the following information, by Mortgage Pool and
Certificate Group (on the basis of Mortgage Loan level information obtained
from the Servicers):
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates, other than
any Class of Notional Certificates, and in respect of each Component, to
the extent applicable, allocable to principal on the Underlying Security
and the Mortgage Loans, including Liquidation Proceeds and Insurance
Proceeds, stating separately the amount attributable to scheduled
principal payments and unscheduled payments in the nature of principal in
each Mortgage Pool;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates, other than
any Class of Principal Only Certificates, allocable to interest on the
Underlying Security and the Mortgage Loans, including any Accrual Amount
added to the Class Principal Amount of any Class of Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holders of a
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Master Servicer or any Servicer (or the Trustee) with
respect to such Distribution Date, (B) the aggregate amount of such
Advances actually made, and (C) the amount, if any, by which (A) above
exceeds (B) above;
(v) the Aggregate Principal Balance of the Mortgage Loans and the
Non-AP Pool Balance of each Mortgage Pool for such Distribution Date and
the Security Principal Balance of the Underlying Security after giving
effect to distributions on the related Underlying Distribution Date, after
giving effect to payments allocated to principal reported under clause (i)
above;
(vi) the Class Principal Amount (or Class Notional Amount) of each
Class of Certificates, to the extent applicable and the Notional Component
Amount of each Component, as of such Distribution Date after giving effect
to payments allocated to principal reported under clause (i) above (and to
the addition of any Accrual Amount in the case of any Class of Accrual
Certificates), separately identifying any reduction of any of the
foregoing Certificate Principal Amounts due to Realized Losses:
(vii) any Realized Losses realized with respect to each of the
Underlying Security and the Mortgage Loans (x) in the applicable
Prepayment Period and (y) in the aggregate since the Cut-off Date, stating
the aggregate amount of such Realized Losses;
(viii) the amount of the Master Servicing Fees, Servicing Fees and
Trustee Fee paid during the Due Period to which such distribution relates;
(ix) the number and aggregate Scheduled Principal Balance of Mortgage
Loans, as reported to the Trustee by the Master Servicer, (a) remaining
outstanding (b) delinquent one month, (c) delinquent two months, (d)
delinquent three or more months, and (e) as to which foreclosure
proceedings have been commenced as of the close of business on the last
Business Day of the calendar month immediately preceding the month in
which such Distribution Date occurs;
(x) the deemed principal balance of each REO Property as of the close
of business on the last Business Day of the calendar month immediately
preceding the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the principal balance of such
Mortgage Loan and the number of such Mortgage Loans as of the close of
business on the Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the preceding
calendar month, the Scheduled Principal Balance of each Deleted Mortgage
Loan, and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Interest Shortfalls and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) the Certificate Interest Rate applicable to such Distribution
Date with respect to each Class of Certificates;
(xv) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which
Certificateholders would have received if there were sufficient available
amounts in the Certificate Account and the amounts actually distributed);
(xvi) any other "loan-level" information for any Mortgage Loans that
are delinquent three or more months and any REO Property held by the Trust
that is reported by the Master Servicer to the Trustee;
(xvii) the Underlying Distribution Date Statement for the related
Underlying Distribution Date;
(xviii) any Insured Payments made in respect of Class 2-A3 Guaranteed
Distributions paid under the Class 2-A3 Certificate Insurance Policy; and
(xix) any amounts withdrawn from the Class 2-A3 Reserve Fund pursuant
to Section 4.06 for that Distribution Date.
In the case of information furnished pursuant to subclauses (i), (ii) and
(viii) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.
The foregoing information and reports shall be prepared and determined by
the Trustee based solely on Mortgage Loan data provided to the Trustee by the
Master Servicer no later than four Business Days prior to the Distribution
Date. In preparing or furnishing the Mortgage Loan data to the Trustee, the
Master Servicer shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Property
that has been provided to the Master Servicer by each Servicer, and the Master
Servicer shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to be
delivered by first class mail to the Depositor a copy of the above-described
written report, to the following address: Mortgage Finance Group, Lehman
Brothers Inc., Three World Financial Center, 200 Vesey Street, New York, New
York, 10285, Attention: Joseph J. Kelly, or to such other address as the
Depositor may designate.
(b) Upon the reasonable advance written request of any Certificateholder
that is a savings and loan, bank or insurance company, which request, if
received by the Trustee, will be promptly forwarded to the Master Servicer,
the Master Servicer shall provide, or cause to be provided, (or, to the extent
that such information or documentation is not required to be provided by a
Servicer under the applicable Servicing Agreement, shall use reasonable
efforts to obtain such information and documentation from such Servicer, and
provide) to such Certificateholder such reports and access to information and
documentation regarding the Mortgage Loans as such Certificateholder may
reasonably deem necessary to comply with applicable regulations of the Office
of Thrift Supervision or its successor or other regulatory authorities with
respect to investment in the Certificates; provided, however, that the Master
Servicer shall be entitled to be reimbursed by such Certificateholder for such
Master Servicer's actual expenses incurred in providing such reports and
access.
(c) Within 90 days, or such shorter period as may be required by statute
or regulation, after the end of each calendar year, the Trustee shall send to
each Person who at any time during the calendar year was a Certificateholder
of record, and make available to Certificate Owners (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report
summarizing the items provided to Certificateholders pursuant to Section
4.03(a) on an annual basis as may be required to enable such Holders to
prepare their federal income tax returns. Such information shall include the
amount of original issue discount accrued on each Class of Certificates and
information regarding the expenses of the Trust Fund. The Master Servicer
shall provide the Trustee with such information as is necessary for the
Trustee to prepare such reports.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
maintain in its name, as trustee, a trust account (the "Certificate Account"),
to be held in trust for the benefit of the Certificateholders and the Class
2-A3 Certificate Insurer until disbursed pursuant to the terms of this
Agreement. The Certificate Account shall be an Eligible Account. If the
existing Certificate Account ceases to be an Eligible Account, the Trustee
shall establish a new Certificate Account that is an Eligible Account within
20 Business Days and transfer all funds on deposit in such existing
Certificate Account into such new Certificate Account. The Certificate Account
shall relate solely to the Certificates issued hereunder and funds in the
Certificate Account shall be held separate and apart from and shall not be
commingled with any other monies including, without limitation, other monies
of the Trustee held under this Agreement.
(b) The Trustee shall cause to be deposited into the Certificate Account
on the day on which, or, if such day is not a Business Day, the Business Day
immediately following the day on which, any monies are remitted by the Master
Servicer to the Trustee or distributions are received by the Trustee with
respect to the Underlying Security, all such amounts. The Trustee shall make
withdrawals from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate Account in
error;
(ii) to pay itself any investment income earned with respect to funds
in the Certificate Account invested in Eligible Investments as set forth
in subsection (c) below, and to make payments to itself and others
pursuant to any provision of this Agreement;
(iii) to make payments of the Master Servicing Fee (to the extent not
already withheld or withdrawn from the Collection Account by the Master
Servicer) to the Master Servicer;
(iv) to make distributions to the Certificateholders and the Class
2-A3 Certificate Insurer pursuant to Article V; and
(v) to clear and terminate the Certificate Account pursuant to
Section 7.02.
(c) If the Trustee shall not have received a distribution with respect to
the Underlying Security by the Business Day after the Underlying Distribution
Date of the Underlying Security, the Trustee shall request the Underlying
Trustee to make such payment as promptly as possible and legally permitted and
may, and at the direction of the Certificateholders shall, subject to the
penultimate sentence of this paragraph, take any available legal action,
including the prosecution of any claims in connection therewith. The
reasonable legal fees and expenses incurred by the Trustee in connection with
the prosecution of any such legal action shall be reimbursable to the Trustee
out of the proceeds of any such action and shall be retained by the Trustee
prior to the deposit of any remaining proceeds in the Certificate Account
pending distribution thereof to Certificateholders in accordance with Section
5.02 hereof. The amount distributable to Certificateholders on the
Distribution Date immediately succeeding the receipt of such proceeds shall be
reduced by the amount so reimbursed. In the event that the Trustee has reason
to believe that the proceeds of any such legal action may be insufficient to
reimburse it for its projected legal fees and expenses, the Trustee shall
notify the Certificateholders that it is not obligated to pursue any such
available remedies unless adequate indemnity for its legal fees and expenses
is provided by Certificateholders. In the event that any such indemnity is
provided to the Trustee, the Trustee shall take such action as shall be
appropriate under the circumstances.
(d) The Trustee may invest, or cause to be invested, funds held in the
Certificate Account, which funds, if invested, shall be invested in Eligible
Investments (which may be obligations of the Trustee). All such investments
must mature no later than the next Distribution Date, and shall not be sold or
disposed of prior to their maturity. All such Eligible Investments will be
made in the name of the Trustee (in its capacity as such) or its nominee. All
income and gain realized from any such investment shall be compensation for
the Trustee and shall be subject to its withdrawal on order from time to time.
The amount of any losses incurred in respect of any such investments shall be
paid by the Trustee for deposit in the Certificate Account out of its own
funds, without any right of reimbursement therefor, immediately as realized.
Funds held in the Certificate Account that are not invested shall be held in
cash.
Section 4.05. Determination of LIBOR. (a) If the outstanding Certificates
include any LIBOR Certificates or consist of any LIBOR Components, then on
each LIBOR Determination Date the Trustee shall determine LIBOR on the basis
of the offered LIBOR quotations of the Reference Banks as of 11:00 a.m. London
time on such LIBOR Determination Date as follows:
(i) If on any LIBOR Determination Date two or more of the Reference
Banks provide such offered quotations, LIBOR for the next Accrual Period
will be the arithmetic mean of such offered quotations (rounding such
arithmetic mean if necessary to the nearest five decimal places;
(ii) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Accrual Period will be whichever is the higher of (x) LIBOR as determined
on the previous LIBOR Determination Date or (y) the Reserve Interest Rate.
The "Reserve Interest Rate" will be either (A) the rate per annum which
the Master Servicer determines to be the arithmetic mean (rounding such
arithmetic mean if necessary to the nearest five decimal places) of the
one-month Eurodollar lending rates that New York City banks selected by
the Depositor are quoting, on the relevant LIBOR Determination Date, to
the principal London offices of at least two leading banks in the London
interbank market or (B) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month Eurodollar lending rate that
the New York City banks selected by the Depositor are quoting on such
LIBOR Determination Date to leading European banks; and
(iii) If on any LIBOR Determination Date the Trustee is required but
is unable to determine the Reserve Interest Rate in the manner provided in
paragraph (ii) above, LIBOR for the next Accrual Period will be LIBOR as
determined on the previous LIBOR Determination Date or, in the case of the
first LIBOR Determination Date, the Initial LIBOR Rate.
(b) The establishment of LIBOR by the Trustee and the Trustee's subsequent
calculation of the Certificate Interest Rate or Component Interest Rate (or
Rates) applicable to the LIBOR Certificates and LIBOR Components for the
relevant Accrual Period, in the absence of manifest error, will be final and
binding. In all cases, the Trustee may conclusively rely on quotations of
LIBOR for the Reference Banks as such quotations appear on the display
designated "LIUS01M" on the Bloomberg Financial Markets Commodities News.
(c) As used herein, "Reference Banks" shall mean four leading banks
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) whose quotations appear on the "Bloomberg Screen LIUS01M Index
Page" (as described in the definition of LIBOR) on the applicable LIBOR
Determination Date and (iii) which have been designated as such by the
Depositor and are able and willing to provide such quotations to the Depositor
on each LIBOR Determination Date. The Reference Banks initially shall be:
Barclay's plc, Bank of Tokyo, National Westminster Bank and Trust Company and
Bankers Trust Company. If any of the initial Reference Banks should be removed
from the Bloomberg Screen LIUS01M Index Page or in any other way fail to meet
the qualifications of a Reference Bank, the Depositor shall use its best
efforts to designate alternate Reference Banks.
(d) If (i) with respect to any LIBOR Determination Date LIBOR is
determined pursuant to clause (a)(iii) of this Section and (ii) on the next
succeeding LIBOR Determination Date LIBOR would, without giving effect to this
paragraph (d), be determined pursuant to such clause (a)(iii), then the
Depositor shall select an alternative interest rate index over which the
Depositor has no control that is used for determining Eurodollar lending rates
and is calculated and published (or otherwise made available) by an
independent third party, and such alternative interest rate index shall
constitute LIBOR for all purposes hereof.
Section 4.06. The Class 2-A3 Reserve Fund. (a) The Trustee shall establish
and maintain the Class 2-A3 Reserve Fund, which shall be an Eligible Account
into which there shall have been deposited the amount of $37,500 on the
Closing Date. No additional funds will be deposited in the Class 2-A3 Reserve
Fund after the Closing Date. All funds deposited in the Class 2-A3 Reserve
Fund, other than investment earnings thereon which shall be released by the
Trustee to Lehman Brothers Inc., shall be held in trust for the benefit of the
Holders of the Class 2-A3 Certificates until withdrawn in accordance with
Section 5.02(d). The Class 2-A3 Reserve Fund shall be an "outside reserve
fund" under the REMIC Provisions. Lehman Brothers Inc. shall be the beneficial
owner of the Class 2-A3 Reserve Fund for federal and state income tax
purposes. The Trustee, upon the instructions of the Depositor, may invest, or
cause to be invested, funds in the Class 2-A3 Reserve Fund in Eligible
Investments (which may be the obligation of the Trustee).
(b) The Trustee shall from time to time make withdrawals from the Class
2-A3 Reserve Fund on behalf of the Trust Fund for the following purposes:
(i) prior to each Distribution Date, to withdraw from the Class 2-A3
Reserve Fund an amount equal to the lesser of (a) any Net Prepayment
Interest Shortfalls and any Relief Act Reductions for Pool 2 allocable to
the Class 2-A3 Certificates for the related Distribution Date, and (b) the
amount on deposit in the Class 2-A3 Reserve Fund, and remit such amount to
the Certificate Account for distribution to the Class 2-A3
Certificateholders on such Distribution Date; and
(ii) on the earlier of (a) the Distribution Date on which the Class
Principal Amount of the Class 2-A3 Certificates is reduced to zero and (b)
the termination of this Agreement pursuant to Section 7.01, to clear and
terminate the Class 2-A3 Reserve Fund and to pay all amounts on deposit
therein to Lehman Brothers Inc. at the address supplied by it to the
Trustee for such purpose.
Section 4.07. The Securities Account. The Depositor shall establish a
"Securities Account" in the name of the Securities Intermediary which shall be
pledged to the Trustee, as collateral agent, for the benefit of the
Certificateholders. The Securities Account shall be a segregated,
non-interest-bearing trust account maintained with the Trustee and established
for the purpose of holding the Underlying Security. The Depositor and the
Trustee hereby appoint U.S. Bank National Association as Securities
Intermediary with respect to the Securities Account, and the Depositor hereby
grants to the Trustee, as collateral agent for the benefit of the
Certificateholders, a security interest to secure all amounts due
Certificateholders hereunder in and to the Securities Account and the Security
Entitlements to all Financial Assets credited to the Securities Account,
including without limitation all amounts, securities, investments, Financial
Assets, investment property and other property from time to time deposited in
or credited to the Securities Account and all proceeds thereof. Amounts held
from time to time in the Securities Account will continue to be held by the
Securities Intermediary for the benefit of the Trustee, as collateral agent,
for the benefit of the Certificateholders. Upon the termination of the Trust
Fund, the Trustee shall inform the Securities Intermediary of such
termination. By acceptance of their Certificates or interests therein, the
Certificateholders shall be deemed to have appointed U.S. Bank National
Association as Securities Intermediary. U.S. Bank National Association hereby
accepts such appointment as Securities Intermediary.
(i) With respect to the Account Property credited to the Securities
Account, the Securities Intermediary agrees that:
(A) any Account Property that is held in deposit accounts shall
be held solely in a bank with a Specified Rating or a bank otherwise
approved in writing by the Rating Agencies; and each such deposit
account shall be subject to the exclusive custody and control of the
Securities Intermediary, and the Securities Intermediary shall have
sole signature authority with respect thereto;
(B) the sole assets permitted in the Securities Account shall be
those as the Securities Intermediary agrees to treat as Financial
Assets; and
(C) any such Account Property that is, or is treated as, a
Financial Asset shall be physically delivered (accompanied by any
required endorsements) to, or credited to an account in the name of,
the Securities Intermediary or other eligible institution maintaining
the Securities Account in accordance with the Securities
Intermediary's customary procedures such that the Securities
Intermediary or such other institution establishes a Security
Entitlement in favor of the Trustee with respect thereto over which
the Securities Intermediary or such other institution has Control.
(ii) The Securities Intermediary hereby confirms that (A) the
Securities Account is an account to which Financial Assets are or may be
credited, and the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Trustee, as collateral agent, as entitled to
exercise the rights that comprise any Financial Asset credited to the
Securities Account, (B) all Account Property in respect of the Securities
Account will be promptly credited by the Securities Intermediary to the
Securities Account, and (C) all securities or other property underlying
any Financial Assets credited to the Securities Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities
account maintained in the name of the Securities Intermediary and in no
case will any Financial Asset credited to the Securities Account be
registered in the name of the Depositor, payable to the order of the
Depositor or specially endorsed to the Depositor except to the extent the
foregoing have been specially endorsed to the Securities Intermediary or
in blank.
(iii) The Securities Intermediary hereby agrees that each item of
property (whether investment property, Financial Asset, security,
instrument or cash) credited to the Securities Account shall be treated as
a Financial Asset.
(iv) If at any time the Securities Intermediary shall receive any
order from the Trustee directing transfer or redemption of any financial
asset relating to the Securities Account, the Securities Intermediary
shall comply with such entitlement order without further consent by the
Depositor or any other Person. If at any time the Trustee notifies the
Securities Intermediary in writing that the Trust Fund has been terminated
in accordance herewith and the security interest granted above has been
released, then thereafter if the Securities Intermediary shall receive any
order from the Depositor directing transfer or redemption of any Financial
Asset relating to the Securities Account, the Securities Intermediary
shall comply with such entitlement order without further consent by the
Trustee or any other Person.
(v) In the event that the Securities Intermediary has or subsequently
obtains by agreement, operation of law or otherwise a security interest in
the Securities Account or any Financial Asset credited thereto, the
Securities Intermediary hereby agrees that such security interest shall be
subordinate to the security interest of the Trustee. The Financial Assets
credited to the Securities Account will not be subject to deduction,
set-off, banker's lien, or any other right in favor of any Person other
than the Trustee (except that the Securities Intermediary may set off the
face amount of any checks which have been credited to the Securities
Account but are subsequently returned unpaid because of uncollected or
insufficient funds).
(vi) There are no other agreements entered into between the
Securities Intermediary in such capacity and the Depositor with respect to
the Securities Account. In the event of any conflict between this
Agreement (or any provision of this Agreement) and any other agreement now
existing or hereafter entered into, the terms of this Agreement shall
prevail.
(vii) The rights and powers granted herein to the Trustee have been
granted in order to perfect its security interest in the Securities
Account and the Security Entitlements to the Financial Assets credited
thereto and are powers coupled with an interest and will neither be
affected by the bankruptcy of the Depositor nor by the lapse of time. The
obligations of the Securities Intermediary hereunder shall continue in
effect until the security interest of the Trustee in the Securities
Account and such Security Entitlements has been terminated pursuant to the
terms of this Agreement and the Trustee has notified the Securities
Intermediary of such termination in writing.
(viii) Notwithstanding anything else contained herein, the Depositor
agrees that the Securities Account will be established only with the
Securities Intermediary or another institution meeting the requirements of
this Section 4.07, which agrees substantially as follows: (1) it will
comply with Entitlement Orders related to such account issued by the
Trustee, as collateral agent, without further consent by the Depositor;
(2) until termination of the Agreement, it will not enter into any other
agreement related to such account pursuant to which it agrees to comply
with Entitlement Orders of any Person other than the Trustee, as
collateral agent; and (3) all assets delivered or credited to it in
connection with such account and all investments thereof will be promptly
credited to such account.
(ix) The Depositor agrees to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments (including, without
limitation, any financing statements under the Relevant UCC or this
Agreement) as may be determined to be necessary, in order to perfect the
interests created by this Section and otherwise effectuate the purposes,
terms and conditions.
Section 4.08. Liability of the Securities Intermediary. The Securities
Intermediary shall be liable in accordance herewith only to the same extent as
the Trustee shall be liable hereunder.
Article V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution
Date the Trustee or the Paying Agent shall make distributions in accordance
with this Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date to any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of the
Notional Certificates and Principal Only Certificates, a Percentage Interest
of 100%, by wire transfer in immediately available funds to an account
specified in the request and at the expense of such Certificateholder;
provided, however, that the final distribution in respect of any Certificate
shall be made only upon presentation and surrender of such Certificate at the
Corporate Trust Office. Wire transfers will be made at the expense of the
Holder requesting such wire transfer by deducting a wire transfer fee from the
related distribution. Notwithstanding such final payment of principal of any
of the Certificates, each Residual Certificate will remain outstanding until
the termination of each REMIC and the payment in full of all other amounts due
with respect to the Residual Certificate and at such time such final payment
in retirement of any Residual Certificate will be made only upon presentation
and surrender of such Certificate at the Corporate Trust Office of the Trustee
or at the office of the New York Presenting Agent. If any payment required to
be made on the Certificates is to be made on a day that is not a Business Day,
then such payment will be made on the next succeeding Business Day. Payments
to the Class 2-A3 Certificate Insurer shall in all cases be made by wire
transfer of immediately available funds.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in
proportion to their respective initial Certificate Principal Amounts (or
initial Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
with respect to each Mortgage Pool, and shall distribute such amount to the
Class 2-A3 Certificate Insurer, to itself and to the Holders of record of each
Class of Certificates, in the following order of priority:
(i) from the Available Distribution Amount for Pool 2, to the Class
2-A3 Certificate Insurer, the Aggregate Class 2-A3 Certificate Insurance
Premium;
(ii) from the Available Distribution Amount for each Mortgage Pool,
to the Trustee, the Trustee Fee allocable to such Mortgage Pool for such
Distribution Date;
(iii) from the Available Distribution Amount for each Mortgage Pool,
to each Class of Senior Certificates or Component in the related
Certificate Group (other than any Class of Principal Only Certificates),
the Accrued Certificate Interest thereon for such Distribution Date, as
reduced by such Class's or such Component's allocable share of any Net
Prepayment Interest Shortfalls for the related Mortgage Pool for such
Distribution Date; provided, however, that any shortfall in available
amounts for each Mortgage Pool shall be allocated among the Classes and
any Component of the related Certificate Group in proportion to the amount
of Accrued Certificate Interest (as so reduced) that would otherwise be
distributable thereon;
(iv) from the Available Distribution Amount for each Mortgage Pool,
to each Class of Senior Certificates or Component in the related
Certificate Group (other than any Class of Principal Only Certificates),
any related Interest Shortfall for such Distribution Date; provided,
however, that any shortfall in available amounts for each Mortgage Pool
shall be allocated among the Classes and any Component of the related
Certificate Group in proportion to the Interest Shortfall for each such
Class or such Component on such Distribution Date;
(v) from the remaining Available Distribution Amount for each
Mortgage Pool, to the Senior Certificates of the related Certificate Group
(other than any Class of Notional Certificates), as follows:
(A) to the Class 1-A1, Class 1-A2, Class 1-A4, Class 1-A7, Class
1-AP and Class R Certificates, from the Available Distribution Amount
for Pool 1 for such Distribution Date, in reduction of their
respective Class Principal Amounts, concurrently, as follows:
(1) to the Class 1-A1, Class 1-A2, Class 1-A4, Class 1-A7
and Class R Certificates, in reduction of their respective Class
Principal Amounts, the Senior Principal Distribution Amount for
Pool 1 for such Distribution Date, in the following order of
priority:
(a) to the Class 1-A7 Certificates, the lesser of (i)
the Class 1-A7 Priority Amount for such Distribution Date
and (ii) 98.6% of the Senior Principal Distribution Amount
for Pool 1 for such Distribution Date, until the Class
Principal Amount thereof has been reduced to zero; and
(b) to the Class 1-A1, Class 1-A2, Class 1-A4 and
Class R Certificates, in reduction of their respective
Class Principal Amounts, the remaining Senior Principal
Distribution Amount for Pool 1 for such Distribution Date,
in the following order of priority:
(I) to the Class R Certificate, until the Class
Principal Amount thereof has been reduced to zero;
(II) to the Class 1-A1 and Class 1-A2
Certificates, until a total of $730,000 has been
distributed under this clause (v)(A)(1)(b)(II),
concurrently, as follows:
(x) to the Class 1-A1 Certificates, 98.00%
of the amount distributable under clause
(v)(A)(1)(b)(II) for such Distribution Date; and
(y) to the Class 1-A2 Certificates, 2.00% of
the amount distributable under clause
(v)(A)(1)(b)(II) for such Distribution Date; and
(III) sequentially, to the Class 1-A2, Class 1-A1
and Class 1-A4 Certificates, in that order, until the
Class Principal Amount of each such Class has been
reduced to zero; and
(2) to the Class 1-AP Certificates, the AP Principal
Distribution Amount for Pool 1, until the Class Principal
Amount thereof has been reduced to zero;
(B) to the Class 2-A1, Class 2-A2, Class 2-A3, Class 2-A4,
Class 2-A5 and Class 2-AP Certificates, from the Available
Distribution Amount for Pool 2 for such Distribution Date, in
reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) to the Class 2-A1, Class 2-A2, Class 2-A3 and
Class 2-A4 Certificates, in reduction of their respective
Class Principal Amounts, the Senior Principal Distribution
Amount for Pool 2 for such Distribution Date, in the
following order of priority:
(a) if the Distribution Date occurs on or after
the Distribution Date in February 2003, to the Class
2-A3 and Class 2-A4 Certificates, pro rata in
proportion to their respective Class Principal
Amounts, an amount on each Distribution Date up to
$41,500, until the Class Principal Amount of each such
Class has been reduced to zero;
(b) to the Class 2-A1 and Class 2-A2
Certificates, until a total of $975,000 has been
distributed under this clause (v)(B)(1)(b),
concurrently, as follows:
(x) to the Class 2-A1 Certificates, 99.00%
of the amount distributable under clause
(v)(B)(1)(b); and
(y) to the Class 2-A2 Certificates, 1.00% of
the amount distributable under clause
(v)(B)(1)(b);
(c) sequentially, to the Class 2-A2 and Class
2-A1 Certificates, in that order, until the Class
Principal Amount of such Class has been reduced to
zero; and
(d) concurrently, to the Class 2-A3 and Class
2-A4 Certificates, pro rata in proportion to their
respective Class Principal Amounts, until the Class
Principal Amount of each such Class has been reduced
to zero;
(2) to the Class 2-A5 Certificates, 3.3333333333% of
the principal portion of the Security Payment for the
related Underlying Distribution Date, until the Class
Principal Amount of such Class has been reduced to zero;
and
(3) to the Class 2-AP Certificates, the AP Principal
Distribution Amount for Pool 2 for such Distribution Date,
until the Class Principal Amount thereof has been reduced
to zero;
(C) to the Class 3-A and Class 3-AP Certificates, from the
Available Distribution Amount for Pool 3 for such Distribution
Date, in reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) to the Class 3-A Certificates, the Senior
Principal Distribution Amount for Pool 3 for such
Distribution Date, until the Class Principal Amount thereof
has been reduced to zero; and
(2) to the Class 3-AP Certificates, the AP
Distribution Amount for Pool 3 for such Distribution Date,
until the Class Principal Amount thereof has been reduced
to zero;
(vi) to the Class 1-AP, Class 2-A5, Class 2-AP and Class 3-AP
Certificates, to the extent of the remaining Available Distribution Amount
for each Mortgage Pool, the Class AP Deferred Amount for such Class and
Distribution Date, until the Class Principal Amount thereof has been
reduced to zero; provided, however, that (A) distributions pursuant to
this priority shall not exceed the aggregate Subordinate Principal
Distribution Amount for all Mortgage Pools for such date; (B) such amounts
will not reduce the Class Principal Amounts of such Classes; and (C) in
the event the aggregate Subordinate Principal Distribution Amount for all
Mortgage Pools is insufficient to fully pay the Class AP Deferred Amount
for the Class 1-AP, Class 2-A5, Class 2-AP and Class 3-AP Certificates,
such amount shall be distributed pro rata to such Classes on the basis of
their respective Class AP Deferred Amounts;
(vii) to the Class 2-A3 Certificate Insurer, any unreimbursed Insured
Payments, plus all amounts due to the Class 2-A3 Certificate Insurer under
the Insurance Agreement, together with interest thereon at the rate
specified in the Insurance Agreement (collectively, the "Reimbursement
Amounts"); and
(viii) from the remaining Available Distribution Amount for all
Mortgage Pools, subject to the prior distribution of amounts pursuant to
Section 5.02(f) in the case of clauses (C), (F), (I), (L), (O) and (R)
below, to the Subordinated Certificates, as follows:
(A) to the Class B1 and Class B1X Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, as
reduced by each such Class's allocable share of any Net
Prepayment Interest Shortfalls for such Distribution Date;
provided, however, that any shortfall in available amounts shall
be allocated between such Classes in proportion to the amount of
Accrued Certificate Interest (as so reduced) that would
otherwise be distributable thereon;
(B) to the Class B1 and Class B1X Certificates, any
Interest Shortfall for such Class on such Distribution Date;
provided, however, that any shortfall in available amounts shall
be allocated between such Classes in proportion to the Interest
Shortfall for each such Class on such Distribution Date;
(C) to the Class B1 Certificates, in reduction of the Class
Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c),
until the Certificate Principal Balance thereof has been reduced
to zero;
(D) to the Class B2 and Class B2X Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, as
reduced by each such Class's allocable share of any Net
Prepayment Interest Shortfalls for such Distribution Date;
provided, however, that any shortfall in available amounts shall
be allocated between such Classes in proportion to the amount of
Accrued Certificate Interest (as so reduced) that would
otherwise be distributable thereon;
(E) to the Class B2 and Class B2X Certificates, any
Interest Shortfall for such Class on such Distribution Date;
provided, however, that any shortfall in available amounts shall
be allocated between such Classes in proportion to the Interest
Shortfall for each such Class on such Distribution Date;
(F) to the Class B2 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Amount thereof has been
reduced to zero;
(G) to the Class B3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest
Shortfalls for such Distribution Date;
(H) to the Class B3 Certificates, any Interest Shortfall
for such Class on such Distribution Date;
(I) to the Class B3 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Amount thereof has been
reduced to zero;
(J) to the Class B4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest
Shortfalls for such Distribution Date;
(K) to the Class B4 Certificates, any Interest Shortfall
for such Class on such Distribution Date;
(L) to the Class B4 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Certificate Principal Balance thereof has
been reduced to zero;
(M) to the Class B5 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest
Shortfalls for such Distribution Date;
(N) to the Class B5 Certificates, any Interest Shortfall
for such Class on such Distribution Date;
(O) to the Class B5 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Class Principal Balance thereof has been
reduced to zero;
(P) to the Class B6 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest
Shortfalls for such Distribution Date;
(Q) to the Class B6 Certificates, any Interest Shortfall
for such Class on such Distribution Date; and
(R) to the Class B6 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate
Class Percentage of each Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section
5.02(c), until the Certificate Principal Balance thereof has
been reduced to zero.
(b) Net Prepayment Interest Shortfalls for each Mortgage Pool shall be
allocated among the Certificates and Components of the related Certificate
Group (other than any related Principal Only Certificates) pro rata based on
(i) in the case of the related Non-AP Senior Certificates and any related
Components, the Accrued Certificate Interest otherwise distributable thereon,
and (ii) in the case of the Subordinate Certificates, interest accrued on the
related Apportioned Principal Balances.
(c) (i) If on any Distribution Date the Credit Support Percentage for the
Class B1 Certificates is less than the Original Credit Support Percentage for
such Class, then, notwithstanding anything to the contrary in Section 5.02(a),
no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in
respect of the Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates
on such Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date
the Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on
such Distribution Date.
Any amount not distributed in respect of any Class on any Distribution
Date pursuant to the immediately preceding paragraph will be allocated among
the remaining Subordinate Classes in proportion to their respective
Certificate Principal Amounts.
(d) On each Distribution Date, the Trustee shall distribute the amount
withdrawn from the Class 2-A3 Reserve Fund with respect to such Distribution
Date pursuant to Section 4.06, to the extent of funds on deposit in the Class
2-A3 Reserve Fund, and shall apply such funds to distributions on the Class
2-A3 Certificates, as interest thereon, in the amount of (i) any Net
Prepayment Interest Shortfalls for Pool 2 allocable to the Class 2-A3
Certificates on such Distribution Date and (ii) any Relief Act Reductions
allocable to the Class 2-A3 Certificates on such Distribution Date.
(e) On each Distribution Date, the Trustee shall distribute to the Holder
of the Class R Certificate any amounts remaining in the Upper Tier REMIC for
such Distribution Date after application of all amounts described in paragraph
(a) of this Section 5.02. Any distributions pursuant to this paragraph (e)
shall not reduce the Class Principal Amount of the Class R Certificate.
(f) (i) On each Distribution Date prior to the Credit Support Depletion
Date but on or after the date on which the aggregate Certificate Principal
Amount of the Non-AP Senior Certificates of any Certificate Group has been
reduced to zero, amounts otherwise distributable as principal on each Class of
Subordinate Certificates pursuant to Section 5.02(a)(viii), in reverse order
of priority, in respect of such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the Mortgage Pool relating to
such retired Certificates, shall be distributed as principal to the Non-AP
Senior Certificates (other than any Notional Certificates) remaining
outstanding, until the Class Principal Amounts thereof have been reduced to
zero, provided that on such Distribution Date (a) the Aggregate Subordinate
Percentage for such Distribution Date is less than 200% of the Aggregate
Subordinate Percentage as of the Closing Date or (b) the average outstanding
principal balance of the Mortgage Loans in any Mortgage Pool that are
delinquent 60 days or more over the last six months as a percentage of the
related Group Subordinate Amount is greater than or equal to 50%.
(A) On each Distribution Date on which the aggregate
Certificate Principal Amount of the Non-AP Senior Certificates
of any two Certificate Groups has been reduced to zero, any
amounts distributable pursuant to this Section 5.02(f)(i) will
be distributed, as to each applicable Class of Subordinate
Certificates, in proportion to such Class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for
the Mortgage Pool relating to each such retired Certificate
Group.
(B) On each Distribution Date on which any of the Non-AP
Senior Certificates of each of two Certificate Groups remain
outstanding, any amounts distributable pursuant to this Section
5.02(f)(i) will be distributed in proportion to the aggregate
Certificate Principal Amounts of such Certificates of each such
Certificate Group.
(ii) (A) On any Distribution Date on which any Certificate Group
constitutes an Undercollateralized Group, all amounts otherwise
distributable as principal on the Subordinate Certificates, in reverse
order of priority (other than amounts necessary to pay Class AP Deferred
Amounts or unpaid Interest Shortfalls) (or, following the Credit Support
Depletion Date, such other amounts described in the immediately following
sentence), will be distributed as principal to the Non-AP Senior
Certificates (other than any Notional Certificates) of such
Undercollateralized Group, until the aggregate Certificate Principal
Amount of such Non-AP Senior Certificates, less, with respect to Group 2,
the Security Principal Balance of the Underlying Security, equals the
Non-AP Pool Balance of the related Mortgage Pool (such distribution, an
"Undercollateralization Distribution"). In the event that any Certificate
Group constitutes an Undercollateralized Group on any Distribution Date
following the Credit Support Depletion Date, Undercollateralization
Distributions will be made from any Available Distribution Amount for each
Mortgage Pool not related to an Undercollateralized Group remaining after
all required amounts have been distributed to the Non-AP Senior
Certificates of each such other Certificate Group. In addition, the amount
of any unpaid Interest Shortfalls with respect to an Undercollateralized
Group on any Distribution Date (including any Interest Shortfalls for such
Distribution Date) will be distributed to the Non-AP Senior Certificates
of such Undercollateralized Group prior to the payment of any
Undercollateralization Distributions from amounts otherwise distributable
as principal on the Subordinate Certificates, in reverse order of priority
(or, following the Credit Support Depletion Date, as provided in the
preceding sentence).
(B) If on any Distribution Date two Certificate Groups are
Undercollateralized Groups and one Certificate Group is not an
Undercollateralized Group, the distributions described in
paragraph (ii)(A) above will be made in proportion to the amount
by which the aggregate Certificate Principal Amount of the
Non-AP Senior Certificates, after giving effect to distributions
pursuant to Sections 5.02(a) and (b) on such Distribution Date,
of each Undercollateralized Group, less, with respect to Group
2, the Security Principal Balance of the Underlying Security,
exceeds the Non-AP Pool Balance of the related Mortgage Pool for
such Distribution Date.
Section 5.03. Allocation of Realized Losses. (a) On any Distribution Date,
(x) the applicable AP Percentage of the principal portion of each Realized
Loss in respect of a Mortgage Loan in each Mortgage Pool will be allocated to
the related Class of Principal Only Certificates (other than the Class 2-A5
Certificates) until the Class Principal Amount thereof has been reduced to
zero; and (y) the applicable Non-AP Percentage of the principal portion of
each Realized Loss in respect of a Mortgage Loan in each Mortgage Pool will be
allocated in the following order of priority:
first, to the Class B6 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class Principal
Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates (other than the
Class 2-A5 Certificates) of the related Certificate Group, pro rata,
in accordance with their Class Principal Amounts; provided, that any
such loss allocated to any Class of Accrual Certificates shall be
allocated (subject to Section 5.03(c)) on the basis of the lesser of
(x) the Class Principal Amount thereof immediately prior to the
applicable Distribution Date and (y) the Class Principal Amount
thereof on the Closing Date (as reduced by any Realized Losses
previously allocated thereto).
(b) On any Distribution Date, (x) 3.3333333333% of the principal portion
of each Realized Loss in respect of the Underlying Security will be allocated
to the Class 2-A5 Certificates until the Class Principal Amount thereof has
been reduced to zero; and (y) 96.6666666667% of the principal portion of each
Realized Loss in respect of the Underlying Security will be allocated in the
following order of priority:
first, to the Class B6 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class Principal
Amount thereof has been reduced to zero; and
seventh, to the Group 2 Certificates (other than the Class 2-A5
Certificates), pro rata, in accordance with their Class Principal
Amounts; provided, that any such loss allocated to any Class of
Accrual Certificates shall be allocated (subject to Section 5.03(c))
on the basis of the lesser of (x) the Class Principal Amount thereof
immediately prior to the applicable Distribution Date and (y) the
Class Principal Amount thereof on the Closing Date (as reduced by any
Realized Losses previously allocated thereto).
(c) Any Realized Losses allocated to a Class of Certificates pursuant to
Section 5.03(a) or (b) shall be allocated among the Certificates of such Class
in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph (c) shall be
accomplished by reducing the Certificate Principal Amount of the related
Certificates on the related Distribution Date in accordance with Section
5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03 shall
be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion
thereof, after giving effect to distributions made on such Distribution Date,
except that the aggregate amount of Realized Losses to be allocated to the
Principal Only Certificates on such Distribution Date will be taken into
account in determining distributions in respect of any related Class AP
Deferred Amount for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Certificate
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class
to which any portion of such Realized Loss had previously been allocated shall
be entitled to receive, on the Distribution Date in the month following the
month in which such recovery is received, its pro rata share (based on the
Class Principal Amount thereof) of such recovery, up to the amount of the
portion of such Realized Loss previously allocated to such Class. In the event
that the total amount of such recovery exceeds the amount of Realized Loss
allocated to the outstanding Classes in accordance with the preceding
provisions, each outstanding Class of Certificates shall be entitled to
receive its pro rata share of the amount of such excess, up to the amount of
any unrecovered Realized Loss previously allocated to such Class. Any such
recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not
otherwise allocated to any Class of Certificates, pursuant to this subsection
shall be treated as Principal Prepayments for purposes of this Agreement.
(g) In the event that there is a recovery of an amount in respect of
principal of the Underlying Security, which amount had previously been
allocated as a Realized Loss to one or more Classes of Certificates, each
outstanding Class to which any portion of such Realized Loss had previously
been allocated shall be entitled to receive, on the Distribution Date in the
month following the month in which such recovery is received, its pro rata
share (based on the Class Principal Amount thereof) of such recovery, up to
the amount of the portion of such Realized Loss previously allocated to such
Class. In the event that the total amount of such recovery exceeds the amount
of Realized Loss allocated to the outstanding Classes in accordance with the
preceding provisions, each outstanding Class of Certificates shall be entitled
to receive its pro rata share of the amount of such excess, up to the amount
of any unrecovered Realized Loss previously allocated to such Class. Any such
recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not
otherwise allocated to any Class of Certificates, pursuant to this subsection
shall be treated as Principal Prepayments for purposes of this Agreement.
Section 5.04. Advances by Master Servicer and Trustee. (a) Advances shall
be made in respect of each Deposit Date as provided herein. If, on any
Determination Date, the Master Servicer determines that any Scheduled Payments
due during the related Due Period (other than Balloon Payments) have not been
received, the Master Servicer shall, or cause the applicable Servicer to,
advance such amount, less an amount, if any, to be set forth in an Officer's
Certificate to be delivered to the Trustee on such Determination Date, which
if advanced the Master Servicer or the applicable Servicer has determined
would not be recoverable from amounts received with respect to such Mortgage
Loan, including late payments, Liquidation Proceeds, Insurance Proceeds or
otherwise. If the Master Servicer determines that an Advance is required, it
shall on the Deposit Date immediately following such Determination Date either
(i) remit to the Trustee from its own funds (or funds advanced by the
applicable Servicer) for deposit in the Certificate Account immediately
available funds in an amount equal to such Advance, (ii) cause to be made an
appropriate entry in the records of the Collection Account that funds in such
account being held for future distribution or withdrawal have been, as
permitted by this Section 5.04, used by the Master Servicer to make such
Advance, and remit such immediately available funds to the Trustee for deposit
in the Certificate Account or (iii) make Advances in the form of any
combination of clauses (i) and (ii) aggregating the amount of such Advance.
Any funds being held in the Collection Account for future distribution to
Certificateholders and so used shall be replaced by the Master Servicer from
its own funds by remittance to the Trustee for deposit in the Certificate
Account on or before any future Deposit Date to the extent that funds in the
Certificate Account on such Deposit Date shall be less than payments to
Certificateholders required to be made on the related Distribution Date. The
Master Servicer and each Servicer shall be entitled to be reimbursed from the
Collection Account for all Advances made by it as provided in Section 4.02.
(b) In the event that the Master Servicer fails for any reason to make an
Advance required to be made pursuant to Section 5.04 on or before the Deposit
Date, the Trustee, as successor Master Servicer pursuant to Section 6.14,
shall, on or before the related Distribution Date, deposit in the Certificate
Account an amount equal to the excess of (a) Advances required to be made by
the Master Servicer or any Servicer that would have been deposited in such
Certificate Account over (b) the amount of any Advance made by the Master
Servicer or any Servicer with respect to such Distribution Date; provided,
however, that the Trustee shall be required to make such Advance only if it is
not prohibited by law from doing so and it has determined that such Advance
would be recoverable from amounts to be received with respect to such Mortgage
Loan, including late payments, Liquidation Proceeds, Insurance Proceeds, or
otherwise. The Trustee shall be entitled to be reimbursed from the Certificate
Account for Advances made by it pursuant to this Section 5.04 as if it were
the Master Servicer.
Section 5.05. Compensating Interest Payments. The amount of the Aggregate
Master Servicing Compensation payable to the Master Servicer in respect of any
Distribution Date shall be reduced by the amount of any Compensating Interest
Payment for such Distribution Date, but only to the extent such Compensating
Interest Payment is not actually made by a Servicer on the applicable
Remittance Date. Such amount shall not be treated as an Advance and shall not
be reimbursable to the Master Servicer.
Section 5.06. Distributions of Principal on Redemption Certificates. (a)
Except as provided in subclauses (d) and (f) below, on each Distribution Date
on which distributions in reduction of the Class Principal Amount of a Class
of Redemption Certificates are made, such distributions will be made in the
following order of priority:
(i) any request by the personal representative of a Deceased Holder
or by a surviving tenant by the entirety, by a surviving joint tenant or
by a surviving tenant in common or other Person empowered to act on behalf
of such Deceased Holder upon his or her death, in an amount up to but not
exceeding $100,000 per request; and
(ii) any request by a Living Holder, in an amount up to but not
exceeding $10,000 per request.
Thereafter, distributions will be made as provided in clauses (i) and (ii)
above up to a second $100,000 and $10,000 per request, respectively. This
sequence of priorities will be repeated for each request for principal
distributions made by the Certificate Owners of a Class of Redemption
Certificates until all such requests have been honored.
Requests for distributions in reduction of the Certificate Principal
Amounts of Redemption Certificates presented on behalf of Deceased Holders in
accordance with the provisions of clause (i) above will be accepted in the
order of their receipt by the Clearing Agency. Requests for distributions in
reduction of the Certificate Principal Amounts of Redemption Certificates
presented in accordance with the provisions of clause (ii) above will be
accepted in the order of priority established by the random lot procedures of
the Clearing Agency after all requests with respect to such Class presented in
accordance with clause (i) have been honored. All requests for distributions
in reduction of the Class Principal Amount of a Class of Redemption
Certificates with respect to any Distribution Date shall be made in accordance
with Section 5.06(c) below and must be received by the Clearing Agency and
forwarded to, and received by, the Trustee no later than the close of business
on the related Record Date. Requests for distributions that are received by
the Clearing Agency and forwarded to the Trustee after the related Record Date
and requests, in either case, for distributions timely received but not
accepted with respect to any Distribution Date, will be treated as requests
for distributions in reduction of the Class Principal Amount of the applicable
Class of Redemption Certificates on the next succeeding Distribution Date, and
each succeeding Distribution Date thereafter, until each such request is
accepted or is withdrawn as provided in Section 5.06(c). Such requests as are
not so withdrawn shall retain their order of priority without the need for any
further action on the part of the appropriate Certificate Owner of the related
Redemption Certificate, all in accordance with the procedures of the Clearing
Agency and the Trustee. Upon the transfer of beneficial ownership of any
Redemption Certificate, any distribution request previously submitted with
respect to such Certificate will be deemed to have been withdrawn only upon
the receipt by the Trustee of notification of such withdrawal using a form
required by the Clearing Agency.
Distributions in reduction of the Certificate Principal Amounts of
Redemption Certificates will be applied, in the aggregate, to such
Certificates in an amount equal to the portion of the Available Distribution
Amount distributable to the Redemption Certificates pursuant to Section
5.02(a)(v), plus any amounts available for distribution from the applicable
Rounding Account pursuant to Section 5.06(e), provided that the aggregate
distribution in reduction of the Class Principal Amount of any Class of
Redemption Certificates on any Distribution Date is made in an integral
multiple of $1,000.
(b) A "Deceased Holder" is a Certificate Owner of a Redemption Certificate
who was living at the time such interest was acquired and whose authorized
personal representative, surviving tenant by the entirety, surviving joint
tenant or surviving tenant in common or other Person empowered to act on
behalf of such Certificate Owner upon his or her death, causes to be furnished
to the Trustee a certified copy of the death certificate of such Certificate
Owner and any additional evidence of death required by and satisfactory to the
Trustee and any tax waivers requested by the Trustee. Redemption Certificates
beneficially owned by tenants by the entirety, joint tenants or tenants in
common will be considered to be beneficially owned by a single owner. The
death of a tenant by the entirety, joint tenant or tenant in common will be
deemed to be the death of the Certificate Owner, and any Redemption
Certificates so beneficially owned will be eligible for priority with respect
to distributions in reduction of the Class Principal Amount of such Class of
Redemption Certificates, subject to the limitations stated above. Redemption
Certificates beneficially owned by a trust will be considered to be
beneficially owned by each beneficiary of the trust to the extent of such
beneficiary's beneficial interest therein, but in no event will a trust's
beneficiaries collectively be deemed to be Certificate Owners of a number of
Individual Redemption Certificates greater than the number of Individual
Redemption Certificates of which such trust is the beneficial owner. The death
of a beneficiary of a trust will be deemed to be the death of a Certificate
Owner of the Redemption Certificates beneficially owned by the trust to the
extent of such beneficiary's beneficial interest in such trust. The death of
an individual who was a tenant by the entirety, joint tenant or tenant in
common in a tenancy that is the beneficiary of a trust will be deemed to be
the death of the beneficiary of the trust. The death of a person who, during
his or her lifetime, was entitled to substantially all of the beneficial
ownership interests in Redemption Certificates will be deemed to be the death
of the Certificate Owner of such Redemption Certificates regardless of the
registration of ownership of such Redemption Certificates, if such beneficial
interest can be established to the satisfaction of the Trustee. Such
beneficial interest will be deemed to exist in typical cases of street name or
nominee ownership, ownership by a trustee, ownership under the Uniform Gifts
to Minors Act and community property or other joint ownership arrangements
between a husband and wife. Beneficial interests shall include the power to
sell, transfer or otherwise dispose of a Redemption Certificate and the right
to receive the proceeds therefrom, as well as interest and distributions in
reduction of the Certificate Principal Amounts of the Redemption Certificates
payable with respect thereto. The Trustee shall not be under any duty to
determine independently (a) the occurrence of the death of any deceased
Certificate Owner or (b) whether an individual is the personal representative
of a Deceased Holder, or the surviving tenant by the entirety, or the
surviving joint tenant, or the surviving tenant in common, or is otherwise the
Person empowered to act on behalf of such Deceased Holder (a
"Representative"). The Trustee shall be entitled to rely on a certificate
executed by the Representative indicating the nature of such Representative's
authority on behalf of the Deceased Holder. The Trustee may rely entirely upon
documentation delivered to it pursuant to this Section 5.06 in establishing
the eligibility of any Certificate Owner to receive the priority accorded
Deceased Holders in this Section 5.06(b), and shall have no liability if it
makes such determination in accordance with such documentation.
(c) Requests for distributions in reduction of the Certificate Principal
Amount of a Redemption Certificate must be made by delivering a written
request therefor to the Clearing Agency Participant or Financial Intermediary
that maintains the account evidencing the Certificate Owner's interest in such
Redemption Certificate. Such Clearing Agency Participant or Financial
Intermediary should in turn make the request of the Clearing Agency (or, in
the case of an Financial Intermediary, such Financial Intermediary should
notify the related Clearing Agency Participant of such request, which Clearing
Agency Participant should make the request of the Clearing Agency) on a form
required by the Clearing Agency and provided to the Clearing Agency
Participant. Upon receipt of such request, the Clearing Agency will date and
time stamp such request and forward such request to the Trustee. The Clearing
Agency may establish such procedures as it deems fair and equitable to
establish the order of receipt of requests for such distributions received by
it on the same day. The Trustee shall not be liable for any delay in delivery
of requests for distributions or withdrawals of such requests by the Clearing
Agency, a Clearing Agency Participant or any Financial Intermediary.
In the event that any requests for distributions in reduction of the
Certificate Principal Amount of Redemption Certificates are rejected by the
Trustee for failure to comply with the requirements of this Section 5.06, the
Trustee shall return such requests to the appropriate Clearing Agency
Participant with a copy to the Clearing Agency with an explanation as to the
reason for such rejection.
The Trustee shall maintain a list of those Clearing Agency
Participants representing the Certificate Owners of Redemption Certificates
that have submitted requests for distributions in reduction of the Certificate
Principal Amount of such Redemption Certificates, together with the order of
receipt and the amounts of such requests. The Trustee shall notify the
Clearing Agency and the appropriate Clearing Agency Participants as to which
requests should be honored on each Distribution Date. Requests shall be
honored by the Clearing Agency in accordance with the procedures, and subject
to the priorities and limitations, described in this Section 5.06. The exact
procedures to be followed by the Trustee and the Clearing Agency for purposes
of determining such priorities and limitations shall be those established from
time to time by the Trustee or the Clearing Agency, as the case may be. The
decisions of the Trustee and the Clearing Agency concerning such matters shall
be final and binding on all affected Persons.
Payments in reduction of the Certificate Principal Amounts of
Redemption Certificates shall be made on the applicable Distribution Date and
the Certificate Principal Amounts as to which such payments are made shall
cease to bear interest after the last day of the month preceding the month in
which such Distribution Date occurs.
Any Certificate Owner of a Redemption Certificate that has requested
a distribution may withdraw its request by so notifying in writing the
Clearing Agency Participant or Financial Intermediary that maintains such
Certificate Owner's account. In the event that such account is maintained by a
Financial Intermediary, such Financial Intermediary should notify the related
Clearing Agency Participant which in turn should forward the withdrawal of
such request, on a form required by the Clearing Agency, to the Trustee. If
such notice of withdrawal of a request for distribution has not been received
by the Clearing Agency and forwarded to the Trustee on or before the Record
Date for the next Distribution Date, the previously made request for
distribution will be irrevocable with respect to the making of distributions
in reduction of the Certificate Principal Amount of such Redemption
Certificate on such Distribution Date.
(d) To the extent, if any, that amounts available for distribution in
reduction of the Class Principal Amount of any Class of Redemption
Certificates on a Distribution Date exceed the dollar amount of requests for
distributions with respect to such Class that have been received by the
related Record Date, as provided in Section 5.06(c) above, distributions in
reduction of the Class Principal Amount of such Class of Redemption
Certificates will be made by mandatory distributions in reduction thereof. The
Trustee shall notify the Clearing Agency of the aggregate amount of the
mandatory distribution in reduction of the Class Principal Amount of such
Class of Redemption Certificates to be made on the next Distribution Date. The
Clearing Agency shall then allocate such aggregate amount among its Clearing
Agency Participants on a random lot basis. Each Clearing Agency Participant
and, in turn, each Financial Intermediary, will then select, in accordance
with its own procedures, Individual Redemption Certificates from among those
held in its accounts to receive mandatory distributions in reduction of the
Class Principal Amount of such Class of Redemption Certificates, such that the
total amount so selected is equal to the aggregate amount of such mandatory
distributions allocated to such Clearing Agency Participant by the Clearing
Agency and to such Financial Intermediary by its related Clearing Agency
Participant, as the case may be. Clearing Agency Participants and Financial
Intermediaries that hold Redemption Certificates selected for mandatory
distributions in reduction of the Class Principal Amount thereof should
provide notice of such mandatory distributions to the affected Certificate
Owners.
(e) On the Closing Date, a Rounding Account shall be established with the
Trustee for each Class of Redemption Certificates, and Lehman Brothers Inc.
shall cause to be initially deposited the sum of $999.99 in each Rounding
Account. On each Distribution Date on which a distribution is made in
reduction of the Class Principal Amount of a Class of Redemption Certificates,
funds on deposit in the applicable Rounding Account shall be, to the extent
needed, withdrawn by the Trustee and applied to round upward to an integral
multiple of $1,000 the aggregate distribution in reduction of the Class
Principal Amount to be made on such Redemption Certificates. Rounding of such
distribution on such Redemption Certificates shall be accomplished, on the
first such Distribution Date, by withdrawing from the applicable Rounding
Account the amount of funds, if any, needed to round the amount otherwise
available for such distribution in reduction of the Class Principal Amount of
such Class of Redemption Certificates upward to the next integral multiple of
$1,000. On each succeeding Distribution Date on which distributions in
reduction of the Class Principal Amount of such Class of Redemption
Certificates are to be made, the aggregate amount of such distributions
allocable to such Class of Redemption Certificates shall be applied first to
repay any funds withdrawn from the applicable Rounding Account and not
previously repaid, and then the remainder of such allocable amount, if any,
shall be similarly rounded upward and applied as distributions in reduction of
the Class Principal Amount of such Class of Redemption Certificates; this
process shall continue on succeeding Distribution Dates until the Class
Principal Amount of such Class of Redemption Certificates has been reduced to
zero. Each Rounding Account shall be an "outside reserve fund" under the REMIC
Provisions that is beneficially owned for all federal income tax purposes by
Lehman Brothers Inc. Lehman Brothers Inc. will report all income, gain,
deduction or loss with respect thereto. The Trustee, upon the instructions of
the Depositor, may invest, or cause to be invested funds in and Rounding
Account in Eligible Investments (which may be obligations of the Trustee). The
Trustee shall distribute interest earnings, if any, on amounts held in any
Rounding Account as such interest is earned pursuant to written instructions
from Lehman Brothers Inc. to the Trustee. In no event shall the Trustee be
liable for investment losses resulting from investment of funds in the
Rounding Accounts made in accordance with the instructions of the Depositor.
Notwithstanding anything herein to the contrary, on the Distribution Date
on which distributions in reduction of the Class Principal Amount of any Class
of Redemption Certificates will reduce the Class Principal Amount thereof to
zero or in the event that distributions in reduction of the Class Principal
Amount of such Class of Redemption Certificates are made in accordance with
the provisions set forth in Section 5.06(f), an amount equal to the difference
between $999.99 and the sum then held in the applicable Rounding Account shall
be paid from the Available Distribution Amount for such Distribution Date to
such Rounding Account. Any funds then on deposit in such Rounding Account
shall be distributed to Lehman Brothers Inc.
(f) Notwithstanding any provisions herein to the contrary, on each
Distribution Date following the first Distribution Date on or after the Credit
Support Depletion Date, all distributions in reduction of the Class Principal
Amount of any Class of Redemption Certificates will be made among the Holders
of such Class of Certificates, pro rata, based on their Certificate Principal
Amounts, and will not be made in integral multiples of $1,000 or pursuant to
requested distributions or mandatory distributions by random lot.
(g) In the event that Definitive Certificates representing any Class of
Redemption Certificates are issued pursuant to Section 3.09(c), all requests
for distributions or withdrawals of such requests relating to such Class must
be submitted to the Trustee, and the Trustee shall perform the functions
described in Section 5.06(a) through (c) using its own procedures, which
procedures shall, to the extent practicable, be consistent with the procedures
described in Section 5.06(a) through (c).
Section 5.07. The Class 2-A3 Certificate Insurance Policy. (a) If, on the
second Business Day before any Distribution Date, the Trustee determines that
an Insured Payment is required to be made by the Class 2-A3 Certificate
Insurer on such Distribution Date, the Trustee shall determine the amount of
any such Insured Payment and shall give notice to the Class 2-A3 Certificate
Insurer by completing a Notice of Nonpayment in the form of Exhibit A to the
Class 2-A3 Certificate Insurance Policy and submitting such Notice of
Nonpayment by 12:00 noon, New York City time on such second Business Day as a
claim for an Insured Payment. The Trustee's responsibility for delivering a
Notice of Nonpayment to the Class 2-A3 Certificate Insurer, as provided in the
preceding sentence, is limited to the availability, timeliness and accuracy of
the information provided by the Master Servicer.
(b) In the event the Trustee receives a certified copy of an order of the
appropriate court that any scheduled payment of principal or interest on a
Class 2-A3 Certificate has been voided in whole or in part as a preference
payment under applicable bankruptcy law, the Trustee shall (i) promptly notify
the Class 2-A3 Certificate Insurer, as appropriate, and the Fiscal Agent, if
any, and (ii) comply with the provisions of the Class 2-A3 Certificate
Insurance Policy to obtain payment by the Class 2-A3 Certificate Insurer of
such voided scheduled payment. In addition, the Trustee shall mail notice to
all Holders of the Class 2-A3 Certificates so affected that, in the event that
any such Holder's scheduled payment is so recovered, such Holder will be
entitled to payment pursuant to the terms of the Class 2-A3 Certificate
Insurance Policy, a copy of which shall be made available to such Holders by
the Trustee. The Trustee shall furnish to the Class 2-A3 Certificate Insurer
and the appropriate Fiscal Agent, if any, its records listing the payments on
the affected Class 2-A3 Certificates, if any, that have been made by the
Trustee and subsequently recovered from the affected Holders, and the dates on
which such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes hereof, the
Trustee shall establish a separate special purpose trust account in the name
of the Trustee for the benefit of Holders of the Class 2-A3 Certificates (the
"Class 2-A3 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class 2-A3 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount
paid under the Class 2-A3 Certificate Insurance Policy into the Class 2-A3
Policy Payments Account and distribute such amount only for the purposes of
making payments to Holders of the Class 2-A3 Certificates in respect of the
Class 2-A3 Guaranteed Distributions (or other amounts payable pursuant to
paragraph (b) above on the Class 2-A3 Certificates by the Class 2-A3
Certificate Insurer pursuant to the Class 2-A3 Certificate Insurance Policy)
for which the related claim was made under the Class 2-A3 Policy. Such amounts
shall be allocated by the Trustee to Holders of Class 2-A3 Certificates
affected by such shortfalls in the same manner as principal and interest
distributions are to be allocated with respect to such Certificates pursuant
to Section 5.02. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to
make regular payments hereunder with funds withdrawn from the Certificate
Account. However, any payments made on the Class 2-A3 Certificates from funds
in the Class 2-A3 Policy Payments Account shall be noted as provided in
subsection (e) below. Funds held in the Class 2-A3 Policy Payments Account
shall not be invested by the Trustee.
(d) Any funds received from the Class 2-A3 Certificate Insurer for deposit
into the Class 2-A3 Policy Payments Account pursuant to the Class 2-A3
Certificate Insurance Policy in respect of a Distribution Date or otherwise as
a result of any claim under such Class 2-A3 Certificate Insurance Policy shall
be applied by the Trustee directly to the payment in full (i) of the Insured
Payments due on such Distribution Date on the Class 2-A3 Certificates, or (ii)
of other amounts to which payments under the Class 2-A3 Certificate Insurance
Policy are to be applied. Funds received by the Trustee as a result of any
claim under the Class 2-A3 Certificate Insurance Policy shall be used solely
for payment to the Holders of the Class 2-A3 Certificates and may not be
applied for any other purpose, including, without limitation, satisfaction of
any costs, expenses or liabilities of the Trustee or the Trust Fund. Any funds
remaining in the Class 2-A3 Policy Payments Account on the first Business Day
after each Distribution Date shall be remitted promptly to the Class 2-A3
Certificate Insurer pursuant to the written instruction of the Class 2-A3
Certificate Insurer.
(e) The Trustee shall keep complete and accurate records in respect of (i)
all funds remitted to it by the Class 2-A3 Certificate Insurer and deposited
into the Class 2-A3 Policy Payments Account and (ii) the allocation of such
funds to (A) payments of interest on and principal in respect of any Class
2-A3 Certificates, (B) Realized Losses allocated to the Class 2-A3
Certificates, (C) Net Prepayment Interest Shortfalls and Relief Act Reductions
allocated to the Class 2-A3 Certificates, and (D) payments in respect of
Preference Amounts. The Class 2-A3 Certificate Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon
three Business Days' prior notice to the Trustee. Any Insured Payments
disbursed by the Trustee from proceeds of the Class 2-A3 Certificate Insurance
Policy shall be considered payment by the Class 2-A3 Certificate Insurer and
not by the Trust Fund with respect to the Class 2-A3 Certificates and the
Class 2-A3 Certificates Insurer will be entitled to receive the related
Reimbursement Amount pursuant to Section 5.02(a)(vii).
(f) The Trustee acknowledges, and each Holder of a Class 2-A3 Certificate
by its acceptance of such Class 2-A3 Certificate agrees, that, without the
need for any further action on the part of the Class 2-A3 Certificate Insurer
or the Trustee, to the extent the Class 2-A3 Certificate Insurer makes Insured
Payments, directly or indirectly, on account of principal of or interest on
any Class 2-A3 Certificates, the Class 2-A3 Certificate Insurer will be fully
subrogated to the rights of the Holders of such Class 2-A3 Certificates to
receive the related Reimbursement Amount pursuant to Section 5.02(a)(vii). The
Class 2-A3 Certificateholders, by acceptance of the Class 2-A3 Certificates,
assign their rights as Holders of the Class 2-A3 Certificates to the extent of
the Class 2-A3 Certificate Insurer's interest with respect to amounts paid
under the Class 2-A3 Certificate Insurance Policy. Each of the Depositor and
Trustee agrees to such subrogation and, further agrees to execute such
instruments and to take such actions as, in the sole judgment of the Class
2-A3 Certificate Insurer are necessary to evidence such subrogation and,
subject to the priority of payment provisions of this Agreement, to perfect
the rights of the Class 2-A3 Certificate Insurer to receive any moneys paid or
payable in respect of the Class 2-A3 Certificates under this Agreement or
otherwise. Anything herein to the contrary notwithstanding, solely for
purposes of determining the Class 2-A3 Certificate Insurer's rights as
subrogee for payments distributable pursuant to Section 5.02, any payment with
respect to distributions to the Class 2-A3 Certificates that is made with
funds received pursuant to the terms of the Class 2-A3 Certificate Insurance
Policy shall not be considered payment of the Class 2-A3 Certificates from the
Trust Fund and shall not result in the distribution or the provision for the
distribution in reduction of the Class Principal Amount of the Class 2-A3
Certificates or Accrued Certificate Interest thereon, within the meaning of
Article V.
(g) Upon its becoming aware of the occurrence of an Event of Default, the
Trustee shall promptly notify the Class 2-A3 Certificate Insurer of such Event
of Default.
(h) The Trustee shall promptly notify the Class 2-A3 Certificate Insurer
of either of the following as to which it has actual knowledge: (A) the
commencement of any proceeding by or against the Depositor commenced under the
United States bankruptcy code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and
(B) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of any
distribution made with respect to the Class 2-A3 Certificates. Each Holder of
a Class 2-A3 Certificate, by its purchase of Class 2-A3 Certificates, and the
Trustee hereby agree that the Class 2-A3 Certificate Insurer (so long as no
the Class 2-A3 Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all
matters relating to such Preference Claim, including, without limitation, (i)
the direction of any appeal of any order relating to any Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any
such appeal. In addition and without limitation of the foregoing, the Class
2-A3 Certificate Insurer shall be subrogated to the rights of the Trustee and
each Holder of a Class 2-A3 Certificate in the conduct of any Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with
any such Preference Claim.
(i) The Trustee shall surrender the Class 2-A3 Certificate Insurance
Policy to the Class 2-A3 Certificate Insurer for cancellation upon the
termination of the Trust Fund pursuant to Section 7.01 hereof.
Article VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
continuance of an Event of Default (of which a Responsible Officer of the
Trustee shall have actual knowledge), undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. Any
permissive right of the Trustee provided for in this Agreement shall not be
construed as a duty of the Trustee. If an Event of Default (of which a
Responsible Officer of the Trustee shall have actual knowledge) has occurred
and has not otherwise been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement and use the same degree
of care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own affairs unless the
Trustee is acting as Master Servicer, in which case it shall use the same
degree of care and skill as the Master Servicer hereunder.
(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 are in the form required by this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer, to the Trustee pursuant to
this Agreement, and shall not be required to recalculate or verify any
numerical information furnished to the Trustee pursuant to this Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful
misconduct. 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) 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 consent or direction of Holders of Certificates as
provided in Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from a
failure by the Master Servicer (i) to remit funds (or to make Advances) or
(ii) to furnish information to the Trustee when required to do so) unless
a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Holders of the Certificates and this Agreement;
(iii) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under this Agreement except during such
time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in
accordance with the terms of this Agreement; and
(iv) The Trustee shall not be responsible for any act or omission of
the Master Servicer. In particular, the Trustee shall not be liable for
any servicing errors or interruptions resulting from any failure of the
Master Servicer or the Servicer to maintain computer and other information
systems that are year 2000 compliant.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided,
however, that the Trustee shall use its best efforts to remit to the Master
Servicer upon receipt any such complaint, claim, demand, notice or other
document (i) which is delivered to the Corporate Trust Office of the Trustee,
(ii) of which a Responsible Officer has actual knowledge, and (iii) which
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
(e) 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 Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
(f) Subject to Section 4.04, the Trustee shall not be held liable by
reason of any insufficiency in any account (including without limitation the
Collection Amount) held by or on behalf of the Trustee resulting from any
investment loss on any Eligible Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
(g) Except as otherwise provided herein, 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 re-recording, re-filing or
re-depositing 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 Fund other than from funds available in the
Collection Account or the Certificate Account, or (D) to confirm or verify the
contents of any reports or certificates of the Master Servicer delivered to
the Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.
(h) The Trustee shall not be liable in its individual capacity 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.
(i) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall not be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including, but not limited to, lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.
Section 6.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors, opinion of counsel or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, 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 may consult with counsel and any advice of its
counsel or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(iii) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(iv) Unless an Event of Default shall have occurred and be
continuing, 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 (provided the same appears regular on its
face), unless requested in writing to do so by Holders of at least a
majority in Class Principal Amount (or Class Notional Amount) of each
Class of Certificates; 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 or payment
of such estimated expenses as a condition to proceeding. The reasonable
expense thereof shall be paid by the Holders requesting such
investigation;
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, or attorneys, which agents, custodians or attorneys shall have
any and all of the rights, powers, duties and obligations of the Trustee
conferred on them by such appointment provided that the Trustee shall
continue to be responsible for its duties and obligations hereunder to the
extent provided herein, and provided further that the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by the Trustee;
(vi) 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 any litigation hereunder or in relation hereto, in each case at
the request, order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
(vii) 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; and
(viii) The Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust Fund created hereby or the powers
granted hereunder.
Section 6.03. Trustee Not Liable for Certificates. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates) or the Underlying Security or of any Mortgage Loan, or related
document save that the Trustee represents that, assuming due execution and
delivery by the other parties hereto, this Agreement has been duly authorized,
executed and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms except that such
enforceability may be subject to (A) applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally, and (B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law. The Trustee
shall not be accountable for the use or application by the Depositor of funds
paid to the Depositor in consideration of the assignment of the Mortgage Loans
or the Underlying Security to the Trust Fund by the Depositor or for the use
or application of any funds deposited into the Collection Account, the
Certificate Account, any Escrow Account or any other fund or account
maintained with respect to the Certificates. The Trustee shall not be
responsible for the legality or validity of this Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates
issued or intended to be issued hereunder. Except as otherwise provided
herein, the Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to record this Agreement.
Section 6.04. Trustee May Own Certificates. The Trustee and any Affiliate
or agent of the Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may transact banking and trust with the
other parties hereto with the same rights it would have if it were not Trustee
or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be (i) an institution insured by the FDIC and (ii) a
corporation or national banking association, organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation or national 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, the combined capital and surplus of
such corporation or national banking association 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 provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section
6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor and the Master Servicer. Upon
receiving such notice of resignation, the Depositor will promptly appoint a
successor trustee by written instrument, one copy of which instrument shall be
delivered to the resigning Trustee, one copy to the successor trustee, one
copy to the Master Servicer and one copy to the Class 2-A3 Certificate
Insurer. If no successor trustee shall have been so appointed and shall 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.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, (iii)
a tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund held by the Trustee is located, or (iv)
the continued use of the Trustee would result in a downgrading of the rating
by the Rating Agencies of any Class of Certificates with a rating (in the case
of the Class 2-A3 Certificates, determined without regard to the Class 2-A3
Certificate Insurance Policy), then the Depositor shall remove the Trustee and
appoint a successor trustee by written instrument, one copy of which
instrument shall be delivered to the Trustee so removed, one copy to the
successor trustee, one copy to the Class 2-A3 Certificate Insurer and one copy
to the Master Servicer.
(c) The Holders of more than 50% of the Class Principal Amount (or Class
Notional Amount) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee, the Depositor and the Class 2-A3 Certificate
Insurer remove the Trustee by such written instrument, signed by such Holders
or their attorney-in-fact duly authorized, one copy of which instrument shall
be delivered to the Depositor, one copy to the Trustee so removed, one copy to
the Class 2-A3 Certificate Insurer and one copy to the Master Servicer; the
Depositor shall thereupon use its best efforts to appoint a mutually
acceptable successor trustee in accordance with this Section.
(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 6.07.
Section 6.07. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and
documents and statements related to each Mortgage Files held by it hereunder,
and shall duly assign, transfer, deliver and pay over to the successor trustee
the entire Trust Fund, together with all necessary instruments of transfer and
assignment or other documents properly executed necessary to effect such
transfer and such of the record or copies thereof maintained by the
predecessor trustee in the administration hereof as may be requested by the
successor trustee and shall thereupon be discharged from all duties and
responsibilities under this Agreement. In addition, the Master Servicer and
the predecessor trustee shall execute and deliver such other instruments and
do such other things as may reasonably be required to more fully and certainly
vest and confirm in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to the Class 2-A3 Certificate Insurer and to all Holders of
Certificates at their addresses as shown in the Certificate Register and to
the Rating Agencies. The expenses of such mailing shall be borne by the Master
Servicer.
Section 6.08. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided that such
Person shall be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the Trustee, the
Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Class Notional Amount) of each Class of Certificates
shall each have the power from time to time to appoint one or more Persons to
act either as co-trustees jointly with the Trustee, or as separate trustees,
or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable (or the Trustee has been
advised by the Master Servicer that such separate trustee or co-trustee is
necessary or advisable) under the laws of any state in which a property
securing a Mortgage Loan is located or for the purpose of otherwise conforming
to any legal requirement, restriction or condition in any state in which a
property securing a Mortgage Loan is located or in any state in which any
portion of the Trust Fund is located. The separate Trustees, co-trustees, or
custodians so appointed shall be trustees or custodians for the benefit of all
the Certificateholders and shall have such powers, rights and remedies as
shall be specified in the instrument of appointment; provided, however, that
no such appointment shall, or shall be deemed to, constitute the appointee an
agent of the Trustee. The obligation of the Trustee to make Advances pursuant
to Section 5.04 and 6.14 hereof shall not be affected or assigned by the
appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other 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, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed 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,
co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder;
and
(iv) the Trustee or the Certificateholders evidencing more than 50%
of the Aggregate Voting Interests of the Certificates may at any time
accept the resignation of or remove any separate trustee, co-trustee or
custodian, so appointed by it or them, if such resignation or removal does
not violate the other terms of this Agreement.
(c) 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, co-trustee or custodian shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the 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.
(d) Any separate trustee, co-trustee or custodian 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 separate trustee,
co-trustee or custodian. If any separate trustee, co-trustee or custodian
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.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the co-trustees
to the extent, and in accordance with the standards, specified in Section 6.12
hereof (which compensation shall not reduce any compensation payable to the
Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one or
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation
organized and doing business under the laws of the United States of America or
of any state, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision
or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency business of
any Authenticating Agent, shall continue to be the Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent
by giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment
to the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.10.
No Authenticating Agent shall have responsibility or liability for any action
taken by it as such at the direction of the Trustee. Any Authenticating Agent
shall be entitled to reasonable compensation for its services and, if paid by
the Trustee, it shall be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its directors,
officers, employees and agents shall be entitled to indemnification from the
Trust Fund for any loss, liability or expense incurred in connection with any
legal proceeding and incurred without negligence or willful misconduct on
their part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder, including the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor, the Master Servicer and the Holders written notice thereof
promptly after the Trustee shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense; and
(iii) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be entitled
to the Trustee Fee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), to the extent
provided herein, and in addition, the Trustee shall be entitled to receive,
and is authorized to pay to itself the amount of income or gain earned from
the investment of funds in the Certificate Account.
Section 6.13. Collection of Monies. Except as otherwise expressly provided
in this Agreement, the Trustee may demand payment or delivery of, and shall
receive and collect, all money and other property payable to or receivable by
the Trustee pursuant to this Agreement. The Trustee shall hold all such money
and property received by it as part of the Trust Fund and shall distribute it
as provided in this Agreement. If the Trustee shall not have timely received
amounts to be remitted with respect to the Mortgage Loans from the Master
Servicer, the Trustee shall request the Master Servicer to make such
distribution as promptly as practicable or legally permitted. If the Trustee
shall subsequently receive any such amount, it may withdraw such request.
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor.
(a) The occurrence of any one or more of the following events shall constitute
an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Trustee the
Mortgage Loan data sufficient to prepare the reports described in Section
4.03(a) which continues unremedied for a period of one Business Day after
the date upon which written notice of such failure shall have been given
to such Master Servicer by the Trustee or to such Master Servicer and the
Trustee by the Holders of not less than 25% of the Class Principal Amount
(or Class Notional Amount) of each Class of Certificates affected thereby;
or
(ii) Any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of such Master Servicer contained in this Agreement
which continues unremedied for a period of 30 days (or 15 days, in the
case of a failure to maintain any Insurance Policy required to be
maintained pursuant to this Agreement) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to such Master Servicer by the Trustee, or to such Master Servicer
and the Trustee by the Holders of not less than 25% of the Class Principal
Amount (or Class Notional Amount) of each Class of Certificates affected
thereby; or
(iii) A decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer, and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or any Rating Agency
reduces or withdraws or threatens to reduce or withdraw the rating of the
Certificates because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to such Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all
or substantially all of its assets, or consolidate with or merge into
another entity or shall permit another entity to consolidate or merge into
it, such that the resulting entity does not meet the criteria for a
successor servicer as specified in Section 9.27 hereof; or
(vii) If a representation or warranty set forth in Section 9.14
hereof shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Certificateholders,
and the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or cured within
60 days after the date on which written notice of such incorrect
representation or warranty shall have been given to the Master Servicer by
the Trustee, or to the Master Servicer and the Trustee by the Holders of
not less than 25% of the Aggregate Certificate Principal Amount of each
Class of Certificates; or
(viii) A sale or pledge of the any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Class Principal Amount (or
Class Notional Amount) of each Class of Certificates;
(ix) Any Servicer at any time is not either an FNMA- or FHLMC-
approved Seller/Servicer, and the Master Servicer has not terminated the
rights and obligations of such Servicer under the applicable Servicing
Agreement and replaced such Servicer with an FNMA- or FHLMC-approved
servicer within 30 days of the absence of such approval; or
(x) Any failure of the Master Servicer to remit to the Trustee any
payment required to be made to the Trustee for the benefit of
Certificateholders under the terms of this Agreement, including any
Advance, on any Deposit Date.
If an Event of Default described in clauses (i) through (ix) of this
Section 6.14 shall occur, then, in each and every case, subject to applicable
law, so long as any such Event of Default shall not have been remedied within
any period of time prescribed by this Section 6.14, the Trustee, by notice in
writing to the Master Servicer may, and shall, if so directed by
Certificateholders evidencing more than 50% of the Class Principal Amount (or
Class Notional Amount) of each Class of Certificates, terminate all of the
rights and obligations of the Master Servicer hereunder and in and to the
Mortgage Loans and the proceeds thereof. If an Event of Default described in
clause (x) of this Section 6.14 shall occur, then, in each and every case,
subject to applicable law, the Trustee, by notice in writing to the Master
Servicer, shall promptly terminate all of the rights and obligations of the
Master Servicer hereunder and in and to the Mortgage Loans and the proceeds
thereof. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer, and only in its
capacity as Master Servicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee
pursuant to and under the terms of this Agreement; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Master Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether
to complete the transfer and endorsement or assignment of the Mortgage Loans
and related documents or otherwise. The defaulting Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the defaulting
Master Servicer's responsibilities and rights hereunder as Master Servicer
including, without limitation, notifying Mortgagors of the assignment of the
master servicing function and providing the Trustee or its designee all
documents and records in electronic or other form reasonably requested by it
to enable the Trustee or its designee to assume the defaulting Master
Servicer's functions hereunder and the transfer to the Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Collection Account
maintained by such defaulting Master Servicer and any other account or fund
maintained with respect to the Certificates or thereafter received with
respect to the Mortgage Loans. The Master Servicer being terminated shall bear
all costs of a master servicing transfer, including but not limited to those
of the Trustee reasonably allocable to specific employees and overhead, legal
fees and expenses, accounting and financial consulting fees and expenses, and
costs of amending the Agreement, if necessary.
Notwithstanding the termination of its activities as Master Servicer, each
terminated Master Servicer shall continue to be entitled to reimbursement to
the extent provided in Section 4.02(i), (ii), (iii), (iv), (v), (vi), (vii),
(ix) and (xi) to the extent such reimbursement relates to the period prior to
such Master Servicer's termination.
If any Event of Default shall occur, the Trustee shall promptly notify the
Class 2-A3 Certificate Insurer and the Rating Agencies of the nature and
extent of such Event of Default. The Trustee shall immediately give written
notice to the Master Servicer upon such Master Servicer's failure to remit
funds on the Deposit Date.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee
receives the resignation of the Master Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.29, the Trustee, unless another master servicer
shall have been appointed, shall be the successor in all respects to the
Master Servicer in its capacity as such under this Agreement and the
transactions set forth or provided for herein and shall have all the rights
and powers and be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Master Servicer
hereunder, including the obligation to make Advances; provided, however, that
any failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by this Agreement shall not
be considered a default by the Trustee hereunder. In addition, the Trustee
shall have no responsibility for any act or omission of the Master Servicer
prior to the issuance of any notice of termination and shall have no liability
relating to the representations and warranties of the Master Servicer set
forth in Section 9.14. In the Trustee's capacity as such successor, the
Trustee shall have the same limitations on liability herein granted to the
Master Servicer. As compensation therefor, the Trustee shall be entitled to
receive all compensation payable to the Master Servicer under this Agreement,
including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution servicer, master servicer, servicing or mortgage
servicing institution having a net worth of not less than $15,000,000 and
meeting such other standards for a successor master servicer as are set forth
in this Agreement, as the successor to such Master Servicer in the assumption
of all of the responsibilities, duties or liabilities of a master servicer,
like the Master Servicer. Any entity designated by the Trustee as a successor
master servicer may be an Affiliate of the Trustee; provided, however, that,
unless such Affiliate meets the net worth requirements and other standards set
forth herein for a successor master servicer, the Trustee, in its individual
capacity shall agree, at the time of such designation, to be and remain liable
to the Trust Fund for such Affiliate's actions and omissions in performing its
duties hereunder. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted to the
Master Servicer hereunder. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate
any such succession and may make other arrangements with respect to the
servicing to be conducted hereunder which are not inconsistent herewith. The
Master Servicer shall cooperate with the Trustee and any successor master
servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
Mortgagors of the assignment of the master servicing functions and providing
the Trustee and successor master servicer, as applicable, all documents and
records in electronic or other form reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and the transfer to the
Trustee or such successor master servicer, as applicable, all amounts which
shall at the time be or should have been deposited by the Master Servicer in
the Collection Account and any other account or fund maintained with respect
to the Certificates or thereafter be received with respect to the Mortgage
Loans. Neither the Trustee nor any other successor master servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof caused by
(i) the failure of the Master Servicer to deliver, or any delay in delivering,
cash, documents or records to it, (ii) the failure of the Master Servicer to
cooperate as required by this Agreement, (iii) the failure of the Master
Servicer to deliver the Mortgage Loan data to the Trustee as required by this
Agreement or (iv) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default. During
the continuance of any Event of Default, so long as such Event of Default
shall not have been remedied, the Trustee, in addition to the rights specified
in Section 6.14, shall have the right, in its own name and as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and to protect the interests,
and enforce the rights and remedies, of the Certificateholders and the Class
2-A3 Certificate Insurer (including the institution and prosecution of all
judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). Except as otherwise expressly
provided in this Agreement, no remedy provided for by this Agreement shall be
exclusive of any other remedy, and each and every remedy shall be cumulative
and in addition to any other remedy, and no delay or omission to exercise any
right or remedy shall impair any such right or remedy or shall be deemed to be
a waiver of any Event of Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
Interests of Certificateholders may waive any default or Event of Default by
the Master Servicer in the performance of its obligations hereunder, except
that a default in the making of any required deposit to the Certificate
Account that would result in a failure of the Trustee to make any required
payment of principal of or interest on the Certificates may only be waived
with the consent of 100% of the affected Certificateholders. Upon any such
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 thereon except to the extent
expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the Master
Servicer or appointment of a successor to the Master Servicer, in each case as
provided herein, the Trustee shall promptly mail notice thereof by first class
mail to the Class 2-A3 Certificate Insurer and the Certificateholders at their
respective addresses appearing on the Certificate Register. The Trustee shall
also, within 45 days after the occurrence of any Event of Default known to the
Trustee, give written notice thereof to Certificateholders, unless such Event
of Default shall have been cured or waived prior to the issuance of such
notice and within such 45-day period.
Section 6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default. Subject to the provisions of Section 8.01 hereof,
during the continuance of any Event of Default, Holders of Certificates
evidencing not less than 25% of the Class Principal Amount (or Class Notional
Amount) of each Class of Certificates may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; provided, however, that the Trustee shall be under no obligation to
pursue any such remedy, or to exercise any of the trusts or powers vested in
it by this Agreement (including, without limitation, (i) the conducting or
defending of any administrative action or litigation hereunder or in relation
hereto and (ii) the terminating of the Master Servicer or any successor master
servicer from its rights and duties as master servicer hereunder) at the
request, order or direction of any of the Certificateholders, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which may be incurred
therein or thereby; and, provided further, that, subject to the provisions of
Section 8.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee, in accordance with an Opinion of Counsel, determines
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith determines that the action or proceeding so directed
would involve it in personal liability or be unjustly prejudicial to the
non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon
Event of Default. In the event that the Trustee shall have actual knowledge of
any action or inaction of the Master Servicer that would become an Event of
Default upon the Master Servicer's failure to remedy the same after notice,
the Trustee shall give notice thereof to the Master Servicer. For all purposes
of this Agreement, in the absence of actual knowledge by a Responsible Officer
of the Trustee, the Trustee shall not be deemed to have knowledge of any
failure of the Master Servicer or any other Event of Default unless notified
in writing by the Depositor, the Master Servicer or a Certificateholder.
Section 6.20. Preparation of Tax Returns and Other Reports. (a) The
Trustee shall prepare or cause to be prepared on behalf of the Trust Fund,
based upon information calculated in accordance with this Agreement pursuant
to instructions given by the Depositor, and the Trustee shall file, federal
tax returns and appropriate state income tax returns and such other returns as
may be required by applicable law relating to the Trust Fund, and the Trustee
shall forward copies to the Depositor of all such returns and Form 1099
information and such other information within the control of the Trustee as
the Depositor may reasonably request in writing, and shall forward to each
Certificateholder such forms and furnish such information within the control
of the Trustee as are required by the Code and the REMIC Provisions to be
furnished to them, and will prepare and file annual reports required by
applicable state authorities, will file copies of this Agreement with the
appropriate state authorities as may be required by applicable law, and will
prepare and disseminate to Certificateholders Form 1099 (or otherwise furnish
information within the control of the Trustee) to the extent required by
applicable law. The Master Servicer will indemnify the Trustee for any
liability of or assessment against the Trustee resulting from any error in any
of such tax or information returns directly resulting from errors in the
information provided by such Master Servicer (other than information that is
derived solely from information provided by a Servicer).
(b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall promptly forward a copy of such notice to the Master
Servicer and the Depositor.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee will prepare or cause to
be prepared Form 10-Ks and Form 10-Qs (if necessary), or monthly current
reports on Form 8-K, on behalf of the Trust Fund, as may be required by
applicable law, for filing with the Securities and Exchange Commission (the
"SEC"), and the Trustee will sign each such report on behalf of the Trust. The
Trustee will forward a copy of each such report to the Depositor promptly
after such report has been filed with the SEC. The Trustee agrees to use its
best efforts to seek to terminate such filing obligation after the period
during which such filings are required under the Securities Exchange Act of
1934. Promptly after filing a Form 15 or other applicable form with the SEC in
connection with such termination, the Trustee shall deliver to the Depositor a
copy of such form together with copies of confirmations of receipt by the SEC
of each report filed therewith on behalf of the Trust Fund.
Article VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of
All Mortgage Loans and the Underlying Security. (a) The respective obligations
and responsibilities of the Trustee and the Master Servicer created hereby
(other than the obligation of the Trustee to make payments to
Certificateholders as set forth in Section 7.02, the obligation of the Master
Servicer to make a final remittance to the Trustee for deposit into the
Certificate Account pursuant to Section 4.01 and the obligations of the Master
Servicer to the Trustee pursuant to Sections 9.10 and 9.14), shall terminate
on the earlier of (i) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust Fund, the disposition of all REO Property
and the final payment under the Underlying Security and (ii) the sale of the
property held by the Trust Fund in accordance with Section 7.01(b); provided,
however, that in no event shall the Trust Fund created hereby continue beyond
the earlier of (i) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof, and (ii)
the Latest Possible Maturity Date. Any termination of the Trust Fund shall be
carried out in such a manner so that the termination of each REMIC included
therein shall qualify as a "qualified liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring after the date on which the sum of
(i) the aggregate Scheduled Principal Balance of the Mortgage Loans and (ii)
the Security Principal Balance of the Underlying Security is less than 10% of
the sum of (i) the Cut-off Date Aggregate Principal Balance and (ii) the
Security Principal Balance of the Underlying Security as of the Closing Date,
the Depositor may, upon written direction to the Trustee, cause (i) the
Trustee to sell (or arrange for the sale of) the assets of the Trust Fund and
(ii) the Trust Fund to adopt a plan of complete liquidation pursuant to
Section 7.03(a)(i) hereof to sell all of its property. The property of the
Trust Fund shall be sold at a price (the "Termination Price") equal to: (i)
100% of the unpaid principal balance of each Mortgage Loan on the day of such
purchase plus interest accrued thereon at the applicable Mortgage Rate with
respect to any Mortgage Loan to the Due Date in the Due Period immediately
preceding the related Distribution Date to the date of such repurchase, (ii)
100% of the total outstanding Security Principal Balance of the Underlying
Security on the date of such purchase, plus interest accrued thereon at the
interest rate paid on the Underlying Security from the last Underlying
Distribution Date to the date of repurchase, (iii) the fair market value of
any REO Property and any other property held by any REMIC, such fair market
value to be determined by an appraiser or appraisers appointed by the Master
Servicer with the consent of the Trustee, (iv) any unreimbursed Servicing
Advances with respect to each Mortgage Loan, and (v) any Reimbursement Amounts
due to the Class 2-A3 Certificate Insurer.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of any
termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
(x) no later than five Business Days after the Trustee has received notice
from the Depositor of its intent to exercise its right to cause the
termination of the Trust Fund pursuant to Section 7.01(b) or (y) upon the
final payment or other liquidation of the last Mortgage Loan or REO Property
in the Trust Fund. Such notice shall specify (A) the Distribution Date upon
which final distribution on the Certificates of all amounts required to be
distributed to Certificateholders pursuant to Section 5.02 will be made upon
presentation and surrender of the Certificates at the Corporate Trust Office,
and (B) that the Record Date otherwise applicable to such Distribution Date is
not applicable, distribution being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified.
The Trustee shall give such notice to the Master Servicer and the Certificate
Registrar at the time such notice is given to Holders of the Certificates.
Upon any such termination, the duties of the Certificate Registrar with
respect to the Certificates shall terminate and the Trustee shall terminate,
or request the Master Servicer to terminate, the Collection Account it
maintains, the Certificate Account and any other account or fund maintained
with respect to the Certificates, subject to the Trustee's obligation
hereunder to hold all amounts payable to Certificateholders in trust without
interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee 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 one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to
contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all
amounts distributable to such Holders for the benefit of such Holders. No
interest shall accrue on any amount held by the Trustee and not distributed to
a Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance
with this Section.
(c) Any reasonable expenses incurred by the Trustee in connection with any
termination or liquidation of the Trust Fund shall be paid from proceeds
received from the liquidation of the Trust Fund.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks (at the request of the Master
Servicer), and subsequently receives, an Opinion of Counsel (at the expense of
the Master Servicer), addressed to the Trustee to the effect that the failure
of the Trust Fund to comply with the requirements of this Section 7.03 will
not (i) result in the imposition of taxes on any REMIC under the REMIC
Provisions or (ii) cause any REMIC established hereunder to fail to qualify as
a REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, the Trustee (upon (x) the sale of the
property of the Trust Fund by the Trustee pursuant to Section 7.01(b) or
(y) notification by the Depositor that it intends to exercise its option
to cause the termination of the Trust Fund) shall adopt a plan of complete
liquidation of the Trust Fund on behalf of each REMIC, meeting the
requirements of a qualified liquidation under the REMIC Provisions;
(ii) The sale of the assets of the Trust Fund pursuant to Section
7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time of
making of the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates,
the Trustee shall make final distributions of principal and interest on
the Certificates in accordance with Section 5.02 and distribute or credit,
or cause to be distributed or credited, to the Holder of the Residual
Certificate all cash on hand after such final payment (other than cash
retained to meet claims), and the Trust Fund (and each REMIC) shall
terminate at that time; and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holder of the Residual Certificate be
made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby (i) authorizes the Trustee to take such action as may be necessary to
adopt a plan of complete liquidation of the related REMIC and (ii) agrees to
take such other action as may be necessary to adopt a plan of complete
liquidation of the related REMIC, which authorization shall be binding upon
all successor Residual Certificateholders.
Article VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or incapacity
of any Certificateholder shall not operate to terminate this Agreement or this
Trust Fund, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or take any action or proceeding in any court for
a partition or winding up of this Trust Fund, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Except as
otherwise expressly provided herein, no Certificateholder, solely by virtue of
its status as a Certificateholder, shall have any right to vote or in any
manner otherwise control the Master Servicer or 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.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Certificates evidencing not less than 25% of the
Class Principal Amount (or Class Notional Amount) of Certificates of each
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
cost, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for sixty 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 and no direction inconsistent with such written request has been
given such Trustee during such sixty-day period by such Certificateholders; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement, except in
the manner herein provided and for the benefit of all Certificateholders. For
the protection and enforcement of the provisions of this Section, each and
every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not acting
as Certificate Registrar, the Certificate Registrar will furnish or cause to
be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred
to as "Applicants") apply in writing to the Trustee, and such application
states that the Applicants desire to communicate with other Holders with
respect to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
of such application, afford such Applicants reasonable access during the
normal business hours of the Trustee to the most recent list of
Certificateholders held by the Trustee or shall, as an alternative, send, at
the Applicants' expense, the written communication proffered by the Applicants
to all Certificateholders at their addresses as they appear in the Certificate
Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the Master
Servicer, the Certificate Registrar and the Trustee that neither the
Depositor, the Master Servicer, the Certificate Registrar nor the Trustee
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders or Certificate Owner, if the
Holder is a Clearing Agency, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where expressly required herein,
to the Master Servicer. Such instrument or instruments (as the action embodies
therein and evidenced thereby) are herein sometimes referred to as an "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agents shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee and
Master Servicer, if made in the manner provided in this Section. Each of the
Trustee and Master Servicer shall promptly notify the other of receipt of any
such instrument by it, and shall promptly forward a copy of such instrument to
the other.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments or deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the individual executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Master Servicer, nor the
Depositor shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Master Servicer in reliance thereon, whether or not notation of
such action is made upon such Certificate.
Section 8.04. Rights of Certificateholders as Holders of the Underlying
Security. The Depositor hereby expressly agrees that each Certificateholder,
to the extent of its ownership interest in the Underlying Security, shall have
the same rights against the Depositor, acting in its capacity as Depositor
with respect to the Underlying Trust Fund, as if such Certificateholder held
the Underlying Security directly.
Article IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer. The Certificateholders, by
their purchase and acceptance of the Certificates, appoint Aurora Loan
Services Inc., as Master Servicer. For and on behalf of the Depositor, the
Trustee and the Certificateholders, the Master Servicer shall master service
the Mortgage Loans in accordance with the provisions of this Agreement and the
provisions of the applicable Servicing Agreement.
Section 9.02. Master Servicer Fidelity Bond and Master Servicer Errors and
Omissions Insurance Policy. (a) The Master Servicer, at its expense, shall
maintain in effect a Fidelity Bond and an Errors and Omissions Insurance
Policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations
hereunder. The Errors and Omissions Insurance Policy and the Fidelity Bond
shall be in such form and amount that would meet the requirements of FNMA or
FHLMC if it were the purchaser of the Mortgage Loans. The Master Servicer
shall (i) require each Servicer to maintain an Errors and Omissions Insurance
Policy and a Fidelity Bond in accordance with the provisions of the applicable
Servicing Agreement, (ii) cause each Servicer to provide to the Master
Servicer certificates evidencing that such policy and bond is in effect and to
furnish to the Master Servicer any notice of cancellation, non-renewal or
modification of the policy or bond received by it, as and to the extent
provided in the applicable Servicing Agreement, and (iii) furnish copies of
the certificates and notices referred to in clause (ii) to the Trustee upon
its request. The Fidelity Bond and Errors and Omissions Insurance Policy may
be obtained and maintained in blanket form.
(b) The Master Servicer shall promptly report to the Trustee any material
changes that may occur in the Master Servicer Fidelity Bond or the Master
Servicer Errors and Omissions Insurance Policy and shall furnish to the
Trustee, on request, certificates evidencing that such bond and insurance
policy are in full force and effect. The Master Servicer shall promptly report
to the Trustee all cases of embezzlement or fraud, if such events involve
funds relating to the Mortgage Loans. The total losses, regardless of whether
claims are filed with the applicable insurer or surety, shall be disclosed in
such reports together with the amount of such losses covered by insurance. If
a bond or insurance claim report is filed with any of such bonding companies
or insurers, the Master Servicer shall promptly furnish a copy of such report
to the Trustee. Any amounts relating to the Mortgage Loans collected by the
Master Servicer under any such bond or policy shall be promptly remitted by
the Master Servicer to the Trustee for deposit into the Certificate Account.
Any amounts relating to the Mortgage Loans collected by any Servicer under any
such bond or policy shall be remitted to the Master Servicer to the extent
provided in the applicable Servicing Agreement.
Section 9.03. Master Servicer's Financial Statements and Related
Information. For each year this Agreement is in effect, the Master Servicer
shall submit to the Trustee, each Rating Agency and the Depositor a copy of
its annual unaudited financial statements on or prior to May 31 of each year.
Such financial statements shall include a balance sheet, income statement,
statement of retained earnings, statement of additional paid-in capital,
statement of changes in financial position and all related notes and schedules
and shall be in comparative form, certified by a nationally recognized firm of
Independent Accountants to the effect that such statements were examined and
prepared in accordance with generally accepted accounting principles applied
on a basis consistent with that of the preceding year.
Section 9.04. Power to Act; Procedures. (a) The Master Servicer shall
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, and
each Servicer shall have full power and authority (to the extent provided in
the applicable Servicing Agreement) to do any and all things that it may deem
necessary or desirable in connection with the servicing and administration of
the Mortgage Loans, including but not limited to the power and authority (i)
to execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion
of the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable; provided that the Master Servicer shall
not take, or knowingly permit any Servicer to take, any action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor, the Trustee and the Certificateholders under this Agreement. The
Master Servicer shall represent and protect the interests of the Trust Fund in
the same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan and
shall not make or permit any Servicer to make any modification, waiver or
amendment of any term of any Mortgage Loan that would cause the Trust Fund to
fail to qualify as a REMIC or result in the imposition of any tax under
Section 860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the
name of a Servicer, and each Servicer, to the extent such authority is
delegated to such Servicer by the Master Servicer under the applicable
Servicing Agreement, is hereby authorized and empowered by the Trustee when
the Master Servicer or a Servicer, as the case may be, believes it appropriate
in its best judgment and in accordance with Accepted Servicing Practices and
the applicable Servicing Agreement, to execute and deliver, on behalf of
itself and the Certificateholders, the Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. The Trustee shall furnish
the Master Servicer, upon request, with any powers of attorney empowering the
Master Servicer or any Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
to foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the applicable Servicing Agreement and
this Agreement, and the Trustee shall execute and deliver such other
documents, as the Master Servicer may request, necessary or appropriate to
enable the Master Servicer to master service and administer the Mortgage Loans
and carry out its duties hereunder, in each case in accordance with Accepted
Servicing Practices (and the Trustee shall have no liability for misuse of any
such powers of attorney by the Master Servicer or any Servicer). If the Master
Servicer or the Trustee has been advised that it is likely that the laws of
the state in which action is to be taken prohibit such action if taken in the
name of the Trustee or that the Trustee would be adversely affected under the
"doing business" or tax laws of such state if such action is taken in its
name, then upon request of the Trustee, the Master Servicer shall join with
the Trustee in the appointment of a co-trustee pursuant to Section 6.09
hereof. In the performance of its duties hereunder, the Master Servicer shall
be an independent contractor and shall not, except in those instances where it
is taking action in the name of the Trustee, be deemed to be the agent of the
Trustee.
(b) In master servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures, and shall cause each Servicer to employ
procedures (including, but not limited to, collection procedures), consistent
with the applicable Servicing Agreement. Consistent with the foregoing, the
Master Servicer may, and may permit any Servicer to, in its discretion (i)
waive any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the due
dates for payments due on a Mortgage Note for a period not greater than 120
days; provided, however, that the maturity of any Mortgage Loan shall not be
extended past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. In the event of any extension
described in clause (ii) above, the Master Servicer shall make or cause to be
made Advances on the related Mortgage Loan in accordance with the provisions
of Section 5.04 on the basis of the amortization schedule of such Mortgage
Loan without modification thereof by reason of such extension. Notwithstanding
anything to the contrary in this Agreement, the Master Servicer shall not,
unless default by the related Mortgagor is, in the reasonable judgment of the
Master Servicer, imminent, permit any modification, waiver or amendment of any
material term of any Mortgage Loan (including but not limited to the interest
rate, the principal balance, the amortization schedule, or any other term
affecting the amount or timing of payments on the Mortgage Loan or the
collateral therefor) unless the Master Servicer shall have provided or caused
to be provided to the Trustee an Opinion of Counsel in writing to the effect
that such modification, waiver or amendment would not be treated as giving
rise to a new debt instrument for federal income tax purposes and would not
adversely affect the status of the REMIC.
Section 9.05. Servicing Agreements Between the Master Servicer and
Servicers; Enforcement of Servicers' Obligations. (a) Each Servicing Agreement
requires the applicable Servicer to service the Mortgage Loans in accordance
with the provisions thereof. References in this Agreement to actions taken or
to be taken by the Master Servicer include actions taken or to be taken by a
Servicer on behalf of the Master Servicer. Any fees and other amounts payable
to such Servicers shall be deducted from amounts remitted to the Master
Servicer by the applicable Servicer and shall not be an obligation of the
Trust.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
terminate the rights and obligations of such Servicer thereunder and either
act as servicer of the related Mortgage Loans or enter into a Servicing
Agreement with a successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Servicing
Agreements and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor initially
only (i) from a general recovery resulting from such enforcement only to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed,
and then, to the extent that such amounts are insufficient to reimburse the
Master Servicer for the costs of such enforcement, (iii) from the Collection
Account.
Section 9.06. Collection of Taxes, Assessments and Similar Items. (a) To
the extent provided in the applicable Servicing Agreement, the Master Servicer
shall cause each Servicer to establish and maintain one or more custodial
accounts at a depository institution (which may be a depository institution
with which the Master Servicer or any Servicer establishes accounts in the
ordinary course of its servicing activities), the accounts of which are
insured to the maximum extent permitted by the FDIC (each, an "Escrow
Account") and shall deposit therein any collections of amounts received with
respect to amounts due for taxes, assessments, water rates, Standard Hazard
Insurance Policy premiums or any comparable items for the account of the
Mortgagors. Withdrawals from any Escrow Account may be made (to the extent
amounts have been escrowed for such purpose) only in accordance with the
applicable Servicing Agreement. Each Servicer shall be entitled to all
investment income not required to be paid to Mortgagors on any Escrow Account
maintained by such Servicer. The Master Servicer shall make (or cause to be
made) to the extent provided in the applicable Servicing Agreement advances to
the extent necessary in order to effect timely payment of taxes, water rates,
assessments, Standard Hazard Insurance Policy premiums or comparable items in
connection with the related Mortgage Loan (to the extent that the Mortgagor is
required, but fails, to pay such items), provided that it has determined that
the funds so advanced are recoverable from escrow payments, reimbursement
pursuant to Section 4.02(v) or otherwise.
(b) Costs incurred by the Master Servicer or by Servicers in effecting the
timely payment of taxes and assessments on the properties subject to the
Mortgage Loans may be added to the amount owing under the related Mortgage
Note where the terms of the Mortgage Note so permit; provided, however, that
the addition of any such cost shall not be taken into account for purposes of
calculating the distributions to be made to Certificateholders. Such costs, to
the extent that they are unanticipated, extraordinary costs, and not ordinary
or routine costs shall be recoverable by the Master Servicer pursuant to
Section 4.02(v).
Section 9.07. Termination of Servicing Agreements; Successor Servicers.
(a) The Master Servicer shall be entitled to terminate the rights and
obligations of any Servicer under the applicable Servicing Agreement in
accordance with the terms and conditions of such Servicing Agreement and
without any limitation by virtue of this Agreement; provided, however, that in
the event of termination of any Servicing Agreement by the Master Servicer or
the related Servicer, the Master Servicer shall either act as Servicer of the
related Mortgage Loans, or enter into a Servicing Agreement with a successor
Servicer.
(b) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces. The Master Servicer shall use reasonable efforts to have the
successor Servicer assume liability for the representations and warranties
made by the terminated Servicer in respect of the related Mortgage Loans, and
in the event of any such assumption by the successor Servicer, the Trustee or
the Master Servicer, as applicable, may, in the exercise of its business
judgment, release the terminated Servicer from liability for such
representations and warranties.
Section 9.08. Master Servicer Liable for Enforcement. Notwithstanding any
Servicing Agreement, the Master Servicer shall remain obligated and liable to
the Trustee and the Certificateholders in accordance with the provisions of
this Agreement, to the extent of its obligations hereunder, without diminution
of such obligation or liability by virtue of such Servicing Agreements or
arrangements. The Master Servicer shall use commercially reasonable efforts to
ensure that the Mortgage Loans are serviced in accordance with the provisions
of this Agreement and shall use commercially reasonable efforts to enforce the
provisions of each Servicing Agreement for the benefit of the
Certificateholders. The Master Servicer shall be entitled to enter into any
agreement with the Servicers for indemnification of the Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification. Except as expressly set forth herein, the Master Servicer
shall have no liability for the acts or omissions of any Servicer in the
performance by such Servicer of its obligations under the related Servicing
Agreement.
Section 9.09. No Contractual Relationship Between Servicers and Trustee or
Depositor. Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer
in its capacity as such and not as an originator shall be deemed to be between
such Servicer, the Seller and the Master Servicer, and the Trustee and the
Depositor shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to such Servicer
except as set forth in Section 9.10 hereof.
Section 9.10. Assumption of Servicing Agreement by Trustee. (a) In the
event the Master Servicer shall for any reason no longer be the Master
Servicer (including by reason of any Event of Default under this Agreement),
the Trustee shall thereupon assume all of the rights and obligations of such
Master Servicer hereunder and under each Servicing Agreement entered into with
respect to the Mortgage Loans. The Trustee, its designee or any successor
master servicer appointed by the Trustee shall be deemed to have assumed all
of the Master Servicer's interest herein and therein to the same extent as if
such Servicing Agreement had been assigned to the assuming party, except that
the Master Servicer shall not thereby be relieved of any liability or
obligations of the Master Servicer under such Servicing Agreement accruing
prior to its replacement as Master Servicer, and shall be liable to the
Trustee, and hereby agrees to indemnify and hold harmless the Trustee from and
against all costs, damages, expenses and liabilities (including reasonable
attorneys' fees) incurred by the Trustee as a result of such liability or
obligations of the Master Servicer and in connection with the Trustee's
assumption (but not its performance, except to the extent that costs or
liability of the Trustee are created or increased as a result of negligent or
wrongful acts or omissions of the Master Servicer prior to its replacement as
Master Servicer) of the Master Servicer's obligations, duties or
responsibilities thereunder; provided that the Master Servicer shall not
indemnify or hold harmless the Trustee against negligent or wrongful acts or
omissions of the Trustee.
(b) The Master Servicer that has been terminated shall, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the
assuming party all documents and records relating to each Servicing Agreement
and the related Mortgage Loans and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of each Servicing Agreement to the assuming party.
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements. To the extent
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.
Section 9.12. Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Master Servicer of
a notification that payment in full has been escrowed in a manner customary
for such purposes for payment to Certificateholders on the next Distribution
Date, the Master Servicer will, or will cause the applicable Servicer to,
promptly notify the Trustee (or the applicable Custodian) by a certification
(which certification shall include a statement to the effect that all amounts
received in connection with such payment that are required to be deposited in
the Collection Account maintained by the Master Servicer pursuant to Section
4.01 have been or will be so deposited) of a Servicing Officer and shall
request the Trustee or the applicable Custodian, to deliver to the applicable
Servicer the related Mortgage File. Upon receipt of such certification and
request, the Trustee or the applicable Custodian (with the consent, and at the
direction of the Trustee), shall promptly release the related Mortgage File to
the applicable Servicer and the Trustee shall have no further responsibility
with regard to such Mortgage File. Upon any such payment in full, the Master
Servicer is authorized, and each Servicer, to the extent such authority is
delegated to such Servicer by the Master Servicer under the applicable
Servicing Agreement, is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction
or assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of 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.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with Accepted Servicing Practices and
the applicable Servicing Agreement, the Trustee shall execute such documents
as shall be prepared and furnished to the Trustee by the Master Servicer, or
by a Servicer (in form reasonably acceptable to the Trustee) and as are
necessary to the prosecution of any such proceedings. The Trustee or the
Custodian, shall, upon request of the Master Servicer, or of a Servicer, and
delivery to the Trustee or the applicable Custodian, of a trust receipt signed
by a Servicing Officer substantially in the form of Exhibit C, release the
related Mortgage File held in its possession or control to the Master Servicer
(or the applicable Servicer). Such trust receipt shall obligate the Master
Servicer or applicable Servicer to return the Mortgage File to the Trustee or
Custodian, as applicable, when the need therefor by the Master Servicer or
applicable Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that herein above specified, the trust receipt shall be
released by the Trustee or the Custodian, as applicable, to the Master
Servicer (or the applicable Servicer).
Section 9.13. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee. (a) The Master Servicer shall transmit, or
cause the applicable Servicer to transmit, to the Trustee such documents and
instruments coming into the possession of the Master Servicer or such Servicer
from time to time as are required by the terms hereof to be delivered to the
Trustee. Any funds received by the Master Servicer or by a Servicer in respect
of any Mortgage Loan or which otherwise are collected by the Master Servicer
or by a Servicer as Liquidation Proceeds or Insurance Proceeds in respect of
any Mortgage Loan shall be held for the benefit of the Trustee and the
Certificateholders subject to the Master Servicer's right to retain or
withdraw from the Collection Account the Master Servicing Fee and other
amounts provided in this Agreement, and to the right of each Servicer to
retain its Servicing Fee as provided in the applicable Servicing Agreement.
The Master Servicer shall, and shall (to the extent provided in the applicable
Servicing Agreement) cause each Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners
of any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or
other regulatory authority, such access to be afforded without charge but only
upon reasonable request in writing and during normal business hours at the
offices of the Master Servicer designated by it. In fulfilling such a request
the Master Servicer shall not be responsible for determining the sufficiency
of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, or any Servicer, in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master
Servicer, or by any Servicer, for and on behalf of the Trustee and the
Certificateholders and shall be and remain the sole and exclusive property of
the Trustee; provided, however, that the Master Servicer and each Servicer
shall be entitled to setoff against, and deduct from, any such funds any
amounts that are properly due and payable to the Master Servicer or such
Servicer under this Agreement or the applicable Servicing Agreement.
(c) The Master Servicer hereby acknowledges that concurrently with the
execution of this Agreement, the Trustee shall own or, to the extent that a
court of competent jurisdiction shall deem the conveyance of the Mortgage
Loans from the Seller to the Depositor not to constitute a sale, the Trustee
shall have a security interest in the Mortgage Loans and in all Mortgage Files
representing such Mortgage Loans and in all funds now or hereafter held by, or
under the control of, a Servicer or the Master Servicer that are collected by
any Servicer or the Master Servicer in connection with the Mortgage Loans,
whether as scheduled installments of principal and interest or as full or
partial prepayments of principal or interest or as Liquidation Proceeds or
Insurance Proceeds or otherwise, and in all proceeds of the foregoing and
proceeds of proceeds (but excluding any fee or other amounts to which a
Servicer is entitled under its Servicing Agreement, or the Master Servicer or
the Depositor is entitled to hereunder); and the Master Servicer agrees that
so long as the Mortgage Loans are assigned to and held by the Trustee, all
documents or instruments constituting part of the Mortgage Files, and such
funds relating to the Mortgage Loans which come into the possession or custody
of, or which are subject to the control of, the Master Servicer or any
Servicer shall be held by the Master Servicer or such Servicer for and on
behalf of the Trustee as the Trustee's agent and bailee for purposes of
perfecting the Trustee's security interest therein as provided by the
applicable Uniform Commercial Code or other laws.
(d) The Master Servicer agrees that it shall not, and shall not authorize
any Servicer to, create, incur or subject any Mortgage Loans, or any funds
that are deposited in any custodial account, Escrow Account or the Collection
Account, or any funds that otherwise are or may become due or payable to the
Trustee, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, nor assert by legal action or otherwise any
claim or right of setoff against any Mortgage Loan or any funds collected on,
or in connection with, a Mortgage Loan.
Section 9.14. Representations and Warranties of the Master Servicer. (a)
The Master Servicer hereby represents and warrants to the Depositor and the
Trustee, for the benefit of the Certificateholders and the Class 2-A3
Certificate Insurer, as of the Closing Date that:
(i) it is validly existing and in good standing under the
jurisdiction of its formation, and as Master Servicer has full power and
authority to transact any and all business contemplated by this Agreement
and to execute, deliver and comply with its obligations under the terms of
this Agreement, the execution, delivery and performance of which have been
duly authorized by all necessary corporate action on the part of the
Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Master Servicer is a party or by which it is bound
or to which any of its assets are subject, which violation, default or
breach would materially and adversely affect the Master Servicer's ability
to perform its obligations under this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights in general, and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency to the extent that any such default would
materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any agreement
or instrument or subject to any charter provision, bylaw or any other
corporate restriction or any judgment, order, writ, injunction, decree,
law or regulation that may materially and adversely affect its ability as
Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this
Agreement or the performance by the Master Servicer of its obligations
under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is an FNMA- and FHLMC approved seller/servicer;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master Servicer
with this Agreement or the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders (if any) as have been obtained;
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
and
(x) the Master Servicer has obtained an Errors and Omissions
Insurance Policy and a Fidelity Bond in accordance with Section 9.02, each
of which is in full force and effect, and each of which provides at least
such coverage as is required hereunder.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 9.14 shall survive the execution and delivery of
this Agreement. The Master Servicer shall indemnify the Depositor and the
Trustee and hold them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Master Servicer's
representations and warranties contained in Section 9.14(a). Notwithstanding
anything in this Agreement to the contrary, the Master Servicer shall not be
liable for special, indirect or consequential losses or damages of any kind
whatsoever (including, but not limited to, lost profits). It is understood and
agreed that the enforcement of the obligation of the Master Servicer set forth
in this Section to indemnify the Depositor and the Trustee as provided in this
Section constitutes the sole remedy (other than as set forth in Section 6.14)
of the Depositor and the Trustee, respecting a breach of the foregoing
representations and warranties. Such indemnification shall survive any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising out
of the breach of any representations and warranties made in this Section shall
accrue upon discovery of such breach by either the Depositor, the Master
Servicer, the Trustee or the Class 2-A3 Certificate Insurer or notice thereof
by any one of such parties to the other parties.
(c) It is understood and agreed that the representations and warranties of
the Depositor set forth in Sections 2.03(a) through (f) shall survive the
execution and delivery of this Agreement. The Depositor shall indemnify the
Master Servicer and hold it harmless against any loss, damages, penalties,
fines, forfeitures, legal fees and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on
or grounded upon, or resulting from, a breach of the Depositor's
representations and warranties contained in Sections 2.03(a) through (f)
hereof. It is understood and agreed that the enforcement of the obligation of
the Depositor set forth in this Section to indemnify the Master Servicer as
provided in this Section constitutes the sole remedy of the Master Servicer
respecting a breach by the Depositor of the representations and warranties in
Sections 2.03(a) through (f) hereof.
Any cause of action against the Depositor relating to or arising out of
the breach of the representations and warranties made in Sections 2.03(a)
through (f) hereof shall accrue upon discovery of such breach by either the
Depositor or the Master Servicer or notice thereof by any one of such parties
to the other parties.
Section 9.15. Closing Certificate and Opinion. On or before the Closing
Date, the Master Servicer shall cause to be delivered to the Depositor and
Lehman Brothers Inc. an Opinion of Counsel, dated the Closing Date, in form
and substance reasonably satisfactory to the Depositor and Lehman Brothers
Inc., as to the due authorization, execution and delivery of this Agreement by
the Master Servicer and the enforceability thereof.
Section 9.16. Standard Hazard and Flood Insurance Policies. For each
Mortgage Loan, the Master Servicer shall maintain, or cause to be maintained
by each Servicer, standard fire and casualty insurance and, where applicable,
flood insurance, all in accordance with the provisions of this Agreement and
the related Servicing Agreement, as applicable. It is understood and agreed
that such insurance shall be with insurers meeting the eligibility
requirements set forth in the applicable Servicing Agreement and that no
earthquake or other additional insurance is to be required of any Mortgagor 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.
Pursuant to Section 4.01, any amounts collected by the Master Servicer, or
by any Servicer, under any insurance policies maintained pursuant to this
Section 9.16 (other than amounts to be applied to the restoration or repair of
the property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into
the Collection Account, subject to withdrawal pursuant to Section 4.02. Any
cost incurred by the Master Servicer or any Servicer in maintaining any such
insurance if the Mortgagor defaults in its obligation to do so shall be added
to the amount owing under the Mortgage Loan where the terms of the Mortgage
Loan so permit; provided, however, that the addition of any such cost shall
not be taken into account for purposes of calculating the distributions to be
made to Certificateholders and shall be recoverable by the Master Servicer or
such Servicer pursuant to Section 4.02(v).
Section 9.17. Presentment of Claims and Collection of Proceeds. The Master
Servicer shall, or shall cause each Servicer (to the extent provided in the
applicable Servicing Agreement) to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies
with respect to the Mortgage Loans, and take such actions (including the
negotiation, settlement, compromise or enforcement of the insured's claim) as
shall be necessary to realize recovery under such policies. Any proceeds
disbursed to the Master Servicer (or disbursed to a Servicer and remitted to
the Master Servicer) in respect of such policies or bonds shall be promptly
deposited in the Collection Account upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition requisite to the presentation of claims on
the related Mortgage Loan to the insurer under any applicable Insurance Policy
need not be so deposited (or remitted).
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies. (a)
The Master Servicer shall not take, or permit any Servicer (consistent with
the applicable Servicing Agreement) to take, any action that would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any
loss which, but for the actions of such Master Servicer or Servicer, would
have been covered thereunder. The Master Servicer shall use its best
reasonable efforts to keep in force and effect, or to cause each Servicer to
keep in force and effect (to the extent that the Mortgage Loan requires the
Mortgagor to maintain such insurance), primary mortgage insurance applicable
to each Mortgage Loan in accordance with the provisions of this Agreement and
the related Servicing Agreement, as applicable. The Master Servicer shall not,
and shall not permit any Servicer to, cancel or refuse to renew any such
Primary Mortgage Insurance Policy that is in effect at the date of the initial
issuance of the Certificates and is required to be kept in force hereunder
except in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any Primary Mortgage Insurance Policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 4.01, any amounts collected by the Master Servicer or any
Servicer under any Primary Mortgage Insurance Policies shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 4.02.
Section 9.19. Trustee To Retain Possession of Certain Insurance Policies
and Documents. The Trustee (or its custodian, if any, as directed by the
Trustee), shall retain possession and custody of the originals of the Primary
Mortgage Insurance Policies or certificate of insurance if applicable and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect
of the Certificates have been distributed in full and the Master Servicer
otherwise has fulfilled its obligations under this Agreement, the Trustee (or
its custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or its custodian, if any, as
directed by the Trustee), upon the execution or receipt thereof the originals
of the Primary Mortgage Insurance Policies and any certificates of renewal
thereof, and such other documents or instruments that constitute portions of
the Mortgage File that come into the possession of the Master Servicer from
time to time.
Section 9.20. Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall use its reasonable best efforts to, or to cause each Servicer
to, foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments, all in accordance with the applicable
Servicing Agreement.
Section 9.21. Compensation to the Master Servicer. The Master Servicer
shall (i) be entitled, at its election, either (a) to pay itself the Master
Servicing Fee, as reduced pursuant to Section 5.05, in respect of the Mortgage
Loans out of any Mortgagor payment on account of interest prior to the deposit
of such payment in the Collection Account it maintains or (b) to withdraw from
the Collection Account, subject to Section 5.05, the Master Servicing Fee to
the extent permitted by Section 4.02(iv). The Master Servicer shall also be
entitled, at its election, either (a) to pay itself the Master Servicing Fee
in respect of each delinquent Mortgage Loan master serviced by it out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 4.02 or (b) to withdraw
from the Collection Account it maintains the Master Servicing Fee in respect
of each Liquidated Mortgage Loan to the extent of such Liquidation Proceeds or
other recoveries, to the extent permitted by Section 4.02. Servicing
compensation in the form of assumption fees, if any, late payment charges, as
collected, if any, or otherwise (including any Prepayment Penalty Amount)
shall be retained by the Master Servicer (or the applicable Servicer) and
shall not be deposited in the Collection Account. If the Master Servicer does
not retain or withdraw the Master Servicing Fee from the Collection Account as
provided herein, the Master Servicer shall be entitled to direct the Trustee
to pay the Master Servicing Fee to such Master Servicer by withdrawal from the
Certificate Account to the extent that payments have been received with
respect to the applicable Mortgage Loan. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement. Pursuant to Section 4.01(e), all income and gain realized from any
investment of funds in the Collection Account shall be for the benefit of the
Master Servicer as additional compensation. The provisions of this Section
9.21 are subject to the provisions of Section 6.14(b).
Section 9.22. REO Property. (a) In the event the Trust Fund acquires
ownership of any REO Property in respect of any Mortgage Loan, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee, on
behalf of the Certificateholders. The Master Servicer shall use its reasonable
best efforts to sell, or, to the extent provided in the applicable Servicing
Agreement, cause the applicable Servicer to sell, any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable, but in all
events within the time period, and subject to the conditions set forth in
Article X hereof. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall protect and conserve, or cause the applicable Servicer
to protect and conserve, such REO Property in the manner and to such extent
required by the applicable Servicing Agreement, subject to Article X hereof.
(b) The Master Servicer shall deposit or cause to be deposited all funds
collected and received by it, or recovered from any Servicer, in connection
with the operation of any REO Property in the Collection Account.
(c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Advances as well as any unpaid Master Servicing Fees or
Servicing Fees from Liquidation Proceeds received in connection with the final
disposition of such REO Property; provided, that any such unreimbursed
Advances as well as any unpaid Master Servicing Fees or Servicing Fees may be
reimbursed or paid, as the case may be, prior to final disposition, out of any
net rental income or other net amounts derived from such REO Property.
(d) The Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the applicable
Servicer as provided above, shall be deposited in the Collection Account on or
prior to the Determination Date in the month following receipt thereof (and
the Master Servicer shall provide prompt written notice to the Trustee upon
such deposit) and be remitted by wire transfer in immediately available funds
to the Trustee for deposit into the Certificate Account on the next succeeding
Deposit Date.
Section 9.23. [Omitted]
Section 9.24. Reports to the Trustee. (a) Not later than 30 days after
each Distribution Date, the Master Servicer shall forward to the Trustee a
statement, deemed to have been certified by a Servicing Officer, setting forth
the status of the Collection Account maintained by the Master Servicer as of
the close of business on the related Distribution Date, indicating that all
distributions required by this Agreement to be made by the Master Servicer
have been made (or if any required distribution has not been made by the
Master 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 maintained by the Master Servicer.
Copies of such statement shall be provided by the Master Servicer to the
Depositor, Attention: Contract Finance, and, upon request, any
Certificateholders (or by the Trustee at the Master Servicer's expense if the
Master Servicer shall fail to provide such copies (unless (i) the Master
Servicer shall have failed to provide the Trustee with such statement or (ii)
the Trustee shall be unaware of the Master Servicer's failure to provide such
statement)).
(b) Not later than two Business Days following each Distribution Date, the
Master Servicer shall deliver to the Person designated by the Depositor, in a
format consistent with other electronic loan level reporting supplied by the
Master Servicer in connection with similar transactions, "loan level"
information with respect to the Mortgage Loans as of the related Determination
Date, to the extent that such information has been provided to the Master
Servicer by the Servicers or by the Depositor.
Section 9.25. Annual Officer's Certificate as to Compliance. (a) The
Master Servicer shall deliver to the Trustee, the Rating Agencies and the
Class 2-A3 Certificate Insurer on or before May 31 of each year, commencing on
May 31, 2001, an Officer's Certificate, certifying that with respect to the
period ending on the immediately preceding December 31; (i) such Servicing
Officer has reviewed the activities of such Master Servicer during the
preceding calendar year or portion thereof and its performance under this
Agreement; (ii) to the best of such Servicing Officer's knowledge, based on
such review, such Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of
any such duties, responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status thereof, (iii)
nothing has come to the attention of such Servicing Officer to lead such
Servicing Officer to believe that any Servicer has failed to perform any of
its duties, responsibilities and obligations under its Servicing Agreement in
all material respects throughout such year, or, if there has been a material
default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Servicing Officer
and the nature and status thereof, and (iv) the Master Servicer has received
from each Servicer such Servicer's annual certificate of compliance and a copy
of such Servicer's annual audit report, in each case to the extent required
under the applicable Servicing Agreement, or, if any such certificate or
report has not been received by the Master Servicer, the Master Servicer is
using its best reasonable efforts to obtain such certificate or report.
(b) Copies of such statements shall be provided to any Certificateholder
upon request, by the Master Servicer or by the Trustee at the Master
Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
Section 9.26. Annual Independent Accountants' Servicing Report. If the
Master Servicer has, during the course of any fiscal year, directly serviced
any of the Mortgage Loans, then the Master Servicer at its expense shall cause
a nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Class 2-A3 Certificate Insurer, the
Rating Agencies and the Depositor on or before May 31 of each year, commencing
on May 31, 2001, to the effect that, with respect to the most recently ended
fiscal year, such firm has examined certain records and documents relating to
the Master Servicer's performance of its servicing obligations under this
Agreement and pooling and servicing and trust agreements in material respects
similar to this Agreement and to each other and that, on the basis of such
examination conducted substantially in compliance with the audit program for
mortgages serviced for FHLMC or the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Master Servicer's
activities have been conducted in compliance with this Agreement, or that such
examination has disclosed no material items of noncompliance except for (i)
such exceptions as such firm believes to be immaterial, (ii) such other
exceptions as are set forth in such statement and (iii) such exceptions that
the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages Serviced by FHLMC requires it to report. Copies of such
statements shall be provided to any Certificateholder upon request by the
Master Servicer, or by the Trustee at the expense of the Master Servicer if
the Master Servicer shall fail to provide such copies. If such report
discloses exceptions that are material, the Master Servicer shall advise the
Trustee whether such exceptions have been or are susceptible of cure, and will
take prompt action to do so.
Section 9.27. Merger or Consolidation. Any Person into which the Master
Servicer may be merged or consolidated, or any Person resulting from any
merger, conversion, other change in form or consolidation to which the Master
Servicer shall be a party, or any Person succeeding to the business of the
Master Servicer, shall be the successor to the Master Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or resulting Person to the Master
Servicer shall be a Person that shall be qualified and approved to service
mortgage loans for FNMA or FHLMC and shall have a net worth of not less than
$15,000,000.
Section 9.28. Resignation of Master Servicer. Except as otherwise provided
in Sections 9.27 and 9.29 hereof, the Master Servicer shall not resign from
the obligations and duties hereby imposed on it unless it or the Trustee
determines that the Master Servicer's duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee shall have assumed, or a successor master servicer shall have been
appointed by the Trustee and until such successor shall have assumed, the
Master Servicer's responsibilities and obligations under this Agreement.
Notice of such resignation shall be given promptly by the Master Servicer to
the Depositor.
Section 9.29. Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed
by the Master Servicer hereunder; provided, however, that the Master Servicer
shall have the right without the prior written consent of the Trustee, the
Depositor or the Rating Agencies to delegate or assign to or subcontract with
or authorize or appoint an Affiliate of the Master Servicer to perform and
carry out any duties, covenants or obligations to be performed and carried out
by the Master Servicer hereunder. In no case, however, shall any such
delegation, subcontracting or assignment to an Affiliate of the Master
Servicer relieve the Master Servicer of any liability hereunder. Notice of
such permitted assignment shall be given promptly by the Master Servicer to
the Depositor and the Trustee. If, pursuant to any provision hereof, the
duties of the Master Servicer are transferred to a successor master servicer,
the entire amount of the Master Servicing Fees and other compensation payable
to the Master Servicer pursuant hereto, including amounts payable to or
permitted to be retained or withdrawn by the Master Servicer pursuant to
Section 9.21 hereof, shall thereafter be payable to such successor master
servicer.
Section 9.30. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Trustee or
the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Master
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its
obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Master Servicer
shall be under no obligation to appear in, prosecute or defend any legal
action that is not incidental to its duties to master service the Mortgage
Loans in accordance with this Agreement and that in its opinion may involve it
in any expenses or liability; provided, however, that the Master Servicer may
in its sole discretion undertake any such action that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund and the
Master Servicer shall be entitled to be reimbursed therefor out of the
Collection Account it maintains as provided by Section 4.02.
The Master Servicer shall not be liable for any acts or omissions of any
Servicer. In particular, the Master Servicer shall not be liable for any
servicing errors or interruptions resulting from any failure of any Servicer
to maintain computer and other information systems that are year-2000
compliant.
Section 9.31. Indemnification; Third-Party Claims. The Master Servicer
agrees to indemnify the Depositor and the Trustee, and hold them harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liability, fees and
expenses that the Depositor and the Trustee may sustain as a result of the
failure of the Master Servicer to perform its duties and master service the
Mortgage Loans in compliance with the terms of this Agreement. The Depositor
and the Trustee shall immediately notify the Master Servicer if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans
entitling the Depositor or the Trustee to indemnification hereunder, whereupon
the Master Servicer shall assume the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it
or them in respect of such claim.
Article X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) As set forth in the Preliminary
Statement hereto, the Trustee shall elect REMIC status in accordance with the
REMIC Provisions with respect to each of the Lower Tier REMIC and the Upper
Tier REMIC. The Trustee shall make such elections on Forms 1066 or other
appropriate federal tax or information return for the taxable year ending on
the last day of the calendar year in which the Certificates are issued. For
the purposes of such elections, each Lower Tier Interests, other than the
Class LTR Interest, is hereby designated as a regular interest in the Lower
Tier REMIC, and each Certificate, other than the Class R Certificate, is
hereby designated as a regular interest in the Upper Tier REMIC. The Class LTR
Interest is hereby designated as the sole residual interest in the Lower Tier
REMIC. The Class R Certificate evidences ownership of the Class LTR Interest
and is also hereby designated as the sole residual interest in the Upper Tier
REMIC.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.
(d) The Trustee shall prepare, sign and file, all of each REMIC's federal
and state tax and information returns as such REMIC's direct representative.
The expenses of preparing and filing such returns shall be borne by the
Trustee.
(e) The Trustee or its designee shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, if required by the Code, the REMIC Provisions, or
other such guidance, the Trustee shall provide (i) to the Treasury or other
governmental authority such information as is necessary for the application of
any tax relating to the transfer of a Residual Certificate to any disqualified
person or organization and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates shall
take any action or cause the REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status.
Neither the Trustee, the Master Servicer nor the Holder of any Residual
Certificate shall take any action, cause the REMIC to take any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of such REMIC as a REMIC or (ii) result in the imposition of a tax upon
such REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set
forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Trustee and the Master Servicer have received an Opinion of
Counsel (at the expense of the party seeking to take such action) to the
effect that the contemplated action will not endanger such status or result in
the imposition of such a tax. In addition, prior to taking any action with
respect to the REMIC or the assets therein, or causing such REMIC to take any
action, which is not expressly permitted under the terms of this Agreement,
any Holder of a Residual Certificate will consult with the Trustee and the
Master Servicer, or their respective designees, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect
to such REMIC, and no such Person shall take any such action or cause such
REMIC to take any such action as to which the Trustee or the Master Servicer
has advised it in writing that an Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the
Residual Certificate in such REMIC or, if no such amounts are available, out
of other amounts held in the Collection Account, and shall reduce amounts
otherwise payable to holders of regular interests in such REMIC, as the case
may be.
(h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) Upon the request of any Rating Agency, the Trustee shall deliver to
such Rating Agency an Officer's Certificate stating the Trustee's compliance
with the provisions of this Section 10.01.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor, the Master Servicer nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of each REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in
the Certificate Account for gain, nor accept any contributions to the REMIC
after the Closing Date, unless it has received an Opinion of Counsel (at the
expense of the party causing such sale, disposition, or substitution) that
such disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the Certificates other
than the Residual Certificates as the regular interests therein, (b) affect
the distribution of interest or principal on the Certificates, (c) result in
the encumbrance of the assets transferred or assigned to the Trust Fund
(except pursuant to the provisions of this Agreement) or (d) cause such REMIC
to be subject to a tax on prohibited transactions or prohibited contributions
pursuant to the REMIC Provisions.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status. (a) In the event that a REMIC fails to qualify as a REMIC, loses
its status as a REMIC, or incurs federal, state or local taxes as a result of
a prohibited transaction or prohibited contribution under the REMIC Provisions
due to the negligent performance by the Trustee of its duties and obligations
set forth herein, the Trustee shall indemnify the Holder of the Residual
Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that
the Trustee shall not be liable for any such Losses attributable to the action
or inaction of the Master Servicer, the Depositor, or the Holder of such
Residual Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which
the Trustee has relied. The foregoing shall not be deemed to limit or restrict
the rights and remedies of the Holder of such Residual Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action
or omission that is taken in accordance with and in compliance with the
express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent
performance by the Trustee of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).
Section 10.04. REO Property. (a) Notwithstanding any other provision of
this Agreement, the Master Servicer, acting on behalf of the Trustee
hereunder, shall not, and shall, to the extent provided in the applicable
Servicing Agreement, not permit any Servicer to, rent, lease, or otherwise
earn income on behalf of any REMIC with respect to any REO Property which
might cause such REO Property to fail to qualify as "foreclosure" property
within the meaning of section 860G(a)(8) of the Code or result in the receipt
by any REMIC of any "income from non-permitted assets" within the meaning of
section 860F(a)(2) of the Code or any "net income from foreclosure property"
which is subject to tax under the REMIC Provisions unless the Master Servicer
has advised, or has caused the applicable Servicer to advise, the Trustee in
writing to the effect that, under the REMIC Provisions, such action would not
adversely affect the status of the REMIC as a REMIC and any income generated
for such REMIC by the REO Property would not result in the imposition of a tax
upon such REMIC.
(b) The Master Servicer shall make, or shall cause the applicable
Servicer to make, reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Master Servicer shall, or shall cause
the applicable Servicer to, dispose of any REO Property within three years
from the end of the calendar year of its acquisition by the Trust Fund unless
the Trustee has received a grant of extension from the Internal Revenue
Service to the effect that, under the REMIC Provisions and any relevant
proposed legislation and under applicable state law, the REMIC may hold REO
Property for a longer period without adversely affecting the REMIC status of
such REMIC or causing the imposition of a Federal or state tax upon such
REMIC. If the Trustee has received such an extension, then the Trustee, or the
Master Servicer, acting on its behalf hereunder, shall, or shall cause the
applicable Servicer to, continue to attempt to sell the REO Property for its
fair market value for such period longer than three years as such extension
permits (the "Extended Period"). If the Trustee has not received such an
extension and the Trustee, or the Master Servicer acting on behalf of the
Trustee hereunder, or the applicable Servicer is unable to sell the REO
Property within 33 months after its acquisition by the Trust Fund or if the
Trustee has received such an extension, and the Trustee, or the Master
Servicer acting on behalf of the Trustee hereunder, is unable to sell the REO
Property within the period ending three months before the close of the
Extended Period, the Master Servicer shall, or shall cause the applicable
Servicer to, before the end of the three year period or the Extended Period,
as applicable, (i) purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Master Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be.
Article XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time to
time by the Depositor, the Master Servicer and the Trustee, without notice to
or the consent of any of the Holders, (i) to cure any ambiguity, (ii) to cause
the provisions herein to conform to or be consistent with or in furtherance of
the statements made with respect to the Certificates, the Trust Fund or this
Agreement in any Offering Document; or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein, (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, nor shall such
amendment effected pursuant to clause (iii) of such sentence adversely affect
in any material respect the interests of any Holder (without regard to the
Class 2-A3 Certificate Insurance Policy). Prior to entering into any amendment
without the consent of Holders pursuant to this paragraph, the Trustee may
require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this
paragraph. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder, if the Trustee receives written confirmation from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce, qualify or withdraw the then current rating assigned to the
Certificates (in the case of the Class 2-A3 Certificates, determined without
regard to the Class 2-A3 Certificate Insurance Policy).
(b) This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of not
less than 66-2/3% of the Class Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not adversely affect the status of the REMIC as
a REMIC or cause a tax to be imposed on such REMIC; and provided further, that
no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate, without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentages of Class Principal Amount
(or Percentage Interest) of Certificates of each Class, the Holders of which
are required to consent to any such amendment without the consent of the
Holders of 100% of the Class Principal Amount (or Class Notional Amount) of
each Class of Certificates affected thereby. For purposes of this paragraph,
references to "Holder" or "Holders" shall be deemed to include, in the case of
any Class of Book-Entry Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing Agreement,
the Trustee shall not consent to any amendment of any Servicing Agreement
except pursuant to the standards provided in this Section with respect to
amendment of this Agreement.
Section 11.04. Voting Rights. Except to the extent that the consent of all
affected Certificateholders is required pursuant to this Agreement, with
respect to any provision of this Agreement requiring the consent of
Certificateholders representing specified percentages of aggregate outstanding
Certificate Principal Amount (or Notional Amount), Certificates owned by the
Depositor, the Master Servicer, the Trustee or any Servicer or Affiliates
thereof are not to be counted so long as such Certificates are owned by the
Depositor, the Master Servicer, the Trustee or any Servicer or Affiliates
thereof.
Section 11.05. Provision of Information. (a) For so long as any of the
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee
in providing such information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or
documents requested, (i) a copy (excluding exhibits) of any report on Form 8-K
or Form 10-K filed with the Securities and Exchange Commission pursuant to
Section 6.20(c) and (ii) a copy of any other document incorporated by
reference in the Prospectus. Any reasonable out-of-pocket expenses incurred by
the Trustee in providing copies of such documents shall be reimbursed by the
Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail to the Depositor, Attention: Contract Finance, a
copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when received
by (a) in the case of the Depositor, Structured Asset Securities Corporation,
200 Vesey Street, 12th Floor, New York, New York 10285, Attention: Mark Zusy,
(b) in the case of the Trustee, U.S. Bank National Association, 180 East Fifth
Street, St. Paul, Minnesota 55101 Attention: Structured Finance (SASCO
2000-1), (c) in the case of the Master Servicer, Aurora Loan Services Inc.,
2530 South Parker Road, Suite 601, Aurora, Colorado 80014; Attention: Master
Servicing, and (d) in the case of the Class 2-A3 Certificate Insurer, MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management - Structured Finance (IMP-SF), Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 2000-1,
Class 2-A3 Certificates, or as to each party such other address as may
hereafter be furnished by such party to the other parties in writing. Any
notice required or permitted to be mailed to a Holder shall be given by first
class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or
not the Holder receives such notice.
Section 11.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of
the Certificates, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement, except to the extent specified in Sections
11.14 and 11.15.
Section 11.12. Special Notices to the Rating Agencies. (a) The Depositor
shall give prompt notice to the Rating Agencies and to the Class 2-A3
Certificate Insurer of the occurrence of any of the following events of which
it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) any Assignment by the Master Servicer of its rights hereunder or
delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer pursuant
to Section 6.14 and any resignation of the Master Servicer hereunder;
(v) the appointment of any successor to any Master Servicer pursuant
to Section 6.14; and
(vi) the making of a final payment pursuant to Section 7.02.
(b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to DCR, to:
Duff & Phelps Credit Rating Co.
17 State Street
12th Floor
New York, New York 10004
Attention: RMBS Monitoring
MBS/SASCO 2000-1
If to Moody's, to:
Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: Monitoring Department
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
Section 11.14. Transfer of Servicing. The Seller agrees that it shall
provide written notice to the Trustee and the Master Servicer thirty days
prior to any transfer or assignment by the Seller of its rights under any
Servicing Agreement or of the servicing thereunder or delegation of its rights
or duties thereunder or any portion thereof to any Person other than the
initial Servicer under such Servicing Agreement. In addition, the ability of
the Seller to transfer or assign its rights and delegate its duties under any
Servicing Agreement or to transfer the servicing thereunder to a successor
servicer shall be subject to the following conditions:
(i) Such successor servicer must be qualified to service loans for
FNMA or FHLMC;
(ii) Such successor servicer must satisfy the seller/servicer
eligibility standards in the applicable Servicing Agreement, exclusive of
any experience in mortgage loan origination, and must be reasonably
acceptable to the Master Servicer, whose approval shall not be
unreasonably withheld;
(iii) Such successor servicer must execute and deliver to the Trustee
and the Master Servicer an agreement, in form and substance reasonably
satisfactory to the Trustee and the Master Servicer, that contains an
assumption by such successor servicer of the due and punctual performance
and observance of each covenant and condition to be performed and observed
by the Servicer under the applicable Servicing Agreement;
(iv) There must be delivered to the Trustee a letter from each Rating
Agency to the effect that such transfer of servicing will not result in a
qualification, withdrawal or downgrade of the then-current rating of any
of the Certificates (determined without regard to the Class 2-A3
Certificate Insurance Policy, in the case of the Class 2-A3 Certificates);
(v) The Seller shall, at its cost and expense, take such steps, or
cause the terminated Servicer to take such steps, as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of
the Mortgage Loans to such successor servicer, including, but not limited
to, the following: (A) to the extent required by the terms of the Mortgage
Loans and by applicable federal and state laws and regulations, the Seller
shall cause the prior Servicer to timely mail to each obligor under a
Mortgage Loan any required notices or disclosures describing the transfer
of servicing of the Mortgage Loans to the successor servicer; (B) prior to
the effective date of such transfer of servicing, the Seller shall cause
the prior Servicer to transmit to any related insurer notification of such
transfer of servicing; (C) on or prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to
deliver to the successor servicer all Mortgage Loan Documents and any
related records or materials; (D) on or prior to the effective date of
such transfer of servicing, the Seller shall cause the prior Servicer to
transfer to the successor servicer, or, if such transfer occurs after a
Remittance Date but before the next succeeding Deposit Date, to the Master
Servicer, all funds held by the Servicer in respect of the Mortgage Loans;
(E) on or prior to the effective date of such transfer of servicing, the
Seller shall cause the prior Servicer to, after the effective date of the
transfer of servicing to the successor servicer, continue to forward to
such successor servicer, within one Business Day of receipt, the amount of
any payments or other recoveries received by the prior Servicer, and to
notify the successor servicer of the source and proper application of each
such payment or recovery; and (F) the Seller shall cause the prior
Servicer to, after the effective date of transfer of servicing to the
successor servicer, continue to cooperate with the successor servicer to
facilitate such transfer in such manner and to such extent as the
successor servicer may reasonably request.
Section 11.15. Matters Relating to the Class 2-A3 Certificate Insurance
Policy. (a) All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to the
Class 2-A3 Certificateholders shall also be sent, and any report or statement
sent by the Master Servicer to the Trustee shall be sent by the Trustee, to
the Class 2-A3 Certificate Insurer at the following address:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management - Structured Finance
Re: Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2000-1, Class 2-A3 Certificates
or such other address as the Class 2-A3 Certificate Insurer may hereafter
furnish to the Depositor and the Trustee.
(b) Notwithstanding any provision to the contrary, the parties to this
Agreement agree that it is appropriate, in furtherance of the interest of such
parties as set forth herein, the Class 2-A3 Certificate Insurer receive the
benefit of Sections 4.03, 5.02, 5.07 and 11.15 as an intended third party
beneficiary of this Agreement to the extent of such provisions.
(c) No purchase of the property of the Trust Fund pursuant to Section
7.01(b) shall occur if such purchase would result in a draw on the Class 2-A3
Certificate Insurance Policy, unless the Class 2-A3 Certificate Insurer has
consented to such purchase.
(d) All references herein to the rating of the Certificates shall be
without regard to the Class 2-A3 Certificate Insurance Policy.
IN WITNESS WHEREOF, the Depositor, the Trustee and the
Master Servicer have caused their names to be signed hereto by
their respective officers hereunto duly authorized as of the day
and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By: /s/ Ellen Kiernan
-----------------------------------------
Name: Ellen Kiernan
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Eve Kaplan
------------------------------------------
Name: Eve Kaplan
Title: Vice President
AURORA LOAN SERVICES INC., as Master Servicer
By: /s/ Rick Skogg
------------------------------------------
Name: Rick Skogg
Title: President
Solely for purposes of Section 11.14,
accepted and agreed to by:
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
Name: Joseph J. Kelly
Title: Vice President
EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT B-1
FORM OF INITIAL CERTIFICATION
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of January 1, 2000
among Structured Asset Securities Corporation, as Depositor, U.S.
Bank National Association, as Trustee, and Aurora Loan Services Inc.,
as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2000-1
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as Custodian on behalf of the
Trustee, hereby certifies that it (or its custodian) has received the
documents listed in Section 2.01(b) of the Trust Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Schedule A, to the Trust
Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Trust Agreement.
This Certificate is subject in all respects to the terms of Section 2.02 of
the Trust Agreement and the Trust Agreement sections cross-referenced therein.
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Name:
Title:
EXHIBIT B-2
FORM OF INTERIM CERTIFICATION
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of January 1, 2000
among Structured Asset Securities Corporation, as Depositor, U.S.
Bank National Association, as Trustee, and Aurora Loan Services Inc.,
as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2000-1
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned, as Custodian on behalf of the Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule
I hereto, it has reviewed the documents identified above and has determined
that each such document appears regular on its face and appears to relate to
the Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement including, but
not limited to, Section 2.02(b).
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT B-3
FORM OF FINAL CERTIFICATION
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of January 1, 2000
among Structured Asset Securities Corporation, as Depositor, U.S.
Bank National Association, as Trustee, and Aurora Loan Services Inc.,
as Master Servicer, with respect to Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2000-1
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the
undersigned, as Custodian on behalf of the Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule
I hereto, it has reviewed the documents listed above and has determined that
each such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement.
[Custodian], on behalf of
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT B-4
FORM OF ENDORSEMENT
Pay to the order of U.S. Bank National Association, as trustee (the
"Trustee") under the Trust Agreement dated as of January 1, 2000, among
Structured Asset Securities Corporation, as Depositor, the Trustee and the
Master Servicer relating to Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 2000-1, without recourse.
--------------------------------------
[current signatory on note]
By:__________________________________
Name:
Title:
EXHIBIT C
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
Date
[Addressed to Trustee
or, if applicable, custodian]
In connection with the administration of the mortgages held by you as
Trustee under a certain Trust Agreement dated as of January 1, 2000 among
Structured Asset Securities Corporation, as Depositor, Aurora Loan Services
Inc., as Master Servicer, and you, as Trustee (the "Trust Agreement"), the
undersigned Master Servicer hereby requests a release of the Mortgage File
held by you as Trustee with respect to the following described Mortgage Loan
for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
1. Mortgage Loan paid in full. (The Master Servicer hereby certifies that
all amounts received in connection with the loan have been or will be credited
to the Collection Account or the Certificate Account (whichever is applicable)
pursuant to the Trust Agreement.)
2. The Mortgage Loan is being foreclosed.
3. Mortgage Loan substituted. (The Master Servicer hereby certifies that a
Qualifying Substitute Mortgage Loan has been assigned and delivered to you
along with the related Mortgage File pursuant to the Trust Agreement.)
4. Mortgage Loan repurchased. (The Master Servicer hereby certifies that
the Purchase Price has been credited to the Collection Account or the
Certificate Account (whichever is applicable) pursuant to the Trust
Agreement.)
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased or
substituted for a Qualifying Substitute Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned
when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Trust Agreement.
-------------------------------------
[Name of Master Servicer]
By:__________________________________
Name:
Title: Servicing Officer
EXHIBIT D-1
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
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 Purchaser] _________________________________________ (the "Purchaser"), a
_______________________ [description of type of entity] duly organized and
existing under the laws of the [State of __________] [United States], on
behalf of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is ______________.
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
__________________ [date of transfer], and that the Purchaser is not acquiring
a Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form
of this affidavit. For these purposes, a "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of
any of the foregoing (other than an instrumentality if all of its activities
are subject to tax and a majority of its board of directors is not selected by
such governmental entity), any cooperative organization furnishing electric
energy or providing telephone service to persons in rural areas as described
in Code Section 1381(a)(2)(C), any "electing large partnership" within the
meaning of Section 775 of the Code, or any organization (other than a farmers'
cooperative described in Code Section 521) that is exempt from federal income
tax unless such organization is subject to the tax on unrelated business
income imposed by Code Section 511.
4. That the Purchaser is not, and on __________________ [date of transfer]
will not be, and is not and on such date will not be investing the assets of,
an employee benefit plan subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or a plan subject to Code Section 4975 or a
person or entity that is using the assets of any employee benefit plan or
other plan to acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among Structured Asset Securities
Corporation, U.S. Bank National Association, as Trustee and Aurora Loan
Services Inc., as Master Servicer, dated as of January 1, 2000, no transfer of
a Residual Certificate shall be permitted to be made to any person unless the
Trustee has received a certificate from such transferee to the effect that
such transferee is not an employee benefit plan subject to ERISA or a plan
subject to Section 4975 of the Code and is not using the assets of any
employee benefit plan or other plan to acquire a Residual Certificate.
6. That the Purchaser does not hold REMIC residual securities as nominee
to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (such
entity, a "Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the assessment
or collection of any federal, state or local taxes legally required to be paid
with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are
not satisfied or that the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form and
providing to the Trustee a written statement substantially in the form of
Exhibit G to the Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash
flows generated by the interest and that it intends to pay taxes associated
with holding such Residual Certificate as they become due.
10. That the Purchaser (i) is a U.S. Person or (ii) is a Non-U.S. Person
that holds a Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or successor form
at the time and in the manner required by the Code. "Non-U.S. Person" Any
person other than (i) a citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of
any state thereof, including, for this purpose, the District of Columbia;
(iii) a partnership (or entity treated as a partnership for tax purposes)
organized in the United States or under the laws of the United States or of
any state thereof, including, for this purpose, the District of Columbia
(unless provided otherwise by future Treasury regulations); (iv) an estate
whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) 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 U.S. Persons have authority to control all
substantial decisions of the trust. Notwithstanding the last clause of the
preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as U.S. Persons prior to
such date, may elect to continue to be U.S. Persons.
11. That the Purchaser agrees to such amendments of the Trust Agreement as
may be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent thereof,
a Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the Trust
Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its [title of officer] this _____ day of __________, 20__.
--------------------------------------
[name of Purchaser]
By:___________________________________
Name:
Title:
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
Purchaser, 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 Purchaser.
Subscribed and sworn before me this _____ day of __________, 20__.
NOTARY PUBLIC
- ---------------------------------
COUNTY OF_____________________
STATE OF_______________________
My commission expires the _____ day of __________, 20__.
EXHIBIT D-2
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
-------------------
Date
Re: Structured Asset Securities Corporation Mortgage Pass-Through
Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no
actual knowledge that such affidavit is not true and has no reason to believe
that the information contained in paragraph 7 thereof is not true, and has no
reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to a Residual Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to
pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
EXHIBIT E
SERVICING AGREEMENTS
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 2000-1
Reference is hereby made to the Trust Agreement dated as of January
1, 2000 (the "Trust Agreement") among Structured Asset Securities Corporation,
as Depositor, Aurora Loan Services Inc., as Master Servicer and U.S. Bank
National Association, as Trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Trust Agreement.
This letter relates to $_________ initial Certificate Principal
Amount of Class Certificates which are held in the form of Definitive
Certificates registered in the name of (the "Transferor"). The Transferor has
requested a transfer of such Definitive Certificates for Definitive
Certificates of such Class registered in the name of [insert name of
transferee].
In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred
in accordance with (i) the transfer restrictions set forth in the Trust
Agreement and the Certificates and (ii) Rule 144A under the Securities Act to
a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer", which
purchaser is aware that the sale to it is being made in reliance upon Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with any applicable securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Placement Agent and the Depositor.
----------------------------------------
[Name of Transferor]
By:_____________________________________
Name:
Title:
Dated: __________________, ________
EXHIBIT G
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
------------------
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Mortgage Pass-Through Certificates, Series 2000-1 (the "Privately
Offered Certificates") of Structured Asset Securities Corporation (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates
have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities
Act"), and may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Privately
Offered Certificates within three years of the later of
the date of original issuance of the Privately Offered
Certificates or the last day on which such Privately
Offered Certificates are owned by the Depositor or any
affiliate of the Depositor (which includes the Placement
Agent) we will do so only (A) to the Depositor, (B) to
"qualified institutional buyers" (within the meaning of
Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act ("QIBs"), (C)
pursuant to the exemption from registration provided by
Rule 144 under the Securities Act, or (D) to an
institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act that is not a QIB (an "Institutional
Accredited Investor") which, prior to such transfer,
delivers to the Trustee under the Trust Agreement dated
as of January 1, 2000 among the Depositor, Aurora Loan
Services Inc., as Master Servicer and U.S. Bank National
Association, as Trustee (the "Trustee"), a signed letter
in the form of this letter; and we further agree, in the
capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates
from us a notice advising such purchaser that resales of
the Privately Offered Certificates are restricted as
stated herein.
(2) We understand that, in connection with any proposed
resale of any Privately Offered Certificates to an
Institutional Accredited Investor, we will be required
to furnish to the Trustee and the Depositor a
certification from such transferee in the form hereof to
confirm that the proposed sale is being made pursuant to
an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act. We
further understand that the Privately Offered
Certificates purchased by us will bear a legend to the
foregoing effect.
(3) We are acquiring the Privately Offered Certificates for
investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge
and experience in financial and business matters as to
be capable of evaluating the merits and risks of our
investment in the Privately Offered Certificates, and we
and any account for which we are acting are each able to
bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are
acquiring the Privately Offered Certificates purchased
by us for our own account or for one or more accounts
(each of which is an Institutional Accredited Investor)
as to each of which we exercise sole investment
discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we
understand that in accordance with ERISA, the Code and
the Exemption, no Plan as to which the Purchaser, the
Depositor, any Servicer or Master Servicer or the
Trustee is a party in interest or disqualified person,
and no person acting on behalf of such a Plan may
acquire such Certificate unless the acquisition would
constitute an exempt transaction under a statutory
exemption or any of the administrative exemptions issued
by the U.S. Department of Labor.
Terms used in this letter which are not otherwise
defined herein have the respective meanings assigned thereto in
the Trust Agreement.
You and the Depositor are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
----------------------------------
[Purchaser]
By________________________________
Name:
Title:
EXHIBIT H
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"),
a [corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 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"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account"
(as such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee and
the Depositor shall be entitled to rely, to the effect that the purchase or
holding of such Certificate by the Investor 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 or the Code and will not subject the Trustee
or the Depositor to any obligation in addition to those undertaken by such
entities in the Trust Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer, and U.S. Bank
National Association, as Trustee, dated as of January 1, 2000, no transfer of
the ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Depositor and Trustee have received a certificate from such
transferee in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 20__.
----------------------------------------
[Investor]
By:_____________________________________
Name:
Title:
ATTEST:
- ---------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named _________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the _________________ of the Investor, and acknowledged
that he executed the same as his free act and deed and the free act and deed
of the Investor.
Subscribed and sworn before me this _____ day of ___________ 20___.
----------------------------------
NOTARY PUBLIC
My commission expires the ____ day of
__________, 20__.
EXHIBIT I
MONTHLY REMITTANCE ADVICE
EXHIBIT J
MONTHLY ELECTRONIC DATA TRANSMISSION
EXHIBIT K
CUSTODIAL AGREEMENT
EXHIBIT L
INSURANCE AGREEMENT
EXHIBIT M
CLASS 2-A3 CERTIFICATE INSURANCE POLICY
SCHEDULE A
MORTGAGE LOAN SCHEDULE
SCHEDULE B
PRINCIPAL AMOUNT SCHEDULES
[Not Applicable]
SCHEDULE C
UNDERLYING SECURITY SCHEDULE
SCHEDULE D
POOL 1 AX LOANS
SCHEDULE E
POOL 2 AX LOANS
EXECUTION
================================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION,
PURCHASER
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
Dated as of January 1, 2000
================================================================================
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans.................................................1
1.02. Delivery of Documents..................................................2
1.03. Review of Documentation................................................2
1.04. Representations and Warranties of Lehman Capital.......................2
1.05. Grant Clause...........................................................6
1.06 Assignment by Depositor.................................................6
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment................................7
2.02. Entire Agreement.......................................................7
2.03. Amendment .............................................................7
2.04. Governing Law..........................................................8
2.05. Severability of Provisions.............................................8
2.06. Indulgences; No Waivers................................................8
2.07. Headings Not to Affect Interpretation..................................8
2.08. Benefits of Agreement..................................................8
2.09. Counterparts...........................................................8
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
This MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT is executed by and
between Lehman Capital, A Division of Lehman Brothers Holdings Inc. ("Lehman
Capital"), and Structured Asset Securities Corporation (the "Depositor"), dated
as of the 1st day of January, 2000.
All capitalized terms not defined herein shall have the same meanings
assigned to such terms in that certain Trust Agreement (the "Trust Agreement"),
dated as of January 1, 2000, among the Depositor, Aurora Loan Services Inc., as
Master Servicer, and U.S. Bank National Association, as Trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the following specified mortgage loan transfer
agreements (each a "Transfer Agreement," and together the "Transfer
Agreements"), Lehman Capital has purchased or received from certain transferors
(each a "Transferor," and together the "Transferors"), certain mortgage loans
identified on the Mortgage Loan Schedule attached hereto as Exhibit A:
1. Mortgage Loan Purchase and Warranties Agreement dated as of
November 30, 1998, between Lehman Capital and Headlands Mortgage
Company; and
2. Assignment and Assumption Agreement dated as of January 28, 2000
(the "Impac Transfer Agreement"), between Lehman Brothers Bank,
F.S.B. ("LBB") and Lehman Capital, which Impac Transfer Agreement
assigns the rights and interests of LBB in the Seller's Purchase,
Warranties and Servicing Agreement dated as of September 1, 1999,
between LBB, as purchaser, and Impac Funding Corporation, as
seller and servicer.
3. Loan Purchase Agreement (Servicing Released) dated March 23,
1998, between Lehman Capital and Aurora Loan Services Inc.
WHEREAS, each Transfer Agreement permits the purchaser to assign its
rights and interests in such agreement and to delegate its obligations
thereunder;
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest in the Mortgage Loans to the Depositor, to assign all
of its rights and interest under each Transfer Agreement, and to delegate all of
its obligations thereunder, to the Depositor; and
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that
the Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Lehman Capital and the Depositor agree as
follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution
and delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse,
subject to Sections 1.03 and 1.04, all the right, title and interest of Lehman
Capital in and to the Mortgage Loans identified on Schedule A hereto, having an
aggregate principal balance as of the Cut-off Date of $319,661,640.54. Such
conveyance includes, without limitation, the right to all distributions of
principal and interest received on or with respect to the Mortgage Loans on or
after January 1, 2000 (other than payments of principal and interest due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date, together with all of Lehman Capital's right, title and interest in and to
each related account and all amounts from time to time credited to and the
proceeds of such account, any REO Property and the proceeds thereof, Lehman
Capital's rights under any Insurance Policies related to the Mortgage Loans, and
Lehman Capital's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
each Transfer Agreement and delegates to the Depositor all of its obligations
thereunder, and Lehman Capital hereby assigns to the Depositor all of its rights
relating to the Mortgage Loans and none of its obligations in, to and under each
Servicing Agreement. Concurrently with the execution hereof, the Depositor
tenders the purchase price of $321,259,948.74. The Depositor hereby accepts such
assignment and delegation, and shall be entitled to exercise all such rights of
Lehman Capital under each Transfer Agreement and each Servicing Agreement, as if
the Depositor had been a party to each Transfer Agreement and each Servicing
Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such
transfer and assignment of the Mortgage Loans hereunder, Lehman Capital does
hereby deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the applicable Transfer
Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by U.S. Bank National Association and LaSalle National Bank, each as the
custodian (a "Custodian") for the applicable Mortgage Loans for the Depositor.
Each Custodian is required to review, within 45 days following the Closing Date,
each applicable Mortgage File. If in the course of such review any Custodian
identifies any Material Defect, Lehman Capital shall be obligated to cure such
defect or to repurchase the related Mortgage Loan from the Depositor (or, at the
direction of and on behalf of the Depositor, from the Trust Fund), or to
substitute a Qualifying Substitute Mortgage Loan therefor, in each case to the
same extent and in the same manner as the Depositor is obligated to the Trustee
and the Trust Fund under Section 2.02(c) of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a)
Lehman Capital hereby represents and warrants to the Depositor that as of the
date hereof that:
(i) Lehman Capital is a corporation duly organized, validly
existing and in good standing under the laws governing its creation
and existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, and to
enter into and perform its obligations under this Agreement;
(ii) the execution and delivery by Lehman Capital of this
Agreement have been duly authorized by all necessary corporate action
on the part of Lehman Capital; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on Lehman Capital or its properties or the
certificate of incorporation or bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital
of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any state, federal or other governmental
authority or agency, except such as has been obtained, given, effected
or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by
Lehman Capital and, assuming due authorization, execution and delivery
by the Depositor, constitutes a valid and binding obligation of Lehman
Capital enforceable against it in accordance with its terms except as
such enforceability may be subject to (A) applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of
the rights of creditors generally and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding
in equity or at law; and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted
against or affecting Lehman Capital, before or by any court,
administrative agency, arbitrator or governmental body (A) with
respect to any of the transactions contemplated by this Agreement or
(B) with respect to any other matter which in the judgment of Lehman
Capital will be determined adversely to Lehman Capital and will if
determined adversely to Lehman Capital materially and adversely affect
it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations
under this Agreement.
(b) The representations and warranties of each Transferor with respect
to the Mortgage Loans in the applicable Transfer Agreement were made as of the
date of such Transfer Agreement. To the extent that any fact, condition or event
with respect to a Mortgage Loan constitutes a breach of both (i) a
representation or warranty of a Transferor under the applicable Transfer
Agreement and (ii) a representation or warranty of Lehman Capital under this
Agreement, the only right or remedy of the Depositor shall be the right to
enforce the obligations of such Transferor under any applicable representation
or warranty made by it. The Depositor acknowledges and agrees that the
representations and warranties of Lehman Capital in this Section 1.04(b) are
applicable only to facts, conditions or events that do not constitute a breach
of any representation or warranty made by the related Transferor in the
applicable Transfer Agreement. Lehman Capital shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to the Mortgage Loans if the fact, condition or event constituting
such breach also constitutes a breach of a representation or warranty made by
the related Transferor in such Transfer Agreement, without regard to whether the
related Transferor fulfills its contractual obligations in respect of such
representation or warranty. Subject to the foregoing, Lehman Capital represents
and warrants upon delivery of the Mortgage Loans to the Depositor hereunder, as
to each, that:
(i) The information set forth with respect to the Mortgage Loans
on the Mortgage Loan Schedule provides an accurate listing of the
Mortgage Loans, and the information with respect to each Mortgage Loan
on the Mortgage Loan Schedule is true and correct in all material
respects at the date or dates respecting which such information is
given;
(ii) There are no defaults (other than delinquency in payment) in
complying with the terms of any Mortgage, and Lehman Capital has no
notice as to any taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing but which have not been paid;
(iii) Except in the case of Cooperative Loans, each Mortgage
requires all buildings or other improvements on the related Mortgaged
Property to be insured by a generally acceptable insurer against loss
by fire, hazards of extended coverage and such other hazards as are
customary in the area where the related Mortgaged Property is located
pursuant to insurance policies conforming to the requirements of the
guidelines of FNMA or FHLMC. If upon origination of the Mortgage Loan,
the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) a
flood insurance policy meeting the requirements of the current
guidelines of the Federal Flood Insurance Administration is in effect
which policy conforms to the requirements of the current guidelines of
the Federal Flood Insurance Administration. Each Mortgage obligates
the related Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where required by
state law or regulation, each Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the
policy is not a "master" or "blanket" hazard insurance policy covering
the common facilities of a planned unit development. The hazard
insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and
inure to the benefit of the Depositor upon the consummation of the
transactions contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is
subject only to: (1) liens of current real property taxes and
assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges permitted
by statute, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such Mortgage acceptable to mortgage lending institutions
in the area in which the related Mortgaged Property is located and
specifically referred to in the lender's Title Insurance Policy or
attorney's opinion of title and abstract of title delivered to the
originator of such Mortgage Loan, and (3) such other matters to which
like properties are commonly subject which do not, individually or in
the aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage. Any security agreement,
chattel mortgage or equivalent document related to, and delivered to
the Trustee in connection with, a Mortgage Loan establishes a valid,
subsisting and enforceable first lien on the property described
therein and the Depositor has full right to sell and assign the same
to the Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of
record and holder of each Mortgage Loan, and Lehman Capital had good
and marketable title thereto, and has full right to transfer and sell
each Mortgage Loan to the Depositor free and clear, except as
described in paragraph (v) above, of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign each Mortgage Loan pursuant to this Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is
covered by either (i) an attorney's opinion of title and abstract of
title the form and substance of which is generally acceptable to
mortgage lending institutions originating mortgage loans in the
locality where the related Mortgaged Property is located or (ii) an
ALTA mortgagee Title Insurance Policy or other generally acceptable
form of policy of insurance, issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring the originator of the Mortgage Loan, and its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (subject only to the exceptions
described in paragraph (v) above). If the Mortgaged Property is a
condominium unit located in a state in which a title insurer will
generally issue an endorsement, then the related Title Insurance
Policy contains an endorsement insuring the validity of the creation
of the condominium form of ownership with respect to the project in
which such unit is located. With respect to any Title Insurance
Policy, the originator is the sole insured of such mortgagee Title
Insurance Policy, such mortgagee Title Insurance Policy is in full
force and effect and will inure to the benefit of the Depositor upon
the consummation of the transactions contemplated by this Agreement,
no claims have been made under such mortgagee Title Insurance Policy
and no prior holder of the related Mortgage, including Lehman Capital,
has done, by act or omission, anything that would impair the coverage
of such mortgagee Title Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage
Loan. There is no proceeding pending for the total or partial
condemnation of any Mortgaged Property (or, in the case of a
Cooperative Loan, the related cooperative unit) and each such property
is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty, so as to have a material adverse
effect on the value of the related Mortgaged Property as security for
the related Mortgage Loan or the use for which the premises were
intended;
(ix) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens
prior to, or equal or coordinate with, the lien of the related
Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a
Federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act;
(xi) Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to each Mortgage Loan have
been complied with; and
(xii) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G of the Code and Treas. Reg. Section 1.860G-2.
It is understood and agreed that the representations and warranties
set forth herein and the obligations of Lehman Capital set forth in this Section
survive delivery of the Mortgage Files and the Assignment of Mortgage of each
Mortgage Loan to the Depositor. Upon discovery by either Lehman Capital or the
Depositor of a breach of any of the foregoing representations and warranties
that adversely and materially affects the value of the related Mortgage Loan,
and that does not also constitute a breach of a representation or warranty of
the related Transferor in the applicable Transfer Agreement, the party
discovering such breach shall give prompt written notice to the other party.
Within 60 days of the discovery of any such breach, Lehman Capital shall either
(a) cure such breach in all material respects, (b) repurchase such Mortgage Loan
or any property acquired in respect thereof from the Depositor at the applicable
Purchase Price or (c) within the two year period following the Closing Date,
substitute a Qualifying Substitute Mortgage Loan for the affected Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of
Lehman Capital's right, title and interest in and to Mortgage Loans and other
property conveyed pursuant to this Agreement shall constitute, and shall be
construed as, a sale of such property and not a grant of a security interest to
secure a loan. However, if such conveyance is deemed to be in respect of a loan,
it is intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) Lehman Capital hereby
grants to the Depositor a first priority security interest in all of Lehman
Capital's right, title and interest in, to and under, whether now owned or
hereafter acquired, such Mortgage Loans and other property; and (3) this
Agreement shall constitute a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the
right, upon notice to but without the consent of Lehman Capital, to assign, in
whole or in part, its interest under this Agreement with respect to the Mortgage
Loans to the Trustee, and the Trustee then shall succeed to all rights of the
Depositor under this Agreement. All references to the Depositor in this
Agreement shall be deemed to include its assignee or designee, specifically
including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 2.03. Amendment. This Agreement may be amended from time to
time by Lehman Capital and the Depositor, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement or (iv) to add, delete, or amend any provisions to the
extent necessary or desirable to comply with any requirements imposed by the
Code and the REMIC Provisions. No such amendment effected pursuant to clause
(iii) of the preceding sentence shall adversely affect in any material respect
the interests of any Holder. Any such amendment shall be deemed not to adversely
affect in any material respect any Holder, if the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to the Certificates
(and any Opinion of Counsel requested by the Trustee in connection with any such
amendment may rely expressly on such confirmation as the basis therefor).
(a) This Agreement may also be amended from time to time by Lehman
Capital and the Depositor with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without, the consent of the Holder
of such Certificate or (ii) reduce the aforesaid percentages of Class Principal
Amount (or Percentage Interest) of Certificates of each Class, the Holders of
which are required to consent to any such amendment without the consent of the
Holders of 100% of the Class Principal Amount (or Percentage Interest) of each
Class of Certificates affected thereby. For purposes of this paragraph,
references to "Holder" or "Holders" shall be deemed to include, in the case of
any Class of Book-Entry Certificates, the related Certificate Owners.
(b) It shall not be necessary for the consent of Holders under this
Section 2.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 2.08. Benefits of Agreement. Nothing in this Agreement,
express or implied, shall give to any Person, other than the parties to this
Agreement and their successors hereunder, any benefit or any legal or equitable
right, power, remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
-------------------------
Name: Joseph J. Kelly
Title: Vice President
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/ Ellen Kiernan
-----------------------
Name: Ellen Kiernan
Title: Vice President
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
EXECUTION
================================================================================
AURORA LOAN SERVICES INC.,
as Servicer
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
as Seller
and
AURORA LOAN SERVICES INC.,
as Master Servicer
-----------------------------
STRUCTURED ASSET SECURITIES CORPORATION
Mortgage Pass-Through Certificates, Series 2000-1
SERVICING AGREEMENT
Dated as of January 1, 2000
-----------------------------
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.......12
Section 2.02 Books and Records...........................................12
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service.........................................13
Section 3.02 Collection of Mortgage Loan Payments........................15
Section 3.03 Establishment of and Deposits to Custodial Account..........15
Section 3.04 Permitted Withdrawals From Custodial Account................16
Section 3.05 Establishment of and Deposits to Escrow Account.............17
Section 3.06 Permitted Withdrawals From Escrow Account...................18
Section 3.07 Maintenance of FHA Mortgage Insurance and VA Guaranty.......18
Section 3.08 Fidelity Bond and Errors and Omissions Insurance............19
Section 3.09 Notification of Adjustments.................................19
Section 3.10 Completion and Recordation of Assignments of Mortgage
and FHA and VA Change Notices ............................19
Section 3.11 Protection of Accounts......................................20
Section 3.12 Title, Management and Disposition of REO Property...........20
Section 3.13 Real Estate Owned Reports...................................22
Section 3.14 MERS........................................................22
Section 3.15 [Reserved]..................................................23
ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances.................................................23
Section 4.02 Statements to Master Servicer...............................24
Section 4.03 Monthly Advances by Servicer................................24
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation......................................25
Section 5.02 Annual Audit Report.........................................25
Section 5.03 Annual Officer's Certificate................................26
ARTICLE VI.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of
the Servicer .............................................26
Section 6.02 Remedies for Breach of Representations and
Warranties of the Servicer ...............................27
Section 6.03 Additional Indemnification by the Servicer;
Third Party Claims .......................................28
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer.....................29
Section 7.02 Limitation on Liability of the Servicer and Others..........29
Section 7.03 Limitation on Resignation and Assignment by the Servicer....30
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.......................................30
Section 8.02 Termination Without Cause...................................32
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer...................................32
Section 9.02 Costs.......................................................34
Section 9.03 Notices.....................................................35
Section 9.04 Severability Clause.........................................36
Section 9.05 No Personal Solicitation....................................36
Section 9.06 Counterparts................................................36
Section 9.07 Place of Delivery and Governing Law.........................37
Section 9.08 Further Agreements..........................................37
Section 9.09 Intention of the Parties....................................37
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement...37
Section 9.11 Assignment by Lehman Capital................................37
Section 9.12 [Reserved]..................................................37
Section 9.13 Waivers.....................................................37
Section 9.14 Exhibits....................................................38
Section 9.15 General Interpretive Principles.............................38
Section 9.16 Reproduction of Documents...................................38
EXHIBITS & SCHEDULES
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B Custodial Account Letter Agreement
EXHIBIT C Escrow Account Letter Agreement
SCHEDULE 1 Servicer Recordation Fees
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the
1st day of January, 2000, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation (the "Seller" or "Lehman
Capital"), AURORA LOAN SERVICES INC., a Delaware corporation ("the Servicer"),
and AURORA LOAN SERVICES INC., as Master Servicer under the Trust Agreement (as
defined herein) recites and provides as follows:
RECITALS
WHEREAS, the Seller has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Mortgage Loans") on a servicing-retained basis to
Structured Asset Securities Corporation (the "Depositor"), which in turn has
conveyed the Mortgage Loans to U.S. Bank National Association, as trustee (the
"Trustee") under a trust agreement dated as of January 1, 2000 (the "Trust
Agreement"), among the Trustee, Aurora Loan Services Inc., as master servicer
(together with any successor Master Servicer appointed pursuant to the
provisions of the Trust Agreement, the "Master Servicer"), and the Depositor.
WHEREAS, Lehman Capital desires that the Servicer service the Mortgage
Loans pursuant to this Agreement, and the Servicer has agreed to do so, subject
to the right of the Seller and of the Master Servicer to terminate the rights
and obligations of the Servicer hereunder at any time and to the other
conditions set forth herein.
WHEREAS, Lehman Capital and the Servicer agree that the provisions of
the Flow Servicing Agreement dated as of September 1, 1997, between Lehman
Capital and the Servicer shall not apply to the Mortgage Loans for so long as
such Mortgage Loans remain subject to the provisions of the Trust Agreement;
WHEREAS, the Master Servicer shall be obligated under the Trust
Agreement, among other things, to supervise the servicing of the Mortgage Loans
on behalf of the Trustee, and shall have the right, under certain circumstances,
to terminate the rights and obligations of the Servicer under this Servicing
Agreement.
WHEREAS, Lehman Capital and the Servicer intend that the Master
Servicer, pursuant to Section 9.12, is an intended third party beneficiary of
this Agreement.
WHEREAS, Lehman Capital and the Servicer acknowledge and agree that
Lehman Capital will assign all of its rights and delegate all of its obligations
hereunder (excluding Lehman Capital's rights and obligations as owner of the
servicing rights relating to the Mortgage Loans) to the Trustee, and that each
reference herein to either Lehman Capital or the Seller is intended, unless
otherwise specified, to mean the Seller or the Trustee, as assignee, whichever
is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the Servicer hereby
agree as follows:
ARTICLE I.
DEFINITIONS
The following terms are defined as follows (except as otherwise agreed
in writing by the parties):
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions that
service mortgage loans of the same type as such Mortgage Loans in the
jurisdiction where the related Mortgaged Property is located.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: A Mortgage Loan serviced pursuant to
this Agreement under which the Mortgage Interest Rate is adjusted from time to
time in accordance with the terms and provisions of the Mortgage Note.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans, other
than Servicing Fees, including but not limited to late charges, fees received
with respect to checks or bank drafts returned by the related bank for
non-sufficient funds, Prepayment Penalty Amounts, assumption fees, optional
insurance administrative fees and all other incidental fees and charges.
Appraised Value: The value set forth in an appraisal made in
connection with the origination or the refinance of the related Mortgage Loan as
the value of the Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law.
Best Efforts: Efforts determined to be reasonably diligent by the
Seller or Servicer, as the case may be, in its sole discretion. Such efforts do
not require the Seller or Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Seller or Servicer, as the case may be, to advance or expend fees or
sums of money in addition to those specifically set forth in this Agreement.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in the States of New
York, Florida and Minnesota are authorized or obligated by law or executive
order to be closed.
Certificates: Any or all of the Certificates issued pursuant to the
Trust Agreement.
Closing Date: January 28, 2000.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to time or any successor statute thereto, and applicable U.S. Department of
the Treasury regulations issued pursuant thereto.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate Mortgage Loan that is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 3.03.
Custodial Agreement: The custodial agreement relating to custody of
all of the Mortgage Loans, among the Custodian, the Trustee, and the Depositor,
dated as of January 1, 2000.
Custodian: LaSalle National Bank, as Custodian pursuant to the
Custodial Agreement, and any successor thereto.
Cut-off Date: January 1, 2000.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Determination Date: With respect to each Distribution Date, the 18th
day of the month in which such Distribution Date occurs, or, if such 18th day is
not a Business Day, the next succeeding Business Day.
Depositor: Structured Asset Securities Corporation, or any successor
in interest.
Due Date: The day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace. With respect to the Mortgage
Loans for which payment from the Mortgagor is due on a day other than the first
day of the month, such Mortgage Loans will be treated as if the Monthly Payment
is due on the first day of the immediately succeeding month.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of the
Remittance Date and ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America 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
("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including U.S. subsidiaries of foreign depositories and the
Trustee or any agent of the Trustee, acting in its respective commercial
capacity) incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking authorities, so long as at the time of investment or
the contractual commitment providing for such investment the commercial paper or
other short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company which is
the principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;
(iii) repurchase agreements collateralized by Direct Obligations
or securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated by each
Rating Agency in its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at the
time of investment or the contractual commitment providing for such investment,
at least equal to one of the two highest long-term credit rating categories of
each Rating Agency; PROVIDED, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust Fund to exceed 20% of the sum of
the Aggregate Loan Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from either Rating Agency;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof) rated
by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment, (A)
rated in the highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating by either Rating Agency of any of the
Certificates. Such investments in this subsection (viii) may include money
market mutual funds or common trust funds, including any fund for which U.S.
Bank National Association (the "Bank"), the Trustee, the Master Servicer or an
affiliate thereof serves as an investment advisor, administrator, shareholder
servicing agent, and/or custodian or subcustodian, notwithstanding that (x) the
Bank or an affiliate thereof charges and collects fees and expenses from such
funds for services rendered, (y) the Bank or an affiliate thereof charges and
collects fees and expenses for services rendered pursuant to this Agreement, and
(z) services performed for such funds and pursuant to this Agreement may
converge at any time. The Trustee specifically authorizes the Bank or an
affiliate thereof to charge and collect from the Trustee such fees as are
collected from all investors in such funds for services rendered to such funds
(but not to exceed investment earnings thereon);
PROVIDED, HOWEVER, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with the FNMA Guides.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any event set forth in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
FHA Approved Mortgagee: A corporation or institution approved as a
mortgagee by FHA under the Act and applicable HUD regulations, and eligible to
own and service mortgage loans such as the FHA Loans.
FHA Insurance Contract: The contractual obligation of FHA respecting
the insurance of a Mortgage Loan.
FHA Loan: A residential Mortgage Loan that, as of the Cut-off Date
(or, in the case of a Qualifying Substitute Mortgage Loan, as of the date of
such substitution), is the subject of an FHA Insurance Contract as evidenced by
a mortgage insurance contract.
FHA Mortgage Insurance: Mortgage insurance authorized under the Act
and provided by the FHA.
FHA Regulations: Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the FNMA Guides.
Fixed Rate Mortgage Loan: Any individual Mortgage Loan serviced
pursuant to this Agreement as to which the Mortgage Interest Rate set forth in
the Mortgage Note is fixed for the term of such Mortgage Loan.
Fitch: Fitch IBCA, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guides: The FNMA Selling Guide and the FNMA Servicing Guide and
all amendments or additions thereto.
GNMA: The Government National Mortgage Association, or any successor
thereto.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and GNMA.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property
including FHA insurance proceeds and/or VA guaranty proceeds.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related REO Property, if the Mortgaged Property is acquired in satisfaction of
the Mortgage Loan.
Master Servicer: Aurora Loan Services Inc., or any successor in
interest, or if any successor master servicer shall be appointed as provided in
the Trust Agreement, then such successor master servicer.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Eligible Mortgage Loan: Any Mortgage Loan that has been
designated by the Servicer as recordable in the name of MERS.
MERS Mortgage Loan: Any Mortgage Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the name
of MERS, as agent for the holder from time to time of the Mortgage Note.
Monthly Advance: With respect to each Remittance Date and each
Mortgage Loan, an amount equal to the Monthly Payment (with the interest portion
of such Monthly Payment adjusted to the Mortgage Loan Remittance Rate) that was
due on the Mortgage Loan, and that (i) was delinquent at the close of business
on the first day of the month in which such Remittance Date occurs and (ii) was
not the subject of a previous Monthly Advance, but only to the extent that such
amount is expected, in the reasonable judgment of the Servicer, to be
recoverable from collections or other recoveries in respect of such Mortgage
Loan. To the extent that the Servicer determines that any such amount is not
recoverable from collections or other recoveries in respect of such Mortgage
Loan, such determination shall be evidenced by a certificate of a Servicing
Officer delivered to the Master Servicer setting forth such determination and
the procedures and considerations of the Servicer forming the basis of such
determination, which shall include a copy of any broker's price opinion and any
other information or reports obtained by the Servicer which may support such
determinations.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: Moody's Investors Service, Inc. or any successor in interest.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in the FNMA Guides.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note.
Mortgage Loan: An individual Mortgage Loan that is the subject of this
Agreement, each Mortgage Loan subject to this Agreement being identified on the
Mortgage Loan Schedule, which Mortgage Loan includes without limitation the
Mortgage Loan documents, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds, and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Master Servicer, which shall be equal to
the Mortgage Interest Rate minus the applicable Servicing Fee.
Mortgage Loan Schedule: A schedule of the Mortgage Loans setting forth
information with respect to such Mortgage Loans (including any MERS
identification number (if available) with respect to each MERS Mortgage Loan or
MERS Eligible Mortgage Loan), attached hereto as Exhibit A.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses incurred by the Servicer in connection with such sale, including,
without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
Non-MERS Eligible Mortgage Loan: Any Mortgage Loan other than a MERS
Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Seller, but which must be
independent outside counsel with respect to any such opinion of counsel
concerning (i) the non-recordation of Mortgage Loans pursuant to Section 2.02
hereof and (ii) federal income tax matters.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by
a Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Excess: With respect to any Principal Prepayment
in full received from the first day through the sixteenth day of any month, all
amounts paid in respect of interest on such Principal Prepayment.
Prepayment Interest Shortfall Amount: With respect to any Remittance
Date and (x) any Principal Prepayment in part (other than any such prepayment
received on the first of the month) and (y) any Principal Prepayment in full
received on or after the seventeenth day of the month immediately preceding the
month of such Remittance Date, but on or before the last day of the month
immediately preceding the month of such Remittance Date, the difference between
(i) one full month's interest at the applicable Mortgage Loan Remittance Rate
(giving effect to any applicable Relief Act Reduction) on the outstanding
principal balance of such Mortgage Loan immediately prior to such prepayment and
(ii) the amount of interest actually received with respect to such Mortgage Loan
in connection with such Principal Prepayment.
Prepayment Penalty Amount: With respect to any Remittance Date, all
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Remittance Date and any partial
Principal Prepayment, the period from the second day of the month immediately
preceding the month of such Remittance Date to the first day of the month of
such Remittance Date. With respect to any Remittance Date and a full Principal
Prepayment, the period from the seventeenth day of the month immediately
preceding the month of such Remittance Date to the sixteenth day of the month of
such Remittance Date.
Prime Rate: The prime rate published from time to time, as published
as the average rate in The Wall Street Journal Northeast Edition.
Principal Prepayment: Any Mortgagor payment of principal (other than a
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled Due
Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note.
Qualified Depository: Any of (i) a depository the accounts of which
are insured by the FDIC and the debt obligations of which are rated AA (or its
equivalent) or better by each Rating Agency; (ii) the corporate trust department
of any bank the debt obligations of which are rated at least A-1 or its
equivalent by each Rating Agency; or (iii) Lehman Brothers Bank, F.S.B., a
federal savings bank.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA, FHLMC and GNMA.
Rating Agency: Each of S&P, Fitch and DCR.
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of the interest collectible thereon as
a result of the application of the Soldiers' and Sailors' Civil Relief act of
1940, as amended, any amount by which interest collectible on such Mortgage Loan
for the Due Date in the related Due Period is less than the interest accrued
thereon for the applicable one-month period at the Mortgage Interest Rate
without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trustee through foreclosure or by deed in lieu of foreclosure, pursuant
to Section 3.12.
Retained Interest: The meaning set forth in the Trust Agreement.
Retained Interest Holder: The meaning set forth in the Trust
Agreement.
Retained Interest Rate: The meaning set forth in the Trust Agreement.
S&P: Standard & Poor's Rating Services, a division of the McGraw-Hill
Companies, Inc., or any successor in interest.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or its successors in interest and assigns.
Servicer: Aurora Loan Services Inc. or its successor in interest or
assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property, and PMI Policy premiums and fire and hazard insurance
coverage, (e) any losses sustained by the Servicer with respect to the
liquidation of the Mortgaged Property and (f) compliance with the obligations
pursuant to the provisions of the FNMA Guides.
Servicing Fee: An amount equal to the sum of (a) one-twelfth the
product of (i) a rate per annum equal to 0.25% and (ii) the outstanding
principal balance of such Mortgage Loan and (b) any Prepayment Interest Excess
Amounts. The obligation of the Trustee to pay the Servicing Fee is limited to,
and the Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds to the extent
permitted by Section 3.02 of this Agreement) of such Monthly Payment collected
by the Servicer, or as otherwise provided under this Agreement.
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Mortgage Loan, which are held in
trust for the Trustee by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Master Servicer or Seller upon request, as such list may from time to time be
amended.
Trust Agreement: The Trust Agreement dated as of January 1, 2000,
among the Trustee, the Master Servicer and the Depositor.
Trust Fund: The trust fund established by the Trust Agreement, the
assets of which consist of the Mortgage Loans and any related assets.
Trustee: U.S. Bank National Association, or any successor in interest,
or if any successor trustee or co-trustee shall be appointed as provided in the
Trust Agreement, then such successor trustee or such co-trustee, as the case may
be.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto including the Administrator of Veterans
Affairs.
VA Approved Lender: Those lenders which are approved by the VA to act
as a lender in connection with the origination of VA Loans.
VA Loan: A Mortgage Loan that, as of the Cut-off Date (or, in the case
of a Qualifying Substitute Mortgage Loan, as of the date of such substitution),
is the subject of a VA Loan Guaranty Agreement as evidenced by a Loan Guaranty
Certificate, or a Mortgage Loan which is a vendee loan sold by the VA.
VA Loan Guaranty Agreement: The obligation of the United States to pay
a specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.
VA Loan Guaranty Certificate: The certificate evidencing a VA Loan
Guaranty Agreement.
VA Regulations: Regulations promulgated by the Veteran's
Administration pursuant to the Servicemen's Readjustment Act, as amended,
codified in 38 Code of Federal Regulations, and other VA issuances relating to
VA Loans, including related Handbooks, Circulars and Notices.
Any capitalized terms used and not defined in this Agreement shall
have the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.
The Seller, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Mortgage Loans. On or before the Closing Date, the Seller shall
cause to be delivered the Servicing Files with respect to the Mortgage Loans
listed on the Mortgage Loan Schedule to the Servicer. Each Servicing File
delivered to a Servicer shall be held in trust by such Servicer for the benefit
of the Trustee, provided, however, that the Servicer shall have no liability for
any Servicing Files (or portions thereof) not delivered by the Seller. The
Servicer's possession of any portion of the Mortgage Loan documents shall be at
the will of the Trustee for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to this Agreement, and such retention and
possession by the Servicer shall be in a custodial capacity only. The ownership
of each Mortgage Note, Mortgage, and the contents of the Servicing File shall be
vested in the Trustee and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Servicer shall immediately vest in the Trustee and shall be
retained and maintained, in trust, by the Servicer at the will of the Trustee in
such custodial capacity only. The portion of each Servicing File retained by the
Servicer pursuant to this Agreement shall be segregated from the other books and
records of the Servicer and shall be appropriately marked to clearly reflect the
ownership of the related Mortgage Loan by the Trustee. The Servicer shall
release from its custody the contents of any Servicing File retained by it only
in accordance with this Agreement.
Section 2.02 Books and Records.
(a) Subject to Section 3.01(a) hereof, as soon as practicable
after the Closing Date or the date on which a Qualifying Substitute Mortgage
Loan is delivered pursuant to Section 2.05 of the Trust Agreement, as applicable
(but in no event more than 90 days thereafter except to the extent delays are
caused by the applicable recording office), the Servicer, at the expense of the
Depositor, shall cause the Mortgage or Assignment of Mortgage, as applicable,
with respect to each MERS Eligible Mortgage Loan, to be properly recorded in the
name of MERS in the public recording office in the applicable jurisdiction, or
shall ascertain that such have previously been so recorded.
(b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage
in favor of the Trustee shall be recorded as to each Non-MERS Mortgage Loan
unless instructions to the contrary are delivered to the Servicer, in writing,
by the Trustee. Subject to the preceding sentence, as soon as practicable after
the Closing Date (but in no event more than 90 days thereafter except to the
extent delays are caused by the applicable recording office), the Servicer, at
the expense of the Depositor, shall cause to be properly recorded in each public
recording office where such Non-MERS Eligible Mortgage Loans are recorded each
Assignment of Mortgage.
(c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the Non-MERS
Mortgage Loans.
(d) All rights arising out of the Mortgage Loans shall be vested
in the Trustee, subject to the Servicer's right to service and administer the
Mortgage Loans hereunder in accordance with the terms of this Agreement. All
funds received on or in connection with a Mortgage Loan, other than the
Servicing Fee and other compensation to which the Servicer is entitled as set
forth herein, including but not limited to in Section 5.01 below, shall be
received and held by the Servicer in trust for the benefit of the Trustee
pursuant to the terms of this Agreement.
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans from and after the Closing Date and shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices, including taking all actions that a mortgagee is permitted
or required to take by the FHA or VA, with respect to any FHA Loans or VA Loans,
as the case may be. Except as set forth in this Agreement, the Servicer shall
service the Mortgage Loans in strict compliance with the servicing provisions
related to the FNMA MBS Program (Special Servicing Option) of the FNMA Guides,
which include, but are not limited to, provisions regarding the liquidation of
Mortgage Loans, the collection of Mortgage Loan payments, the payment of taxes,
insurance and other charges, the maintenance of hazard insurance, the
maintenance of Mortgage Impairment Insurance Policies, the maintenance of
Fidelity Bond and Errors and Omissions Insurance, inspections, the restoration
of Mortgaged Property, the maintenance of PMI Policies, insurance claims, the
title, management and disposition of REO Property, permitted withdrawals with
respect to REO Property, REO reports, liquidation reports, and reports of
foreclosures and abandonments of Mortgaged Property, the transfer of Mortgaged
Property, the release of Mortgage Loan documents, annual statements, and
examination of records and facilities. In the event of any conflict,
inconsistency or discrepancy between any of the servicing provisions of this
Agreement and any of the servicing provisions of the FNMA Guides, the provisions
of this Agreement shall control and be binding upon the Seller, the Master
Servicer and the Servicer.
The Seller and the Servicer additionally agree as follows:
(a) The Servicer shall (A) record or cause to be recorded the
Mortgage or the Assignment of Mortgage, as applicable, with respect to all MERS
Eligible Mortgage Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Mortgage Loans; (C) record or
cause to be recorded, subject to Section 2.02(b) hereof, all Assignments of
Mortgage with respect to Non-MERS Mortgage Loans in the name of the Trustee; (D)
pay the recording costs pursuant to Section 2.02 hereof; and/or (E) track such
Mortgages and Assignments of Mortgage to ensure they have been recorded. The
Servicer shall be entitled to be paid by the Seller the fees set forth on
Schedule 1 hereto for the preparation and recordation of the Mortgages and
Assignments of Mortgage. After the expenses of such recording costs pursuant to
Section 2.02 hereof shall have been paid by the Servicer, the Servicer shall
submit to the Depositor a reasonably detailed invoice for reimbursement of
recording costs it incurred hereunder.
(b) The Servicer shall, in accordance with the relevant
provisions of the Cranston-Gonzales National Affordable Housing Act of 1990, as
the same may be amended from time to time, and the regulations provided in
accordance with the Real Estate Settlement Procedures Act, provide notice to the
Mortgagor of each Mortgage of the transfer of the servicing thereto to the
Servicer.
(c) The Servicer shall be responsible for the preparation of and
costs associated with notifications to Mortgagors of the assumption of servicing
by the Servicer.
Consistent with the terms of this Agreement, the Servicer may waive
any late payment charge, assumption fee or other fee that may be collected in
the ordinary course of servicing the Mortgage Loans. The Servicer shall not make
any future advances to any obligor under any Mortgage Loan, and (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, reasonably foreseeable) the Servicer shall not
permit any modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive the
payment of principal or interest, reduce or increase the outstanding principal
balance (except for actual payments of principal) or change the final maturity
date on such Mortgage Loan. In the event of any such modification which permits
the deferral of interest or principal payments on any Mortgage Loan, the
Servicer shall, on the Business Day immediately preceding the Remittance Date in
any month in which any such principal or interest payment has been deferred,
make a Monthly Advance in accordance with Section 4.03, in an amount equal to
the difference between (a) such month's principal and one month's interest at
the Mortgage Loan Remittance Rate on the unpaid principal balance of such
Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. Upon the request of the Servicer, the
Trustee shall execute and deliver to the Servicer any powers of attorney and
other documents, furnished to it by the Servicer and reasonably satisfactory to
the Trustee, necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the
Servicer shall not (unless the Servicer determines, in its own discretion, that
there exists a situation of extreme hardship to the Mortgagor), waive any
premium or penalty in connection with a prepayment of principal of any Mortgage
Loan, and shall not consent to the modification of any Mortgage Note to the
extent that such modification relates to payment of a prepayment premium or
penalty.
In servicing and administering any FHA Loans or VA Loans, the Servicer
shall comply strictly with the National Housing Act and the FHA Regulations, the
Servicemen's Readjustment Act, the VA Regulations and administrative guidelines
issued thereunder or pursuant thereto, and, to the extent permitted hereunder,
promptly discharge all of the obligations of the mortgagee thereunder and under
each Mortgage including the payment of any fees, premiums and charges and the
timely giving of notices.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, the FNMA Guides, the FHA Regulations and the VA Regulations,
and the Master Servicer's and the Seller's reliance on the Servicer.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the Closing Date until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 3.03 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled as directed by the Master
Servicer. The Custodial Account shall be established with a Qualified
Depository. Any funds deposited in the Custodial Account may be invested in
Eligible Investments subject to the provisions of Section 3.11 hereof. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 3.04. The creation of any Custodial Account shall be evidenced by a
letter agreement in the form of Exhibit B. A copy of such certification or
letter agreement shall be furnished to the Master Servicer and, upon request, to
any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein, the following collections received by the Servicer and
payments made by the Servicer after the Closing Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;
(vi) any Prepayment Interest Shortfall Amount;
(vii) all Advances made by the Servicer pursuant to Section 4.03;
(viii) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
(ix) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds; and
(x) any other amount required hereunder to be deposited by the
Servicer in the Custodial Account.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section 3.04 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Master Servicer in the amounts and in
the manner provided for in Section 4.01;
(ii) in the event the Servicer has elected not to retain the
Servicing Fee out of any Mortgagor payments on account of interest or other
recovery of interest with respect to a particular Mortgage Loan (including late
collections of interest on such Mortgage Loan, or interest portions of Insurance
Proceeds or Liquidation Proceeds) prior to the deposit of such Mortgagor payment
or recovery in the Custodial Account, to pay to itself the related Servicing Fee
from all such Mortgagor payments on account of interest or other such recovery
for interest with respect to that Mortgage Loan;
(iii) to pay itself investment earnings on funds deposited in the
Custodial Account;
(iv) to clear and terminate the Custodial Account upon the
termination of this Agreement;
(v) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;
(vi) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;
(vii) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 4.03, the Servicer's right to reimburse itself
pursuant to this subclause (vii) with respect to any Mortgage Loan is limited to
amounts received on or in respect of the related Mortgage Loan which represent
late recoveries of payments of principal or interest with respect to which a
Monthly Advance was made, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights of the
Trust Fund; and
(viii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (viii) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and other amounts received in respect of the
related REO Property, and such other amounts as may be collected by the Servicer
from the Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the Servicer's right
thereto shall be prior to the rights of the Trust Fund.
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled as
directed by the Master Servicer. The Escrow Accounts shall be established with a
Qualified Depository in a manner that shall provide maximum available insurance
thereunder. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit C. A copy of
such certification or letter agreement shall be furnished to the Master Servicer
and, upon request, to any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds that are to be applied to the restoration or repair of any
Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the Mortgagor. Additionally, any
other benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 3.06 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, sewer rents, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan;
(iii) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
(iv) for application to restoration or repair of the Mortgaged
Property in accordance with the FNMA Guides;
(v) for transfer to the Custodial Account of fire and hazard
insurance proceeds and Escrow Payments with respect to any FHA Loan or VA Loan,
where the FHA or the VA, respectively, has directed application of funds as a
credit against the proceeds of the FHA Insurance Contract or VA Loan Guaranty
Agreement;
(vi) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account;
and
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement.
Section 3.07 Maintenance of FHA Mortgage Insurance and VA Guaranty.
With respect to any FHA Loans and VA Loans, the Servicer shall
maintain and keep the FHA Mortgage Insurance and the VA Guaranty, respectively,
in full force and effect throughout the term of this Agreement and discharge its
obligations arising out of FHA Mortgage Insurance and the VA Guaranty
Certificate. The Servicer hereby agrees that it shall be liable to the Trustee
for any loss, liability or expense incurred by the Trust Fund by reason of any
FHA Mortgage Insurance or VA Guaranty being voided, reduced, released or
adversely affected by reason of the negligence or willful misconduct of the
Servicer. The Servicer will service and administer the Mortgage Loans in
accordance with the obligations of mortgagees under the Act and the applicable
regulations thereunder and under the Servicemen's Readjustment Act and VA
Regulations and will discharge all obligations of the mortgagee under each
Mortgage Loan including, with respect to FHA Loans and VA Loans, paying all FHA
and VA insurance premiums, fees or charges, as required, and, subject to the
right to assign the Mortgage Loan to the FHA or VA, as the case may be, will
take all action reasonably necessary to preserve the lien of such Mortgage,
including the defense of actions to challenge or foreclose such lien.
Section 3.08 Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this Agreement a
Fidelity Bond and Errors and Omissions Insurance. Such Fidelity Bond and Errors
and Omissions Insurance shall be maintained with recognized insurers and shall
be in such form and amount as would permit the Servicer to be qualified as a
FNMA or FHLMC seller-servicer. The Servicer shall be deemed to have complied
with this provision if an affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. The
Servicer shall furnish to the Master Servicer a copy of each such bond and
insurance policy if (i) the Master Servicer so requests and (ii) the Servicer is
not an affiliate of Lehman Brothers Inc. at the time of such request.
Section 3.09 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Master Servicer such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Servicer or the receipt of
notice from the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
thereby.
Section 3.10 Completion and Recordation of Assignments of Mortgage
and FHA and VA Change Notices.
As soon as practicable after the Closing Date or the date on which a
Qualifying Substitute Mortgage Loan is delivered pursuant to Section 2.05 of the
Trust Agreement, as applicable (but in no event more than 90 days thereafter
except to the extent delays are caused by the applicable government agency), the
Servicer shall cause the endorsements on the Mortgage Note (if applicable), the
Assignments of Mortgage (subject to Section 3.01(a)), the assignment of security
agreement and the HUD form 92080 Mortgage Record Change with respect to all FHA
Loans to be completed in the name of the Trustee (or MERS, as applicable), and
shall give notice to the VA of a transfer of insurance credits, if applicable,
with respect to VA Loans on the form prescribed by the VA.
Section 3.11 Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Master Servicer, which consent shall
not be withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by
the Master Servicer or the Trustee if the Custodial Account and/or the Escrow
Account are not demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount") the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Business Day immediately preceding the
related Remittance Date, provided, however, that if such Eligible Investment is
an obligation of a Qualified Depository (other than the Servicer) that maintains
the Custodial Account or the Escrow Account, then such Eligible Investment may
mature on the related Remittance Date. Any such Eligible Investment shall be
made in the name of the Servicer in trust for the benefit of the Trustee. All
income on or gain realized from any such Eligible Investment shall be for the
benefit of the Servicer and may be withdrawn at any time by the Servicer. Any
losses incurred in respect of any such investment shall be deposited in the
Custodial Account or the Escrow Account, by the Servicer out of its own funds
immediately as realized.
Section 3.12 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Trustee (or MERS, as applicable), or in the
event the Trustee is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Trustee or the Master Servicer otherwise requests, an environmental
inspection or review of such Mortgaged Property to be conducted by a qualified
inspector shall be arranged by the Servicer. Upon completion of the inspection,
the Servicer shall provide the Trustee and the Master Servicer with a written
report of such environmental inspection. In the event that the environmental
inspection report indicates that the Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, the Servicer shall not proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In the event that
the environmental inspection report is inconclusive as to the whether or not the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Servicer shall not, without the prior approval of the Trustee, proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In such instance,
the Trustee shall be deemed to have approved such foreclosure or acceptance of a
deed in lieu of foreclosure unless the Trustee notifies the Servicer in writing,
within two (2) Business Days after its receipt of written notice of the proposed
foreclosure or deed in lieu of foreclosure from the Servicer, that it
disapproves of the related foreclosure or acceptance of a deed in lieu of
foreclosure. The Servicer shall be reimbursed for all Servicing Advances made
pursuant to this paragraph with respect to the related Mortgaged Property from
the Custodial Account.
The Servicer shall use its Best Efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event within three
years after title has been taken to such REO Property, unless (a) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (b) the Servicer determines,
and gives an appropriate notice to the Master Servicer to such effect, that a
longer period is necessary for the orderly liquidation of such REO Property. If
a period longer than three years is permitted under the foregoing sentence and
is necessary to sell any REO Property, (i) the Servicer shall report monthly to
the Master Servicer as to the progress being made in selling such REO Property
and (ii) if, with the written consent of the Trustee, a purchase money mortgage
is taken in connection with such sale, such purchase money mortgage shall name
the Servicer as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement among
the Servicer and Trustee shall be entered into with respect to such purchase
money mortgage. Notwithstanding anything herein to the contrary, the Servicer
shall not be required to provide financing for the sale of any REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
Subject to the approval of the Master Servicer as described in this
paragraph, the disposition of REO Property shall be carried out by the Servicer
at such price, and upon such terms and conditions, as the Servicer deems to be
in the best interests of the Trust Fund. Prior to acceptance by the Servicer of
an offer to sell any REO Property, the Servicer shall notify the Master Servicer
and the Trustee of such offer in writing which notification shall set forth all
material terms of said offer (each a "Notice of Sale"). The Master Servicer
shall be deemed to have approved the sale of any REO Property unless the Master
Servicer notifies the Servicer in writing, within 2 Business Days after its
receipt of the related Notice of Sale, that it disapproves of the related sale.
With respect to any REO Property, upon a REO Disposition, the Servicer shall be
entitled to retain from REO Disposition Proceeds a disposition fee equal to the
lesser of (A) 1.5% of the Net Sale Proceeds or (B) $1,250; provided, however,
that (1) in the event that the REO Disposition Proceeds exceed $25,000, such
disposition fee shall not be less than $500 and (2) in the event that the REO
Disposition Proceeds are $25,000 or less, such disposition fee shall be equal to
$250. The proceeds of sale of the REO Property shall be promptly deposited in
the Custodial Account. After the expenses of such disposition shall have been
paid, the Servicer shall reimburse itself pursuant to Section 3.04 hereof for
any Servicing Advances it incurred with respect to such REO Property.
The Servicer shall withdraw from the Custodial Account funds necessary
for the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to the FNMA
Guides. The Servicer shall make monthly distributions on each Remittance Date to
the Master Servicer of the net cash flow from the REO Property (which shall
equal the revenues from such REO Property net of the expenses described in this
Section 3.12 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 3.13 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish to the Master Servicer on or before the Remittance Date
each month a statement with respect to any REO Property covering the operation
of such REO Property for the previous month and the Servicer's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Master Servicer shall
reasonably request.
Section 3.14 MERS.
(a) The Servicer shall take such actions as are necessary to
cause the Trustee to be clearly identified as the owner of each MERS Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership
in MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall promptly notify MERS as to any transfer of beneficial
ownership or release of any security interest in such Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall notify MERS as to any transfer of servicing pursuant to
Section 3.15 or Section 9.01 within 10 Business Days of such transfer of
servicing. The Servicer shall cooperate with the Trustee, the Master Servicer
and any successor Servicer to the extent necessary to ensure that such transfer
of servicing is appropriately reflected on the MERS system.
Section 3.15 [Reserved.]
ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Master Servicer (a) all amounts deposited in
the Custodial Account as of the close of business on the last day of the related
Due Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04), plus (b) all Monthly Advances, if any, which the
Servicer is obligated to make pursuant to Section 4.03, minus (c) any amounts
attributable to Principal Prepayments, Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or REO Disposition Proceeds received after the applicable
Prepayment Period, which amounts shall be remitted on the following Remittance
Date, together with any additional interest required to be deposited in the
Custodial Account in connection with such Principal Prepayment in accordance
with Section 3.03(vi), and minus (d) any amounts attributable to Monthly
Payments collected but due on a Due Date or Due Dates subsequent to the first
day of the month in which such Remittance Date occurs, which amounts shall be
remitted on the Remittance Date next succeeding the Due Date related to such
Monthly Payment.
With respect to any remittance received by the Master Servicer after
the Business Day on which such payment was due, the Servicer shall pay to the
Master Servicer interest on any such late payment at an annual rate equal to the
Prime Rate, adjusted as of the date of each change, plus two (2) percentage
points, but in no event greater than the maximum amount permitted by applicable
law. Such interest shall be deposited in the Custodial Account by the Servicer
on the date such late payment is made and shall cover the period commencing with
the day following such Business Day and ending with the Business Day on which
such payment is made, both inclusive. Such interest shall be remitted along with
the distribution payable on the next succeeding Remittance Date. The payment by
the Servicer of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Servicer.
All remittances required to be made to the Master Servicer shall be
made to the following wire account or to such other account as may be specified
by the Master Servicer from time to time:
The Chase Manhattan Bank
New York, New York
ABA #: 021-000-021
Account Name: Aurora Loan Services Inc.
Master Servicing Payment Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 2000-1
Section 4.02 Statements to Master Servicer.
Not later than the fifth Business Day of each month, the Servicer
shall furnish to the Master Servicer (a) a monthly remittance advice containing
such information in the form of FNMA form 2010 or such other form as shall be
required by the FNMA Guides or by the Master Servicer as to the accompanying
remittance and the period ending on the last day of the preceding Determination
Date and (b) all such information required pursuant to clause (a) above on a
magnetic tape or other similar media reasonably acceptable to the Master
Servicer.
Not later than the seventeenth day of each month, the Servicer shall
furnish to the Master Servicer (a) a monthly payoff remittance advice regarding
any Principal Prepayment in full received on or after the seventeenth day of the
month preceding the month of such reporting date, but on or before the sixteenth
day of the month of such reporting date, containing such information and in such
format as is mutually acceptable to the Master Servicer and the Servicer, and in
any event containing sufficient information to permit the Master Servicer to
properly report Principal Prepayment in full information to the Trustee under
the Trust Agreement and (b) all such information required pursuant to clause (a)
above on a magnetic tape or other similar media reasonably acceptable to the
Master Servicer.
In addition, not more than 60 days after the end of each calendar
year, commencing December 31, 2000, the Servicer shall furnish to each Person
who was an owner of the Mortgage Loans at any time during such calendar year as
required by applicable law or if not required by applicable law, at the request
of such owner as to the aggregate of remittances for the applicable portion of
such year.
Such obligation of the Servicer shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Internal Revenue Code as from time
to time are in force.
Beginning with calendar year 2001, the Servicer shall prepare and file
any and all tax returns, information statements or other filings for the portion
of the tax year 2000 and the portion of subsequent tax years for which the
Servicer has serviced some or all of the Mortgage Loans hereunder as such
returns, information statements or other filings are required to be delivered to
any governmental taxing authority or to the Master Servicer pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Master Servicer
with such information concerning the Mortgage Loans as is necessary for the
Master Servicer to prepare the Trust Fund's federal income tax return as the
Master Servicer may reasonably request from time to time.
Section 4.03 Monthly Advances by Servicer.
The Servicer shall make Monthly Advances through the Remittance Date
immediately preceding the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loans.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to this
Agreement, the Servicer shall retain (a) the relevant Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month and (b)
Ancillary Income. In addition, if at any time the Servicer is the Retained
Interest Holder with respect to any Mortgage Loans, then the Servicer, as the
Retained Interest Holder, shall retain an amount equal to the Retained Interest
relating to such Mortgage Loans; provided, that (i) the Trustee shall have no
obligation to make payment of the Retained Interest to the Servicer and (ii) the
Servicer's right to retain the Retained Interest is limited to (and the Retained
Interest may only be retained from) the interest portion (including recoveries
with respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of the Monthly Payments collected by the
Servicer with respect to those Mortgage Loans for which payment is in fact made
of the entire amount of the Monthly Payment. The Servicing Fee shall be payable
monthly. The Servicing Fees shall be payable only at the time of and with
respect to those Mortgage Loans for which payment is in fact made of the entire
amount of the Monthly Payment or as otherwise provided in Section 3.04. The
obligation of the Trustee to pay the Servicing Fees is limited as provided in
Section 3.04. The aggregate of the Servicing Fees payable to the Servicer for
any month with respect to the Mortgage Loans shall be reduced by any Prepayment
Interest Shortfall Amount with respect to such month.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 5.02 Annual Audit Report.
On or before April 30 of each year, beginning with April 30, 2001,
Servicer shall, at its own expense, cause a firm of independent public
accountants (who may also render other services to Servicer), which is a member
of the American Institute of Certified Public Accountants, to furnish to the
Seller and Master Servicer (i) year-end audited (if available) financial
statements of the Servicer and (ii) a statement to the effect that such firm has
examined certain documents and records for the preceding fiscal year (or during
the period from the date of commencement of such servicer's duties hereunder
until the end of such preceding fiscal year in the case of the first such
certificate) and that, on the basis of such examination conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers,
such firm is of the opinion that Servicer's overall servicing operations have
been conducted in compliance with the Uniform Single Attestation Program for
Mortgage Bankers except for such exceptions that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers requires it to
report, in which case such exceptions shall be set forth in such statement.
Section 5.03 Annual Officer's Certificate.
On or before April 30 of each year, beginning with April 30, 2001, the
Servicer, at its own expense, will deliver to the Seller and Master Servicer a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding fiscal year and
of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Servicer to remedy
such default.
ARTICLE VI.
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Seller as of the Closing Date:
(a) Due Organization and Authority. Due Organization and Authority.
The Servicer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all licenses necessary
to carry on its business as now being conducted and is licensed, qualified and
in good standing in each state where a Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer, and in any event the Servicer is in
compliance with the laws of any such state to the extent necessary to ensure the
enforceability of the terms of this Agreement; the Servicer has the full power
and authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer and all requisite action has been taken
by the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Servicer's
organizational documents or any legal restriction or any agreement or instrument
to which the Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Servicer or its property is subject, or impair the ability of the Servicer
to service the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Perform. The Servicer does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer which, either in any
one instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer, or which would draw into question the
validity of this Agreement or of any action taken or to be taken in connection
with the obligations of the Servicer contemplated herein, or which would be
likely to impair materially the ability of the Servicer to perform under the
terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement;
(g) Ability to Service. The Servicer is an FHA Approved Mortgagee, a
VA Approved Lender and an approved seller/servicer of conventional residential
mortgage loans for FNMA, FHLMC or GNMA, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is in good standing to service
mortgage loans for the FHA and the VA and either FNMA, FHLMC or GNMA. The
Servicer is a member in good standing of the MERS system;
(h) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement of fact or omits to state a fact necessary to make the statements
contained therein not misleading; and
(i) No Commissions to Third Parties. The Servicer has not dealt with
any broker or agent or anyone else who might be entitled to a fee or commission
in connection with this transaction other than the Seller.
Section 6.02 Remedies for Breach of Representations and Warranties
of the Servicer.
It is understood and agreed that the representations and warranties
set forth in Section 6.01 shall survive the engagement of the Servicer to
perform the servicing responsibilities as of the Closing Date hereunder and the
delivery of the Servicing Files to the Servicer and shall inure to the benefit
of the Seller and the Trustee. Upon discovery by either the Servicer, the Master
Servicer or the Seller of a breach of any of the foregoing representations and
warranties which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property or the interest
of the Seller or the Trustee, the party discovering such breach shall give
prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property, the Servicer shall
use its Best Efforts promptly to cure such breach in all material respects and,
if such breach cannot be cured, the Servicer shall, at the Trustee's or the
Master Servicer's option, assign the Servicer's rights and obligations under
this Agreement (or respecting the affected Mortgage Loans) to a successor
Servicer. Such assignment shall be made in accordance with Sections 9.01 and
9.02.
In addition, the Servicer shall indemnify the Seller and the Master
Servicer and hold each of them harmless against any Costs resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Servicer representations and warranties contained in this
Agreement. It is understood and agreed that the remedies set forth in this
Section 6.02 constitute the sole remedies of the Master Servicer and the Trustee
respecting a breach of the foregoing representations and warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Seller or Master Servicer to the Servicer, (ii) failure by the Servicer to
cure such breach within the applicable cure period, and (iii) demand upon the
Servicer by the Seller or the Master Servicer for compliance with this
Agreement.
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Seller, the Master Servicer and the
Trust Fund and hold them harmless against any and all Costs that the indemnified
party may sustain in any way related to (i) the failure of the Servicer to
perform its duties and service the Mortgage Loans in material compliance with
the terms of this Agreement or (ii) the failure of the Servicer to cause any
event to occur which requires its "Best Efforts" under this Agreement. The
Servicer shall immediately notify the Seller, the Master Servicer, the Trustee,
or any other relevant party if a claim is made by a third party with respect to
this Agreement or the Mortgage Loans, assume (with the prior written consent of
the indemnified party) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or any
indemnified party in respect of such claim and follow any written instructions
received from such indemnified party in connection with such claim. Each
indemnified party, as applicable, promptly shall reimburse the Servicer for all
amounts advanced by it pursuant to the preceding sentence except when the claim
is in any way related to the Servicer's indemnification pursuant to Section
6.02, or the failure of the Servicer to service and administer the Mortgage
Loans in material compliance with the terms of this Agreement. In the event a
dispute arises between an indemnified party and the Servicer with respect to any
of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law, by an arbitration panel or any
other judicial process, then the losing party shall indemnify and reimburse the
winning party for all attorney's fees and other costs and expenses related to
the adjudication of said dispute.
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
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 the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an institution (i)
having a net worth of not less than $25,000,000, and (ii) which is a FNMA-,
FHLMC-, and GNMA-approved servicer in good standing and an FHA approved
Mortgagee and a VA Approved Lender.
Section 7.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Seller, the Master
Servicer or the Trustee 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 Servicer
or any such person against any breach of warranties or representations made
herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Servicer may, with the
consent of the Master Servicer, undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the Trust Fund for the reasonable legal expenses and costs of
such action.
Section 7.03 Limitation on Resignation and Assignment by the
Servicer.
The Seller has entered into this Agreement with the Servicer in
reliance upon the independent status of the Servicer, and the representations as
to the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall neither assign its rights
under this Agreement or the servicing hereunder nor delegate its duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the prior
written consent of the Seller and the Master Servicer, which consent, in the
case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Seller and the Master Servicer, and which
consent, in the case of a sale or disposition of all or substantially all of the
property or assets of the Servicer, shall not be unreasonably withheld;
provided, that in each case, there must be delivered to the Master Servicer and
the Trustee a letter from each Rating Agency to the effect that such transfer of
servicing or sale or disposition of assets will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Master Servicer
or upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Master Servicer and the
Trustee which Opinion of Counsel shall be in form and substance acceptable to
the Master Servicer and the Trustee. No such resignation shall become effective
until a successor shall have assumed the Servicer's responsibilities and
obligations hereunder in the manner provided in Section 9.01.
Without in any way limiting the generality of this Section 7.03, in
the event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Seller and the Master
Servicer, then the Seller or the Master Servicer shall have the right to
terminate this Agreement upon notice given as set forth in Section 8.01, without
any payment of any penalty or damages and without any liability whatsoever to
the Servicer or any third party.
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.
This Agreement shall be terminable at the option of the Seller or the
Master Servicer if any of the following events of default exist on the part of
the Servicer:
(i) any failure by the Servicer to remit to the Master Servicer
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of two Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Master Servicer; or
(ii) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement which continues unremedied for a period of
30 days; or
(iii) failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction, if required
by such jurisdiction, where the Mortgaged Properties are located; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling 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; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business Days; or
(vii) the Servicer ceases to meet the qualifications of a FNMA,
FHLMC or GNMA lender/servicer or ceases to be an FHA Approved Mortgagee or
ceases to be a VA Approved Lender; or
(viii) the Servicer attempts to assign the servicing of the
Mortgage Loans or its right to servicing compensation hereunder or the Servicer
attempts to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof, in each
case without complying fully with the provisions of Section 7.03.
In each and every such case, so long as an event of default shall not
have been remedied, in addition to whatever rights the Seller or the Master
Servicer may have at law or equity to damages, including injunctive relief and
specific performance, the Seller or the Master Servicer, by notice in writing to
the Servicer, may terminate all the rights and obligations of the Servicer under
this Agreement and in and to the servicing contract established hereby and the
proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in a successor Servicer
appointed by the Seller and the Master Servicer. Upon written request from the
Seller, the Servicer shall prepare, execute and deliver to the successor entity
designated by the Seller any and all documents and other instruments, place in
such successor's possession all Servicing Files, 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 Mortgage Loans and related documents, at the Servicer's
sole expense. The Servicer shall cooperate with the Seller and the Master
Servicer and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
By a written notice, the Seller and the Master Servicer may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. 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 thereon except to the
extent expressly so waived.
Section 8.02 Termination Without Cause.
This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Mortgage
Loan to the Master Servicer (or advances by the Servicer for the same), and (b)
the disposition of all REO Property acquired upon foreclosure of the last
Mortgage Loan and the remittance of all funds due hereunder, (ii) mutual consent
of the Servicer, Seller and the Master Servicer in writing or (iii) at the sole
discretion of the Seller (acting in its capacity as owner of the servicing
rights relating to the Mortgage Loans). Any such termination pursuant to clause
(iii) above shall be with 30 days' prior notice, in writing and delivered to the
Trustee, the Master Servicer and the Servicer by registered mail to the
addresses set forth in Section 9.03 of this Agreement (in the case of the
Servicer) or in the Trust Agreement (in the case of the Trustee or the Master
Servicer). The Servicer shall comply with the termination procedures set forth
in Sections 7.03, 8.01 and 9.01 hereof. The Master Servicer or the Trustee shall
have no right to terminate the Servicer pursuant to this Section 8.02.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(ii), the Master Servicer shall (i) succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
clauses (i) and (ii) of Section 7.01 and which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the Servicer under
this Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement; or (b) pursuant
to Section 8.02(iii), the Seller shall appoint a successor having the
characteristics set forth in clauses (i) and (ii) of Section 7.01 and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer's responsibilities, duties and liabilities under
this Agreement. Any successor to the Servicer shall be subject to the approval
of the Master Servicer and, to the extent required by the Trust Agreement, the
Trustee, shall be a member in good standing of the MERS system (if any of the
Mortgage Loans are MERS Eligible Mortgage Loans, unless such Mortgage Loans are
withdrawn from MERS and Assignments of Mortgage are recorded in favor of the
Trustee at the expense of the successor Servicer) and shall be an FHA Approved
Mortgagee and a VA Approved Lender. Any approval of a successor servicer by the
Master Servicer and, to the extent required by the Trust Agreement, the Trustee,
shall be conditioned upon the receipt by the Master Servicer and the Trustee of
a letter from each Rating Agency to the effect that such transfer of servicing
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates. In addition, with respect to any FHA Loans
serviced hereunder, the Servicer shall provide notice of such change in
servicers to HUD on HUD form 92080 or such other form as prescribed by HUD,
within 10 days after such transfer of servicing. In connection with such
appointment and assumption, the Master Servicer or the Seller, as applicable,
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree, provided,
however, that no such compensation shall be in excess of that permitted the
Servicer under this Agreement. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.01 and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 6.01 and the remedies available to the Master Servicer
and the Seller under Section 6.02 and 6.03, it being understood and agreed that
the provisions of such Sections 6.01, 6.02 and 6.03 shall be applicable to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.
Within a reasonable period of time, but in no event longer than 30
days of the appointment of a successor entity, the Servicer shall prepare,
execute and deliver to the successor entity any and all documents and other
instruments, place in such successor's possession all Servicing Files, 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 of the Mortgage Notes and related documents, and the
preparation and recordation of Assignments of Mortgage. The Servicer shall
cooperate with the Trustee, the Master Servicer or the Seller, as applicable,
and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor Servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Trustee, the Servicer, the Master Servicer and the Seller an
instrument (i) accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 6.01 (including a
representation that the successor Servicer is a member of MERS, unless none of
the Mortgage Loans are MERS Mortgage Loans or MERS Eligible Mortgage Loans or
any such Mortgage Loans have been withdrawn from MERS and Assignments of
Mortgage are recorded in favor of the Trustee) and (ii) an assumption of the due
and punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer under this Agreement, whereupon such
successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 6.02, 7.03, 8.01 or 8.02 shall not affect any claims that the Master
Servicer or the Trustee may have against the Servicer arising out of the
Servicer's actions or failure to act prior to any such termination or
resignation. In addition, in the event any successor Servicer is appointed
pursuant to Section 8.02(iii) of this Agreement, such successor Servicer must
satisfy the conditions relating to the transfer of servicing set forth in the
Trust Agreement.
The Servicer shall deliver promptly to the successor Servicer the
funds in the Custodial Account and Escrow Account and all Mortgage Loan
documents and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Trustee, the Seller and Master Servicer of such appointment in
accordance with the procedures set forth in Section 9.03.
Section 9.02 Costs.
The Seller shall pay any legal fees and expenses of its attorneys.
Costs and expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by the Seller. Subject to Sections 2.02 and 3.01(a), the Depositor shall pay the
costs associated with the preparation, delivery and recording of Assignments of
Mortgages.
Section 9.03 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if sent by facsimile or mailed by
overnight courier, addressed as follows (or such other address as may hereafter
be furnished to the other party by like notice):
(i) if to the Seller:
Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telephone No.: (212) 526-5837
Telecopier No.: (212) 526-6154
(ii) if to the Servicer:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado 80014
Attention: Rick Skogg
Telephone No.: (303) 632-3000
Telecopier No.: (303) 632-3001
and
Aurora Loan Services Inc.
601 Fifth Avenue
P.O. Box 1706
Scottsbluff, Nebraska 69361
Attention: Manager, Loan Administration
Telephone No.: (308) 635-3500
Telecopier No.: (308) 632-4287
(iii) if to the Master Servicer:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado 80014
Attention: E. Todd Whittemore
Telephone No.: (303) 632-3422
Telecopier No.: (303) 632-3123
Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee.
Section 9.04 Severability Clause.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
Section 9.05 No Personal Solicitation.
From and after the Closing Date, the Servicer hereby agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Servicer's
behalf, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan (on a targeted basis) for any purposes of prepayment,
refinancing or modification of the related Mortgage Loan, provided, however,
that this limitation shall not prohibit Servicer from soliciting such Mortgagor
for purposes of prepayment, refinance or modification of any loan owned or
serviced by Servicer other than a Mortgage Loan. It is understood and agreed
that, among other marketing activities, promotions undertaken by Servicer which
are directed of the general public at large or which are directed generally to a
segment of the then existing customers of Servicer or any of its direct or
indirect subsidiaries (including, without limitation, the mailing of promotional
materials to Servicer's deposit customers by inserting such materials into
customer account statements, mass mailings based on commercially acquired
mailing lists and newspaper, radio and television advertisements) shall not
constitute solicitation under this section. In the event the Servicer does
refinance any Mortgage Loan as a result of a violation of the requirements set
forth in this Section 9.05, Servicer hereby agrees to pay to the Trust Fund an
amount equal to the difference, if any, between the amount that the Trust Fund
would have received if it had sold the Mortgage Loan to a third party, and the
proceeds received by the Trust Fund as result of such refinancing.
Section 9.06 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 9.07 Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Seller in the State of New York and shall
be deemed to have been made in the State of New York. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
Section 9.08 Further Agreements.
The Seller and the Servicer each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 9.09 Intention of the Parties.
It is the intention of the parties that the Seller is conveying, and
the Servicer is receiving only a contract for servicing the Mortgage Loans.
Accordingly, the parties hereby acknowledge that the Trust Fund remains the sole
and absolute owner of the Mortgage Loans and all rights (other than the
servicing rights) related thereto.
Section 9.10 Successors and Assigns; Assignment of Servicing
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller, the Trustee and the Master Servicer and
their respective successors and assigns. This Agreement shall not be assigned,
pledged or hypothecated by the Servicer to a third party except in accordance
with Section 7.03.
Section 9.11 Assignment by Lehman Capital.
The Seller shall have the right, upon notice to but without the
consent of the Servicer, to assign, in whole or in part, its interest under this
Agreement to the Depositor, which in turn shall assign such rights to the
Trustee, and the Trustee then shall succeed to all rights of the Seller under
this Agreement. All references to the Seller in this Agreement shall be deemed
to include its assignee or designee and any subsequent assignee or designee,
specifically including the Trustee.
Section 9.12 [Reserved.]
Section 9.13 Waivers.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
Section 9.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 9.15 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.16 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
IN WITNESS WHEREOF, the Servicer, the Seller and the Master Servicer
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the date first above written.
LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., as Seller
By: /s/ Joseph J. Kelly
---------------------------
Name: Joseph J. Kelly
Title: Vice President
AURORA LOAN SERVICES INC.,
as Servicer
By: /s/ Rick W. Skogg
---------------------------
Name: Rick W. Skogg
Title: President
AURORA LOAN SERVICES INC.,
as Master Servicer
By: /s/ Rick W. Skogg
---------------------------
Name: Rick W. Skogg
Title: President
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of January 1, 2000
(the "Agreement"), we hereby authorize and request you to establish an account,
as a Custodial Account pursuant to Section 3.03 of the Agreement, to be
designated as "Aurora Loan Services Inc., in trust for the Master Servicer for
SASCO 2000-1." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. This letter is submitted to you in
duplicate. Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:_____________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
________________________________
Depository
By:_____________________________
Name:
Title:
Date:
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of January 1, 2000
(the "Agreement"), we hereby authorize and request you to establish an account,
as an Escrow Account pursuant to Section 3.05 of the Agreement, to be designated
as "Aurora Loan Services Inc., in trust for the Master Servicer for SASCO
2000-1." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:_____________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
________________________________
Depository
By:_____________________________
Name:
Title:
Date:
EXECUTION
RECONSTITUTED SERVICING AGREEMENT
THIS RECONSTITUTED SERVICING AGREEMENT (this "Agreement"), entered into
as of the 1st day of January, 2000, by and between LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and
IMPAC FUNDING CORPORATION, a Delaware corporation (the "Servicer"), recites and
provides as follows:
RECITALS
WHEREAS, Lehman Brothers Bank, F.S.B., a federal savings bank ("LBB")
purchased certain Mortgage Loans identified on Schedule I hereto (the "Serviced
Mortgage Loans") on a servicing-retained basis from the Servicer pursuant to the
Seller's Purchase, Warranties and Servicing Agreement dated as of September 1,
1999 (the "Purchase, Warranties and Servicing Agreement"), between LBB and the
Servicer.
WHEREAS, LBB has conveyed the Serviced Mortgage Loans to Lehman
Capital, and Lehman Capital has in turn conveyed the Serviced Mortgage Loans to
Structured Asset Securities Corporation ("SASCO"), which has further conveyed
the Serviced Mortgage Loans to U.S. Bank National Association, as trustee (the
"Trustee") under a trust agreement dated as of January 1, 2000 (the "Trust
Agreement"), among the Trustee, Aurora Loan Services Inc., as master servicer
("Aurora," and, together with any successor Master Servicer appointed pursuant
to the provisions of the Trust Agreement, the "Master Servicer") and SASCO.
WHEREAS, Lehman Capital desires that the Servicer service the Serviced
Mortgage Loans, and the Servicer has agreed to do so, subject to the conditions
set forth herein.
WHEREAS, Aurora and any successor Master Servicer shall be obligated,
among other things, to supervise the servicing of the Serviced Mortgage Loans on
behalf of the Trustee, and shall have the right, under certain circumstances, to
terminate the rights and obligations of the Servicer under this Servicing
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lehman Capital and the Servicer
hereby agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this
Agreement, including Exhibit A hereto, shall have the meanings ascribed to such
terms in the Purchase, Warranties and Servicing Agreement.
2. Servicing. The Servicer agrees, with respect to the Serviced
Mortgage Loans, to perform and observe the duties, responsibilities and
obligations that are to be performed and observed under the provisions of the
Purchase, Warranties and Servicing Agreement, except as otherwise provided
herein and on Exhibit A hereto, and that the provisions of the Purchase,
Warranties and Servicing Agreement, as so modified, are and shall be a part of
this Agreement to the same extent as if set forth herein in full.
3. Master Servicing; Termination of Servicer. The Servicer,
including any successor servicer hereunder, shall be subject to the supervision
of the Master Servicer, which Master Servicer shall, pursuant to the terms of
the Trust Agreement, ensure that the Servicer services the Serviced Mortgage
Loans in accordance with the provisions of this Agreement. The Master Servicer,
acting on behalf of the Trustee pursuant to the Trust Agreement, shall have the
same rights as the "Purchaser" (as defined in the Purchase, Warranties and
Servicing Agreement) to enforce the obligations of the Servicer under the
Purchase, Warranties and Servicing Agreement. In addition, all of the
representations, warranties, covenants, agreements and indemnities made by the
Servicer (or by any successor servicer) to the "Purchaser" under the Purchase,
Warranties and Servicing Agreement are hereby deemed made to the Master Servicer
as if the Master Servicer were the "Purchaser" and all such representations,
warranties, covenants, agreements and indemnities shall inure to the benefit of
the Master Servicer. Nothing contained herein is intended to result in the
creation or assumption by the Master Servicer of any obligation of the
"Purchaser" or any Person under the Purchase, Warranties and Servicing Agreement
or any other agreement or instrument relating thereto except as specifically set
forth herein. The Master Servicer shall be entitled to terminate the rights and
obligations of the Servicer under this Agreement upon the failure of the
Servicer to perform any of its obligations under this Agreement, as provided in
Article IX of the Purchase, Warranties and Servicing Agreement.
4. No Representations. Neither the Servicer nor the Master Servicer
shall be obligated or required to make any representations and warranties
regarding the Serviced Mortgage Loans in connection with the transactions
contemplated by the Trust Agreement and issuance of the certificates issued
pursuant thereto.
5. Notices. All notices and communications between or among the
parties hereto shall be in writing and shall be deemed received or given when
mailed first-class mail, postage prepaid, addressed to each other party at its
address specified below. Each party may designate to the other parties in
writing, from time to time, other addresses to which notices and communications
hereunder shall be sent.
6. Governing Law. THIS SERVICING AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
NOTWITHSTANDING NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
8. Reconstitution. Lehman Capital and the Servicer agree that this
Agreement is a Reconstitution Agreement, and that the date hereof is the
Reconstitution Date, each as defined in the Purchase, Warranties and Servicing
Agreement.
9. Notices and Remittances to the Master Servicer. All notices
required to be delivered to the Purchaser or the Master Servicer under this
Agreement shall be delivered to the Master Servicer at the following address:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado 80014
Attention: E. Todd Whittemore
Telephone No.: (303) 632-3422
Telecopier No.: (303) 632-3123
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
The Chase Manhattan Bank
New York, New York
ABA #: 021-000-021
Account Name: Aurora Loan Services Inc., Master Servicing
Payment Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 2000-1
10. Transfer of Sub-Servicing Rights. Lehman Capital hereby consents to
and approves the sale and transfer of the sub-servicing rights to the Serviced
Mortgage Loans to Countrywide Home Loans ("Countrywide"), pursuant to Section
8.04 of the Purchase, Warranties and Servicing Agreement. The sale and transfer
of such sub-servicing rights to Countrywide shall be evidenced by the Consent of
Purchaser to Sale and Transfer of Servicing Rights substantially in the form of
Exhibit B hereto. However, under no circumstances does the sale and transfer of
such sub-servicing rights eliminate, transfer or assign the Servicer's duties
and responsibilities as Servicer under the Purchase, Warranties and Servicing
Agreement.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
----------------------------------------
Name: Joseph J. Kelly
Title: Vice President
IMPAC FUNDING CORPORATION
By: /s/ Richard J. Johnson
----------------------------------------
Name: Richard J. Johnson
Title: Executive Vice President, CFO
EXHIBIT A
Modifications to the Purchase, Warranties and Servicing Agreement
1. The definition of "Custodial Account" in Article I is hereby amended
by deleting the words "in trust for the Purchaser, Owner of Whole
Loan Series" and substituting the following words: "in trust for
Aurora Loan Services Inc., as master servicer for the SASCO 2000-1
Trust."
2. The definition of "Escrow Account" in Article I is hereby amended by
deleting the words "in trust for the Purchaser, Owner of Whole Loan
Series FRM, and various Mortgagors" and substituting the following
words: "in trust for Aurora Loan Services Inc., as master servicer
for the SASCO 2000-1 Trust."
3. The words "but in no event shall such period exceed three years after
title has been taken to such REO Property" are added at the end of
the first sentence of the fourth paragraph of Section 4.13.
4. Section 5.02 is hereby amended by deleting the words "Remittance
Date" in the first line of such Section, and substituting the
following: "tenth Business Day of each month"
EXHIBIT B
CONSENT OF PURCHASER
TO SALE AND TRANSFER OF SERVICING RIGHTS
Impac Funding Corporation
Pursuant to Section 8.04 of the
Seller's Purchase, Warranties, and Servicing Agreement
Pursuant to Section 8.04 of the Seller's Purchase, Warranties, and
Servicing Agreement dated as of September 1, 1999 (the "Agreement"), among Impac
Funding Corporation, as Seller and Servicer (the "Seller"), and Lehman Brothers
Bank, F.S.B., a federal savings bank, as Purchaser (the "Purchaser"), the
Purchaser hereby consents to and approves the sale and transfer of the
sub-servicing rights to the mortgage loans set forth on Exhibit I hereto (the
"Transferred Mortgaged Loans") to Countrywide Home Loans ("Countrywide"). The
sale and transfer of such sub-servicing rights as set forth in Exhibit I are in
accordance with the Servicing Rights Purchase and Sale Agreement by and between
Countrywide, as purchaser of the sub-servicing rights, and the Seller, as seller
of the sub-servicing rights, dated as of January 1, 2000. However, under no
circumstances does the sale and transfer of such sub-servicing rights eliminate,
transfer or assign Impac Funding Corporation's duties and responsibilities as
Seller and Servicer under the Agreement. Capitalized terms used and not defined
in this Agreement shall have the meanings ascribed to such terms in the
Agreement.
LEHMAN BROTHERS BANK, F.S.B.,
as Purchaser
By: /s/ Ted Meylor
-----------------------------
Name: Ted Meylor
Title: CEO
<PAGE>
LEHMAN BROTHERS BANK, FSB
Purchaser,
IMPAC FUNDING CORPORATION,
Seller and Servicer
SELLER'S PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of September 1, 1999
Fixed Rate Loans
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I.......................................................................................................-2-
Section 1.01 Defined Terms............................................................................-2-
ARTICLE II.....................................................................................................-13-
Section 2.01 Agreement to Purchase...............................................................-13-
Section 2.02 Purchase Price......................................................................-13-
Section 2.03 Servicing of Mortgage Loans.........................................................-14-
Section 2.04 Record Title and Possession of Mortgage Files; Maintenance of Servicing Files.......-14-
Section 2.05 Books and Records...................................................................-14-
Section 2.06 Transfer of Mortgage Loans..........................................................-15-
Section 2.07 Delivery of Mortgage Loan Documents.................................................-16-
Section 2.08 Quality Control Procedures..........................................................-17-
ARTICLE III....................................................................................................-18-
Section 3.01 Representations and Warranties of the Seller........................................-18-
Section 3.02 Representations and Warranties as to Individual Mortgage Loans......................-19-
Section 3.03 Repurchase; Substitution............................................................-27-
Section 3.04 Repurchase of Certain Mortgage Loans................................................-29-
ARTICLE IV.....................................................................................................-30-
Section 4.01 Seller to Act as Servicer...........................................................-30-
Section 4.02 Collection of Mortgage Loan Payments................................................-31-
Section 4.03 Realization Upon Defaulted Mortgage Loans...........................................-31-
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial Accounts.................-33-
Section 4.05 Permitted Withdrawals From the Custodial Account....................................-34-
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts.......................-35-
Section 4.07 Permitted Withdrawals From Escrow Account...........................................-36-
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Mortgage Insurance Policies and CMAC PMI Policies;
Collections Thereunder...........................................................-37-
Section 4.09 Transfer of Accounts................................................................-38-
Section 4.10 Maintenance of Hazard Insurance.....................................................-38-
Section 4.11 Maintenance of Mortgage Impairment Insurance Policy.................................-39-
Section 4.12 Fidelity Bond, Errors and Omissions Insurance.......................................-39-
Section 4.13 Title, Management and Disposition of REO Property...................................-40-
Section 4.14 Notification of Maturity Date.......................................................-41-
Section 4.15 Sub-Servicers.......................................................................-42-
Section 4.16 Compliance With REMIC Provisions....................................................-42-
ARTICLE V......................................................................................................-44-
Section 5.01 Distributions.......................................................................-44-
Section 5.02 Statements to the Purchaser.........................................................-44-
Section 5.03 Monthly Advances by the Seller......................................................-45-
Section 5.04 Liquidation Reports.................................................................-46-
ARTICLE VI.....................................................................................................-47-
Section 6.01 Assumption Agreements...............................................................-47-
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.............................-48-
Section 6.03 Servicing Compensation..............................................................-49-
Section 6.04 Annual Statement as to Compliance...................................................-49-
Section 6.05 Annual Independent Certified Public Accountants' Servicing Report...................-49-
Section 6.06 Purchaser's Right to Examine Seller Records.........................................-49-
Section 6.07 Seller Shall Provide Information as Reasonably Required.............................-50-
ARTICLE VII....................................................................................................-51-
Section 7.01 [Reserved]..........................................................................-51-
Section 7.02 [Reserved]..........................................................................-51-
ARTICLE VIII...................................................................................................-52-
Section 8.01 Indemnification; Third Party Claims.................................................-52-
Section 8.02 Merger or Consolidation of the Seller...............................................-52-
Section 8.03 Limitation on Liability of the Seller and Others....................................-53-
Section 8.04 Seller Not to Assign or Resign......................................................-53-
Section 8.05 No Transfer of Servicing............................................................-53-
ARTICLE IX.....................................................................................................-55-
Section 9.01 Events of Default...................................................................-55-
Section 9.02 Waiver of Defaults..................................................................-56-
ARTICLE X......................................................................................................-57-
Section 10.01 Termination.........................................................................-57-
ARTICLE XI.....................................................................................................-58-
Section 11.01 Reconstitution of Mortgage Loans ...................................................-58-
ARTICLE XII....................................................................................................-61-
Section 12.01 Successor to the Seller.............................................................-61-
Section 12.02 Expenses............................................................................-62-
Section 12.03 Confidentiality.....................................................................-62-
Section 12.04 Amendment...........................................................................-62-
Section 12.05 Recordation of Agreement............................................................-62-
Section 12.06 Governing Law.......................................................................-62-
Section 12.07 Notices.............................................................................-63-
Section 12.08 Severability of Provisions..........................................................-63-
Section 12.09 Exhibits............................................................................-64-
Section 12.10 General Interpretive Principles.....................................................-64-
Section 12.11 Reproduction of Documents...........................................................-64-
Section 12.12 Confidentiality of Information......................................................-65-
Section 12.13 Recordation of Assignments of Mortgage..............................................-65-
Section 12.14 Assignment by Purchaser.............................................................-65-
Section 12.15 No Partnership......................................................................-65-
Section 12.16 Execution: Successors and Assigns...................................................-66-
Section 12.17 Entire Agreement....................................................................-66-
Section 12.18 No Solicitation....................................................................-66-
Section 12.19 Closing.............................................................................-66-
Section 12.20 Non-Competition.....................................................................-67-
</TABLE>
EXHIBITS
A Contents of Mortgage File
B Custodial Account Letter Agreement
C Escrow Account Letter Agreement
D Form of Assignment and Assumption
E Form of Trial Balance
F Mortgage Loan Schedule
G Underwriting Guidelines
This Seller's Purchase, Warranties and Servicing Agreement, dated as
of September 1, 1999 (the "Cut-off Date"), and is executed between LEHMAN
BROTHERS BANK, FSB, as Purchaser (the "Purchaser"), and IMPAC FUNDING
CORPORATION, as seller and servicer ("Seller").
W I T N E S S E T H :
WHEREAS, the Purchaser has heretofore agreed to purchase from the
Seller and the Seller has heretofore agreed to sell to the Purchaser certain
Mortgage Loans with a Cut-off Date principal balance of approximately
$51,837,031.07 (as specified on the Mortgage Loan Schedule attached hereto) on
a servicing retained basis.
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit F. The Mortgage Loans as described herein
shall be delivered to the Seller on September 30, 1999 (the "Closing Date");
and
WHEREAS, the Purchaser and the Seller wish to prescribe the
representations and warranties of the Seller with respect to itself and the
Mortgage Loans and the management, servicing, transfer and control of the
Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Seller agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meaning
specified in this Article:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located.
Agency: Either Fannie Mae, Freddie Mac or GNMA.
Agency Transfer: The sale or transfer by Purchaser of some or all of
the Mortgage Loans to Fannie Mae under its Cash Purchase Program or its MBS
Swap Program (Special Servicing Option) or to Freddie Mac under its Freddie Mac
Cash Program or Gold PC Program, retaining the Seller as servicer thereunder.
Agreement: This Seller's Purchase, Warranties and Servicing Agreement
including all exhibits hereto, amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with
the proceeds of the Mortgage Loan, provided, however, in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the value determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage
Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale or transfer of the Mortgage Loan.
Assignment and Assumption: An assignment and conveyance, in the form
of Exhibit D hereto, executed by the Purchaser and a subsequent transferee of
the Mortgage Loans pursuant to Section 2.06 hereof.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than: (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of New York, or (iii) a day on which banks in the
States of New York, Illinois or Kentucky are authorized or obligated by law or
executive order to be closed.
Closing Date: On the Closing Date, the Purchaser shall purchase from
the Seller the Mortgage Loans listed on the Mortgage Loan Schedule. The Closing
Date shall be September 30, 1999, or such other date as mutually agreed upon.
CMAC: Radian Guaranty, Inc., f/k/a Commonwealth Mortgage Assurance
Corporation, or its successor in interest.
CMAC PMI Policies: The modified primary mortgage insurance policies
issued with respect to certain of the Mortgage Loans by CMAC. The rights of the
Mortgage Loans with respect to the CMAC PMI Policies are fully assignable and
are hereby transferred to the Purchaser.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Commitment Letter: With respect to the Mortgage Loans, the letter
dated as of September 18, 1999 and revised as of September 29, 1999, between
the Purchaser and the Seller (including any exhibits, schedules and attachments
thereto).
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Credit Score: The credit score for each Mortgage Loan shall be the
minimum of two credit bureau scores obtained at origination or such other time
by the Seller. If two credit bureau scores are obtained, the Credit Score will
be the lower score. If three credit bureau scores are obtained, the Credit
Score will be the middle of the three.
Custodial Account: Each separate demand account or accounts created
and maintained pursuant to Section 4.04 which shall be entitled "Impac Funding
Corporation, as servicer, in trust for the Purchaser, Owner of Whole Loan
Series shall be established in an Eligible Account, in the name of the Person
that is the "Purchaser" with respect to the related Mortgage Loans.
Custodian: U.S. Bank Trust, N.A., or any successor designated by
Purchaser.
Cut-off Date: September 1, 1999.
Determination Date: The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the
month of the related Remittance Date.
Due Date: The day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of the Remittance Date.
Eligible Account: An account established and maintained: (a) within
FDIC insured accounts (or other accounts with comparable insurance coverage
acceptable to the Rating Agencies) created, maintained and monitored by the
Seller so that all funds deposited therein are fully insured, (b) with the
corporate trust department of a financial institution assigned a long-term debt
rating of not less than AA by Standard & Poor's Ratings Services and, if
ownership of the Mortgage Loans is evidenced by mortgaged backed securities,
the equivalent ratings of the rating agencies, and held such that the rights of
the Purchaser and the owner of the Mortgage Loans shall be fully protected
against the claims of any creditors of the Seller and of any creditors or
depositors of the institution in which such account is maintained and (c) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account is established pursuant to
clause (b) or (c) of the preceding sentence, the Seller shall provide the
Purchaser with written notice on the Business Day following the date on which
the applicable institution fails to meet the applicable ratings requirements.
Eligible Institution: An institution having (i) the highest short-term
debt rating, and one of the two highest long-term debt ratings of the Rating
Agency; or (ii) with respect to any Custodial Account, an unsecured long-term
debt rating of at least one of the two highest unsecured long-term debt ratings
of the Rating Agencies.
Equity Take-Out Refinanced Mortgage Loan: A Refinanced Mortgage Loan
the proceeds of which were in excess of the outstanding principal balance of
the existing mortgage loan.
Escrow Account: Each separate trust account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "Impac Funding
Corporation, as servicer, in trust for the Purchaser, Owner of Whole Loan
Series FRM , and various Mortgagors" and shall be established in an Eligible
Account, in the name of the Person that is the "Purchaser" with respect to the
related Mortgage Loans.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 10.01.
Fannie Mae: Fannie Mae, or any successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie Mae
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Seller pursuant
to Section 4.12.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller pursuant to this Agreement), a determination made by the Seller
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Seller, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
First Remittance Date: October 19, 1999, or if such day is not a
Business Day, the first Business Day immediately preceding such date.
Freddie Mac: Freddie Mac, or any successor thereto.
GNMA: Government National Mortgage Association, or any successor
thereto.
GAAP: Generally accepted accounting procedures, consistently applied.
HUD: The United States Department of Housing and Urban Development or
any successor.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of the Mortgage Loan, to (i)
the Appraised Value of the Mortgaged Property at origination with respect to a
Refinanced Mortgage Loan, and (ii) the lesser of the Appraised Value of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property with respect to all other Mortgage Loans.
Monthly Advance: The aggregate of the advances made by the Seller on
any Remittance Date pursuant to Section 5.03.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust
or other instrument securing a Mortgage Note which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage
Note; except that with respect to real property located in jurisdictions in
which the use of leasehold estates for residential properties is a
widely-accepted practice, the mortgage, deed of trust or other instrument
securing the Mortgage Note may secure and create a first lien upon a leasehold
estate of the Mortgagor.
Mortgage File: The mortgage documents pertaining to a particular
Mortgage Loan which are specified in Exhibit A hereto and any additional
documents required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as required by Section 4.11.
Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan in accordance with the provisions of the related Mortgage
Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
replaced or repurchased mortgage loans.
Mortgage Loan Documents: The documents listed in Exhibit A.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus any amounts payable with respect to any related
CMAC PMI Policy and minus the Servicing Fee Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans annexed hereto
as Exhibit F, such schedule setting forth the following information with
respect to each Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the city,
state and zip code;
(4) a code indicating whether the Mortgaged Property is
owner-occupied, an investment property or second home;
(5) the type of residential property constituting the Mortgaged
Property;
(6) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original amortization
schedule and, if different, the maturity expressed in the same manner but based
on the actual amortization schedule;
(7) the Loan-to-Value Ratio at origination;
(8) the Mortgage Interest Rate as of the Cut-off Date;
(9) the stated maturity date;
(10) the amount of the Monthly Payment as of the Cut-off Date;
(11) the original principal amount of the Mortgage Loan;
(12) the principal balance of the Mortgage Loan as of the close of
business on the Cut-off Date, after deduction of payments of principal due on
or before the Cut-off Date whether or not collected;
(13) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase, rate and term refinance, equity take-out refinance);
(14) a code indicating the documentation style (i.e. full, alternative
or reduced);
(15) the date on which the first payment is due;
(16) a code indicating whether or not the Mortgage Loan is the subject
of a Primary Mortgage Insurance Policy;
(17) a code indicating the Credit Score of the borrower at the time of
origination of the Mortgage Loan;
(18) a code indicating the prepayment penalty term for each Mortgage
Loan;
(19) the next Due Date of the Mortgage Loan;
(20) debt to income ratios, if applicable;
(21) combined monthly income, if applicable;
(22) combined housing expense, if applicable.
Setting forth in the aggregate, the following information with respect
to the Mortgage Loans, as of the Cut-off Date:
(1) the number of Mortgage Loans;
(2) the current aggregate outstanding principal balance of the
Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage Loans
as of the Cut-off Date;
(4) the weighted average maturity of the Mortgage Loans;
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to a Mortgage Loan, the underlying
real property securing repayment of a Mortgage Note, consisting of a single
parcel of real estate considered to be real estate under the laws of the State
in which such real property is located, which may include condominium units and
planned unit developments, improved by a residential dwelling; except that with
respect to real property located in jurisdictions in which the use of leasehold
estates for residential properties is a widely-accepted practice, a leasehold
estate of the Mortgagor, the term of which is equal to or longer than the term
of the Mortgage.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Advance: Any Monthly Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Seller, will not, or,
in the case of a proposed Monthly Advance or Servicing Advance, would not be,
ultimately recoverable from related late payments, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.
Officers' Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Senior Vice President
or a Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Seller, and delivered to
the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the party on behalf of whom the opinion is being given, reasonably
acceptable to the Purchaser.
Originator: Means, with respect to any Mortgage Loan, the entity(ies)
that (i) took the Mortgagor's loan application, (ii) processed the Mortgagor's
loan application, and (iii) closed and/or funded the Mortgagor's Mortgage Loan.
OTS: Office of Thrift Supervision, its successors and assigns.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction,
retaining the Servicer as "servicer" (with or without a master servicer)
thereunder.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Primary Mortgage Insurance Policy: Each primary policy of mortgage
insurance represented to be in effect pursuant to Section 3.02 (cc), or any
replacement policy therefor obtained by the Seller pursuant to Section 4.08.
Prime Rate: The prime rate announced to be in effect from time to time
as published as the average rate in the Wall Street Journal (Northeast
Edition).
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan full or partial which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent
to the month of prepayment.
Purchase Price: As defined in Section 2.02.
Purchaser: Lehman Brothers Bank, FSB, its successors in interest and
assigns.
Qualified Appraiser: An appraiser, duly appointed by the Seller, who
had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
FIRREA and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by Fannie
Mae and Freddie Mac.
Rating Agencies: Standard & Poor's Ratings Services, Moody's Investors
Service or, in the event that some or all ownership of the Mortgage Loans is
evidenced by mortgage-backed securities, the nationally recognized rating
agencies issuing ratings with respect to such securities, if any.
Reconstitution Agreement: Any agreement or agreements entered into by
the Seller and the Purchaser, with or without any third Persons, on any
Reconstitution Date with respect to a Whole Loan Transfer, Pass-Through
Transfer or Agency Transfer of one or more of the Mortgage Loans serviced
hereunder.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer, Pass-Through
Transfer or Agency Transfer pursuant to Section 11 hereof.
Refinanced Mortgage Loan: A Mortgage Loan which was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy
an existing mortgage.
REMIC: A "real estate mortgage investment conduit," as such term is
defined in the Internal Revenue Code.
Remittance Date: The 19th day of any month, beginning with the First
Remittance Date, or if such 19th day is not a Business Day, the first Business
Day immediately preceding such 19th day.
REO Disposition: The final sale by the Seller of any REO Property.
REO Disposition Proceeds: Amounts received by the Seller in connection
with a related REO Disposition.
REO Property: A Mortgaged Property acquired by the Seller on behalf of
the Purchaser as described in Section 4.13.
Repurchase Price: With respect to any Mortgage Loan, a price equal to
(i) the outstanding principal balance of the Mortgage Loan, plus (ii) interest
on such outstanding principal balance at the Mortgage Loan Remittance Rate from
the last date through which interest has been paid and distributed to the
Purchaser to the date of repurchase, plus, (iii) all other unreimbursed
advances and third party expenses incurred in connection with the transfer of
the Mortgage Loan being repurchased; less amounts received or advanced in
respect of such repurchased Mortgage Loan which are being held in the Custodial
Account for distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Seller's Officer's Certificate: A certificate signed by the Chairman
of the Board, President, any Vice President or Treasurer of Seller stating the
date by which Seller expects to receive any missing documents sent for
recording from the applicable recording office.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement,
administrative or judicial proceedings, or any legal work or advice
specifically related to servicing the Mortgage Loans, including but not limited
to, foreclosures, bankruptcies, condemnations, drug seizures, elections,
foreclosures by subordinate or superior lienholders, and other legal actions
incidental to the servicing of the Mortgage Loans (provided that such expenses
are reasonable and that the Seller specifies the Mortgage Loan(s) to which such
expenses relate, and provided further that any such enforcement, administrative
or judicial proceeding does not arise out of a breach of any representation,
warranty or covenant of the Seller hereunder), (c) the management and
liquidation of the Mortgaged Property if the Mortgaged Property is acquired in
full or partial satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rates and other charges which are or may become a lien upon the
Mortgaged Property, and Primary Mortgage Insurance Policy premiums and fire and
hazard insurance coverage, (e) any expenses reasonably sustained by the Seller,
as servicer, with respect to the liquidation of the Mortgaged Property in
accordance with the terms of this Agreement and (f) compliance with the
obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
fee the Purchaser shall pay to the Seller for servicing the Mortgage Loans in
accordance with the terms of this Agreement, which shall be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the unpaid
principal balance of the Mortgage Loan. Such fee shall be payable monthly in
arrears (a pro rata Servicing Fee shall be paid for any partial month).
Servicing Fee Rate: The per annum rate at which the Servicing Fee
accrues, which rate shall be equal to 0.28% per annum.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Seller consisting of originals of all documents in the Mortgage File
which are not delivered to the Purchaser and copies of the Mortgage Loan
Documents listed in Exhibit A, the originals of which are delivered to the
Purchaser or its designee pursuant to Section 2.04.
Servicing Officer: Any officer of the Seller involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Seller to the
Purchaser upon request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of such Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Purchaser with respect to the Mortgage Loan representing payments or recoveries
of principal or advances in lieu thereof.
Sub-Servicer: Any mortgage loan servicing institution other than the
Seller which is responsible for the servicing and administration of any
Mortgage Loan or any successor appointed pursuant to any Sub-Servicing
Agreement.
Sub-Servicing Agreement: Each agreement providing for the servicing of
any of the Mortgage Loans by a Sub-Servicer.
Underwriting Guidelines: The underwriting standards of the Seller in
effect on the date of origination of the Mortgage Loans, a copy of which is
attached hereto as Exhibit G.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer or an Agency Transfer.
ARTICLE II
SERVICING OF MORTGAGE LOANS; RECORD TITLE AND POSSESSION OF
MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Agreement to Purchase.
The Seller agrees to sell and the Purchaser agrees to purchase the
Mortgage Loans, having an aggregate principal balance on the Cut-off Date in an
amount set forth in the Commitment Letter, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on the Closing Date.
Section 2.02 Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the Commitment Letter (subject to adjustment as provided
therein), multiplied by the Stated Principal Balance as of the Cut-off Date.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest up to, but not including,
the Closing Date on the current principal amount of the Mortgage Loans as of
the Cut-off Date at the Mortgage Loan Remittance Rate of the Mortgage Loans as
of the Cut-off Date.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid on the Closing Date by wire transfer of immediately
available funds.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected on or
after the Cut-off Date (provided, however, that all scheduled payments of
principal due on or before the Cut-off Date and collected by the Seller or any
successor servicer after the Cut-off Date shall belong to the Seller), and (3)
all payments of interest on the Mortgage Loans (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
outstanding principal balance of each Mortgage Loan as of the Cut-off Date is
determined after application of payments of principal due on or before the
Cut-off Date whether or not collected, together with any unscheduled Principal
Prepayments collected prior to the Cut-off Date; provided, however, that
payments of scheduled principal and interest prepaid for a Due Date beyond the
Cut-off Date shall not be applied to the principal balance as of the Cut-off
Date. Such prepaid amounts shall be the property of the Purchaser. The Seller
shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
If, subsequent to the Closing Date, the amount on which the Purchase
Price with respect to a Mortgage Loan was based is found to be in error, or if,
for any other reason, the Purchase Price or such other amounts are found to be
in error, within ten (10) Business Days of the receipt of information
sufficient to provide notice that payment is due the party benefitting from the
error shall pay an amount sufficient to correct and reconcile the Purchase
Price (plus interest thereon in the case of overpayment by Purchaser) or such
other amounts and shall provide a reconciliation statement and such other
documentation sufficient reasonably to satisfy the other party concerning the
accuracy of such reconciliation.
Section 2.03 Servicing of Mortgage Loans.
The Mortgage Loans have been sold by the Seller to the Purchaser on a
servicing retained basis.
Simultaneously with the execution and delivery of this Agreement, the
Seller does hereby agree to service the Mortgage Loans listed on the Mortgage
Loan Schedule subject to the terms of this Agreement.
Section 2.04 Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files.
As of the Closing Date, the Seller sold, transferred, assigned, set
over and conveyed to the Purchaser, without recourse, and the Seller hereby
acknowledges that the Purchaser has, all the right, title and interest of the
Seller in and to the Mortgage Loans. The delivery of the Mortgage Files was on
the Closing Date at the expense of the Seller. The possession of each Servicing
File by the Seller is at the will of the Purchaser, for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Seller is in a custodial capacity only. From the Closing Date, the ownership of
each Mortgage Loan, including the Mortgage Note, the Mortgage, the contents of
the related Mortgage File and all rights, benefits, proceeds and obligations
arising therefrom or in connection therewith, has been vested in the Purchaser.
All rights arising out of the Mortgage Loans including, but not limited to, all
funds received on or in connection with the Mortgage Loans and all records or
documents with respect to the Mortgage Loans prepared by or which come into the
possession of the Seller shall be received and held by the Seller in trust for
the benefit of the Purchaser as the owner of the Mortgage Loans. Any portion of
the Mortgage Files retained by the Seller shall be appropriately identified in
the Seller's computer system to clearly reflect the ownership of the Mortgage
Loans by the Purchaser. The Seller shall release its custody of the contents of
the Mortgage Files only in accordance with written instructions of the
Purchaser, except when such release is required as incidental to the Seller's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan or Loans with respect thereto pursuant to this Agreement, such
written instructions shall not be required.
Section 2.05 Books and Records.
The sale of each Mortgage Loan has been reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
The Seller shall be responsible for maintaining, and shall maintain, a complete
set of books and records for the Mortgage Loans which shall be appropriately
identified in the Seller's computer system to clearly reflect the ownership of
the Mortgage Loan by the Purchaser. In particular, the Seller shall maintain in
its possession, available for inspection by the Purchaser, or its designee and
shall deliver to the Purchaser upon demand, evidence of compliance with all
federal, state and local laws, rules and regulations, and requirements of
Fannie Mae or Freddie Mac, as applicable, including but not limited to
documentation as to the method used in determining the applicability of the
provisions of the Flood Disaster Protection Act of 1973, as amended, to the
Mortgaged Property, documentation evidencing insurance coverage and eligibility
of any condominium project for approval by Seller and periodic inspection
reports as required by Section 4.13. To the extent that original documents are
not required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the Seller may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Seller
complies with the requirements of the Fannie Mae Guides.
The Seller shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations. The
Servicing Files will be made available to the Purchaser (or its designee) for
its review at one time, with respect to any further review, there will be a
reasonable charge per file to be agreed upon by the Seller and the Purchaser.
In addition to the foregoing, Seller shall provide to any supervisory
agents or examiners that regulate Purchaser, including but not limited to, the
OTS, the FDIC and other similar entities, access, during normal business hours,
upon reasonable advance notice to Seller and without charge to Seller or such
supervisory agents or examiners, to any documentation regarding the Mortgage
Loans that may be required by any applicable regulator.
Section 2.06 Transfer of Mortgage Loans.
The Seller shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Seller
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Seller shall be under no obligation to deal
with any person with respect to this Agreement or any Mortgage Loan unless a
notice of the transfer of such Mortgage Loan has been delivered to the Seller
in accordance with this Section 2.06 and the books and records of the Seller
show such person as the owner of the Mortgage Loan. The Purchaser may, subject
to the terms of this Agreement, sell and transfer one or more of the Mortgage
Loans, provided, however, that (i) the transferee will not be deemed to be a
Purchaser hereunder binding upon the Seller unless such transferee shall agree
in writing to be bound by the terms of this Agreement and an original
counterpart of the instrument of transfer and an Assignment and Assumption of
this Agreement in the form of Exhibit D hereto executed by the transferee shall
have been delivered to the Seller, and (ii) in no event shall there be more
than four (4) Persons at any given time having the status of "Purchaser"
hereunder. The Purchaser also shall advise the Seller of the transfer in
writing. Upon receipt of notice of the transfer, the Seller shall mark its
books and records to reflect the ownership of the Mortgage Loans of such
assignee.
Section 2.07 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Purchaser (except for
those records to be kept under Section 2.04 herein) or its designee the
Mortgage Loan Documents. The documents enumerated as items (1), (2), (3), (4),
(5), (6), (7), (8), (9) and (16) in Exhibit A hereto shall be delivered by the
Seller to the Purchaser or its designee no later than three (3) Business Days
prior to the Closing Date pursuant to a bailee letter agreement. All other
documents in Exhibit A hereto shall be retained by the Seller. If the Seller
cannot deliver the original recorded Mortgage Loan Documents or the original
policy of title insurance, including riders and endorsements thereto, on the
Closing Date, the Seller shall, promptly upon receipt thereof and in any case
not later than 180 days from the Closing Date, deliver such original documents,
including original recorded documents, to the Purchaser or its designee (unless
the Seller is delayed in making such delivery by reason of the fact that such
documents shall not have been returned by the appropriate recording office). If
delivery is not completed within 180 days of the Closing Date solely due to
delays in making such delivery by reason of the fact that such documents shall
not have been returned by the appropriate recording office, Seller shall
deliver such document to Purchaser, or its designee, within such time period as
specified in a Seller's Officer's Certificate. In the event that documents have
not been received by the date specified in the Seller's Officer's Certificate,
a subsequent Seller's Officer's Certificate shall be delivered by such date
specified in the prior Seller's Officer's Certificate, stating a revised date
for receipt of documentation. The procedure shall be repeated until the
documents have been received and delivered. The Seller shall continue to use
its best efforts to effect delivery within 300 days of the Closing Date.
Seller shall provide a copy of the title insurance policy to Purchaser
or its designee within ninety (90) days of the receipt of the recorded
documents (required for issuance of such policy) from the applicable recording
office.
The Seller shall forward to the Purchaser, or its designee, original
documents evidencing an assumption, modification, consolidation or extension of
any Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within
one week of their execution; provided, however, that the Seller shall provide
the Purchaser, or its designee, with a certified true copy of any such document
submitted for recordation within one week of its execution, and shall provide
the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within sixty (60) days of its submission for
recordation.
From time to time, in order to fulfill its obligations hereunder, the
Seller may have a need for Mortgage Loan Documents to be released from the
Custodian or the Purchaser, or its designee. Purchaser shall, or shall cause
its designee or the Custodian, upon the written request of the Seller, within
ten (10) Business Days, deliver to the Seller, any requested documentation
previously delivered to Purchaser as part of the Mortgage File, provided that
such documentation is promptly returned to Purchaser, or its designee of the
Custodian, when the Seller no longer requires possession of the document, and
provided that during the time that any such documentation is held by the
Seller, such possession is in trust for the benefit of Purchaser. The Purchaser
shall cooperate with the Seller in order to allow the Seller to make any such
request stated above directly to the Custodian, which cooperation may be in the
form of assigning to the Seller the rights as servicer under a custodial
agreement, in form and substance acceptable to the Seller. Seller shall
indemnify Purchaser, and its designee, from and against any and all losses,
claims, damages, penalties, fines, forfeitures, costs and expenses (including
court costs and reasonable attorney's fees) resulting from or related to the
loss, damage, or misplacement of any documentation delivered to Seller pursuant
to this paragraph.
Section 2.08 Quality Control Procedures.
The Seller must have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal
documents, credit documents, property appraisals, and underwriting decisions.
The program must be capable of evaluating and monitoring the overall quality of
its loan production and servicing activities. The program is to ensure that the
Mortgage Loans were originated and serviced in accordance with prudent mortgage
banking practices and accounting principles; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Seller.
The Seller represents, warrants and covenants to the Purchaser that as
of the Closing Date or as of such date specifically provided herein:
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has all licenses
necessary to carry out its business as now being conducted, and is licensed and
qualified to transact business in and is in good standing under the laws of
each state in which any Mortgaged Property is located or is otherwise exempt
under applicable law from such licensing or qualification or is otherwise not
required under applicable law to effect such licensing or qualification and no
demand for such licensing or qualification has been made upon such Seller by
any such state, and in any event such Seller is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with the
terms of this Agreement;
(b) The Seller has the full power and authority and legal right to
hold, transfer and convey each Mortgage Loan, to sell each Mortgage Loan and to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted, has duly authorized the execution, delivery and performance of this
Agreement and any agreements contemplated hereby, has duly executed and
delivered this Agreement, and any agreements contemplated hereby, and this
Agreement and each Assignment of Mortgage to the Purchaser and any agreements
contemplated hereby, constitutes a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms, and all requisite
corporate action has been taken by the Seller to make this Agreement and all
agreements contemplated hereby valid and binding upon the Seller in accordance
with their terms;
(c) None of the execution and delivery of this Agreement, the
origination of the Mortgage Loans by the Seller, the sale of the Mortgage Loans
to the Purchaser, the consummation of the transactions contemplated hereby, or
the fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with any of the terms, conditions or provisions of the
Seller's charter or by-laws or materially conflict with or result in a material
breach of any of the terms, conditions or provisions of any legal restriction
or any agreement or instrument to which the Seller is now a party or by which
it is bound, or constitute a default or result in an acceleration under any of
the foregoing, or result in the material violation of any law, rule,
regulation, order, judgment or decree to which the Seller or its property is
subject or impair the ability of the Purchaser to realize on the Mortgage Loans
or impair the value of the Mortgage Loans;
(d) Each Mortgage Note, each Mortgage, each Assignment of Mortgage and
any other documents required pursuant to this Agreement to be delivered to the
Purchaser or its designee, or its assignee for each Mortgage Loan, have been,
on or before the Closing Date, delivered to the Purchaser or its designee, or
its assignee;
(e) There is no litigation, suit, proceeding or investigation pending
or threatened, or any order or decree outstanding, with respect to the Seller
which is reasonably likely to have a material adverse effect on the sale or
servicing of the Mortgage Loans, the execution, delivery, performance or
enforceability of this Agreement, or which is reasonably likely to have a
material adverse effect on the financial condition of the Seller;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement,
except for consents, approvals, authorizations and orders which have been
obtained;
(g) The Seller is an approved seller/servicer for Fannie Mae and
Freddie Mac in good standing. No event has occurred, including but not limited
to a change in insurance coverage, which would make the Seller unable to comply
with Fannie Mae or Freddie Mac eligibility requirements or which would require
notification to Fannie Mae or Freddie Mac;
(h) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement; and
(i) The Seller acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services and the entire
Servicing Fee shall be treated by Seller, for accounting and tax purposes, as
compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement.
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans.
References in this Section to percentages of Mortgage Loans refer in
each case to the percentage of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date, based on the aggregate outstanding balances of
the Mortgage Loans as of the Cut-off Date, and giving effect to scheduled
Monthly Payments due on or prior to the Cut-off Date, whether or not received.
References to percentages of Mortgaged Properties refer, in each case, to the
percentages of expected aggregate principal balances of the related Mortgage
Loans (determined as described in the preceding sentence). The Seller hereby
represents and warrants to the Purchaser, as to each Mortgage Loan, as of the
Closing Date as follows:
(a) The information set forth in the Mortgage Loan Schedule, including
any diskette or other related data tapes sent to the Purchaser, is true and
correct in all material respects as of the Closing Date and, to the best of
Seller's knowledge, there has been no fraud, misrepresentation or dishonesty
with respect to the origination of any Mortgage Loan. Neither the Mortgage Loan
Schedule nor the Mortgage File nor any other document furnished in connection
with this transaction contains any untrue statement of a material fact by the
Seller or its affiliates, or omits to state a fact necessary to make the
statements of the Seller or its affiliates contained therein not materially
misleading;
(b) The Mortgage creates a first lien or a first priority ownership
interest in an estate in fee simple in real property securing the related
Mortgage Note;
(c) All payments due on or prior to the Cut-off Date for such Mortgage
Loan have been made and credited as of the Closing Date and have not been
dishonored; there are no material defaults under the terms of the Mortgage
Loan; the Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the Mortgagor, directly
or indirectly, for the payment of any amount required by the Mortgage Loan; and
there has been no delinquency of 30 or more days prior to the Closing Date;
(d) There are no defaults by Seller in complying with the terms of the
Mortgage, and 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 escrow funds have been
established in an amount sufficient to pay for every such escrowed item which
remains unpaid and which has been assessed but is not yet due and payable;
(e) Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after the funds were disbursed in connection with the Mortgage
Loan. The Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and interest, with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than thirty years;
(f) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by law, or, necessary to protect the interest of the Purchaser. No
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, from the terms thereof except
in connection with an assumption agreement and which assumption agreement is
part of the Mortgage File and the terms of which are reflected in the Mortgage
Loan Schedule; the substance of any such waiver, alteration or modification has
been approved by the issuer of any related Primary Mortgage Insurance Policy
and title insurance policy, to the extent required by the related policies;
(g) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation,
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder, render
the Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the
defense of usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto; and the Mortgagor was not a
debtor in any state or federal bankruptcy or insolvency proceeding at the time
the Mortgage Loan was originated;
(h) All buildings or other customarily insured improvements upon the
Mortgaged Property are insured by an insurer acceptable under the Fannie Mae
Guides, against loss by fire, hazards of extended coverage and such other
hazards as are provided for in the Fannie Mae Guides or by Freddie Mac, as well
as all additional requirements set forth in Section 4.10 of this Agreement. All
such standard hazard policies are in full force and effect and on the date of
origination contained a standard mortgagee clause naming the Seller and its
successors in interest and assigns as loss payee and such clause is still in
effect and all premiums due thereon have been paid. If required by the Flood
Disaster Protection Act of 1973, as amended, the Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration which policy conforms to Fannie Mae and
Freddie Mac requirements, as well as all additional requirements set forth in
Section 4.10 of this Agreement. Such policy was issued by an insurer acceptable
under Fannie Mae or Freddie Mac guidelines. The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor. The hazard insurance policy is
the valid and binding obligation of the Insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement. The
Seller has not engaged in, and has no knowledge of any Mortgagor or any
Originator having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either;
(i) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(j) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission. The Seller has not waived the performance by the
Mortgagor of any action, if the Mortgagor's failure to perform such action
would cause the Mortgage Loan to be in default, nor has the Seller waived any
default resulting from any action or inaction by the Mortgagor;
(k) The Mortgage is a valid, subsisting, enforceable and perfected
first lien on the Mortgaged Property. The Mortgage and the Mortgage Note do not
contain any evidence of any security interest or other interest or right
thereto. Such lien is free and clear of all adverse claims, liens and
encumbrances having priority over the first lien of the Mortgage subject only
to (1) the lien of non-delinquent current real property taxes and assessments
not yet due and payable, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage which are acceptable to mortgage lending institutions
generally and either (A) which are referred to in either the Originator's title
insurance policy or in the appraisal made for the Originator of the Mortgage
Loan, or (B) which do not adversely affect the Appraised Value of the Mortgaged
Property as set forth in such appraisal, and (3) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein, and the Seller has the full right
to sell and assign the same to the Purchaser. The Mortgaged Property was not,
as of the date of origination of the Mortgage Loan, subject to a mortgage, deed
of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;
(l) The Mortgage Note and the related Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors' rights and the Seller has taken all action necessary
to transfer such rights of enforceability to the Purchaser. All parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage Loan
and to execute and deliver the Mortgage Note and the Mortgage. The Mortgage
Note and the Mortgage have been duly and properly executed by such parties. The
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been satisfied. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid or are in the process of being paid, and the Mortgagor is
not entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
(m) The Seller is the sole legal, beneficial and equitable owner and
holder of the Mortgage Loan and the indebtedness evidenced by the Mortgage Note
and has full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest. Upon the sale of the Mortgage Loan to the Purchaser, the Seller will
retain the Mortgage File or any part thereof with respect thereto not delivered
to the Purchaser or the Purchaser's designee in trust only for the purpose of
servicing and supervising the servicing of the Mortgage Loan. Upon the sale of
each Mortgage Loan on the Closing Date, the Purchaser will own such Mortgage
Loan free and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest. The Seller intends to relinquish
all rights to possess, control and monitor the Mortgage Loan, except for the
purposes of servicing the Mortgage Loan as set forth in this Agreement. After
the Closing Date, the Seller will have no right to modify or alter the terms of
the sale of the Mortgage Loan and the Seller will have no obligation or right
to repurchase the Mortgage Loan or substitute another Mortgage Loan, except as
provided in this Agreement, or as otherwise agreed to by the Seller and the
Purchaser;
(n) Each Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy or insurance acceptable to
Fannie Mae or Freddie Mac, issued by a title insurer acceptable to Fannie Mae
or Freddie Mac and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions contained in
(j)(1), (2) and (3) above) the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan. Such lender's title insurance policy affirmatively insures
ingress and egress and against encroachment by or upon the Mortgaged Property
or any interest therein. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. The Seller, its successors and assigns, are the sole
insureds under such lender's title insurance policy, such title insurance
policy has been duly and validly endorsed to the Purchaser or the assignment to
the Purchaser of the Seller's interest therein does not require the consent of
or notification to the insurer and such lender's title insurance policy is in
full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of
the related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such lender's title insurance
policy;
(o) There is no default, breach or event of acceleration existing
under the Mortgage or the related Mortgage Note and, to the best of Seller's
knowledge, there is no material event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach or event of acceleration; and neither the Seller nor any prior
mortgagee has waived any material default, breach or event of acceleration;
(p) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which
are or may be liens prior to, or equal with, the lien of the related Mortgage;
(q) All improvements subject to the Mortgage which were considered in
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property except those which
are insured against by the title insurance policy referred to in clause (n)
above and all improvements thereon comply with all requirements of any
applicable zoning and subdivision laws and ordinances;
(r) The Mortgage Loan complies with all the terms, conditions and
requirements of the Underwriting Guidelines in effect at the time of
origination of such Mortgage Loan. Each Mortgage Loan bears interest at a fixed
rate as set forth in the Mortgage Loan Schedule, and Monthly Payments under the
Mortgage Note are due and payable on the first day of each month. The Mortgage
contains the usual and enforceable provisions for the acceleration of the
payment of the unpaid principal amount of the Mortgage Loan if the related
Mortgaged Property is sold or transferred without the prior consent of the
mortgagee thereunder.
(s) The Mortgaged Property is not subject to any material damage by
waste, fire, earthquake, windstorm, flood or other casualty. At origination of
the Mortgage Loan there was, and there currently is, no proceeding pending for
the total or partial condemnation of the Mortgaged Property. To the best of
Seller's knowledge, there have not been any condemnation proceedings with
respect to the Mortgaged Property and there are no such proceedings scheduled
to commence at a future date;
(t) The related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for
the realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There
is no homestead or other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(u) If the Mortgage constitutes a deed of trust, either a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses, except as may be required by local law, are or will become payable by
the Purchaser to the trustee under the deed of trust, except in connection with
a trustee's sale or attempted sale after default by the mortgagor;
(v) The Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the final approval of the mortgage loan application by
a Qualified Appraiser, approved by the Seller, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and the appraisal and appraiser both satisfy the
requirements of Fannie Mae or Freddie Mac and 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 Mortgage Loan was
originated. The appraisal is in a form acceptable to Fannie Mae or Freddie Mac
and was made by a Qualified Appraiser;
(w) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (A) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (B) (1) organized under the laws of such
state, or (2) qualified to do business in such state, or (3) federal savings
and loan associations or national banks or a Federal Home Loan Bank or savings
bank having principal offices in such state, or (4) not doing business in such
state;
(x) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation;
(y) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of such mortgage loans;
(z) The Mortgage Loan does not contain "graduated payment" "contingent
interest" or "shared appreciation" features and is not paid by any source other
than the Mortgagor nor does it contains any other similar provisions which may
constitute a "buydown" provision;
(aa) The Mortgagor is not in bankruptcy and the Mortgagor is not
insolvent or in bankruptcy and the Seller has no knowledge of any circumstances
or condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that could reasonably be expected
to cause investors to regard the Mortgage Loan as an unacceptable investment,
cause the Mortgage Loan to become delinquent, or materially adversely affect
the value or marketability of the Mortgage Loan;
(bb) In the event the Mortgage Loan has an LTV greater than 80%, the
excess of the principal balance of the Mortgage Loan over 75% of the Appraised
Value, with respect to a Refinanced Mortgage Loan, or the lesser of the
Appraised Value or the purchase price of the Mortgaged Property, with respect
to a purchase money Mortgage Loan, is and will be insured as to payment
defaults by a Primary Mortgage Insurance Policy acceptable to Fannie Mae and
Freddie Mac issued by a Qualified Insurer or by the CMAC PMI Policies. All
provisions of such Primary Mortgage Insurance Policy and the CMAC PMI Policies
have been and are being complied with, such policy is in full force and effect,
such policy is fully transferable and assignable to Purchaser and all premiums
due thereunder have been paid. No action, inaction, or event has occurred and
no state of facts exists that has, or will result in the exclusion from, denial
of, or defense to coverage. Any Mortgage Loan subject to a Primary Mortgage
Insurance Policy obligates the Mortgagor thereunder to maintain the Primary
Mortgage Insurance Policy and to pay all premiums and charges in connection
therewith. Any Mortgage subject to a Primary Mortgage Insurance Policy
obligates the Mortgagor thereunder to maintain the Primary Mortgage Insurance
Policy and to pay all premiums and charges in connection therewith subject to
all laws and regulations regarding the Primary Mortgage Insurance Policy;
(cc) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(dd) As to Mortgage Loans that are not secured by an interest in a
leasehold estate, the Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of a single parcel of real property
with a detached single-family residence erected thereon, or a townhouse, or a
two- to four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit development or a
de minimis planned unit development, provided, however, that no residence or
dwelling is a single parcel of real property with a mobile home or manufactured
dwelling. As of the date of origination, no portion of the Mortgaged Property
is used for commercial purposes, and since the date or origination no portion
of the Mortgaged Property is used for commercial purposes;
(ee) As of the date of origination of the Mortgage Loan, the Mortgage
Property was lawfully occupied under applicable law, and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(ff) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development), such
condominium or planned unit development project meets Seller's eligibility
requirements as set forth in the Seller's underwriting guidelines;
(gg) To the best of Seller's knowledge, there is no pending action or
proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; to the best of Seller's
knowledge, there is no violation of any environmental law, rule or regulation
with respect to the Mortgaged Property; and nothing further remains to be done
to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(hh) The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act of 1940;
(ii) No action has been taken or failed to be taken by Seller, on or
prior to the Closing Date which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any Primary Mortgage Insurance
Policy (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, or for any other reason under such coverage;
(jj) With respect to any ground lease to which a Mortgaged Property
may be subject: (i) the Mortgagor is the owner of a valid and subsisting
leasehold interest under such ground lease: (ii) such ground lease is in full
force and effect, unmodified and not supplemented by any writing or otherwise;
(iii) all rent, additional rent and other charges reserved therein have been
fully paid to the extent payable as of the Closing Date; (iv) the Mortgagor
enjoys the quiet and peaceful possession of the leasehold estate, subject to
any sublease; (v) the Mortgagor is not in default under any of the terms of
such ground lease, and there are no circumstances which, with the passage of
time or the giving of notice, or both, would result in a default under such
ground lease; (vi) the lessor under such ground lease is not in default under
any of the terms or provisions of such ground lease on the part of the lessor
to be observed or performed; (vii) the lessor under such ground lease has
satisfied any repair or construction obligations due as of the Closing Date
pursuant to the terms of such ground lease; and (viii) the execution, delivery
and performance of the Mortgage do not require the consent (other than those
consents which have been obtained and are in full force and effect) under, and
will not contravene any provision of or cause a default under, such ground
lease;
(kk) The origination and collection practices used by the Seller with
respect to each Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage origination and servicing
industry. The Mortgage Loan has been serviced by the Seller and any predecessor
servicer in accordance with the terms of the Mortgage Note. With respect to
Escrow deposits and Escrow Payments, all such payments are in possession of the
Seller or the Sub-Servicer of such Mortgage Loan and there exists no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been made in
full compliance with state and federal law. No escrow deposits or Escrow
Payments or other charges or payments due Seller have been added to the
outstanding principal balance on the Mortgage Loan Schedule; and
(ll) No Mortgage Loan is classified as a "high cost" mortgage loan
under Section 32 of the Homeownership and Equity Protection Act of 1994.
Section 3.03 Repurchase; Substitution.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage
Loans, delivery of the Mortgage Loan Documents to the Purchaser, or its
designee, and shall inure to the benefit of the Purchaser. Upon discovery by
either the Seller or the Purchaser of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Purchaser in any Mortgage Loan,
the party discovering such breach shall give prompt written notice to the
other.
The Seller shall have a period of 90 days from the earlier of its
discovery or its receipt of notice of any such breach within which to correct
or cure such breach. The Seller hereby covenants and agrees that if any such
breach is not corrected or cured within such ninety day period, the Seller
shall, at the Purchaser's option and not later than ninety days of its
discovery or its receipt of notice of such breach, repurchase such Mortgage
Loan, at the Repurchase Price or, with the Purchaser's prior consent, which
consent shall not be unreasonably withheld, substitute a Mortgage Loan as
provided below. Any such repurchase shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price, after deducting
therefrom any amounts received in respect of such repurchased Mortgage Loan and
being held in the Custodial Account for future distribution.
If the Seller is required to repurchase any Mortgage Loan pursuant to
this Section 3.03, the Seller may, with the Purchaser's prior consent, which
consent shall not be unreasonable withheld, within six months from the Closing
Date, remove such defective Mortgage Loan, from the terms of this Agreement and
substitute another mortgage loan for such defective Mortgage Loan, in lieu of
repurchasing such defective Mortgage Loan. Any substitute Mortgage Loan shall
(a) have a principal balance at the time of substitution not in excess of the
principal balance of the defective Mortgage Loan (the amount of any difference,
plus one month's interest thereon at the Mortgage Interest Rate borne by the
defective Mortgage Loan, being paid by the Seller and deemed to be a Principal
Prepayment to be deposited by the Seller in the Custodial Account), (b) have a
Mortgage Interest Rate not less than, and not more than one percentage point
greater than, the current Mortgage Interest Rate of the removed Mortgage Loan,
(c) have a remaining term to stated maturity not later than, and not more than
one year less than, the remaining term to stated maturity of the removed
Mortgage Loan, (d) be, in the reasonable determination of the Purchaser, of the
same type, quality and character (including location of the Mortgaged Property)
as the removed Mortgage Loan as if the breach had not occurred, (e) have a
Loan-to-Value Ratio at origination no greater than that of the removed Mortgage
Loan and (f) be, in the reasonable determination of the Purchaser, in material
compliance with the representations and warranties contained in this Agreement
and described in Section 3.02 as of the date of substitution.
The Seller shall amend the Mortgage Loan Schedule to reflect the
withdrawal of the removed Mortgage Loan from this Agreement and the
substitution of such substitute Mortgage Loan therefor. Upon such amendment,
the Purchaser shall review the Mortgage File delivered to it relating to the
substitute Mortgage Loan. In the event of such a substitution, accrued interest
on the substitute Mortgage Loan for the month in which the substitution occurs
and any Principal Prepayments made thereon during such month shall be the
property of the Purchaser and accrued interest for such month on the Mortgage
Loan for which the substitution is made and any Principal Prepayments made
thereon during such month shall be the property of the Seller. The principal
payment on a substitute Mortgage Loan due on the Due Date in the month of
substitution shall be the property of the Seller and the principal payment on
the Mortgage Loan for which the substitution is made due on such date shall be
the property of the Purchaser.
It is understood and agreed that the obligation of the Seller set
forth in this Section 3.03 to cure, repurchase or substitute for a defective
Mortgage Loan, and to indemnify Purchaser pursuant to section 8.01, constitutes
the sole remedies of the Purchaser respecting a breach of the foregoing
representations and warranties. If the Seller fails to repurchase or substitute
for a defective Mortgage Loan in accordance with this Section 3.03, or fails to
cure a defective Mortgage Loan to Purchaser's reasonable satisfaction in
accordance with this Section 3.03, or to indemnify Purchaser pursuant to
Section 8.01, that failure shall, upon compliance by the Purchaser with the
next to the last paragraph of this Section 3.03, be an Event of Default and the
Purchaser shall be entitled to pursue all remedies available in this Agreement
as a result thereof. No provision of this paragraph shall affect the rights of
the Purchaser to terminate this Agreement for cause, as set forth in Sections
10.01 and 11.01.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) the earlier of discovery of such
breach by the Seller or notice thereof by the Purchaser to the Seller, (ii)
failure by the Seller to cure such breach or repurchase such Mortgage Loan as
specified above, and (iii) demand upon the Seller by the Purchaser for
compliance with this Agreement.
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding any contrary provision of this Agreement, with respect to any
Mortgage Loan that is not in default or as to which no default is imminent,
Purchaser may elect not to require repurchase or permit substitution pursuant
to Section 3.03 after the applicable REMIC's "start up day" (as defined in
Section 860G(a) (9) of the Code), unless the Seller has obtained an Opinion of
Counsel to the effect that such repurchase or substitution will not (i) result
in the imposition of taxes on "prohibited transactions" of such REMIC (as
defined in Section 860F of the Code) or otherwise subject the REMIC to tax, or
(ii) cause the REMIC to fail to qualify as a REMIC at any time. In the event
the Seller substitutes a Mortgage Loan, all the representations and warranties
stated in Section 3.02 shall be made as of the date of substitution for the
substituted mortgage loan.
Section 3.04 Repurchase of Certain Mortgage Loans.
In the event that the first Due Date for a Mortgage Loan is subsequent
to the Cut-off Date and the initial Monthly Payment is not made within thirty
(30) days of such Due Date, then the Seller shall repurchase the affected
Mortgage Loan at the Repurchase Price, which shall be paid as provided for in
Section 3.03.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01 Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices, and shall have full power and authority, acting
alone or through Sub-Servicers, to do or cause to be done any and all things in
connection with such servicing and administration which the Seller may deem
necessary or desirable and consistent with the terms of this Agreement and with
Accepted Servicing Practices and exercise the same care that it customarily
employs for its own account. Except as set forth in this Agreement, the Seller
shall service the Mortgage Loans in strict compliance with the servicing
provisions of the Fannie Mae Guides (special servicing option), which include,
but are not limited to, provisions regarding the liquidation of Mortgage Loans,
the collection of Mortgage Loan payments, the payment of taxes, insurance and
other charges, the maintenance of hazard insurance with a Qualified Insurer,
the maintenance of mortgage impairment insurance, the maintenance of fidelity
bond and errors and omissions insurance, inspections, the restoration of
Mortgaged Property, the maintenance of Primary Mortgage Insurance Policies,
insurance claims, the title, management of REO Property, permitted withdrawals
with respect to REO Property, liquidation reports, and reports of foreclosures
and abandonments of Mortgaged Property, the transfer of Mortgaged Property, the
release of Mortgage Files, annual statements, and examination of records and
facilities. In the event of any conflict, inconsistency or discrepancy between
any of the servicing provisions of this Agreement and any of the servicing
provisions of the Fannie Mae Guides, the provisions of this Agreement shall
control and be binding upon the Purchaser and the Seller.
Consistent with the terms of this Agreement, the Seller may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
any such term or in any manner grant indulgence to any Mortgagor if in the
Seller's reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Purchaser,
provided, however, that unless the Seller has obtained the prior written
consent of the Purchaser, the Seller shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which has been agreed to in writing by the Purchaser and which
permits the deferral of interest or principal payments on any Mortgage Loan,
the Seller shall, on the Business Day immediately preceding the Remittance Date
in any month in which any such principal or interest payment has been deferred,
deposit in the Custodial Account from its own funds, in accordance with Section
4.04, the difference between (a) such month's principal and one month's
interest at the Mortgage Loan Remittance Rate on the unpaid principal balance
of such Mortgage Loan and (b) the amount paid by the Mortgagor. The Seller
shall be entitled to reimbursement for such advances to the same extent as for
all other advances pursuant to Section 4.05. Without limiting the generality of
the foregoing, the Seller shall continue, and is hereby authorized and
empowered, to prepare, execute and deliver, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. Notwithstanding anything herein to the contrary, the
Seller may not enter into a forbearance agreement or similar arrangement with
respect to any Mortgage Loan which runs more than 180 days after the first
delinquent Due Date. Any such agreement shall be approved by any applicable
holder of a Primary Mortgage Insurance Policy, if required.
Section 4.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the date each Mortgage Loan
ceases to be serviced subject to this Agreement, the Seller will proceed
diligently to collect all payments due under each Mortgage Loan when the same
shall become due and payable and shall, to the extent such procedures shall be
consistent with this Agreement, Accepted Servicing Practices, and the terms and
provisions of related Primary Mortgage Insurance Policy, follow such collection
procedures as it follows with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Further, the Seller will take
special care in ascertaining and estimating annual escrow payments, and all
other charges that, as provided in the Mortgage, will become due and payable,
so that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 4.03 Realization Upon Defaulted Mortgage Loans.
The Seller shall use its best efforts, consistent with the procedures
that the Seller would use in servicing loans for its own account, consistent
with Accepted Servicing Practices, any Primary Mortgage Insurance Policies and
the best interest of Purchaser, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section 4.01.
Foreclosure or comparable proceedings shall be initiated within ninety (90)
days of default for Mortgaged Properties for which no satisfactory arrangements
can be made for collection of delinquent payments. The Seller shall use its
best efforts to realize upon defaulted Mortgage Loans in such manner as will
maximize the receipt of principal and interest by the Purchaser, taking into
account, among other things, the timing of foreclosure proceedings. The
foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage, the Seller shall not be required to expend
its own funds toward the restoration of such property unless it shall determine
in its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to the Purchaser after reimbursement
to itself for such expenses, and (ii) that such expenses will be recoverable by
the Seller through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Section 4.05. Seller shall obtain prior
approval of Purchaser as to restoration expenses in excess of two thousand five
hundred dollars ($2500). The Seller shall notify the Purchaser in writing of
the commencement of foreclosure proceedings and prior to the acceptance or
rejection of any offer of reinstatement. The Seller shall be responsible for
all costs and expenses incurred by it in any such proceedings or functions;
provided, however, that it shall be entitled to reimbursement thereof from the
related property, as contemplated in Section 4.05. Notwithstanding anything to
the contrary contained herein, with respect to any Mortgage Loan as to which
the Seller has received actual notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the related Mortgaged Property,
the Seller shall not either (i) obtain title to such Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, or take any other action, with respect to, such Mortgaged
Property if, as a result of any such action, the Purchaser would be considered
to hold title to, to be a mortgagee-in-possession of, or to be an owner or
operator of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Seller has also previously
determined, based on its reasonable judgment and a prudent report prepared by a
Person who regularly conducts environmental audits using customary industry
standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest
of the Purchaser to take such actions as are necessary to bring the Mortgaged
Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Purchaser to take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 4.03 shall be advanced by the Seller, subject to the Seller's right to
be reimbursed therefor from the Custodial Account as provided in Section
4.05(vii).
If the Purchaser determines, as described above, that it is in the
best economic interest of the Seller to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Purchaser shall take such action.
In the event that a Mortgage Loan becomes part of a REMIC, and becomes
REO Property, such property shall be disposed of by Seller, with the consent of
Purchaser as required pursuant to this Agreement, within three years after
becoming an REO Property, unless Seller provides to the trustee under such
REMIC an opinion of counsel to the effect that the holding of such REO Property
subsequent to three years after its becoming REO Property, will not result in
the imposition of taxes on "prohibited transactions" as defined in Section 860F
of the Code, or cause the transaction to fail to qualify as a REMIC at any time
that certificates are outstanding. Seller shall manage, conserve, protect and
operate each such REO Property solely for the purpose of its prompt disposition
and sale in a manner which does not cause such property to fail to qualify as
"foreclosure property" within the meaning of Section 860F(a)(2)(E) of the Code,
or any "net income from foreclosure property" which is subject to taxation
under the REMIC provisions of the Code. Pursuant to its efforts to sell such
property, the Seller shall either itself or through an agent selected by
Seller, protect and conserve such property in the same manner and to such an
extent as is customary in the locality where such property is located.
Additionally, Seller shall perform the tax withholding and reporting related to
Sections 1445 and 6050J of the Code.
Section 4.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts.
The Custodial Account shall be an Eligible Account. Funds deposited in the
Custodial Account may be drawn on in accordance with Section 4.05. The creation
of any Custodial Account shall be evidenced by a letter agreement in the form
shown in Exhibit B hereto. The original of such letter agreement shall be
furnished to the Purchaser on the Closing Date, and upon the request of any
subsequent Purchaser.
The Seller shall deposit in the Custodial Account on a daily basis,
and retain therein the following payments and collections received or made by
it subsequent to the Cut-off Date, or received by it prior to the Cut-off Date
but allocable to a period subsequent thereto, other than in respect of
principal and interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) any amounts required to be deposited by the Seller in connection
with any REO Property pursuant to Section 4.13;
(v) all Insurance Proceeds including amounts required to be deposited
pursuant to Sections 4.08, 4.10 and 4.11, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Accepted Servicing
Practices;
(vi) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with Accepted Servicing
Practices;
(vii) any Monthly Advances;
(viii) all proceeds of any Mortgage Loan repurchased in accordance
with Section 3.03 and Section 3.04;
(ix) any amounts required to be deposited by the Seller pursuant to
Section 4.10 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit shall be made from the Seller's own funds,
without reimbursement therefor;
(x) any amounts required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.13 or 6.02;
(xi) with respect to each Principal Prepayment in full, an amount (to
be paid by the Seller out of its own funds without reimbursement therefor)
which, when added to all amounts allocable to interest received in connection
with such Principal Prepayment, equals one month's interest on the amount of
principal so prepaid at the Mortgage Loan Remittance Rate, provided, however,
that in no event shall the aggregate of deposits made by the Seller pursuant to
this clause (xi) in any calendar month exceed the aggregate amount of the
Seller's servicing compensation in the calendar month in which such deposits
are required.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Seller in the Custodial Account. Any interest paid on funds deposited in
the Custodial Account by the depository institution shall accrue to the benefit
of the Seller and the Seller shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05(iv).
Section 4.05 Permitted Withdrawals From the Custodial Account.
The Seller may, from time to time, withdraw from the Custodial Account
for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the Seller's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net of
the related Servicing Fee) of principal and/or interest respecting which any
such Monthly Advance was made, it being understood that, in the case of such
reimbursement, the Seller's right thereto shall be prior to the rights of the
Purchaser, except that, where the Seller is required to repurchase a Mortgage
Loan, pursuant to Section 3.03 or Section 3.04, the Seller's right to such
reimbursement shall be subsequent to the payment to the Purchaser of the
Repurchase Price pursuant to such Section and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances and any
unpaid Servicing Fees, the Seller's right to reimburse itself pursuant to this
subclause (iii) with respect to any Mortgage Loan being limited to related
proceeds from Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds in accordance with the relevant provisions of the Fannie Mae Guides or
as otherwise set forth in this Agreement, it being understood that for those
Mortgage Loans in foreclosure, the Purchaser shall reimburse the Seller for
Servicing Advances and Servicing Fees through the completion of foreclosure and
disposition of the REO Property; such reimbursement shall be made following a
Final Recovery Determination (to the extent that Seller was not reimbursed from
the proceeds on such REO Property);
(iv) to pay to itself as part of its servicing compensation: (a) any
interest earned on funds in the Custodial Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and (b) the pro rata
Servicing Fee from that portion of any payment or recovery as to interest with
respect to a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Section 3.03 or Section 3.04 all amounts received
thereon and not distributed as of the date on which the related repurchase
price is determined;
(vi) with respect to any Mortgage Loan which was subject to a Final
Recovery Determination, to reimburse itself for any Servicing Advance
previously made or Monthly Advance previously made which the Seller has
determined to be a Nonrecoverable Advance if the Servicing Advance or Monthly
Advance was not reimbursed pursuant to clauses (ii) or (iii);
(vii) to reimburse itself for the cost of any environmental audit
report required by Section 4.03;
(viii) to transfer funds to another Eligible Account in accordance
with Section 4.09 hereof;
(ix) to remove funds inadvertently placed in the Custodial Account by
the Seller; and
(x) to clear and terminate the Custodial Account upon the termination
of this Agreement.
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts. The Escrow Account shall be an Eligible
Account. Funds deposited in the Escrow Account may be drawn on by the Seller in
accordance with Section 4.07. The creation of any Escrow Account shall be
evidenced by a letter agreement in the form shown in Exhibit C. The original of
such letter agreement shall be furnished to the Purchaser on the Closing Date,
and upon request to any subsequent purchaser.
The Seller shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required under
the terms of this Agreement;
(ii) all Insurance Proceeds which are to be applied to the restoration
or repair of any Mortgaged Property and all Condemnation Proceeds affecting any
Mortgaged Property which are not released to the Mortgagor in accordance with
the Seller's normal servicing procedures, the loan documents or applicable law;
and
(iii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.
The Seller shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth or in accordance with Section 4.07. The
Seller shall be entitled to retain any interest paid on funds deposited in the
Escrow Account by the depository institution other than interest on escrowed
funds required by law to be paid to the Mortgagor and, to the extent required
by law, the Seller shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by Seller only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, Primary Mortgage Insurance Policy premiums, if applicable, fire
and hazard insurance premiums, condominium assessments and comparable items;
(ii) to reimburse Seller for any Servicing Advance made by Seller with
respect to a related Mortgage Loan but only from amounts received on the
related Mortgage Loan which represent late payments or collections of Escrow
Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be determined to be
overages;
(iv) for transfer to the Custodial Account in accordance with the
terms of this Agreement;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Seller, or to the Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement. As part of its servicing duties, the Seller shall pay to the
Mortgagors interest on funds in Escrow Account, to the extent required by law,
and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor; and
(viii) to pay to the Mortgagors or other parties Insurance Proceeds
deposited in accordance with Section 4.06.
Section 4.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Mortgage Insurance Policies and CMAC PMI Policies;
Collections Thereunder.
With respect to each Mortgage Loan, the Seller shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property
and the status of primary mortgage insurance premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including renewal premiums and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Seller in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage or applicable law. To the
extent that the Mortgage does not provide for Escrow Payments, the Seller shall
determine that any such payments are made by the Mortgagor at the time they
first become due. The Seller assumes full responsibility for the timely payment
of all such bills and shall effect timely payments of all such bills
irrespective of the Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments.
The Seller shall pay directly to CMAC the premium with respect to the
CMAC PMI Policies from interest payments on the Mortgage Loans, in accordance
with the CMAC PMI Policies. Such obligation will be assigned to any successor
servicer.
The Seller will maintain in full force and effect Primary Mortgage
Insurance Policies issued by a Qualified Insurer with respect to each Mortgage
Loan for which such coverage is herein required. Such coverage will be
maintained until the loan-to-value ratio of the related Mortgage Loan is
reduced to 80% or less in the case of a Mortgage Loan having a Loan-to-Value
Ratio at origination in excess of 80%. The Seller will not cancel or refuse to
renew any Primary Mortgage Insurance Policy in effect on the Closing Date that
is required to be kept in force under this Agreement unless a replacement
Primary Mortgage Insurance Policy for such canceled or nonrenewed policy is
obtained from and maintained with a Qualified Insurer. The Seller shall not
take any action which would result in non-coverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Seller
would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
6.01, the Seller shall promptly notify the insurer under the related Primary
Mortgage Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all
actions which may be required by such insurer as a condition to the
continuation of coverage under the Primary Mortgage Insurance Policy. If such
Primary Mortgage Insurance Policy is terminated as a result of such assumption
or substitution of liability, the Seller shall obtain a replacement Primary
Mortgage Insurance Policy as provided above.
In connection with its activities as servicer, the Seller agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Private Mortgage Insurance Policy and the CMAC PMI Policies
in a timely fashion in accordance with the terms of such Primary Mortgage
Insurance Policy or CMAC PMI Policy and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Mortgage Insurance
Policy or CMAC PMI Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 4.04, any amounts collected by the Seller under any Primary Mortgage
Insurance Policy or CMAC PMI Policy shall be deposited in the Custodial
account, subject to withdrawal pursuant to Section 4.05.
Section 4.09 Transfer of Accounts.
The Seller may transfer the Custodial Account or the Escrow Account to
a different Eligible Account from time to time. Such transfer shall be made
only upon obtaining the prior written consent of the Purchaser, which consent
will not be unreasonably withheld.
Section 4.10 Maintenance of Hazard Insurance.
The Seller shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is acceptable to Fannie Mae and
Freddie Mac and customary in the area where the Mortgaged Property is located
in an amount which is equal to the lesser of (i) the maximum insurable value of
the improvements securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan, and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. If required by the Flood Disaster
Protection Act of 1973, as amended, each Mortgage Loan shall be covered by a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration in effect with an insurance carrier
acceptable to Fannie Mae and/or Freddie Mac, in an amount representing coverage
not less than the least of (i) the outstanding principal balance of the
Mortgage Loan, (ii) the maximum insurable value of the improvements securing
such Mortgage Loan or (iii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. If at any time
during the term of the Mortgage Loan, the Seller determines in accordance with
applicable law and pursuant to the Fannie Mae Guides that a Mortgaged Property
is located in a special flood hazard area and is not covered by flood insurance
or is covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Seller shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Seller shall immediately
force place the required flood insurance on the Mortgagor's behalf. The Seller
shall also maintain on each REO Property, fire and hazard insurance with
extended coverage in an amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, and, to the extent
required and available under the Flood Disaster Protection Act of 1973, as
amended, flood insurance in an amount as provided above. Any amounts collected
by the Seller under any such policies other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or REO Property, or released to the Mortgagor in accordance with
Accepted Servicing Practices, shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 4.05. It is understood and agreed
that no other additional insurance need be required by the Seller of the
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,
other than pursuant to this Agreement, the Fannie Mae Guides or such applicable
state or federal laws and regulations as shall at any time be in force and as
shall require such additional insurance. All such policies shall be endorsed
with standard mortgagee clauses with loss payable to the Seller and its
successors and/or assigns and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount or material change
in coverage to the Seller. The Seller shall not interfere with the Mortgagor's
freedom of choice in selecting either his insurance carrier or agent, provided,
however, that the Seller shall not accept any such insurance policies from
insurance companies unless such companies are Qualified Insurers. [If the
related Mortgage is secured by a condominium, the Seller will verify that the
insurance coverage meets the requirements of the related condominium
association.]
Section 4.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Seller shall obtain and maintain a blanket
policy issued by an issuer acceptable to Fannie Mae and/or Freddie Mac insuring
against hazard losses on all of the Mortgage Loans, then, to the extent such
policy provides coverage in an amount equal to the amount required pursuant to
Section 4.10 and otherwise complies with all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.10, it being understood and agreed that such policy may
contain a deductible clause, in which case the Seller shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with Section 4.10, and there shall have been a loss
which would have been covered by such policy, deposit in the Custodial Account
the amount not otherwise payable under the blanket policy because of such
deductible clause. In connection with its activities as servicer of the
Mortgage Loans, the Seller agrees to prepare and present, on behalf of the
Purchaser, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy. Upon request of the Purchaser, the
Seller shall cause to be delivered to the Purchaser a certified true copy of
such policy and shall use its best efforts to obtain a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty days' prior written notice to the Purchaser.
Section 4.12 Fidelity Bond, Errors and Omissions Insurance.
The Seller shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other persons acting in any
capacity with regard to the Mortgage Loan to handle funds, money, documents and
papers relating to the Mortgage Loan. The Fidelity Bond shall be in the form of
the Mortgage Banker's Blanket Bond and shall protect and insure the Seller
against losses, including forgery, theft, embezzlement and fraud of such
persons. The errors and omissions insurance shall protect and insure the Seller
against losses arising out of errors and omissions and negligent acts of such
persons. Such errors and omissions insurance shall also protect and insure the
Seller against losses in connection with the failure to maintain any insurance
policies required pursuant to this Agreement and the release or satisfaction of
a Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 4.12 requiring the fidelity bond
or errors and omissions insurance shall diminish or relieve the Seller from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by Fannie Mae in the Fannie Mae Guide or by
Freddie Mac in the Freddie Mac Guide. The Seller shall deliver to the Purchaser
a certificate from the surety and the insurer as to the existence of the
Fidelity Bond and errors and omissions insurance policy and shall obtain a
statement from the surety and the insurer that such Fidelity Bond or insurance
policy shall in no event be terminated or materially modified without thirty
days' prior written notice to the Purchaser. The Seller shall notify the
Purchaser within five business days of receipt of notice that such Fidelity
Bond or insurance policy will be, or has been, materially modified or
terminated. The Purchaser (or any party having the status of Purchaser
hereunder) and any subsidiary thereof and their successors or assigns as their
interests may appear must be named as loss payees on the Fidelity Bond and as
additional insured on the errors and omissions policy. Upon request by
Purchaser, Seller shall provide Purchaser with an insurance certificate
certifying coverage under this Section 4.12, and will provide an update to such
certificate upon request, or upon renewal or material modification of coverage.
Section 4.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event
the Purchaser or its designee is not authorized or permitted to hold title to
real property in the state where the REO Property is located, or would be
adversely affected under the "doing business" or tax laws of such state by so
holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be consistent with an opinion of counsel
obtained by the Seller from an attorney duly licensed to practice law in the
state where the REO Property is located. Any Person or Persons holding such
title other than the Purchaser shall acknowledge in writing that such title is
being held as nominee for the benefit of the Purchaser.
The Seller shall notify the Purchaser in accordance with the Fannie
Mae Guides of each acquisition of REO Property upon such acquisition, together
with a copy of the drive by appraisal or brokers price opinion of the Mortgaged
Property obtained in connection with such acquisition, and thereafter assume
the responsibility for marketing such REO property in accordance with Accepted
Servicing Practices. Thereafter, the Seller shall continue to provide certain
administrative services to the Purchaser relating to such REO Property as set
forth in this Section 4.13.
The Seller shall, either itself or through an agent selected by the
Seller, and in accordance with the Fannie Mae Guides manage, conserve, protect
and operate each REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. The Seller shall cause each REO Property to be inspected in accordance
with Accepted Servicing Practices. The Seller shall make or cause the Seller to
be made a written report of each such inspection. Such reports shall be
retained in the Mortgage File and copies thereof shall be forwarded by the
Seller to the Purchaser.
The Seller shall use commercially reasonable efforts to dispose of
(and may temporarily rent) the REO Property as soon as possible and shall sell
such REO Property in any event within one year after title has been taken to
such REO Property, unless the Seller determines, and gives an appropriate
notice to the Purchaser to such effect, that a longer period is necessary for
the orderly liquidation of such REO Property. If a longer period than one (1)
year is permitted under the foregoing sentence and is necessary to sell any REO
Property, the Seller shall report monthly to the Purchaser as to the progress
being made in selling such REO Property. No REO Property shall be marketed for
less than the appraised value, without the prior consent of Purchaser. No REO
Property shall be sold for less than ninety five percent (95%) of its appraised
value, without the prior consent of Purchaser. If as of the date title to any
REO Property was acquired by the Seller there were outstanding unreimbursed
Servicing Advances with respect to the REO Property, the Seller shall be
entitled to immediate reimbursement from the Purchaser for any related
unreimbursed Servicing Advances. All requests for reimbursement of Servicing
Advances shall be in accordance with the Fannie Mae Guides. The disposition of
REO Property shall be carried out by the Seller at such price, and upon such
terms and conditions, as the Seller deems to be in the best interests of the
Purchaser. The proceeds from the REO Disposition, net of any payment to the
Seller as provided above, shall be deposited in the Custodial Account. Seller
shall provide monthly reports to Purchaser in reference to the status of the
marketing of the REO Properties.
Notwithstanding anything to the contrary contained herein, the
Purchaser may, at the Purchaser's sole option, terminate the Seller as servicer
of any such REO Property without payment of any termination fee with respect
thereto, provided that the Seller shall on the date said termination takes
effect be reimbursed by withdrawal from the Custodial Account for any
unreimbursed advances of the Seller's funds made pursuant to Section 5.03 and
any unreimbursed Servicing Advances in each case relating to the Mortgage Loan
underlying such REO Property notwithstanding anything to the contrary set forth
in Section 4.05. In the event of any such termination, the provisions of
Section 11.01 hereof shall apply to said termination and the transfer of
servicing responsibilities with respect to such REO Property to the Purchaser
or its designee.
Section 4.14 Notification of Maturity Date.
With respect to each Mortgage Loan, the Seller shall execute and
deliver to the Mortgagor any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage
regarding the maturity date if required under applicable law.
Section 4.15 Sub-Servicers.
(a) The Seller may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans. The
Seller and the Sub-Servicers may make amendments to the Sub-Servicing
Agreements or enter into different forms of Sub-Servicing Agreements; provided,
however, that any such amendments or different forms shall be consistent with
and not violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Purchaser, without the consent
of the Purchaser.
(b) Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Seller and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Seller shall remain obligated and liable to the Purchaser for
the servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 5.01 without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer for any acts and omissions and to the
same extent and under the same terms and conditions as if the Seller alone were
servicing and administering the Mortgage Loans and any other transactions or
services relating to the Mortgage Loans involving the Sub-Servicer shall be
deemed to be between the Sub-Servicer and the Seller alone and the Purchaser
shall have no obligations, duties or liabilities with respect to the
Sub-Servicer including no obligation, duty or liability of the Purchaser to pay
Sub-Servicer's fees and expenses or the cost of enforcing the Sub-Servicing
Agreements.
(c) Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such and not as an originator shall be deemed
to be between the Sub-Servicer and the Seller alone, and the Purchaser shall
not be deemed a party thereto and shall have no claims, rights, obligations,
duties or liabilities with respect to the Sub-Servicer.
Section 4.16 Compliance With REMIC Provisions.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Servicer shall
not take any action, cause the REMIC to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of the
REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC
(including but not limited to the tax on "prohibited transactions" as defined
in Section 860F(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(d) of the Code) unless the Servicer has received an
Opinion of Counsel (at the expense of the party seeking to take such action) to
the effect that the contemplated action will not endanger such REMIC status or
result in the imposition of any such tax.
ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01 Distributions.
On each Remittance Date, the Seller shall distribute by wire transfer
to the Purchaser (i) all amounts credited to the Custodial Account as of the
close of business on the preceding Determination Date, net of charges against
or withdrawals from the Custodial Account pursuant to Section 4.05, plus (ii)
all Monthly Advances, if any, which the Seller is obligated to distribute
pursuant to Section 5.03, plus (iii) interest at the Mortgage Loan Remittance
Rate on any Principal Prepayment from the date of such Principal Prepayment
through the end of the month for which disbursement is made, provided that the
Seller's obligation as to payment of such interest shall be limited to the
Servicing Fee earned during the month of the distribution, minus (iv) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the preceding Determination Date, which amounts shall be
remitted on the Remittance Date next succeeding the Due Period for such
amounts, and any Principal Prepayments received during the month of such
Remittance Date, which amounts shall be remitted on the next succeeding
Remittance Date.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Seller shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Seller on the date such late payment is made and shall cover the
period commencing with the day following the Business Day on which such payment
was due and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Seller of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Seller.
Section 5.02 Statements to the Purchaser.
No later than the Remittance Date, the Seller shall furnish to
Purchaser an individual loan accounting report, as of the last Business Day of
each month, in the Seller's assigned loan number order to document Mortgage
Loan payment activity on an individual Mortgage Loan basis. With respect to
each month, the corresponding individual loan accounting report shall be
received by the Purchaser on a disk or tape or other computer-readable format
in such format as may be mutually agreed upon by both Purchaser and Seller, and
no later than the seventh Business Day of the following month in hard copy,
which report, in hard copy, shall be substantially in the form of Exhibit E,
and shall contain the following information, in each case as of the related
Determination Date:
(i) With respect to each Monthly Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, and any prepayment
penalties or premiums, along with a detailed report of interest on principal
prepayment amounts remitted in accordance with Section 4.04);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the Seller
during the prior distribution period;
(iv) the aggregate Stated Principal Balance of the Mortgage Loans;
(v) the aggregate of any expenses reimbursed to the Seller as servicer
during the prior distribution period pursuant to Section 4.05; and
(vi) The number and aggregate outstanding principal balances of
Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 days
or more; (b) as to which foreclosure has commenced; and (c) as to which REO
Property has been acquired.
The Seller shall also provide a trial balance, sorted in Seller's
assigned loan number order, in the form of Exhibit E hereto, with each such
Report.
The Seller shall prepare and file any and all information statements
or other filings required to be delivered to any governmental taxing authority
or to Purchaser pursuant to any applicable law with respect to the Mortgage
Loans and the transactions contemplated hereby. In addition, the Seller shall
provide Purchaser with such information concerning the Mortgage Loans as is
necessary for Purchaser to prepare its federal income tax return as Purchaser
may reasonably request from time to time.
In addition, not more than 60 days after the end of each calendar
year, the Seller shall furnish to each Person who was a Purchaser at any time
during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Section 5.03 Monthly Advances by the Seller.
Not later than each Remittance Date, the Seller shall deposit in the
Custodial Account an amount equal to all payments not previously advanced by
the Seller, whether or not deferred pursuant to Section 4.01, of principal (due
after the Cut-off Date) and interest not allocable to the period prior to the
Cut-off Date, at the Mortgage Loan Remittance Rate, which were due on a
Mortgage Loan and delinquent at the close of business on the related
Determination Date.
The Seller's obligation to make such Monthly Advances as to any
Mortgage Loan will continue until a Final Recovery Determination is made by
Seller in connection therewith; provided that, notwithstanding anything herein
to the contrary, no Monthly Advance or Servicing Advance shall be required to
be made hereunder by the Seller if such Monthly Advance or Servicing Advance
would, if made, constitute a Nonrecoverable Advance. The determination by the
Seller that it has made a Nonrecoverable Advance or that any proposed Monthly
Advance or Servicing Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer's Certificate delivered to the
Purchaser.
Section 5.04 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Seller
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property. The Seller shall also provide reports on the status of REO
Property containing such information as Purchaser may reasonably require.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Assumption Agreements.
The Seller will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due on sale" clause to the extent permitted by law; provided, however, that
the Seller shall not exercise any such rights if prohibited by law or the terms
of the Mortgage Note from doing so or if the exercise of such rights would
impair or threaten to impair any recovery under the related Primary Mortgage
Insurance Policy, if any. If the Seller reasonably believes it is unable under
applicable law to enforce such "due on sale" clause, the Seller, with the
approval of the Purchaser (such approval not to be unreasonably withheld), will
enter into an assumption agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. Where an
assumption is allowed pursuant to this Section 6.01, the Seller, with the prior
consent of the Purchaser and the primary mortgage insurer, if any, is
authorized to enter into a substitution of liability agreement with the person
to whom the Mortgaged Property has been conveyed or is proposed to be conveyed
pursuant to which the original mortgagor is released from liability and such
Person is substituted as mortgagor and becomes liable under the related
Mortgage Note. Any such substitution of liability agreement shall be in lieu of
an assumption agreement. Purchaser shall be deemed to have consented to any
assumption for which Purchaser was given notification and requested to consent,
but for which neither a consent nor an objection was given by Purchaser within
two Business Days of such notification.
In connection with any such assumption or substitution of liability,
the Seller shall follow the underwriting practices and procedures of the Fannie
Mae Guides. With respect to an assumption or substitution of liability, the
Mortgage Interest Rate borne by the related Mortgage Note and the amount of the
Monthly Payment may not be changed. If the credit of the proposed transferee
does not meet such underwriting criteria, the Seller diligently shall, to the
extent permitted by the Mortgage or the Mortgage Note and by applicable law,
accelerate the maturity of the Mortgage Loan. The Seller shall notify the
Purchaser that any such substitution of liability or assumption agreement has
been completed by forwarding to the Purchaser the original of any such
substitution of liability or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. All fees collected by the Seller for
entering into an assumption or substitution of liability agreement shall belong
to the Seller.
Notwithstanding the foregoing paragraphs of this Section or any other
provision of this Agreement, the Seller shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Seller may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 6.01, the term "assumption" is deemed to also include
a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Seller of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Seller will immediately notify the Purchaser
by a certification, which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Custodial Account pursuant to Section
4.04 have been or will be so deposited, of a Servicing Officer and shall
request delivery to it of the portion of the Mortgage File held by the
Purchaser. The Purchaser shall no later than five Business Days after receipt
of such certification and request, release or cause to be released to the
Seller, the related Mortgage Loan Documents and, upon its receipt of such
documents, the Seller shall promptly prepare and deliver to the Purchaser the
requisite satisfaction or release. No later than three Business Days following
its receipt of such satisfaction or release, the Purchaser shall deliver, or
cause to be delivered, to the Seller the release or satisfaction properly
executed by the owner of record of the applicable Mortgage or its duly
appointed attorney in fact. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account.
In the event the Seller satisfies or releases a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should it otherwise prejudice any right the Purchaser may have under the
mortgage instruments, the Seller, upon written demand, shall remit within two
Business Days to the Purchaser the then outstanding principal balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Seller
shall maintain the Fidelity Bond and errors and omissions insurance insuring
the Seller against any loss it may sustain with respect to any Mortgage Loan
not satisfied in accordance with the procedures set forth herein. From time to
time and as appropriate for the service or foreclosure of the Mortgage Loan,
including for the purpose of collection under any Primary Mortgage Insurance
Policy, the Purchaser shall, upon request of the Seller and delivery to the
Purchaser of a servicing receipt signed by a Servicing Officer, release the
portion of the Mortgage File held by the Purchaser to the Seller. Such
servicing receipt shall obligate the Seller to return the related Mortgage
documents to the Purchaser when the need therefor by the Seller no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial
Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for
the foreclosure of the Mortgaged Property either judicially or non-judicially,
and the Seller has delivered to the Purchaser a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Mortgage Loan was liquidated, the servicing receipt shall be released
by the Purchaser to the Seller.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Seller shall be
entitled to the amounts provided for as the Seller's Servicing Fee, subject to
payment of compensating interest on Principal Prepayments as capped by the
Servicing Fee pursuant to Section 5.01(iii). Additional servicing compensation
in the form of assumption fees, as provided in Section 6.01, and late payment
charges and other similar ancillary fees or otherwise shall be retained by the
Seller to the extent not required to be deposited in the Custodial Account. The
Seller shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
On or before July 30 of each year beginning July 30, 2000, the Seller
will deliver to the Purchaser an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Seller during the
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Seller has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof. Copies of such
statement shall be provided by the Seller to the Purchaser upon request.
Section 6.05 Annual Independent Certified Public Accountants'
Servicing Report.
On or before July 30 of each year beginning July 30, 2000, the Seller
at its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Purchaser to the effect that such firm has examined certain
documents and records relating to the Seller's servicing of mortgage loans of
the same type as the Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in the uniform single attestation program for mortgage bankers,
such firm is of the opinion that the Seller's servicing has been conducted in
compliance with the agreements examined pursuant to this Section 6.05, except
for (i) such exceptions as such firm shall believe to be immaterial, and (ii)
such other exceptions as shall be set forth in such statement. Copies of such
statement shall be provided by the Seller to the Purchaser. In addition, on an
annual basis, Seller shall provided Purchaser with copies of its audited
financial statements upon execution by Purchaser of an agreement to keep
confidential the contents of such financial statements.
Section 6.06 Purchaser's Right to Examine Seller Records.
The Purchaser shall have the right to examine and audit upon
reasonable notice to the Seller, during business hours or at such other times
as might be reasonable under applicable circumstances, any and all of the
books, records, documentation or other information of the Seller, or held by
another for the Seller or on its behalf or otherwise, which relates to the
performance or observance by the Seller of the terms, covenants or conditions
of this Agreement.
The Seller shall provide to the Purchaser and any supervisory agents
or examiners representing a state or federal governmental agency having
jurisdiction over the Purchaser, including but not limited to OTS, FDIC and
other similar entities, access to any documentation regarding the Mortgage
Loans in the possession of the Seller which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Seller, and in
accordance with the federal government, FDIC, OTS, or any other similar
regulations.
Section 6.07 Seller Shall Provide Information as Reasonably Required.
The Seller shall furnish to the Purchaser during the term of this
Agreement, such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be necessary,
reasonable or appropriate in respect to the Purchaser, or otherwise in respect
to the Mortgage Loans and the performance of the Seller under this Agreement,
including any reports, information or documentation reasonably required to
comply with any regulations regarding any supervisory agents or examiners of
the Purchaser all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser
may reasonably request in relation to this Agreement or the performance of the
Seller under this Agreement. The Seller agrees to execute and deliver all such
instruments and take all such action as the Purchaser, from time to time, may
reasonably request in order to effectuate the purpose and to carry out the
terms of this Agreement.
In connection with marketing the Mortgage Loans, the Purchaser may
make available to a prospective purchaser audited financial statements of the
Seller for the most recently completed two (2) fiscal years for which such
statements are available, as well as a Consolidated Statement of Condition at
the end of the last two (2) fiscal years covered by any Consolidated Statement
of Operations. If it has not already done so, the Seller shall furnish promptly
to the Purchaser or a prospective purchaser copies of the statements specified
above; provided, however, that prior to furnished such statements or
information to any prospective purchaser, the Seller may require such
prospective purchaser to execute a confidentiality agreement in a form
satisfactory to the Seller.
The Seller shall make reasonably available to the Purchase or any
prospective Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions and to permit any prospective purchaser to
inspect the Seller's servicing facilities for the purpose of satisfying such
prospective purchaser that the Seller has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VII
[RESERVED]
Section 7.01 [Reserved].
Section 7.02 [Reserved].
ARTICLE VIII
THE SELLER
Section 8.01 Indemnification; Third Party Claims.
The Seller agrees to indemnify the Purchaser and hold it harmless
against any and all losses, damages, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Seller to
observe and perform its duties, obligations, covenants, and agreements to
service the Mortgage Loans in strict compliance with the terms of this
Agreement or any Reconstitution Agreement. The Seller agrees to indemnify the
Purchaser and hold it harmless against any and all losses, damages, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Purchaser may sustain in any way related to
the breach of a representation or warranty set forth in Sections 3.01 or 3.02
of this Agreement. The Purchaser shall promptly reimburse the Seller for all
amounts advanced by it pursuant to the two preceding sentences except when the
claim relates to the failure of the Seller to service and administer the
Mortgages in strict compliance with the terms of this Agreement, the breach of
representation or warranty set forth in Sections 3.01 or 3.02, or the gross
negligence, bad faith or willful misconduct of Seller. The Seller shall give
prompt notice to the Purchaser of any such third party claims. The provisions
of this Section 8.01 shall survive termination of this Agreement.
In connection with a Pass-Through Transfer or Agency Transfer, the
Seller shall indemnify the Purchaser if any information furnished by the Seller
for use in any prospectus delivered with respect to securities issued in
connection therewith is untrue in any material respect or omits information
necessary to make the statements contained therein not misleading in any
material respect in light of the circumstances under which they were made.
Section 8.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the Seller
whether or not related to loan servicing, shall be the successor of the Seller
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person
shall be an institution (i) having a GAAP net worth of not less than
$25,000,000, (ii) the deposits of which are insured by the FDIC, SAIF and/or
BIF, or which is a HUD-approved mortgagee whose primary business is in
origination and servicing of first lien mortgage loans, and (iii) who is a
Fannie Mae or Freddie Mac approved seller/service in good standing.
Section 8.03 Limitation on Liability of the Seller and Others.
Neither the Seller nor any of the officers, employees or agents of the
Seller shall be under any liability to the Purchaser 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 made in good faith; provided, however,
that this provision shall not protect the Seller or any such person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of
negligence, bad faith or willful misconduct, or any breach of the terms and
conditions of this Agreement. The Seller and any officer, employee or agent of
the Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by the Purchaser respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its duties to service the
Mortgage Loans in accordance with this Agreement and which in its reasonable
opinion may involve it in any expenses or liability; provided, however, that
the Seller may, with the consent of the Purchaser, undertake any such action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto. In such event, the reasonable legal
expenses and costs of such action and any liability resulting therefrom shall
be expenses, costs and liabilities for which the Purchaser will be liable, and
the Seller shall be entitled to be reimbursed therefor from the Purchaser upon
written demand.
Section 8.04 Seller Not to Assign or Resign.
The Seller shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Seller and the Purchaser or upon the determination that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Seller; provided, however, that the Seller may sell the
sub-servicing rights under this Agreement to any entity approved by the
Purchaser, such approval not to be unreasonably withheld or delayed. Any such
determination permitting the resignation of the Seller shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 11.01.
Section 8.05 No Transfer of Servicing.
With respect to the retention of the Seller to service the Mortgage
Loans hereunder, the Seller acknowledges that the Purchaser has acted in
reliance upon the Seller's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, except as provided in Section 4.15 or Section
8.04 the Seller shall not either assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion thereof, or
sell or otherwise dispose of all or substantially all of its property or
assets, without the prior written approval of the Purchaser.
Without in any way limiting the generality of this Section 8.05, in
the event that the Seller either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or (ii) the
prior written consent of the Purchaser, then the Purchaser shall have the right
to terminate this Agreement, without any payment of any penalty or damages and
without any liability whatsoever to the Seller (other than with respect to
accrued but unpaid Servicing Advances remaining unpaid) or any third party.
ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
In case one or more of the following Events of Default by the Seller
shall occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of two Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Seller by the Purchaser; or
(ii) failure on the part of the Seller duly to observe or perform in
any material respect any other of the covenants or agreements on the part of
the Seller set forth in this Agreement which continues unremedied for a period
of thirty days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Seller by the
Purchaser; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Seller and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Seller shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Seller or of or relating to all or substantially all of its property; or
(v) the Seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) Except as set forth in this Agreement, the Seller attempts to
assign its right to servicing compensation hereunder or the Seller attempts,
without the consent of the Purchaser, to sell or otherwise dispose of all or
substantially all of its property or assets or to assign this Agreement or the
servicing responsibilities hereunder or to delegate its duties hereunder or any
portion thereof; or
(vii) the Seller or its Sub-Servicer ceases to be (a) licensed to
service first lien residential mortgage loans in each jurisdiction in which a
Mortgaged Property is located and such licensing is required, and (b) qualified
to transact business in any jurisdiction where it is currently so qualified,
but only to the extent such non-qualification or licensing materially and
adversely affects the Seller's ability to perform its obligations hereunder; or
(viii) the net worth of the Seller shall be less than $15,000,000,
which continues unremedied for a period of five Business Days following the
earlier of the discovery thereof by the Seller or notice thereof by the
Purchaser to the Seller; or
(ix) neither the Seller nor its Sub-Servicer meets the qualifications
of either a Fannie Mae or Freddie Mac seller/servicer;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Seller may, in
addition to whatever rights the Purchaser may have under Sections 3.03 and 8.01
and at law or equity or to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Seller under this
Agreement and in and to the Mortgage Loans and the proceeds thereof without
compensating the Seller for the same. On or after the receipt by the Seller of
such written notice, all authority and power of the Seller under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the successor appointed pursuant to Section 11.01. Upon
written request from the Purchaser, the Seller shall prepare, execute and
deliver, any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise, at the Seller's sole expense. The
Seller agrees to cooperate with the Purchaser and such successor in effecting
the termination of the Seller's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Seller to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans or any REO Property.
Section 9.02 Waiver of Defaults.
The Purchaser may waive only by written notice any default by the
Seller in the performance of its obligations hereunder and its consequences.
Upon any such 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 thereon except to
the extent expressly so waived in writing.
ARTICLE X
TERMINATION
Section 10.01 Termination.
The respective obligations and responsibilities of the Seller shall
terminate upon: (i) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (ii) by
mutual consent of the Seller and the Purchaser in writing; or (iii) termination
with or without cause under the terms of this Agreement.
ARTICLE XI
RECONSTITUTION OF MORTGAGE LOANS
Section 11.01 Reconstitution of Mortgage Loans .
(a) The Seller acknowledges and the Purchaser agrees that with respect
to some or all of the Mortgage Loans, the Purchaser may effect either:
(i) one or more sales of the Mortgage Loans as Whole Loan
Transfers; and/or
(ii) one or more sales of the Mortgage Loans as Pass-Through
Transfer; and/or
(iii) one or more sales of the Mortgage Loans as Agency
Transfer.
(b) With respect to each Whole Loan Transfer, Pass-Through Transfer or
Agency Transfer, as the case may, the Seller agrees:
(i) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due diligence procedures
including participating in meetings with rating agencies, bond insurers and
such other parties as the Purchaser shall designate and participating in
meetings with prospective purchasers of the Mortgage Loans or interests therein
and providing information contained in the Mortgage Loan Schedule including any
diskette or other related data tapes provided as reasonably requested by such
purchasers;
(ii) to execute all agreements reasonably required to be
executed by the Seller in connection with such Whole Loan Transfer,
Pass-Through Transfer or Agency Transfer provided that each of the Seller and
the Purchaser is given an opportunity to review and reasonably negotiate in
good faith the content of such documents not specifically referenced or
provided for herein;
(iii) to make the representations and warranties regarding the
Seller with respect to Sections 3.01 and 3.02, as of the date of the Whole Loan
Transfer, Pass-Through Transfer or Agency Transfer; provided that such
representations and warranties shall not be made if such Whole Loan Transfer,
Pass-Through Transfer or Agency Transfer is made later than thirty (30) days
after the Closing Date;
(iv) to negotiate and execute one or more subservicing
agreements between the Seller and any master servicer which is generally
considered to be a prudent master servicer in the secondary mortgage market
designated by the Purchaser in its sole discretion after consultation with the
Seller and/or one or more custodial and servicing agreements among the
Purchaser or an affiliate of the Purchaser, the Seller and a third party
custodian/trustee which is generally considered to be a prudent
custodian/trustee in the secondary mortgage market designated by the Purchaser
in its sole discretion after consultation with the Seller, in either case for
the purpose of pooling the Mortgage Loans with other mortgage loans for resale
or securitization;
(v) in connection with any Pass-Through Transfer or Agency
Transfer of any Mortgage Loans, to execute a pooling and servicing agreement,
which pooling and servicing agreement may, at the Purchaser's direction,
contain contractual provisions including, but not limited to, servicer advances
of delinquent scheduled payments of principal and interest through liquidation
(unless deemed non-recoverable) and payment of compensating interest with
respect to prepayment interest shortfalls (to the extent of the monthly
servicing fee payable thereto), servicing and mortgage loan representations and
warranties and indemnifications with respect thereto which in form and
substance conform to secondary market standards for securities backed by
mortgage loans similar to the Mortgage Loans and such provisions with regard to
servicing responsibilities, investor reporting, segregation and deposit of
principal and interest payments, custody of the Mortgage Loans, and other
covenants as are required by the Purchaser and one or more nationally
recognized rating agencies for "AAA" rated mortgage pass-through transactions
which are "mortgage related securities" for purposes of the Secondary Mortgage
Market Enhancement Act of 1984, unless otherwise mutually agreed. The pooling
and servicing agreement shall be reasonably satisfactory in form and substance
to the Seller and the representations and warranties and servicing provisions
contained therein shall be substantially similar to those contained in this
Agreement and shall not contain any obligation materially more onerous than
those contained herein unless otherwise mutually agreed by the parties. Seller
agrees that, in the event that the Rating Agencies impose unreasonably large
subordination levels or other unreasonable requirements for credit support in
connection with any Pass-Through Transfer or Agency Transfer due to the fact
that the Seller will be acting as special servicer with respect to the Mortgage
Loans that become more than 90 days delinquent, the Seller shall, upon request
of the Purchaser, transfer the special servicing of such Mortgage Loans to any
entity approved to act as a special servicer designated by the Purchaser. In
the event that the Purchaser is required to repurchase any such Mortgage Loan
pursuant to the terms of such pooling and servicing agreement, the Purchaser
shall give notice of such repurchase to the Seller and such Mortgage Loan shall
become such to the terms of this Agreement
(vi) to deliver to the Purchaser and to any Person designated by
the Purchaser (a) for inclusion in any prospectus or other offering material
such publicly available information regarding the Seller, its financial
condition and its mortgage loan delinquency, foreclosure and loss experience
and any additional information requested by the Purchaser, (b) any similar non
public, unaudited financial information (which the Purchaser may, at its option
and at its cost, have audited by certified public accountants) and such other
information as is reasonably requested by the Purchaser and which the Seller is
capable of providing without unreasonable effort or expense, and to indemnify
the Purchaser and its affiliates for material misstatements contained in such
information, and (c) such statements and audit letters of reputable, certified
public accountants pertaining to information provided by the Seller pursuant to
clause (a) above as shall be reasonably requested by the Purchaser; and
(vii) to deliver to the Purchaser, and to any Person designated
by the Purchaser, such legal documents and in-house opinions of counsel in a
form reasonably acceptable to the Purchaser as are customarily delivered by
servicers and reasonably determined by the Purchaser to be necessary in
connection with Whole Loan Transfers, Pass-Through Transfers or Agency
Transfers, as the case may be, it being understood that the cost of any
opinions of outside special counsel that may be required for a Whole Loan
Transfer, Pass-Through Transfer or Agency Transfer, as the case may be, shall
be the responsibility of the Purchaser.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to the Seller.
Prior to termination of Seller's responsibilities and duties under
this Agreement pursuant to Sections 4.13, 8.04, 9.01 or 10.01, the Purchaser
shall (i) succeed to and assume all of the Seller's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor having
the characteristics set forth in Section 8.02 hereof and which shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of
the Seller under this Agreement prior to the termination of Seller's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Purchaser may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as the
Purchaser and such successor shall agree. In the event that the Seller's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned Sections, the Seller shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of Seller pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section and shall in no
event relieve the Seller of the representations and warranties made pursuant to
Sections 3.01, 3.02 and 3.03 and the remedies available to the Purchaser
thereunder and under Section 8.01, it being understood and agreed that the
provisions of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to
the Seller notwithstanding any such resignation or termination of the Seller,
or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Seller and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Seller, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Seller or this Agreement pursuant to
Section 4.13, 8.04, 9.01 or 10.01 shall not affect any claims that the
Purchaser may have against the Seller arising prior to any such termination or
resignation.
The Seller shall promptly deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Seller shall account for
all funds. The Seller shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely
vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Seller. The successor
shall make arrangements as it may deem appropriate to reimburse the Seller for
unrecovered Servicing Advances which the successor retains hereunder and which
would otherwise have been recovered by the Seller pursuant to this Agreement
but for the appointment of the successor servicer.
Upon a successor's acceptance of appointment as such, the Seller shall
notify by mail the Purchaser of such appointment.
Section 12.02 Expenses.
The Purchaser shall pay its due diligence costs and the fees and
expenses of its counsel. The Seller shall pay its out-of-pocket costs and
expenses, all servicing fees prior to the Closing Date, recording fees, fees to
transfer files and prepare assignments and endorsements, and other costs
associated with the transfer of the ownership of the Mortgage Loans and the
fees and expenses of the Seller's counsel, subject to Section 2.05.
Section 12.03 Confidentiality.
The parties hereto shall keep the pricing terms of this Agreement
confidential and shall only reveal such terms to their respective employees,
agents and affiliates, unless otherwise required by law or judicial process.
Section 12.04 Amendment.
This Agreement may be amended from time to time by the Seller and the
Purchaser by written agreement signed by the Seller and the Purchaser.
Section 12.05 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any of all the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Seller at the Seller's expense on direction of the Purchaser accompanied by an
opinion of counsel to the effect that such recordation materially and
beneficially affects the interest of the Purchaser or is necessary for the
administration or servicing of the Mortgage Loans.
Section 12.06 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York except to the extent preempted by Federal
law. The obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 12.07 Notices.
Any demands, notices or other communications permitted or required
hereunder shall be in writing and shall be deemed conclusively to have been
given if personally delivered at or mailed by registered mail, postage prepaid,
and return receipt requested or certified mail, return receipt requested, or
transmitted by telex, telegraph or facsimile and confirmed by a similar mailed
writing, as follows:
(i) if to the Seller:
Impac Funding Corporation
1401 Dove Street
Newport Beach, California 92660
Attention: General Counsel
ii) if to the Purchaser:
Lehman Brothers Bank, FSB
3 World Financial Center, 8th Floor
New York, New York 10285
Attention: Leslie Gelber
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 12.08 Severability of Provisions.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage
Loan shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good faith, to develop a structure the economic effect of which is nearly as
possible the same as the economic effect of this Agreement without regard to
such invalidity.
Section 12.09 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 12.10 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(iii) references herein to "Articles", "Sections", Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions
of this Agreement;
(iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(v) the words "herein", "hereof ", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;
(vi) the term "include" or "including" shall mean without limitation
by reason of enumeration; and
(vii) headings of the Articles and Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
Section 12.11 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. The
parties agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not
the original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 12.12 Confidentiality of Information.
Each party recognizes that, in connection with this Agreement, it may
become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Each party agrees to keep all
non-public information regarding the other party strictly confidential, and to
use all such information solely in order to effectuate the purpose of the
Agreement, provided that each party may provide confidential information to its
employees, agents and affiliates who have a need to know such information in
order to effectuate the transaction, provided further that such information is
identified as confidential non-public information. In addition, confidential
information may be provided to a regulatory authority with supervisory power
over Purchaser, provided such information is identified as confidential
non-public information.
Section 12.13 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
Section 12.14 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Seller
hereof, to assign, in whole or in part, its interest under this Agreement with
respect to some or all of the Mortgage Loans, and designate any person to
exercise any rights of the Purchaser hereunder, by executing an Assignment and
Assumption Agreement substantially in the form of Exhibit D hereto and the
assignee or designee shall accede to the rights and obligations hereunder of
the Purchaser with respect to such Mortgage Loans. In no event shall Purchaser
sell a partial interest in any Mortgage Loan without the written consent of
Seller, which consent shall not be unreasonably denied. All references to the
Purchaser in this Agreement shall be deemed to include its assignee or
designee. However, in no event shall there be more than four (4) Persons at any
given time having the status of "Purchaser" hereunder.
Section 12.15 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 Seller shall be rendered as an independent contractor and not as agent for
Purchaser.
Section 12.16 Execution: Successors and Assigns.
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. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Seller and the Purchaser
and their respective successors and assigns.
Section 12.17 Entire Agreement.
The Seller acknowledges that no representations, agreements or
promises were made to the Seller by the Purchaser or any of its employees other
than those representations, agreements or promises specifically contained
herein. This Agreement sets forth the entire understanding between the parties
hereto and shall be binding upon all successors of both parties. In the event
of any inconsistency between any prior agreement, oral or written, the
Commitment Letter and this Agreement, this Agreement shall control.
Section 12.18 No Solicitation.
From and after the Closing Date, the Seller agrees that it will not
take any action or permit or cause any action to be taken by any of its agents
or affiliates, or by any independent contractors on the Seller's behalf, to
personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan to refinance the Mortgage Loan, in whole or in part, without the
prior written consent of the Purchaser. It is understood and agreed that all
rights and benefits relating to the solicitation of any Mortgagors to refinance
any Mortgage Loans and the attendant rights, title and interest in and to the
list of such Mortgagors and data relating to their Mortgages (including
insurance renewal dates) shall be transferred to the Purchaser pursuant hereto
on the Closing Date and the Seller shall take no action to undermine these
rights and benefits. Notwithstanding the foregoing, it is understood and agreed
that promotions undertaken by the Seller or any affiliate of the Seller which
are directed to the general public at large, or segments thereof, provided that
no segment shall consist primarily of the Mortgage Loans, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute
solicitation under this Section 12.18. This Section 12.18 shall not be deemed
to preclude the Seller or any of its affiliates from soliciting any Mortgagor
for any other financial products or services. The Seller shall use its best
efforts to prevent the sale of the name of any Mortgagor to any Person who is
not an affiliate of the Seller.
Section 12.19 Closing.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. The closing shall be either: by telephone, confirmed
by letter or wire as the parties shall agree, or conducted in person, at such
place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the Closing Date
shall be subject to each of the following conditions:
(a) at least two (2) Business Days prior to the Closing Date, the
Seller shall deliver to the Purchaser a magnetic diskette, or transmit by modem
or electronic mail, a listing on a loan-level basis of the information
contained in the Mortgage Loan Schedule;
(b) all of the representations and warranties of the Seller under this
Agreement shall be materially true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a material default under this Agreement;
(c) the Purchaser shall have received, or the Purchaser's attorneys
shall have received in escrow, all closing documents, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(d) the Seller shall have delivered and released to the Purchaser (or
its designee) on or prior to the Closing Date all documents required pursuant
to the terms of this Agreement; and
(e) all other terms and conditions of this Agreement and the
Commitment Letter shall have been materially complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 2.02 of this Agreement, by wire transfer of immediately available
funds to the account designated by the Seller.
Section 12.20 Non-Competition.
The Initial Purchaser agrees that the Seller has introduced or shall
introduce to the Initial Purchaser or its Affiliates certain Persons that
originally sold one or more of the Mortgage Loans to the Seller prior to the
Closing Date (the "Conduit Sellers"), that such Conduit Sellers are customers
of the Seller and that the relationships between the Seller and the Conduit
Sellers are confidential. The Initial Purchaser agrees that, for a period of
two years following the Closing Date, neither the Initial Purchaser nor its
Affiliates shall, for the purpose of purchasing loans similar to the Mortgage
Loans, communicate with or purchase such loans from any Conduit Seller unless
such Conduit Seller has sold to the Initial Purchaser or its Affiliate loans
similar to the Mortgage Loans prior to the Closing Date or the Conduit Seller
comes directly and independently to the Initial Purchaser or its Affiliates for
the sale of such loans.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
LEHMAN BROTHERS BANK, FSB
Purchaser
By: /s/ Jack E. Desens
-----------------------
Name: Jack E. Desens
Title: Vice President
IMPAC FUNDING CORPORATION
Seller and Servicer
By: /s/ Lisa A. Duehring
------------------------
Name: Lisa A. Duehring
Title: Vice President
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, delivered to the Purchaser or its designee
pursuant to Sections 2.04 and 2.05 of the Seller's Purchase, Warranties and
Servicing Agreement.
1. The original Mortgage Note endorsed "Pay to the order of
___________________, as custodian/trustee, without recourse," and signed in the
name of the Seller by an authorized officer, with all intervening endorsements
showing a complete chain of title from the originator to the Seller. If the
Mortgage Loan was acquired by the Seller in a merger, the endorsement must be
by "Seller, successor by merger to the name of predecessor". If the Mortgage
Loan was acquired or originated by the Seller while doing business under
another name, the endorsement must be by "Seller formerly known as previous
name".
2. The original Mortgage with evidence of recording thereon, or a copy
thereof certified by the public recording office in which such mortgage has
been recorded or, if the original Mortgage has not been returned from the
applicable public recording office, a true certified copy, certified by the
Seller, of the original Mortgage together with a certificate of the Seller
certifying that the original Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
3. The original or certified to be true copy, certified by the Seller,
of the Primary Mortgage Insurance Policy, if required.
4. The original assignment, from the Seller to _____________________,
as custodian/trustee, or in accordance with Purchaser's instructions, which
assignment shall, but for any blanks requested by Purchaser, be in form and
substance acceptable for recording, or a copy certified by Seller as a true and
correct copy of the original Assignment which has been sent for recordation. If
the Mortgage Loan was acquired or originated by the Seller while doing business
under another name, the Assignment must be by "Seller formerly known as
previous name".
5. The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company.
6. Originals of all recorded intervening Assignments, or copies
thereof, certified by the public recording office in which such Assignments
have been recorded showing a complete chain of title from the originator to the
Seller, with evidence of recording thereon, or a copy thereof certified by the
public recording office in which such Assignment has been recorded or, if the
original Assignment has not been returned from the applicable public recording
office, a copy, certified by the Seller to be a true and correct copy of the
original Assignment has sent for recording in the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is located.
7. Originals, or copies thereof certified by the public recording
office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements, if
applicable, or if the original of such document has not been returned from the
applicable public recording office, a true certified copy, certified by the
Seller, of such original document. The original of such document has been
delivered for recording in the appropriate recording office of the jurisdiction
in which the Mortgage Property is located.
8. If the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a person on behalf
of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located (or, in lieu thereof, a duplicate or
conformed copy of such instrument, together with a certificate of receipt from
the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted
to be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the original power
of attorney or other such instrument has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
9. Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending or real estate settlement procedure forms required by law.
10. Residential loan application.
11. Uniform underwriter and transmittal summary (Fannie Mae Form 1008)
or reasonable equivalent.
12. Credit report on the mortgagor.
13. Business credit report, if applicable.
14. Residential appraisal report and attachments thereto.
15. The original of any guarantee executed in connection with the
Mortgage Note.
16. Verification of employment and income except for Mortgage Loans
originated under a Limited Documentation Program, all in accordance with the
Seller's underwriting guidelines.
17. Verification of acceptable evidence of source and amount of down
payment, in accordance with the Seller's underwriting guidelines.
18. Photograph of the Mortgaged Property (may be part of appraisal);
if available.
19. Survey of the Mortgaged Property, if any.
20. Sales contract, if applicable.
21. If available, termite report, structural engineer's report, water
portability and septic certification.
22. Any original security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
23. Any original hazard insurance policy.
24. Any original flood insurance policy.
Notwithstanding anything to the contrary herein, Seller may provide
one certificate for all of the Mortgage Loans indicating that the documents
were delivered for recording.
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
__________, 1999
To: The _______________ Bank
________________________
________________________
"Depository"
As "Seller" under the Seller's Purchase, Warranties and Servicing Agreement,
dated as of _______________, 199(____), Whole Loan Series (the "Agreement"), we
hereby authorize and request you to establish an account, as a Custodial
Account pursuant to Section 4.04 of the Agreement, to be designated as
"_______________ _______________, in trust for the Purchaser, Owner of Whole
Loan Series . All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. This letter is submitted to you in
duplicate. Please execute and return one original to us.
_______________________________
By:____________________________
Name:__________________________
Title:_________________________
The undersigned, as "Depository", hereby certifies that the above described
account has been established under Account Number _______________, at the
office of the depository indicated above, and agrees to honor withdrawals
on such account as provided above.
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
___________, 1999
To: The _______________ Bank
________________________
________________________
(the "Depository")
As "Seller" under the Seller's Purchase, Warranties and Servicing
Agreement, dated as of ____________ 1, 199(___) Whole Loan Series (the
"Agreement"), we hereby authorize and request you to establish an account, as
an Escrow Account pursuant to Section 4.06 of the Agreement, to be designated
as "_______________ _______________, in trust for the Purchaser, Owner of Whole
Loan Series , and various Mortgagors." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Seller. This letter is
submitted to you in duplicate. Please execute and return one original to us.
--------------- ---------------
By:____________________________
Name:__________________________
Title:_________________________
The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number _______________, at
the office of the depository indicated above, and agrees to honor withdrawals
on such account as provided above.
THE _______________ BANK
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Agreement"), dated _______ __, 1999 (the "Closing Date"), among
_____________________________, a Delaware corporation ("Assignor"), a
________________________ corporation (the "Assignee") and IMPAC Funding
Corporation, a California corporation (the "Seller"). For valuable
consideration the receipt and sufficiency of which hereby are acknowledged, and
of the mutual covenants herein contained, the parties hereto hereby agree as
follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all
of the right, title and interest of Assignor, as purchaser, in, to and under
(a) that certain Seller's Purchase, Warranties and Servicing Agreement, dated
as of September 1, 1999 (the "Seller's Purchase, Warranties and Servicing
Agreement"), by and between the Assignor, as purchaser and the Seller, as
seller, a copy of which is attached hereto as Exhibit A, solely as it pertains
to the Mortgage Loans (as defined below) and (b) those certain mortgage loans
which were purchased by the Assignor from the Seller pursuant to the Seller's
Purchase, Warranties and Servicing Agreement and which are listed on Exhibit B
attached hereto (the "Mortgage Loans"). The Assignor specifically reserves and
does not assign to the Assignee hereunder any or all right, title or interest
in, to and under and all obligations of the Assignor with respect to any
mortgage loans related thereto subject to the Seller's Purchase, Warranties and
Servicing Agreement which are not the Mortgage Loans set forth on Exhibit B.
2. Each of the Seller and the Assignor represent to the Assignor that
(a) the copy of the Seller's Purchase, Warranties and Servicing Agreement,
attached hereto as Exhibit A, provided to the Assignee, is a true, complete and
accurate copy of the Seller's Purchase, Warranties and Servicing Agreement, (b)
the Seller's Purchase, Warranties and Servicing Agreement is in full force and
effect as of the date hereof, and (c) the provisions thereof have not been
waived, amended or modified in any respect, nor have any notices of termination
been given thereunder. The Assignor further represents to the Assignee that as
of the date hereof, the Assignor is not in default under the Seller's Purchase,
Warranties and Servicing Agreement. The Seller further represents to the
Assignee that as of the date hereof, it is not in default under the Seller's
Purchase, Warranties and Servicing Agreement.
3. The Assignor warrants and represents to, and covenants with, the
Assignee as of the date hereof, that:
a. The Assignor is the lawful owner of the Mortgage Loans with
the full right to transfer the Mortgage Loans and any and all of its interests,
rights and obligations under the Seller's Purchase, Warranties and Servicing
Agreement free from any and all claims and encumbrances arising out of the
Assignor's ownership thereof, and the Mortgage Loans, as well as the Seller's
Purchase, Warranties and Servicing Agreement, upon the transfer thereof to the
Assignee as contemplated herein, shall be free of and clear of all liens,
claims and encumbrances arising out of the Assignor's ownership thereof;
b. There are no offsets, counterclaims or other defenses
available to the Seller with respect to the Seller's Purchase, Warranties and
Servicing Agreement and the Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Seller with respect to the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Seller's Purchase,
Warranties and Servicing Agreement or the Mortgage Loans. The Assignor has no
knowledge of, and has not received notice of, any waivers under or amendments
or other modifications of, or assignments of rights or obligations under, or
defaults under, the Mortgage Loans;
d. The Assignor has full corporate power and authority to
execute, deliver and perform under this Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of the Assignor's
business and will not conflict with, or result in a breach of, any of the
terms, conditions or provisions of the Assignor's charter or by-laws, or any
legal restriction, or any material agreement or instrument to which the
Assignor is now a party or by which it is bound, or result in the violation of
any law, rule, regulation, order, judgment or decree to which the Assignor or
its property is subject. The execution, delivery and performance by the
Assignor of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action of the Assignor. This Agreement has been duly executed and delivered by
the Assignor and constitutes the valid and legally binding obligation of the
Assignor enforceable against the Assignor in accordance with its respective
terms except as enforceability thereof may be limited by bankruptcy,
insolvency, or reorganization or other similar laws now or hereinafter in
effect relating to creditor's rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or in law;
e. The Assignor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite power and authority to acquire, own and sell the Mortgage Loans;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required
to be obtained or made by the Assignor in connection with the execution,
delivery or performance by the Assignor of this Agreement, or the consummation
by it of the transactions contemplated hereby;
g. The Assignor has paid the purchase price for the Mortgage
Loans and has satisfied any conditions to closing required of it under the
terms of the Seller's Purchase, Warranties and Servicing Agreement;
4. Within sixty (60) days of the earlier of either, discovery by the
Assignor or notice to the Assignor from the Assignee, of a breach of any of the
foregoing representations and warranties with respect to a Mortgage Loan which
materially and adversely affects the value of such Mortgage Loan or the
Assignee's interests therein, the Assignor shall use its best efforts to cure
such breach in all material respects and, if such breach is not cured within
such sixty (60) day period, the Assignor shall, at the Assignee's option,
repurchase such Mortgage Loan at a price equal to the unpaid principal balance
of the Mortgage Loan as of the date of repurchase, plus accrued interest
thereon to, but not including, the date of repurchase.
In connection with any repurchase of a Mortgage Loan, the Assignee
shall reassign the provisions of the Seller's Purchase, Warranties and
Servicing Agreement to the Assignor with respect to such Mortgage Loan, and
provide for the prompt delivery of the related custodial file to the Assignor
or its designee.
5. The Assignee warrants and represents to, and covenants with, the
Assignor, as of the date hereof, that:
a. The Assignee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to acquire,
own and purchase the Mortgage Loans;
b. The Assignee has full corporate power and authority to
execute, deliver and perform under this Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of the Assignee's
business and will not conflict with, or result in a breach of, any of the
terms, conditions or provisions of the Assignee's charter or by-laws, or any
legal restriction, or any material agreement or instrument to which the
Assignee is now a party or by which it is bound, or result in the violation of
any law, rule, regulation, order, judgment or decree to which the Assignee or
its property is subject. The execution, delivery and performance by the
Assignee of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action of the Assignee. This Agreement has been duly executed and delivered by
the Assignee and, assuming the duly authorized execution and delivery hereof by
the Assignor, constitutes the valid and legally binding obligation of the
Assignee enforceable against the Assignee in accordance with its respective
terms except as enforceability thereof may be limited by bankruptcy,
insolvency, or reorganization or other similar laws now or hereinafter in
effect relating to creditor's rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or in law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required
to be obtained or made by the Assignee in connection with the execution,
delivery or performance by the Assignee of this Agreement, or the consummation
by it of the transactions contemplated hereby;
d. The Assignee agrees to be bound, as purchaser, by all of the
terms, covenants and conditions of the Seller's Purchase, Warranties and
Servicing Agreement (solely as they pertain to the Mortgage Loans) and the
Mortgage Loans, and from and after the date hereof, the Assignee assumes for
the benefit of the Seller and the Assignor all of the Assignor's obligations as
purchaser thereunder (solely as they pertain to the Mortgage Loans);
e. The Assignee understands that the Mortgage Loans have not
been registered under the Securities Act of 1933, as amended, or the securities
laws of any state;
f. The purchase price being paid by the Assignee for the
Mortgage Loans is in excess of $250,000 and will be paid by cash remittance of
the full purchase price within sixty (60) days of the sale;
g. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
h. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor; and
i. Either: (1) the Assignee is not an employee benefit plan (a
"Plan") within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also, a "Plan") within
the meaning of section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Assignee is not directly or indirectly purchasing
the Mortgage Loans on behalf of, an investment manager of, as named fiduciary
of, as Trustee of, or with assets of, a Plan; or (2) the Assignee's purchase of
the Mortgage Loans will not result in a prohibited transaction under section
406 of ERISA or section 4975 of the Code.
6. (a) The Seller's address for purposes of all notices and
correspondence related to the Mortgage Loans and this Agreement is:
Impac Funding Corporation
1401 Dove Street
Newport Beach, CA
Attn: [Name]
(b) The Assignor's address for purposes of all notices and
correspondence related to the Mortgage Loans and this Agreement is:
__________________________
__________________________
__________________________
Attention:
(c) The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and this Agreement is:
7. This Agreement shall be construed in accordance with the
substantive laws of the State of New York (without regard to conflicts of law
principles) and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, except to the extent
preempted by federal law.
8. Notwithstanding anything contained herein or in the Seller's
Purchase, Warranties and Servicing Agreement, the Assignee agrees that no more
than three (3) party may have the status of "Purchaser" under the Seller's
Purchase, Warranties and Servicing Agreement with respect to the Mortgage Loans
subject thereto transferred to the Assignee.
9. The Assignor and the Seller agree that in the event the Assignor is
required to repurchase any Mortgage Loan from the Assignee pursuant to Section
4 of this Agreement, such repurchase, in and of itself, will not cause the
Assignor or the Assignee to be in default under the Seller's Purchase,
Warranties and Servicing Agreement with respect to the number of parties
permitted to have the status as "Purchaser" thereunder.
10. This Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which the Assignor, Seller or
Assignee may be merged or consolidated shall, without the requirement for any
further writing, be deemed the Assignor, Seller or Assignee, respectively,
hereunder.
11. No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party
against whom such waiver or modification is sought to be enforced.
12. This Agreement shall survive the conveyance of the Mortgage Loans
and the assignment of the Seller's Purchase, Warranties and Servicing Agreement
by the Assignor.
13. Notwithstanding the assignment of the Seller's Purchase,
Warranties and Servicing Agreement by either the Assignor or Assignee, this
Agreement shall not be deemed assigned by the Assignor or the Assignee unless
assigned by separate written instrument. Neither the Seller nor the Assignor
may assign its rights or obligations under this Agreement without the prior
written consent of the Assignee.
14. For the purpose of facilitating the execution of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute and be one
and the same instrument.
15. From and after the date hereof, the Seller shall recognize the
Assignee as the owner of the Mortgage Loans.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Assignment,
Assumption and Recognition Agreement to be executed by their duly authorized
officers as of the date first above written.
[NAME OF PURCHASER]___________________________.
Assignor Assignee
By: ___________________________ By: __________________________
Its: ___________________________ Its: _________________________
Taxpayer Taxpayer
Identification No. 13-3460798 Identification No.
IMPAC FUNDING CORPORATION
Seller
By: ___________________________
Its: ___________________________
Taxpayer
Identification No.
EXHIBIT E
FORM OF TRIAL BALANCE
EXHIBIT F
MORTGAGE LOAN SCHEDULE
EXHIBIT G
UNDERWRITING GUIDELINES
EXECUTION COPY
- --------------------------------------------------------------------------------
MBIA INSURANCE CORPORATION,
as Insurer
LEHMAN CAPITAL,
as Seller
STRUCTURED ASSET SECURITIES CORPORATION,
as Depositor
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
INSURANCE AGREEMENT
Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 2000-1
$40,000,000 7.75% Class 2-A3 Certificates
Dated as of January 1, 2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions.........................................1
Section 1.02. Generic Terms...............................................4
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations, Warranties and Covenants of the Seller
and the Depositor .............................................4
Section 2.02. Reserved........................................................9
Section 2.03. Representations, Warranties and Covenants of Trustee............9
ARTICLE III
THE POLICY; REIMBURSEMENT; SECURITY
Section 3.01. Agreement To Issue the Policy..................................11
Section 3.02. Conditions Precedent to Issuance of the Policy.................11
Section 3.03. Payment of Fees and Premium....................................11
Section 3.04. Payment Procedure..............................................12
Section 3.05. Reimbursement and Additional Payment Obligation of the
Seller and the Depositor .....................................12
Section 3.06. Indemnification by the Seller and the Depositor................13
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement..............................14
Section 4.02. Waiver of Rights; Further Assurances...........................14
Section 4.03. Obligations Absolute...........................................15
Section 4.04. Assignments; Reinsurance; Third-Party Rights...................15
Section 4.05. Liability of Insurer...........................................16
Section 4.06. Subrogation....................................................16
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults.......................................................16
Section 5.02. Remedies; No Remedy Exclusive..................................17
Section 5.03. Waivers........................................................17
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Changes and Modifications..........................18
Section 6.02. Notices........................................................18
Section 6.03. Severability...................................................19
Section 6.04. Governing Law..................................................19
Section 6.05. Consent to Jurisdiction and Venue, Etc.........................19
Section 6.06. Consent of Insurer.............................................20
Section 6.07. Counterparts...................................................20
Section 6.08. Headings.......................................................20
Section 6.09. WAIVER OF TRIAL BY JURY........................................20
Section 6.10. Entire Agreement...............................................20
Section 6.11. Third Party Beneficiary........................................20
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT is made as of January 1, 2000 by and among MBIA
INSURANCE CORPORATION (the "Insurer"), LEHMAN CAPITAL, a Division of Lehman
Brothers Holdings Inc., as Seller (the "Seller"), STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor (the "Depositor"), and U.S. BANK NATIONAL ASSOCIATION,
a national banking association, in its capacity as trustee under the Trust
Agreement (the "Trustee").
RECITALS:
WHEREAS, the Trust Agreement dated as of January 1, 2000 by and among
the Depositor, the Master Servicer and the Trustee (the "Trust Agreement")
relating to the Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2000-1 $40,000,000 7.75% Class 2-A3 Certificates (the
"Insured Certificates") provides for, among other things, the issuance of
mortgage backed certificates, representing fractional ownership interests in the
trust estate (the "Trust") established thereby;
WHEREAS, the Depositor has requested that the Insurer issue a
certificate guaranty insurance policy (the "Policy") to guarantee payment of
Insured Payments (as defined in the Policy) to the Trustee for the benefit of
the Owners of the Insured Certificates upon such terms and conditions as were
mutually agreed upon by the parties and subject to the terms and the conditions
of the Policy;
WHEREAS, the parties hereto desire to specify the conditions precedent
to the issuance of the Policy by the Insurer and to provide for certain other
matters;
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Agreement,
unless the context clearly requires otherwise, in both singular and plural form,
as appropriate. Capitalized terms used in this Agreement but not otherwise
defined herein will have the meanings assigned to such terms in the Trust
Agreement.
"AGREEMENT" means this Insurance Agreement dated as of January 1,
2000, including any amendments or any supplements hereto as herein permitted.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday
(ii) a day on which the Insurer is closed or (iii) a day on which banking
institutions in New York City or in the city in which the corporate trust office
of the Trustee under the Trust Agreement is located are authorized or obligated
by law or executive order to close.
"CLASS 2-A3 PREMIUM PERCENTAGE" shall have the meaning set forth in
paragraph 1(a) of the Commitment.
"COMMITMENT" means the Commitment, dated January 27, 2000 between
Lehman Brothers Inc. and the Insurer, relating to the Insured Certificates.
"DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.
"EVENT OF DEFAULT" means any event of default set forth in Section
5.01 hereof.
"FINANCIAL STATEMENTS" means, with respect to the Seller or the
Depositor the balance sheets and the statements of income and retained earnings
and the notes thereto.
"IMPAC SERVICING AGREEMENT" means the Reconstituted Servicing
Agreement dated January 1, 2000, between the Seller and Impac Funding
Corporation including any amendments and supplements thereto as therein and
herein permitted.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of January 21, 2000 among the Insurer, the Seller, and the Underwriter
including any amendments and supplements thereto as therein and herein
permitted.
"LATE PAYMENT RATE" means the rate of interest publicly announced by
Citibank, N.A. at its principal office in New York, New York as its prime rate
(any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in the ability of such Person to perform its obligations under
any of the Transaction Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Insurer.
"MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT" means the Mortgage Loan
Sale and Assignment Agreement dated as of January 1, 2000 between the Seller and
the Depositor including any amendments and supplements thereto as therein and
herein permitted.
"OFFERING DOCUMENT" means the Prospectus dated January 15, 1999 and
the Prospectus Supplement thereto dated January 21, 2000 of the Depositor in
respect of the Insured Certificates (and any amendment or supplement thereto)
and any other offering document in respect of the Insured Certificates prepared
by the Depositor that makes reference to the Policy.
"OWNER" means each Holder (as defined in the Trust Agreement) of an
Insured Certificate who, on the applicable Distribution Date, is entitled under
the terms of the Insured Certificates to payment thereunder.
"PERSON" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
limited liability company, partnership or other organization or entity (whether
governmental or private).
"PREMIUM" means the premium payable in accordance with Section 3.03
hereof.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of January
21, 2000 between the Depositor and the Underwriter including any amendments and
supplements thereto as therein and herein permitted.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-3
of the Depositor relating to the Certificates.
"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"SECURITY PURCHASE AGREEMENT" means the Security Purchase Agreement
dated as of January 28, 2000 between the Depositor and the Underwriter,
including any amendments and supplements thereto as therein and herein
permitted.
"SERVICING AGREEMENT" means the Servicing Agreement dated as of
January 1, 2000 between the Seller and Aurora Loan Services, Inc. including any
amendments and supplements thereto as therein and herein permitted.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"TERM OF THE AGREEMENT" shall be determined as provided in Section
4.01 hereof.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transaction described in the Prospectus Supplement.
"TRANSACTION DOCUMENTS" means this Agreement, the Indemnification
Agreement, the Commitment, the Trust Agreement, the Servicing Agreement, the
Impac Servicing Agreement, the Mortgage Loan Sale and Assignment Agreement, the
Security Purchase Agreement, the Purchase Agreement, the Custodial Agreements,
the Underwriting Agreement, the Offering Document and the Certificates.
"TRUST AGREEMENT" means the Trust Agreement dated as of January 1,
2000 among the Depositor, Aurora Loan Services, Inc, as Master Servicer, and the
Trustee, including any amendments and supplements thereto as therein and herein
permitted.
"UNDERWRITER" means Lehman Brothers Inc.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as of
April 16, 1996 between the Depositor and the Underwriter, as supplemented by a
terms agreement dated January 21, 2000 between the Depositor and the
Underwriter, including any amendments and supplements thereto as therein and
herein permitted.
Section 1.02. GENERIC TERMS. All words used herein shall be construed
to be of such gender or number as the circumstances require. This "Agreement"
shall mean this Agreement as a whole and as the same may, from time to time
hereafter, be amended, supplemented or modified. The words "herein," "hereby,"
"hereof," "hereto," "hereinabove" and "hereinbelow," and words of similar
import, refer to this Agreement as a whole and not to any particular paragraph,
clause or other subdivision hereof, unless otherwise specifically noted.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
AND THE DEPOSITOR. Each of the Seller and the Depositor, represents and warrants
to, as of the Date of Issuance, and covenants with, the Insurer as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. Each of the Seller and
the Depositor is a corporation, duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Seller and the Depositor is duly qualified
to do business, is in good standing and has obtained all licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted and
as described in the Offering Document and the performance of its
obligations under the Transaction Documents, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals would
render any Transaction Document unenforceable in any respect or would
have a material adverse effect upon the Transaction, the Owners or the
Insurer.
(b) POWER AND AUTHORITY. Each of the Seller and the Depositor
have all necessary corporate power and authority to conduct its
business as currently conducted and, as described in the Offering
Document, to execute, deliver and perform its obligations under the
Transaction Documents and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery, and performance
of the Transaction Documents by the Seller and the Depositor have been
duly authorized by all necessary corporate action and do not require
any additional approvals or consents, or other action by or any notice
to or filing with any Person, including, without limitation, any
governmental entity or the Seller's or the Depositor's stockholders,
which have not previously been obtained or given by the Seller or the
Depositor.
(d) NONCONTRAVENTION. Neither the execution and delivery of the
Transaction Documents by the Seller or the Depositor, the consummation
of the transactions contemplated thereby nor the satisfaction of the
terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of
any provision of the certificate of incorporation or bylaws of
the Seller or the Depositor or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Seller or the
Depositor or any of its material properties, including
regulations issued by an administrative agency or other
governmental authority having supervisory powers over the Seller
and the Depositor;
(ii) constitutes a default by the Seller or the Depositor
under or a breach of any provision of any material loan
agreement, mortgage, indenture or other agreement or instrument
to which the Seller or the Depositor is a party or by which any
of its or their respective properties, which are individually or
in the aggregate material to the Seller or the Depositor, is or
may be bound or affected; or
(iii) results in or requires the creation of any lien upon
or in respect of any assets of the Seller or the Depositor,
except as contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Seller or the Depositor
or any of its or their subsidiaries, or any properties or rights of
the Seller or the Depositor or any of its or their subsidiaries,
pending or, to the Seller's, and the Depositor's knowledge,
threatened, which, in any case, could reasonably be expected to result
in a Material Adverse Change with respect to the Seller or the
Depositor.
(f) VALID AND BINDING OBLIGATION. The Transaction Documents to
which either the Seller or the Depositor are a party constitute, and
when executed by the Seller and the Depositor (if not previously) will
constitute, the legal, valid and binding obligations of the Seller and
the Depositor, as applicable, enforceable against the Seller and the
Depositor in accordance with their respective terms, except as the
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
limiting creditors' rights generally or general equitable principles,
as such relate to the Seller or the Depositor.
(g) FINANCIAL STATEMENTS. The Financial Statements supplied, or
publicly available, to the Insurer prior to the Date of Issuance (i)
present fairly the financial condition and results of operations of
the Seller and the Depositor as of the dates and for the periods
indicated and (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied, except as noted
therein and subject to year-end adjustments with respect to interim
statements. Since the date of such Financial Statements, there has
been no Material Adverse Change in such condition or operations of the
Seller or the Depositor.
(h) COMPLIANCE WITH LAW, REGULATIONS, ETC. Except as disclosed in
writing to the Insurer or in the Offering Document, neither the Seller
nor the Depositor has notice or any reason to believe that any
practice, procedure or policy employed by the Seller or the Depositor
in the conduct of its business violates, any law, regulation, judgment
or agreement applicable to the Seller or the Depositor which, if
enforced, would have a material adverse effect on the ability of the
Seller or the Depositor to perform its obligations under the
Transaction Documents. Except as disclosed in writing to the Insurer
or in the Offering Document, neither the Seller nor the Depositor is
in breach of or in default under any applicable law or administrative
regulation of any department, division, agency or instrumentality
which has jurisdiction over it or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Seller or the Depositor is a party or is
otherwise subject which would have a material adverse affect on its or
their ability to perform under the Transaction Documents.
(i) DELIVERY OF INFORMATION. None of the Transaction Documents
nor any other documents, reports, notices, operating agreements,
schedules, certificates, statements or other writings (collectively,
the "Documents"), furnished to the Insurer by the Seller or the
Depositor on or before the Date of Issuance contain any statement of a
material fact by the Seller or the Depositor which was untrue or
misleading in any material respect when made. Since the furnishing of
the Documents but prior to the offering of the Insured Certificates,
there has been no change nor any development or event involving a
prospective change which would render any of the Transaction Documents
untrue or misleading in a material respect.
(j) CONTINUING INFORMATION. The Seller or the Depositor shall
deliver to the Insurer concurrently with the delivery thereof to the
Trustee the statements, notices, reports or other information required
by the Trust Agreement to be delivered to the Insurer or the
Certificateholders. Upon the request of the Insurer, the Depositor
shall furnish, with reasonable promptness, any Financial Statements or
data regarding the Trust.
(k) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
The Depositor shall, upon the request of the Insurer, permit the
Insurer, or its authorized agent, at reasonable times and upon
reasonable notice, to inspect, the Depositor's books and records as
they may relate to the Certificates, the Mortgage Loans and the
Underlying Security and the Depositor's obligations under the
Transaction Documents and to discuss the Depositor's affairs, finances
and accounts with an appropriate authorized officer of the Depositor.
(l) NOTICE OF MATERIAL EVENTS. The Seller and the Depositor shall
be obligated (which obligation shall be satisfied as to each if
performed by the Seller or the Depositor) promptly to inform the
Insurer in writing of the occurrence of any of the following to the
extent any of the following relate to it:
(i) the submission of any claim or the initiation or threat
of any legal process, litigation or administrative or judicial
investigation or rule making or disciplinary proceeding in any
federal, state or local court or before any arbitration board, or
any such proceeding threatened by any government agency, which,
if adversely determined, would have a material adverse effect on
the Seller, the Depositor, the Owners or the Insurer or would
result in a Material Adverse Change with respect to the Seller or
the Depositor;
(ii) the occurrence of any Default or Event of Default or of
any Material Adverse Change;
(iii) the commencement of any proceedings by or against the
Seller or the Depositor under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or other
similar law now or hereafter in effect or of any proceeding in
which a receiver, liquidator, conservator, trustee or similar
official shall have been, or may be, appointed or requested for
the Seller or the Depositor or any of its or their assets; or
(iv) the receipt of notice that (A) the Seller or the
Depositor is being placed under regulatory supervision, (B) any
license, permit, charter, registration or approval necessary for
the conduct of the Seller or the Depositor business is to be or
may be suspended or revoked, or (C) the Seller or the Depositor
is to cease and desist any practice, procedure or policy employed
by the Seller or the Depositor in the conduct of its business,
and such cessation may result in a Material Adverse Change with
respect to the Seller or the Depositor.
(m) IMPAIRMENT OF RIGHTS. The Seller and the Depositor shall not
take any action, if such action will have a material adverse effect on
the Insurer's ability to enforce its rights under the Trust Agreement,
or this Agreement; provided, however, that this Section 2.01 (m) shall
not prohibit the Seller or the Depositor from taking any action it is
required to take pursuant to the Transaction Documents, any applicable
law or order of any court or regulatory authority with jurisdiction
over the Seller, the Depositor, the Transaction Documents or the
Certificates.
(n) SECURITIES LAW COMPLIANCE. The Seller and the Depositor each
represent and warrant that neither the offer nor the sale of the
Certificates to the Underwriter has been or will be in violation of
the Securities Act or any federal or state securities laws. The Seller
and the Depositor each further represents and warrants that it is not
required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended.
(o) TRANSCRIPTS. The Seller and the Depositor shall, within 90
days following the closing of the Transaction, provide each of the
Insurer and its counsel a final transcript containing the documents
and opinions executed in connection with the Transaction.
(p) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Seller and the Depositor contained in the
Transaction Documents is true and correct in all material respects,
and the Seller and the Depositor hereby make each such representation
and warranty to, and for the benefit of, the Insurer as if the same
were set forth in full herein.
(q) SOLVENCY; FRAUDULENT CONVEYANCE. The Seller and the Depositor
are solvent and will not be rendered insolvent by the Transaction and,
after giving effect to the Transaction, neither the Seller nor the
Depositor will be left with an unreasonably small amount of capital
with which to engage in its business, nor does the Seller or the
Depositor intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. Neither of the Seller nor
the Depositor contemplates the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in
respect of the Seller or the Depositor or any of its or their assets.
The amount of consideration being received by the Depositor upon the
sale of the Certificates to the Underwriter constitutes reasonably
equivalent value and fair consideration for the interest in the
Mortgage Loans and the Underlying Security evidenced by the
Certificates. The Seller is not transferring the Mortgage Loans and
the Underlying Security to the Depositor, the Depositor is not
transferring the Mortgage Loans and the Underlying Security to the
Trust and the Depositor is not selling the Certificates to the
Underwriter, as provided in the Transaction Documents, with any intent
to hinder, delay or defraud any of the Seller's or the Depositor's
creditors.
(r) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Seller
and the Depositor shall comply in all material respects with the terms
and conditions of the Transaction Documents to which it is a party and
shall comply with all material requirements of any law, rule or
regulation applicable to it.
(s) MAINTENANCE OF EXISTENCE. The Seller and the Depositor, its
or their successors and assigns, shall maintain their corporate
existence and shall at all times continue to be duly organized under
the laws of their respective jurisdictions of organization and duly
qualified and duly authorized (as described in section 2.01(a), (b)
and (c) hereof) and shall conduct its business in accordance with the
terms of its charter, certificate or articles of incorporation and
bylaws.
Section 2.02. RESERVED.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TRUSTEE.
The Trustee represents and warrants to, as of the Date of Issuance, and
covenants with the other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Trustee is a national
banking association, duly organized, validly existing and in good
standing under the laws of the United States. The Trustee is duly
qualified to do business, is in good standing and has obtained all
licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and the performance of its obligations under the Transaction
Documents, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Transaction
Document unenforceable in any respect or would have a material adverse
effect upon the Transaction, the Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents by the Trustee have been duly authorized by
all necessary action and do not require any additional approvals or
consents, or other action by or any notice to or filing with any
Person, including, without limitation, any governmental entity or the
Trustee's stockholders, which have not previously been obtained or
given by the Trustee.
(c) NONCONTRAVENTION. Neither the execution and delivery of the
Transaction Documents by the Trustee, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms
and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of
any provision of the certificate or articles of incorporation or
bylaws of the Trustee or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Trustee or any of its material
properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers
over the Trustee;
(ii) constitutes a default by the Trustee under or a breach
of any provision of any loan agreement, mortgage, indenture or
other agreement or instrument to which the Trustee is a party or
by which any of its or their respective properties, which are
individually or in the aggregate material to the Trustee, is or
may be bound or affected; or
(iii) results in or requires the creation of any lien upon
or in respect of any assets of the Trustee, except as
contemplated by the Transaction Documents.
(d) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Trustee, or any of its
subsidiaries, or any properties or rights of the Trustee, or any of
its subsidiaries, pending or, to the Trustee's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a Material Adverse Change with respect to the
Trustee.
(e) VALID AND BINDING OBLIGATIONS. The Insured Certificates, when
executed, authenticated and issued in accordance with the Trust
Agreement, and the Transaction Documents (other than the Insured
Certificates) to which it is a party, when executed and delivered by
the Trustee, will constitute the legal, valid and binding obligations
of the Trustee, as applicable, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable
principles. The Trustee will not at any time in the future deny that
the Transaction Documents constitute the legal, valid and binding
obligations of the Trustee.
(f) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Trustee in the conduct of
its business violates any law, regulation, judgment, agreement, order
or decree applicable to any of them that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Trustee. The Trustee is not in breach of or in default
under any applicable law or administrative regulation of its
respective jurisdiction of incorporation, or any department, division,
agency or instrumentality thereof or of the United States or any
applicable judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Trustee is a
party or is otherwise subject which, if enforced, would have a
material adverse effect on the ability of the Trustee to perform its
obligations under the Transaction Documents.
(g) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Trustee contained in the Transaction Documents is
true and correct in all material respects, and the Trustee hereby
makes each such representation and warranty to, and for the benefit
of, the Insurer as if the same were set forth in full herein.
(h) COMPLIANCE. The Trustee shall comply in all material respects
with the terms and conditions of the Transaction Documents to which it
is a party.
ARTICLE III
THE POLICY; REIMBURSEMENT; SECURITY
Section 3.01. AGREEMENT TO ISSUE THE POLICY. The Insurer agrees,
subject to the conditions set forth in Section 3.02 hereof, to issue the Policy
on the Date of Issuance.
Section 3.02. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY. The
Seller, the Depositor and the Underwriter shall have complied with the terms and
satisfied the conditions precedent set forth below:
(a) the Underwriter shall have paid or caused to be paid that
portion of a non-refundable Premium, if any, payable on the Date of
Issuance in accordance with Section 3.03 hereof;
(b) the Seller and the Depositor shall have complied with all
requirements of the Commitment;
(c) the Insurer shall have received true and correct copies of
any governmental approvals necessary for the transactions contemplated
by this Agreement and the Trust Agreement or a certificate to the
effect that no such approvals are necessary;
(d) the Insurer shall have received a certificate of an
authorized officer of the Seller and the Depositor certifying the name
and true signatures of the officers of the Seller and the Depositor
executing the Transaction Documents; and
(e) the Insurer shall have received confirmation that the risk
secured by the Policy constitutes a "AAA" risk by S&P and at least
"Aaa" by Moody's and that the Insured Certificates, when issued, will
be rated "AAA" by Moody's without regard to the Policy.
Issuance of the Policy will be conclusive evidence of satisfaction or waiver of
any of the conditions set forth in this Section 3.02.
Section 3.03. PAYMENT OF FEES AND PREMIUM.
(a) In consideration of the issuance by the Insurer of the
Policy, the Insurer shall be entitled to receive a premium (the
"Premium") in accordance with the terms of the Commitment. The Premium
shall be calculated according to paragraph 1 of the Commitment. The
Premium paid hereunder shall be nonrefundable without regard to
whether the Insurer makes any payment under the Policy or any other
circumstances relating to the Insured Certificates or provision being
made for payment of the Insured Certificates prior to maturity. The
Trustee shall make all payments of Premium to be made by it by wire
transfer to an account designated by the Insurer by written notice to
the Trustee.
(b) The Underwriter shall pay the fees of the Insurer's counsel
in connection with the Transaction, Moody's fees for the shadow
rating, S&P's fees and the cost of obtaining the Insurer's
accountant's consent letter.
Section 3.04. PAYMENT PROCEDURE. All payments to be made to the
Insurer under this Agreement shall be made to the Insurer in lawful currency of
the United States of America in immediately available funds at the notice
address for the Insurer as specified in the Trust Agreement on the date when
due. Payments to be made to the Insurer under this Agreement shall bear interest
at the Late Payment Rate from the date when due to the date paid, provided that
reimbursement to the Insurer of Insured Payments shall be made from the assets
of the Trust in accordance with the terms of the Trust Agreement at the Late
Payment Rate. If the Trustee is required to pay any amounts to the Insurer from
moneys available therefor under the Trust Agreement and the Trustee fails timely
to pay any such amount at a time when such moneys are available, the Trustee
shall, from the Trustee's own funds, reimburse the Seller or the Depositor, as
applicable, for any resulting penalty interest if the Trustee's failure was due
to negligence, bad faith or willful misconduct.
Section 3.05. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION OF THE
SELLER AND THE DEPOSITOR.
(a) In accordance with the priorities established in Section 5.02
of the Trust Agreement, the Insurer shall be entitled to reimbursement
for any payment made by the Insurer under the Policy, which
reimbursement shall be due and payable on the date that any amount is
to be paid pursuant to a Notice (as defined in the Policy), in an
amount equal to the amount to be so paid and all amounts previously
paid that remain unreimbursed, together with interest on any and all
amounts remaining unreimbursed (to the extent permitted by law, if in
respect of any unreimbursed amounts representing interest) from the
date such amounts became due until paid in full (after as well as
before judgment), at a rate of interest equal to the Late Payment
Rate.
(b) Notwithstanding anything in Section 3.03(a) to the contrary,
the Seller agrees to reimburse the Insurer for payments made under the
Policy arising as a result of the Seller's failure to repurchase any
Mortgage Loan required to be repurchased pursuant to Section 1.04 of
the Mortgage Loan Sale and Assignment Agreement, together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts
representing interest) from the date such amounts became due until
paid in full (after as well as before judgment), at a rate of interest
equal to the Late Payment Rate.
(c) The Seller and the Depositor each agree to reimburse the
Insurer, immediately upon receipt of two Business Days' prior written
notice, for any and all charges, fees, costs and expenses that the
Insurer may reasonably pay or incur including, but not limited to,
reasonable attorneys' and accountants' fees and reasonable expenses,
in connection with (a) the enforcement, defense or preservation of any
rights in respect of any of the Transaction Documents, including
defending or participating in any litigation or proceeding (including
any insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate thereof) relating to any of the
Transaction Documents, any party to any of the Transaction Documents,
in its capacity as such a party, or the Transaction, provided that the
foregoing arises out of the Seller's or the Depositor's breach or
alleged breach of its or their obligations under the applicable
Transaction Document or (b) any amendment of any Transaction Document,
whether or not executed or completed.
(d) The Seller and the Depositor agree to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to
the Seller or the Depositor, respectively, including, without
limitation, any amounts payable by the Seller or the Depositor
pursuant to the Certificates or any other Transaction Documents.
All such amounts are to be immediately due and payable without demand.
Section 3.06. INDEMNIFICATION BY THE SELLER AND THE DEPOSITOR.
(a) In addition to any and all rights of indemnification or any
other rights of the Insurer pursuant hereto or under law or equity,
the Seller and the Depositor and any successors thereto agree to pay,
and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents and each person,
if any, who controls the Insurer within the meaning of either Section
15 of the Securities Act or Section 20 of the Securities Exchange Act
from and against any and all claims, losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or
reasonable expenses (including, without limitation, reasonable fees
and expenses of attorneys, consultants and auditors and reasonable
costs of investigations) or obligations whatsoever paid by the Insurer
(herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the transactions contemplated by the
Transaction Documents by reason of:
(i) any act or omission of the Seller or the Depositor, or
the allegation thereof, in connection with the offering,
issuance, sale or delivery of the Certificates other than by
reason of false or misleading information provided by the Insurer
in writing for inclusion in the Offering Document, which is
contained in the caption "The Class 2-A3 Certificate Insurance
Policy" of the Offering Document;
(ii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of
the Seller or the Depositor;
(iii) the violation by the Seller or the Depositor of any
federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of
the Certificates or the transactions contemplated by the
Transaction Documents;
(iv) the violation by the Seller or the Depositor of any
federal or state laws, rules or regulations relating to the
Transaction, including without limitation the maximum amount of
interest permitted to be received on account of any loan of money
or with respect to the Mortgage Loans or the Underlying Security;
(v) the breach by the Seller or the Depositor of any of its
obligations under this Insurance Agreement or any of the other
Transaction Documents; and
(vi) the breach by the Seller or the Depositor of any
representation or warranty on the part of the Seller or the
Depositor contained in the Transaction Documents or in any
certificate or report furnished or delivered to the Insurer
thereunder.
This indemnity provision and the provisions in Section 3.05 shall
survive the termination of this Insurance Agreement and shall survive until the
statute of limitations has run on any causes of action which arise from one of
these reasons and until all suits filed as a result thereof have been finally
concluded.
(b) Each of the Seller and the Depositor agree to pay to the
Insurer interest on any and all amounts required to be paid by the
Seller or the Depositor, including but not limited to those amounts
described in Section 3.05 and this Section 3.06, from the date payable
until payment thereof is made in full. Such interest shall be payable
at the Late Payment Rate per annum.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall
take effect on the date on which the Policy is issued and shall remain in effect
until such time as the Insurer is no longer subject to a claim under the Policy
and all amounts payable by the Seller or the Depositor hereunder or under the
Trust Agreement and under the Certificates have been paid in full; provided,
however, that the provisions of Sections 3.05 and 3.06 shall survive any
termination of this Agreement.
Section 4.02. WAIVER OF RIGHTS; FURTHER ASSURANCES.
(a) Excepting at such times as a default in payment under the
Policy shall exist or shall have occurred, none of the Trustee, the
Seller or the Depositor shall grant any waiver of rights under any of
the Transaction Documents to which any of them is a party without the
prior written consent of the Insurer, (unless such waiver is expressly
permitted in the applicable Transaction Document) and any such waiver
without the prior written consent of the Insurer shall be null and
void and of no force or effect.
(b) To the extent permitted by law, the Trustee, the Seller and
the Depositor agree that they will, from time to time, following good
faith negotiations in connection therewith, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as the Insurer may
request and as may be required in the Insurer's judgment to effectuate
the intention of or facilitate the performance of this Insurance
Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. The obligations of the Seller, the
Depositor and the Trustee hereunder shall be absolute and unconditional, and
shall not be subject to, and the Seller, the Depositor and the Trustee hereby
waive (a) presentment and demand for payment, (b) notices in connection with
delivery and acceptance hereof or notices in connection with performance,
default or enforcement of payment hereunder and (c) its rights of, abatement,
diminution, postponement or deduction, or to any defense other than payment, or
to any right of setoff or recoupment arising out of any breach under any of the
Transaction Documents, by any party thereto or any beneficiary thereof, or out
of any obligation at any time owing to the Seller, the Depositor or the Trustee.
Nothing herein shall be construed as prohibiting the Seller, the Depositor or
the Trustee from pursuing any rights or remedies it may have against any other
person or entity in a separate legal proceeding. The obligations of the Seller,
the Depositor and the Trustee hereunder are absolute and unconditional and will
be paid or performed strictly in accordance with this Agreement.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Agreement shall be a continuing obligation of the Seller
and the Depositor and shall (i) be binding upon the Seller and the
Depositor, its or their successors and assigns and (ii) inure to the
benefit of and be enforceable by the Insurer and its successors,
transferees and assigns. Neither the Seller nor the Depositor may
assign this Agreement, or delegate any of its rights or obligations
hereunder, without the prior written consent of the Insurer.
(b) The Insurer shall have the right to give participations in
its rights under this Agreement and to enter into contracts of
reinsurance with respect to the Policy and each such participant or
reinsurer shall be entitled to the benefit of any representation,
warranty, covenant and obligation of the Seller or the Depositor
hereunder as if such participant or reinsurer was a party hereto;
provided that no such grant of participation shall operate to relieve
the Insurer of any of its obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with
respect to the Transaction or the obligations of the Insurer in
connection therewith any rights of the Insurer under the Transaction
Documents or with respect to any real or personal property or other
interests pledged to the Insurer, or in which the Insurer has a
security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy
or claim, express or implied, upon any person, including,
particularly, any Holder of a Certificate, other than the Insurer,
against the Seller and the Depositor and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the
sole and exclusive benefit of the parties hereto and their successors.
Neither the Trustee nor any Holder of a Certificate shall have any
right to payment from the premium paid pursuant to Section 3.03
hereof.
Section 4.05. LIABILITY OF INSURER.The Insurer shall not be
responsible for any act or omission of the Trustee with respect to its use of
the Policy. Neither the Insurer nor any of its officers, directors or employees
shall be liable or responsible for: (a) the use which may be made of the Policy
by or for any acts or omissions of the Trustee in connection therewith; or (b)
the validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereon, submitted by any person in connection with a claim under
the Policy, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged, unless the Insurer has
actual knowledge thereof. In furtherance and not in limitation of the foregoing,
the Insurer may accept documents that appear on their face to be in order,
without responsibility for further investigation.
Section 4.06. SUBROGATION. To the extent of any payments under the
Policy, the Insurer shall be fully subrogated to any remedies against the Seller
or the Depositor or in respect of the Mortgage Loans and the Underlying Security
available to the Trustee under the Trust Agreement. The Trustee acknowledges
such subrogation and, further, agrees to execute such instruments prepared by
the Insurer and to take such reasonable actions as, in the sole judgment of the
Insurer, are necessary to evidence such subrogation and to perfect the rights of
the Insurer to receive any moneys paid or payable under the Trust Agreement.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) any representation or warranty made by the Seller or the
Depositor under this Agreement shall prove to be untrue or incomplete
in any material respect; PROVIDED, HOWEVER, that if the Seller or the
Depositor effectively cures any such defect in any representation or
warranty under such agreement within the time period specified in such
agreement as the cure period therefor, such defect shall not in and of
itself constitute an Event of Default hereunder; or
(b) either the Seller or the Depositor shall fail to pay to the
Insurer when due any amount payable by the Seller or the Depositor
under this Agreement, or the Trust Agreement, unless such amounts are
paid in full within the applicable cure period explicitly provided for
under such agreement; or
(c) the occurrence of an Event of Default under Section 8.01 of
the Servicing Agreement (as defined therein) or the termination of
Impac Funding Corporation for cause pursuant to the terms of the Impac
Servicing Agreement.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the Insurer may
exercise any one or both of the rights and remedies set forth below:
(i) exercise any rights and remedies under this Agreement or
the Trust Agreement, as applicable, in accordance with their
terms; or
(ii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts
then due and thereafter to become due under this Agreement, or to
enforce performance and observance of any obligation, agreement
or covenant of the Seller or the Depositor under this Agreement,
the Servicing Agreement, the Impac Servicing Agreement or the
Trust Agreement, as applicable.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Transaction Documents or
existing at law or in equity. No delay or omission to exercise any
right or power accruing under the Transaction Documents upon the
happening of any event set forth in Section 5.01 hereof shall impair
any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Insurer to
exercise any remedy reserved to the Insurer in this Article, it shall
not be necessary to give any notice, other than such notice as may be
expressly required in this Article.
Section 5.03. WAIVERS.
(a) No failure by any of the parties to exercise, and no delay by
any of the parties in exercising, any right hereunder shall operate as
a waiver thereof. The exercise by any of the parties of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein to each of the parties are declared in every
case to be cumulative and not exclusive of any remedies provided by
law or equity.
(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Default hereunder, by a
writing setting forth the terms, conditions and extent of such waiver
signed by the Insurer and delivered to the Seller and the Depositor.
Unless such writing expressly provides to the contrary, any waiver so
granted shall extend only to the specific event or occurrence which
gave rise to the Event of Default so waived and not to any other
similar event or occurrence which occurs subsequent to the date of
such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement
may be amended, changed, modified, altered or terminated only by written
instrument or written instruments signed by the Insurer, the Trustee, the Seller
and the Depositor. The Seller, the Depositor and the Insurer also agree to
provide prior written notification to Moody's and S&P of any amendment to this
Agreement.
Section 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF) Structured Asset
Securities Corporation Mortgage
Pass-Through Certificates Series 2000-1
Class 2-A3 Certificates.
Telecopy No.: (914) 765-3810
Confirmation: (914) 765-3781
(in each case in which notice or other communication to
the Insurer refers to an Event of Default, a claim on
the Policy or with respect to which failure on the part
of the Insurer to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention
of each of the general counsel and the Insurer and shall
be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Depositor:
Structured Asset Securities Corporation
200 Vesey Street, 12th Floor
3 World Financial Center
New York, NY 10285
Attention: Mark Zusy
Telecopy No.: (212) 526-7209
Confirmation: (212) 526-7000
(c) To the Trustee:
U.S. Bank National Association
180 East Fifth Street
St. Paul, MN 55101
Attention: Structured Finance (Sasco 2000-1)
(d) To the Seller:
Lehman Capital
200 Vesey Street, 12th Floor
3 World Financial Center
New York, NY 10285
Attention: Scott Kimmel/Lehman Brothers (Legal)
Telecopy No.: (212) 526-3721
Confirmation: (212) 526-7000
Section 6.03. SEVERABILITY. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereunder is unavailable or unenforceable shall not affect
in any way the ability of any party to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.05. CONSENT TO JURISDICTION AND VENUE, ETC. The parties
hereto irrevocably (i) agree that any suit, action or other legal proceeding
arising out of or relating to this Agreement may be brought in a court of record
in the Borough of Manhattan, City of New York, State of New York or in the
Courts of the United States of America located in such state, (ii) consent to
the jurisdiction of each such court in any such suit, action or proceeding and
(iii) waive any objection which it may have to the laying of venue of any such
suit, action or proceeding in any of such courts and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum.
Nothing in this Section 6.05 shall limit or affect the right of the
Insurer to serve legal process in any manner permitted by law or to start legal
proceedings relating to any Transaction Document against any party hereto or its
or their respective property in the courts of any jurisdiction.
Section 6.06. CONSENT OF INSURER. In the event that the Insurer's
consent is required under the terms hereof or any term of the Trust Agreement,
it is understood and agreed that, except as otherwise provided expressly herein
or therein, the determination whether to grant or withhold such consent shall be
made solely by the Insurer in its absolute discretion. The Insurer hereby agrees
that it will respond to any request for consent in a timely manner, taking into
consideration the business of the Depositor.
Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 6.08. HEADINGS. The headings of sections contained in this
Agreement are provided for convenience only. They form no part of this Agreement
and shall not affect its construction or interpretation. All references to
sections or subsections of this Agreement refer to the corresponding sections or
subsections of this Agreement.
Section 6.09. WAIVER OF TRIAL BY JURY. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. ENTIRE AGREEMENT. This Agreement and the Policy set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
Section 6.11. THIRD PARTY BENEFICIARY. Each of the parties hereto
acknowledges that the Insurer shall be an express third party beneficiary of the
Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By /s/ Frederick B. Hnat
___________________________________
Assistant Secretary
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By /s/ Ellen Kiernan
___________________________________
Title Vice President
LEHMAN CAPITAL, a Division of Lehman
Brothers Holdings, Inc., as Seller
By /s/ Joseph J. Kelly
___________________________________
Title Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Nancie J. Arvin
___________________________________
Title Vice President
EXECUTION
SECURITY PURCHASE AGREEMENT
THIS SECURITY PURCHASE AGREEMENT, dated January 28, 2000 (the
"Agreement"), is between Lehman Brothers Inc., a Delaware corporation (the
"Seller"), and Structured Asset Securities Corporation, a Delaware corporation
(the "Depositor"). Capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the Trust Agreement (as defined below).
W I T N E S S E T H
WHEREAS, the Depositor desires to purchase from the Seller and the
Seller desires to sell to the Depositor the Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS3, Class 2-NC
Certificates (the "Underlying Security"); and
WHEREAS, the Depositor intends to sell such Underlying Security,
together with certain mortgage loans, to U.S. Bank National Association, as
trustee (the "Trustee") under the Trust Agreement to be dated as of January 1,
2000 (the "Trust Agreement"), among the Depositor, the Trustee and Aurora Loan
Services Inc., as Master Servicer, in exchange for $453,689,369.12 aggregate
principal amount of Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 2000-1, to be issued under the Trust
Agreement;
NOW THEREFORE, the parties hereto agree as follows:
1. Purchase and Sale of the Underlying Securities.
----------------------------------------------
(a) Set forth in Annex A hereto is additional information regarding
the Underlying Security. The Seller hereby sells to the Depositor in exchange
for payment by the Depositor to the Seller of an aggregate purchase price in
U.S. dollars equal to $134,697,867.22 (the "Purchase Price"), and the Depositor
hereby purchases from the Seller, the Underlying Security, including all
interest accrued and unpaid thereon and all other rights with respect thereto.
(b) The Depositor hereby acknowledges that delivery or transfer of the
Underlying Security to the Depositor or its designee has been made. The Seller
hereby acknowledges that the Depositor has paid to the Seller the Purchase Price
in the manner agreed upon by the Seller and the Depositor.
2. Conditions.
----------
The obligations of the parties under this Agreement are subject to the
following conditions:
(a) the representations and warranties contained herein shall be
accurate and complete; and
(b) on the date hereof, counsel for the Depositor shall have been
furnished with all such documents, certificates and opinions as such counsel may
reasonably request in order to evidence the accuracy and completeness of any of
the representations, warranties or statements of the Seller, the performance of
any of the obligations of the Seller hereunder or the fulfillment of any of the
conditions herein contained.
3. Representations and Warranties.
------------------------------
(a) Each party hereby represents and warrants to the other party that
(i) it is duly organized and validly existing as an entity under the laws of the
jurisdiction in which it is chartered or organized, (ii) it has the requisite
corporate power and authority to enter into and perform this Agreement, and
(iii) this Agreement has been duly authorized by all necessary corporate action,
has been duly executed by one or more duly authorized officers and is the valid
and binding agreement of such party enforceable against such party in accordance
with its terms.
(b) The Seller further represents and warrants to the Depositor that
(i) immediately prior to the sale thereof to the Depositor, the Seller owned the
Underlying Security, had good and marketable title thereto, free and clear of
any pledge, lien, security interest, charge, claim, equity, or encumbrance of
any kind, and upon the delivery or transfer of the Underlying Security to the
Depositor as contemplated herein, the Depositor will receive good and marketable
title to the Underlying Security, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind; (ii) neither the
execution, delivery nor performance by the Seller of this Agreement shall (A)
conflict with, result in any breach of or constitute a default (or an event
which, with the giving of notice or passage of time, or both, would constitute a
default) under any term or provision of the organizational documents of the
Seller, or any material indenture, agreement, order, decree or other material
instrument to which the Seller is party or by which the Seller is bound which
materially adversely affects the Seller's ability to perform its obligations
hereunder or (B) violate any provision of any law, rule or regulation applicable
to the Seller of any regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties; and (iii) no consent, license, approval or authorization from, or
registration or qualification with any governmental body, agency or authority,
nor any consent, approval, waiver or notification of any creditor or lessor is
required in connection with the execution, delivery and performance by the
Seller of this Agreement except such as have been obtained and are in full force
and effect.
4. Non-Recourse.
------------
Notwithstanding anything to the contrary contained herein, no recourse
shall be had, whether by levy or execution or otherwise, for the payment of the
principal of or interest or premium (if any) on the Underlying Security, or for
any claim based on payments due thereon, against the Seller or any of its
stockholders, directors, officers, agents or employees under any rule of law,
statute or constitution, or by the enforcement of any assessment or penalty, or
otherwise, nor shall any of such persons be personally liable for any such
amounts or claims, or liable for any defenses or judgment based thereon or with
respect thereto; provided, that the foregoing shall not (a) constitute a waiver
of any rights of the Depositor against the Seller for breach of any
representations or warranties contained herein, or (b) be taken to prevent
recourse by the Depositor to, and the enforcement of its rights against, the
Underlying Securities or any issuer thereof.
5. Amendments.
----------
This Agreement may not be modified, amended, altered or supplemented,
except upon the execution and delivery of a written agreement by the parties
hereto.
6. Communications.
--------------
Except as may be otherwise agreed between the parties, all
communications hereunder shall be made in writing to the relevant party by
personal delivery or by courier or first-class registered mail, or the closest
local equivalent thereto, or by facsimile transmission confirmed by personal
delivery or by courier or first-class registered mail as follows:
To the Seller: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Attention: Contract Finance
Telephone Number: (212) 526-7000
Facsimile Number: (212) 526-3738
To the Depositor: Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Attention: Mark Zusy
Telephone Number: (212) 526-7000
Facsimile Number: (212) 526-3738
or to such other address, telephone number or facsimile number as either party
may notify to the other in accordance with the terms hereof from time to time.
Any communications hereunder shall be effective upon receipt.
7. Successors.
----------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns, and no
other person shall have any right or obligation hereunder. Neither party may
assign its rights under this Agreement without the written consent of the other
party.
8. Severability.
------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9. Headings.
--------
The headings of the various Sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
10. Entire Agreement.
----------------
This Agreement embodies the entire agreement of the parties with
respect to the subject matter hereof and supersedes any prior written or oral
agreement or understanding relating to the subject matter hereof.
11. Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
12. Counterparts.
------------
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
Executed as of the day and year first above written.
LEHMAN BROTHERS INC.
By: /s/ Joseph J. Kelly
----------------------
Name: Joseph J. Kelly
Title: Vice President
STRUCTURED ASSET SECURITIES CORPORATION
By: /s/ Ellen Kiernan
--------------------
Name: Ellen Kiernan
Title: Vice President
<TABLE>
<CAPTION>
ANNEX A
-------
SCHEDULE OF UNDERLYING SECURITY
Certificate Designation Original Principal Amount Outstanding Principal Amount (1)
- ----------------------- ------------------------- --------------------------------
<S> <C> <C>
Structured Asset Securities $144,842,000.00 $134,027,728.58
Corporation Mortgage
Pass-Through Certificates,
Series 1999-ALS3, Class 2-NC
- -------------
(1) As of the Closing Date.
</TABLE>
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: Structured Asset Securities Corporation POLICY NUMBER: 31312
Mortgage Pass-Through Certificates, Series 2000-1
$40,000,000 7.75% Class 2-A3 Certificates
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received by U.S. Bank National Association, or its successor, as
trustee for the Owners (the "Trustee"), on behalf of the Owners from the
Insurer, for distribution by the Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations hereunder
with respect to a particular Insured Payment shall be discharged to the extent
funds equal to the applicable Insured Payment are received by the Trustee,
whether or not such funds are properly applied by the Trustee. Insured Payments
shall be made only at the time set forth in this Policy, and no accelerated
Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of a REMIC, the Trust Fund or
the Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability). This Policy will not provide credit enhancement
for any Class of Certificates other than the Class 2-A3 Certificates.
The Insurer will pay any Insured Payment that is a Preference Amount
on the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon, New York City time, on the later of the Distribution Date on which
the related Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A., as Fiscal Agent for the Insurer, or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent"), of a Notice (as described below),
provided that if such Notice is received after 12:00 noon, New York City time,
on such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making claim hereunder, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due hereunder, unless otherwise stated herein, will
be disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"AGREEMENT" means the Trust Agreement, dated as of January 1, 2000,
between Structured Asset Securities Corporation, as Depositor, Aurora Loan
Services, Inc, as Master Servicer, and U.S. Bank National Association, as
Trustee, without regard to any amendment or supplement thereto.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which the Insurer or banking institutions in New York City or in the city in
which the corporate trust office of the Trustee under the Agreement is located
are authorized or obligated by law or executive order to close
"DEFICIENCY AMOUNT" means with respect to any Distribution Date, the
excess, if any, of Guaranteed Distributions over Available Distribution Amount
for Pool 2 available to Class 2-A3 Certificateholders.
"GUARANTEED DISTRIBUTIONS" means (a) for any Distribution Date, (i)
the Accrued Certificate Interest for the Class 2-A3 Certificates for such
Distribution Date including any Net Prepayment Interest Shortfalls relating to
prepayments and any Relief Act Reductions allocable to such Class of
Certificates on such Distribution Date that are not covered by the Class 2-A3
Reserve Fund and (ii) the amount of any Realized Loss allocated to the Class
2-A3 Certificates on such Distribution Date, and (b) for the Final Scheduled
Distribution Date, the Class Principal Amount of the Class 2-A3 Certificates to
the extent unpaid on the Final Scheduled Distribution Date.
"INSURED PAYMENT" means (a) as of any Distribution Date, any
Deficiency Amount and (b) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly
confirmed in writing by facsimile substantially in the form of Exhibit A
attached hereto, the original of which is subsequently delivered by registered
or certified mail, from the Trustee specifying the Insured Payment which shall
be due and owing on the applicable Distribution Date.
"OWNER" means each Class 2-A3 Certificateholder (as defined in the
Agreement) who, on the applicable Distribution Date, is entitled under the terms
of the related Certificates to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an
Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
THIS POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 28th day of January, 2000.
MBIA INSURANCE CORPORATION
By /s/ Gary C. Dunton
___________________________________
President
Attest:
By /s/ Frederick B. Hnat
___________________________________
Assistant Secretary
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE
POLICY NUMBER: 31312
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 31312
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
15th Floor
61 Broadway
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as trustee (the
"Trustee"), hereby certifies to State Street Bank and Trust Company, N.A. (the
"Fiscal Agent") and MBIA Insurance Corporation (the "Insurer"), with reference
to Certificate Guaranty Insurance Policy Number: 31312 (the "Policy") issued by
the Insurer in respect of the Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 2000-1 $40,000,000 7.75% Class 2-A3
Certificates (the "Obligations"), that:
(a) the Trustee is the trustee under the Trust Agreement, dated as of
January 1, 2000, between Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services, Inc, as Master Servicer, and U.S. Bank
National Association, as Trustee, without regard to any amendment or
supplement thereto.
(b) the amount due under clause (a) of the definition of Guaranteed
Distributions for the Distribution Date occurring on [ ] the "Applicable
Distribution Date") is $[ ];
(c) the amount due under clause (b) of the definition of Guaranteed
Distributions for the Applicable Distribution Date is $[ ];
(d) the sum of the amounts listed in paragraphs (b) and (c) is $[ ]
(e) the Available Distribution Amount available to the Class 2-A3
Certificateholders for the Applicable Distribution Date is $[ ];
(f) the excess of the amounts listed in paragraphs (d) over the
amounts listed in paragraph (e) above is $[ ] (the "Deficiency Amount");
(g) the amount of previously distributed payments on the Obligations
that is recoverable and sought to be recovered as a voidable preference by
a trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with
a final nonappealable order of a court having competent jurisdiction is $[
] (the "Preference Amount");
(h) the total Insured Payment due is $[ ], which amount equals the sum
of the Deficiency Amount and the Preference Amount;
(i) the Trustee is making a claim under and pursuant to the terms of
the Policy for the dollar amount of the Insured Payment set forth in (f)
above to be applied to the payment of the Deficiency Amount for the
Applicable Distribution Date in accordance with the Agreement and for the
dollar amount of the Insured Payment set forth in (g) above to be applied
to the payment of any Preference Amount; and
(j) the Trustee directs that payment of the Insured Payment be made to
the following account by bank wire transfer of federal or other immediately
available funds in accordance with the terms of the Policy: [TRUSTEE'S
ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR
OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM CONTAINING
ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF MISLEADING,
INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A FRAUDULENT INSURANCE
ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT TO A CIVIL PENALTY NOT TO
EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM FOR EACH SUCH
VIOLATION.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the [ ] day of [ ], [ ].
[NAME OF TRUSTEE], as Trustee
By ___________________________________
Title ________________________________
