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)
April 30, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as depositor under the Trust
Agreement, dated as of April 1, 1998, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-4)
Structured Asset Securities Corporation
______________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-47499 74-2440805
____________________________ _____________ __________________
(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 (Zip Code)
Executive 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
A. 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.
333-47499) (the "Registration Statement"). Pursuant to the Registration
Statement, the Registrant issued $759,131,000 in aggregate principal amount of
Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates of its
Structured Asset Securities Corporation Mortgage Pass-Through Certificates,
Series 1998-4 on April 30, 1998. This Current Report on Form 8-K is being
filed to satisfy an undertaking, contained in the definitive Prospectus dated
March 18, 1998, as supplemented by the Prospectus Supplement dated April 27,
1998 (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 March 1, 1998, among
Structured Asset Securities Corporation, as depositor (the "Depositor"),
Norwest Bank Minnesota, National Association, as master servicer and First
Union National Bank, as trustee (the "Trustee"). The "Certificates" consist of
the following classes: Class A-1, Class A-2, Class M-1, Class M-2, Class B,
Class X and Class R. The Certificates evidence all the beneficial ownership
interest in a trust fund (the "Trust Fund") that consists primarily of a pool
of fixed and adjustable rate, fully amortizing and balloon, conventional,
first lien residential mortgage loans (the "Mortgage Loans") with an aggregate
outstanding principal balance of $769,131,604.23 as of April 1, 1998, 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 April 1, 1998, between Structured
Asset Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of April 1, 1998, among
Structured Asset Securities Corporation, as Depositor, Norwest
Bank Minnesota, National Association, as Master Servicer and
First Union National Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of
April 1, 1998, between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., as Seller, and Structured Asset
Securities Corporation, as Purchaser.
99.2 Special Servicing Agreement, dated as of April 1, 1998,
between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., and Ocwen Federal Bank FSB, as special servicer.
99.3* Servicing Agreement, dated as of December 1, 1997,
between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., and Ocwen Federal Bank FSB, as special servicer.
99.4 Servicing Agreement, dated as of April 1, 1998, between
Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
and Aurora Loan Services Inc., as servicer.
99.5* Flow Servicing Agreement, dated as of September 1, 1997,
between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., and Aurora Loan Services Inc., as servicer.
99.6 Servicing Agreement, dated as of April 1, 1998, between
Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
and Option One Mortgage Corporation, as servicer.
99.7* Seller's Warranties and Servicing Agreement, dated as of
September 30, 1997, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Option One Mortgage
Corporation, as servicer.
* Incorporated by reference to the Depositor's Current Report on Form
8-K dated March 30, 1998, filed with the Securities and Exchange
Commission on April 14, 1998 (File No. 333-47499).
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/ Stanley P. Labanowski
__________________________
Name: Stanley P. Labanowski
Title: Authorized Signatory
Dated: May 14, 1998
EXHIBIT INDEX
Exhibit
No. Description Page No.
1.1 Terms Agreement, dated April 1, 1998,
between Structured Asset Securities Corporation
and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of April 1, 1998,
among Structured Asset Securities Corporation,
as Depositor, Norwest Bank Minnesota, National
Association, as Master Servicer and First Union
National Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment
Agreement, dated as of April 1, 1998, between
Lehman Capital, A Division of Lehman Brothers
Holdings Inc., as Seller, and Structured Asset
Securities Corporation, as Purchaser.
99.2 Special Servicing Agreement, dated as of
April 1, 1998, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc., and
Ocwen Federal Bank FSB, as special servicer.
99.3* Servicing Agreement, dated as of December
1, 1997, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Ocwen Federal
Bank FSB, as special servicer.
99.4 Servicing Agreement, dated as of April 1,
1998, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Aurora Loan
Services Inc., as servicer.
99.5* Flow Servicing Agreement, dated as of
September 1, 1997, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc., and
Aurora Loan Services Inc., as servicer.
99.6 Servicing Agreement, dated as of April 1,
1998, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Option One
Mortgage Corporation, as servicer.
99.7* Seller's Warranties and Servicing
Agreement, dated as of September 30, 1997,
between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., and Option One Mortgage
Corporation, as servicer.
* Incorporated by reference to the Depositor's Current Report on Form
8-K dated March 30, 1998, filed with the Securities and Exchange
Commission on April 14, 1998 (File No. 333-47499).
EXECUTION
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-4
TERMS AGREEMENT
Dated: April 27, 1998
To: Structured Asset Securities Corporation, as Depositor under the
Trust Agreement dated as of April 1, 1998 (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 1998-4.
Terms of the Series 1998-4 Certificates: Structured Asset Securities
Corporation Series 1998-4 Mortgage Pass-Through Certificates, Class A-1, Class
A-2, Class M-1, Class M-2, Class B, Class X 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 will
consist of fixed and adjustable rate, fully amortizing and balloon,
conventional, first lien residential mortgage loans (the "Mortgage Loans").
Only the Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates
(the "Offered Certificates") are being sold pursuant to the terms hereof.
Registration Statement: File Number 333-47499
Certificate Ratings: It is a condition to the issuance of the Class A
Certificates that they be rated "AAA" by Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc. ("S&P"). It is a condition to the
issuance of the Class M-1 Certificates that they be rated "AA" by S&P, it is a
condition to the issuance of the Class M-2 Certificates that they be rated "A"
by S&P and it is a condition to the issuance of the Class B Certificates that
they be rated "BBB" by S&P.
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: April 1, 1998.
Closing Date: 10:00 A.M., New York time, on or about April 30, 1998. 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:
Name: Theodore P. Janulis
Title: Managing Director
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By:
_____________________________
Name: Stanley P. Labanowski
Title: Authorized Signatory
Schedule 1
Initial
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
Class A-1 $313,331,000 (2) 100%
Class A-2 313,331,000 (2) 100%
Class M-1 62,173,000 (2) 100%
Class M-2 29,454,000 (2) 100%
Class B 25,810,000 (2) 100%
- -------------------------
(1) Approximate.
(2) Interest will accrue on the Class A-1, Class A-2 Class M-1, Class M-2
and Class B Certificates at the applicable per annum rate described
in the Prospectus Supplement.
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer,
and
FIRST UNION NATIONAL BANK, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of April 1, 1998
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-4
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions........................................................... 3
1.02. Calculations Respecting Mortgage Loans................................ 33
1.03. Calculations Respecting Accrued Interest.............................. 33
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans...33
2.02. Acceptance of Trust Fund by Trustee:
Review of Documentation for Trust Fund.............................. 36
2.03. Representations and Warranties of the Depositor........................37
2.04. Discovery of Breach....................................................39
2.05. Repurchase, Purchase or Substitution of Mortgage Loans.................40
2.06. Grant Clause...........................................................41
2.07. Purchase of Defaulted Mortgage Loans...................................41
ARTICLE III
THE CERTIFICATES
3.01. The Certificates.......................................................42
3.02. Registration...........................................................42
3.03. Transfer and Exchange of Certificates..................................43
3.04. Cancellation of Certificates...........................................45
3.05. Replacement of Certificates............................................46
3.06. Persons Deemed Owners..................................................46
3.07. Temporary Certificates.................................................46
3.08. Appointment of Paying Agent............................................47
3.09. Book-Entry Certificates................................................47
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
4.01. Collection Account.....................................................49
4.02. Application of Funds in the Collection Account.........................51
4.03. Reports to Certificateholders..........................................53
4.04. Certificate Account....................................................55
4.05. Determination of LIBOR.................................................56
4.06. Determination of Fed Funds Average Rate................................57
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally................................................59
5.02. Distributions from the Certificate Account.............................59
5.03. Allocation of Losses...................................................63
5.04. Advances by Master Servicer and Trustee................................63
5.05. Compensating Interest Payments.........................................64
5.06. REMIC 1, REMIC 2, REMIC 3 and REMIC 4 Allocations......................64
5.07. Directing Holder Servicing Fee.........................................68
5.08. Basis Risk Reserve Fund................................................68
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Duties of Trustee......................................................69
6.02. Certain Matters Affecting the Trustee..................................70
6.03. Trustee Not Liable for Certificates....................................71
6.04. Trustee May Own Certificates...........................................72
6.05. Eligibility Requirements for Trustee...................................72
6.06. Resignation and Removal of Trustee.....................................72
6.07. Successor Trustee......................................................73
6.08. Merger or Consolidation of Trustee.....................................73
6.09. Appointment of Co-Trustee, Separate Trustee or Custodian...............74
6.10. Authenticating Agents..................................................75
6.11. Indemnification of Trustee.............................................76
6.12. Fees and Expenses of Trustee...........................................77
6.13. Collection of Monies...................................................77
6.14. Trustee To Act; Appointment of Successor...............................77
6.15. Additional Remedies of Trustee Upon Event of Default...................81
6.16. Waiver of Defaults.....................................................81
6.17. Notification to Holders................................................81
6.18. Directions by Certificateholders and
Duties of Trustee During Event of Default............................ 82
6.19. Action Upon Certain Failures of the
Master Servicer and Upon Event of Default............................ 82
ARTICLE VII
PURCHASE AND TERMINATION OF THE
TRUST FUND
7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans................................... 82
7.02. Procedure Upon Termination of Trust Fund.............................. 84
7.03. Additional Trust Fund Termination Requirements........................ 85
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders....................................... 86
8.02. Access to List of Holders............................................. 87
8.03. Acts of Holders of Certificates....................................... 88
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
9.01. Duties of the Master Servicer......................................... 89
9.02. Master Servicer Fidelity Bond and Master Servicer
Errors and Omissions Insurance Policy............................... 89
9.03. Master Servicer's Financial Statements and Related Information........ 90
9.04. Power to Act; Procedures.............................................. 90
9.05. Servicing Agreements Between the Master Servicer
and Servicers; Enforcement of Servicers' Obligations................ 92
9.06. Collection of Taxes, Assessments and Similar Items.................... 92
9.07. Termination of Servicing Agreements; Successor Servicers.............. 93
9.08. Master Servicer Liable for Enforcement................................ 94
9.09. No Contractual Relationship Between Servicers and
Trustee or Depositor................................................ 94
9.10. Assumption of Servicing Agreement by Trustee.......................... 94
9.11. "Due-on-Sale" Clauses; Assumption Agreements.......................... 95
9.12. Release of Mortgage Files............................................. 95
9.13. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee..................................... 96
9.14. Representations and Warranties of the Master Servicer................. 97
9.15. Closing Certificate and Opinion....................................... 99
9.16. Standard Hazard and Flood Insurance Policies..........................100
9.17. Presentment of Claims and Collection of Proceeds......................100
9.18. Maintenance of the Primary Mortgage Insurance Policies................100
9.19. Trustee To Retain Possession of Certain Insurance
Policies and Documents..............................................101
9.20. Realization Upon Defaulted Mortgage Loans.............................101
9.21. Compensation to the Master Servicer...................................101
9.22. REO Property..........................................................102
9.23. Preparation of Tax Returns and Other Reports..........................103
9.24. Reports to the Trustee................................................104
9.25. Annual Officer's Certificate as to Compliance.........................104
9.26. Annual Independent Accountants' Servicing Report......................105
9.27. Merger or Consolidation...............................................105
9.28. Resignation of Master Servicer........................................105
9.29. Assignment or Delegation of Duties by the Master Servicer.............106
9.30. Limitation on Liability of the Master Servicer and Others.............106
9.31. Indemnification; Third-Party Claims...................................107
9.32. Alternative Index.....................................................107
ARTICLE X
REMIC ADMINISTRATION
10.01. REMIC Administration.................................................107
10.02. Prohibited Transactions and Activities...............................109
10.03. Indemnification with Respect to Certain Taxes
and Loss of REMIC Status...........................................110
10.04. REO Property.........................................................110
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Binding Nature of Agreement; Assignment..............................111
11.02. Entire Agreement.....................................................112
11.03. Amendment............................................................112
11.04. Voting Rights........................................................113
11.05. Provision of Information.............................................113
11.06. Governing Law........................................................114
11.07. Notices..............................................................114
11.08. Severability of Provisions...........................................114
11.09. Indulgences; No Waivers..............................................114
11.10. Headings Not To Affect Interpretation................................114
11.11. Benefits of Agreement................................................115
11.12. Special Notices to the Rating Agencies...............................115
11.13. Counterparts.........................................................116
11.14. Transfer of Servicing................................................116
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 Residual Certificate Transfer Affidavit
(Transferee)
Exhibit D-2 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 Special Servicing Compensation Agreement
Schedule A Mortgage Loan Schedule
This TRUST AGREEMENT, dated as of April 1, 1998 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
master servicer (the "Master Servicer"), and FIRST UNION NATIONAL BANK, a
national banking association with its main office in Charlotte, North Carolina,
as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. ("Lehman Capital"), and at the Closing
Date is the owner of the Mortgage Loans 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 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 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 and the other property constituting the Trust
Fund are for the benefit of the Holders from time to time of the Certificates.
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 four separate real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1," "REMIC
2," "REMIC 3," and "REMIC 4," respectively, REMIC 4 also being referred to as
the "Upper Tier REMIC"). The Class A-1, Class A-2, Class M-1. Class M-2 and
Class B Certificates and the Class X Certificate represent ownership of all of
the "regular interests" in REMIC 4 (the Class T4-1, Class T4-2, Class T4-3,
Class T4-4, Class T4-5, Class T4-6, Class T4-7, Class T4-8, Class T4-9, and
Class T4-10 Interests), and the Class R4 Interests represent the sole class of
"residual interest" in REMIC 4 for purposes of the REMIC Provisions. Each of the
Class R1, R2, and R3 Certificates represents the sole class of "residual
interest" in REMIC 1, REMIC 2, and REMIC 3, respectively, for purposes of the
REMIC Provisions. There are also three classes of uncertificated REMIC 1 Regular
Interests issued under this Agreement (the Class T1-1, Class T1-2, and Class
T1-3 Interests), each of which will constitute regular interests in REMIC 1,
four classes of uncertificated REMIC 2 Regular Interests (the Class T2-1, Class
T2-2, Class T2-3, and Class T2-4 Interests), each of which will constitute
regular interests in REMIC 2, and eight classes of uncertificated REMIC 3
Regular Interests (the Class T3-1, Class T3-2, Class T3-3, Class T3-4, Class
T3-5, Class T3-6, Class T3-7, and Class T3-8 Interests), each of which will
constitute regular interests in REMIC 3. The REMIC 1 Regular Interests will be
held as assets of REMIC 2, the REMIC 2 Regular Interests will be held as assets
of REMIC 3, and the REMIC 3 Regular Interests will be held as assets of REMIC 4.
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Certificate Principal Amount and
minimum denomination for each Class of Certificates comprising the interests in
the Trust Fund created hereunder.
<TABLE>
<CAPTION>
Class Designation Certificate Interest Rate Initial Certificate Minimum
Principal Amount Denominations
<S> <C> <C> <C>
Class A-1 (1) $313,331,000.00 $100,000
Class A-2 (2) 313,331,000.00 100,000
Class M-1 (3) 62,173,000.00 100,000
Class M-2 (4) 29,454,000.00 100,000
Class B (5) 25,810,000.00 100,000
Class X (6) (6) (7)
Class R (6) (6) (7)
</TABLE>
- ---------------------------
(1) The Certificate Interest Rate with respect to any Distribution Date for
the Class A-1 Certificates is a per annum rate equal to the least of
(i) the Fed Funds Average Rate plus 0.25%, (ii) 9.50% and (iii) the Net
Funds Cap for such Distribution Date; provided, that if the Class X
Certificateholder does not exercise its option to purchase the assets
of the Trust Fund pursuant to Section 7.01(c) or to purchase the Class
A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates pursuant
to Section 7.01(d) on the first Distribution Date on which it is first
entitled to do so, with respect to each subsequent Distribution Date
the per annum rate calculated pursuant to clause (i) above will be the
Fed Funds Average Rate plus 0.50%.
(2) The Certificate Interest Rate with respect to any Distribution Date for
the Class A-2 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.24%, (ii) 9.50% and (iii) the Net Funds Cap for such
Distribution Date; provided, that if the Class X Certificateholder does
not exercise its option to purchase the assets of the Trust Fund
pursuant to Section 7.01(c) or to purchase the Class A-1, Class A-2,
Class M-1, Class M-2 and Class B Certificates pursuant to Section
7.01(d) on the first Distribution Date on which it is first entitled to
do so, with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above will be LIBOR plus 0.48%.
(3) The Certificate Interest Rate with respect to any Distribution Date for
the Class M-1 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.43%, (ii) 9.50% and (iii) the Net Funds Cap for such
Distribution Date; provided, that if the Class X Certificateholder does
not exercise its option to purchase the assets of the Trust Fund
pursuant to Section 7.01(c) or to purchase the Class A-1, Class A-2,
Class M-1, Class M-2 and Class B Certificates pursuant to Section
7.01(d) on the first Distribution Date on which it is first entitled to
do so, with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above will be LIBOR plus 0.93%.
(4) The Certificate Interest Rate with respect to any Distribution Date for
the Class M-2 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.75%, (ii) 9.50% and (iii) the Net Funds Cap for such
Distribution Date; provided, that if the Class X Certificateholder does
not exercise its option to purchase the assets of the Trust Fund
pursuant to Section 7.01(c) or to purchase the Class A-1, Class A-2,
Class M-1, Class M-2 and Class B Certificates pursuant to Section
7.01(d) on the first Distribution Date on which it is first entitled to
do so, with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above will be LIBOR plus 1.25%.
(5) The Certificate Interest Rate with respect to any Distribution Date for
the Class B Certificates is a per annum rate equal to the least of (i)
LIBOR plus 1.15%, (ii) 9.50% and (iii) the Net Funds Cap for such
Distribution Date; provided, that if the Class X Certificateholder does
not exercise its option to purchase the assets of the Trust Fund
pursuant to Section 7.01(c) or to purchase the Class A-1, Class A-2,
Class M-1, Class M-2 and Class B Certificates pursuant to Section
7.01(d) on the first Distribution Date on which it is first entitled to
do so, with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above will be LIBOR plus 1.65%.
(6) The Class X and Class R Certificates will be issued without a
Certificate Principal Amount and will not bear interest.
(7) The Class X and Class R Certificates will each be issued as a single
Certificate evidencing the entire Percentage Interest in such Class.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $759,131,604.23.
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 (except in its capacity as successor to a Servicer), or
(y) as provided in the applicable Servicing Agreement, to the extent applicable
to any Servicer.
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.
Accrual Period: With respect to any Distribution Date and any Class of
LIBOR Certificates or Fed Funds Certificates, the one-month period beginning on
the immediately preceding Distribution Date (or on the Closing Date, in the case
of the first Accrual Period) and ending on the day immediately preceding the
related Distribution Date.
Additional Collateral: None.
Adjustable Rate Mortgage Loan: Any Mortgage Loan as to which the related
Mortgage Note provides for the adjustment of the Mortgage Rate applicable
thereto.
Adjusted Overcollateralization Amount: With respect to any Distribution
Date, the amount, if any, by which (a) the Aggregate Loan Balance as of the end
of the related Collection Period (reduced to give effect to any Realized Losses
and Advances of principal) exceeds (b) the aggregate of the balances of the
Class T3-4, Class T3-5. Class T3-6, and Class T3-7 Interests as of such
Distribution Date (after giving effect to the distribution of principal on such
Regular Interests on such Distribution Date).
Adjusted Overcollateralization Release Amount: With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the amount, if any, by which (i) the Adjusted
Overcollateralization Amount for such date, calculated for this purpose on the
basis of the assumption that 100% of the Principal Remittance Amount for such
date is applied on such date in reduction of the principal balances of the Class
T3-4, Class T3-5, Class T3-6, and Class T3-7 Interests, exceeds (ii) the
Targeted Overcollateralization Amount for such date.
Advance: An advance of the aggregate of payments of principal and interest
(net of the Master Servicing Fee and the applicable Servicing Fee) on one or
more Mortgage Loans that were due on the Due Date in the related Collection
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 Loan Balance: The aggregate of the Scheduled Principal Balances
for all Mortgage Loans at the date of determination.
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 Notional Amount: With respect to any Class of Notional
Certificates, the applicable aggregate notional amount set forth or described in
the Preliminary Statement hereto.
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.
Applied Loss Amount: With respect to any Distribution Date, the amount, if
any, by which (x) the aggregate Certificate Principal Amount after giving effect
to distributions on such date, but before giving effect to any application of
the Applied Loss Amount on such date, exceeds (y) the Aggregate Loan Balance as
of the close of the related Collection Period.
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.
Aurora: Aurora Loan Services Inc., as Servicer under the applicable
Servicing Agreement.
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.
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.
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.
Basis Risk Reserve Fund: A fund created as part of the Trust Fund pursuant
to Section 5.08 of this Agreement but which is not an asset of any of the
REMICs.
Basis Risk Shortfall: With respect to any Distribution Date and any Class
of LIBOR Certificates, the amount by which the Certificate Interest Rate
applicable to such Class for such date, determined without regard to the Net
Funds Cap for such date, exceeds such Net Funds Cap.
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 A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates.
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 Corporate Trust Office of the Trustee is located, or the State
of Maryland, 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.
Carryforward Interest: With respect to any Distribution Date and each Class
of Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates, the sum
of (i) the amount, if any, by which (x) the sum of (A) Current Interest for such
Class for the immediately preceding Distribution Date and (B) any unpaid
Carryforward Interest for such Class from previous Distribution Dates exceeds
(y) the amount distributed in respect of interest on such Class on such
immediately preceding Distribution Date, and (ii) interest on such amount for
the related Accrual Period at the applicable Certificate Interest Rate.
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 Interest Rate: With respect to each Class of Certificates, the
applicable per annum rate set forth or described 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
Class X or Class R Certificate or 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, less the
amount of all principal distributions previously made with respect to such
Certificate and all Applied Loss Amounts previously allocated to such
Certificate.
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 B Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A-1,
Class A-2, Class M-1 and Class M-2 Certificates after giving effect to
distributions on such Distribution Date and (ii) the Class Certificate Principal
Amount of the Class B Certificates immediately prior to such Distribution Date
exceeds (y) the lesser of (A) the product of (i) 96.04% and (ii) the Aggregate
Loan Balance as of the last day of the related Collection Period and (B) the
amount, if any, by which (i) the Aggregate Loan Balance as of the last day of
the related Collection Period exceeds (ii) $5,693,487.03.
Class Certificate Principal Amount: With respect to each Class of
Certificates other than the Class X and Class R Certificates and any Class of
Notional Certificates, the aggregate of the Certificate Principal Amounts of all
Certificates of such Class at the date of determination.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amount of the Class A-1 and
Class A-2 Certificates after giving effect to distributions on such Distribution
Date and (ii) the Class Certificate Principal Amount of the Class M-1
Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) 65.10% and (ii) the Aggregate Loan Balance as of the
last day of the related Collection Period and (B) the amount, if any, by which
(i) the Aggregate Loan Balance as of the last day of the related Collection
Period exceeds (ii) $5,693,487.03.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A-1,
Class A-2 and Class M-1 Certificates after giving effect to distributions on
such Distribution Date and (ii) the Class Certificate Principal Amount of the
Class M-2 Certificates immediately prior to such Distribution Date exceeds (y)
the lesser of (A) the product of (i) 89.24% and (ii) the Aggregate Loan Balance
as of the last day of the related Collection Period and (B) the amount, if any,
by which (i) the Aggregate Loan Balance as of the last day of the related
Collection Period exceeds (ii) $5,693,487.03.
Class R Certificate: The Class R Certificate executed by the Trustee, and
authenticated and delivered by the Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-3 and evidencing the ownership of the Class R1
Interest, the Class R2 Interest, the Class R3 Interest, and the Class R4
Interest.
Class R1 Interest: The uncertificated Residual Interest in REMIC 1.
Class R2 Interest: The uncertificated Residual Interest in REMIC 2.
Class R3 Interest: The uncertificated Residual Interest in REMIC 3.
Class R4 Interest: The uncertificated Residual Interest in REMIC 4.
Class T1-1 Interest: A regular interest in REMIC 1 held as an asset of
REMIC 2 that has an initial principal balance equal to 98% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Net
Funds Cap and has such other terms as are described in Section 5.06.
Class T1-2 Interest: A regular interest in REMIC 1 held as an asset of
REMIC 2 that has an initial principal balance equal to 1% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Net
Funds Cap and has such other terms as are described in Section 5.06.
Class T1-3 Interest: A regular interest in REMIC 1 held as an asset of
REMIC 2 that has an initial principal balance equal to 1% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Net
Funds Cap and has such other terms as are described in Section 5.06.
Class T2-1 Interest: A regular interest in REMIC 2 held as an asset of
REMIC 3 that has an initial principal balance equal to 98% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Net
Funds Cap and has such other terms as are described in Section 5.06.
Class T2-2 Interest: A regular interest in REMIC 2 held as an asset of
REMIC 3 that has an initial principal balance equal to 1% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Standard
Rate and has such other terms as are described in Section 5.06.
Class T2-3 Interest: A regular interest in REMIC 2 held as an asset of
REMIC 3 that has an initial principal balance equal to 1% of the Cut-off Date
Aggregate Loan Balance, bears interest at a per annum rate equal to the Net
Funds Cap and has such other terms as are described in Section 5.06.
Class T2-4 Interest: A regular interest in REMIC 2 held as an asset of
REMIC 3 that is entitled to 100% of the interest accruals on the Class T1-2
Interest in excess of the Standard Rate and has such other terms as are
described in Section 5.06 hereof. The Class T2-4 Interest shall not have a
principal balance.
Class T3-1 Distributable Amount: With respect to any Distribution Date, an
amount equal to the product of (i) a fraction, the numerator of which is the
number of days in the related Accrual Period and the denominator of which is
360, (ii) the Class T3-1 Notional Balance immediately prior to such Distribution
Date and (iii) the Class T3-1 Pass-Through Rate.
Class T3-1 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has such terms as are described in Section 5.06.
Class T3-1 Notional Balance: A notional principal balance equal as of any
date to the sum of the principal balances of the Class T2-1 and T2-3 Interests
for such date.
Class T3-1 Pass-Through Rate: With respect to any Distribution Date, a per
annum rate equal to the excess of (i) the Net Funds Cap for such date over (ii)
the product of (x) two and (y) a fraction, the numerator of which is the product
of the Standard Rate and the principal balance of the Class T2-2 Interest
immediately prior to such Distribution Date and the denominator of which is the
sum of the principal balances of the Class T2-2 and Class T2-3 Interests
immediately prior to such Distribution Date.
Class T3-2 Distributable Amount: With respect to any Distribution Date, an
amount equal to the product of (i) a fraction, the numerator of which is the
number of days in the related Accrual Period and the denominator of which is
360, (ii) the Class T3-2 Notional Balance immediately prior to such Distribution
Date and (iii) the Class T3-2 Pass-Through Rate.
Class T3-2 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has such terms as are described in Section 5.06.
Class T3-2 Notional Balance: A notional principal balance equal as of any
date to the principal balance of the Class T2-2 Interest for such date.
Class T3-2 Pass-Through Rate: With respect to any Distribution Date, a per
annum rate equal to the excess of (i) the Standard Rate over (ii) the product of
(x) two and (y) a fraction, the numerator of which is the product of the
Standard Rate and the principal balance of the Class T2-2 Interest immediately
prior to such Distribution Date and the denominator of which is the sum of the
principal balances of the Class T2-2 and Class T2-3 Interests immediately prior
to such Distribution Date.
Class T3-3 Distributable Amount: With respect to any Distribution Date, an
amount equal to the amount distributable in respect of the Class T2-4 Interest
for such date.
Class T3-3 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that is entitled to the Class T3-3 Distributable Amount.
Class T3-4 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has an initial principal balance of $313,331,000 as of the Cut-off
Date, bears interest at the Standard Rate and has such other terms as are
described in Section 5.06.
Class T3-5 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has an initial principal balance of $313,331,000 as of the Cut-off
Date, bears interest at the Standard Rate and has such other terms as are
described in Section 5.06.
Class T3-6 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has an initial principal balance of $62,173,000 as of the Cut-off
Date, bears interest at the Standard Rate and has such other terms as are
described in Section 5.06.
Class T3-7 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has an initial principal balance of $29,454,000 as of the Cut-off
Date, bears interest at the Standard Rate and has such other terms as are
described in Section 5.06.
Class T3-8 Interest: A regular interest in REMIC 3 held as an asset of
REMIC 4 that has an initial principal balance of $25,810,000 as of the Cut-off
Date and bears interest at the Standard Rate and has such other terms as are
described in Section 5.06.
Class T4-1 Interest: A regular interest in REMIC 4 that has an initial
principal balance of $313,331,000 as of the Cut-off Date and bears interest at
the Class A-1 Certificate Interest Rate. Ownership of the Class T4-1 Interest is
evidenced by the Class A-1 Certificates.
Class T4-2 Interest: A regular interest in REMIC 4 that has an initial
principal balance of $313,331,000 as of the Cut-off Date and bears interest at
the Class A-2 Certificate Interest Rate. Ownership of the Class T4-2 Interest is
evidenced by the Class A-2 Certificates.
Class T4-3 Interest: A regular interest in REMIC 4 that has an initial
principal balance of $62,173,000 as of the Cut-off Date and bears interest at
the Class M-1 Certificate Interest Rate. Ownership of the Class T4-3 Interest is
evidenced by the Class M-1 Certificates.
Class T4-4 Interest: A regular interest in REMIC 4 that has an initial
principal balance of $29,454,000 as of the Cut-off Date and bears interest at
the Class M-2 Certificate Interest Rate. Ownership of the Class T4-4 Interest is
evidenced by the Class M-2 Certificates.
Class T4-5 Interest: A regular interest in REMIC 4 that has an initial
principal balance of $25,810,000 as of the Cut-off Date and bears interest at
the Class B Certificate Interest Rate. Ownership of the Class T4-4 Interest is
evidenced by the Class B Certificates.
Class T4-6 Interest: A regular interest in REMIC 4 that is entitled to 100%
of the interest accruals on the Class T3-4 Interest in excess of the Class A-1
Certificate Interest Rate. The Class T4-6 Interest shall not have a principal
balance. Ownership of the Class T4-6 Interest is evidenced by the Class X
Certificate.
Class T4-7 Interest: A regular interest in REMIC 4 that is entitled to 100%
of the interest accruals on the Class T3-5 Interest in excess of the Class A-2
Certificate Interest Rate. The Class T4-7 Interest shall not have a principal
balance. Ownership of the Class T4-7 Interest is evidenced by the Class X
Certificate.
Class T4-8 Interest: A regular interest in REMIC 4 that is entitled to 100%
of the interest accruals on the Class T3-6 Interest in excess of the Class M-1
Certificate Interest Rate. The Class T4-8 Interest shall not have a principal
balance. Ownership of the Class T4-8 Interest is evidenced by the Class X
Certificate.
Class T4-9 Interest: A regular interest in REMIC 4 that is entitled to 100%
of the interest accruals on the Class T3-7 Interest in excess of the Class M-2
Certificate Interest Rate. The Class T4-9 Interest shall not have a principal
balance. Ownership of the Class T4-9 Interest is evidenced by the Class X
Certificate.
Class T4-10 Distributable Amount: With respect to any Distribution Date, an
amount equal to the sum of the Class T3-1 Distributable Amount, the Class T3-2
Distributable Amount and the Class T3-3 Distributable Amount for such date.
Class T4-10 Interest: A regular interest in REMIC 4 that is entitled to
100% of the T4-10 Distributable Amount. Ownership of the Class T4-10 Interest is
evidenced by the Class X Certificate.
Class X Distributable Amount: With respect to any Distribution Date, the
aggregate of the amounts distributable on the Class T4-6, Class T4-7, Class
T4-8, Class T4-9, and Class T4-10 Interests on 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: April 30, 1998.
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.
Collection 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.
Compensating Interest Payment: With respect to any Distribution Date, an
amount equal to the excess of (x) the aggregate of any Prepayment Interest
Shortfalls with respect to such Distribution Date over (y) the aggregate of any
amounts required to be paid by the Servicers in respect of such shortfalls but
not paid; provided, that such amount shall not exceed the Aggregate Master
Servicing Compensation that would be payable to the Master Servicer in respect
of such Distribution Date without giving effect to any Compensating Interest
Payment.
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 230 South Tryon
Street NC1179, Charlotte, North Carolina 28288, Attention: Structured Finance.
Current Interest: With respect to each Class of Class A-1, Class A-2, Class
M-1, Class M-2 and Class B Certificates and any Distribution Date, the aggregate
amount of interest accrued during the related Accrual Period at the applicable
Certificate Interest Rate on the Class Certificate Principal Amount of such
Class immediately prior to such Distribution Date
Custodial Agreement: The 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: April 1, 1998.
Cut-off Date Aggregate Loan Balance: With respect to the Mortgage Loans in
the Trust Fund on the Closing Date, the Aggregate Loan Balance as of the Cut-off
Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Deferred Amount: With respect to any Distribution Date and each Class of
Subordinate Certificates, the aggregate of Applied Loss Amounts previously
applied in reduction of the Class Certificate Principal Amount thereof, less any
amounts previously reimbursed in respect thereof.
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 Collection Period.
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.
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.
Directing Holder: As defined in the Special Servicing Agreement.
Directing Holder Servicing Fee: Amounts payable to the Directing Holder
under Section 5.07 of this Agreement.
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, or (viii) 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 May 1998.
Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note.
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");
(i) 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;
(ii) 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;
(iii) 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;
(iv) a Qualified GIC;
(v) 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 (vi) 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;
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.
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).
Extra Principal Distribution Amount: With respect to any Distribution Date,
the lesser of (a) Monthly Excess Interest for such Distribution Date and (b) the
Overcollateralization Deficiency for such date.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fed Funds Average Rate: With respect to each Accrual Period other than the
initial Accrual Period, the fraction, expressed as a percentage, the numerator
of which will be equal to the sum of each day's Fed Funds Rate, determined as
provided in Section 4.06, during the applicable Fed Funds Calculation Period and
the denominator of which will be equal to the number of days in such Fed Funds
Calculation Period.
Fed Funds Business Day: Any day other than a Saturday or Sunday or a day on
which banking institutions in New York, New York are closed.
Fed Funds Calculation Period: With respect to each Accrual Period other
than the initial Accrual Period, the period commencing the 19th day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs and ending on the 18th day of the month in which the related
Distribution Date occurs.
Fed Funds Certificate: Any Class A-1 Certificate.
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: June 25, 2028.
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.
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.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
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.
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.
Index: The index specified in the related Mortgage Note for calculation of
the Mortgage Rate thereof.
Initial LIBOR Rate: [[5.75]]%.
Initial Fed Funds Average Rate: [6.39]%.
Insurance Policy: Any Primary Mortgage Insurance Policy and any standard
hazard insurance policy, flood 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.
Insurance Proceeds: Amounts paid by the insurer under any Insurance Policy,
other than amounts to be applied to restoration or repair of the related
Mortgaged Property or required to be paid over to the Mortgagor pursuant to law
or the related Mortgage Note.
Interest Distribution Amount: Not applicable.
Interest Remittance Amount: With respect to any Distribution Date, the sum
of (i) all interest collected (other than Payaheads) or advanced in respect of
Scheduled Payments on the Mortgage Loans, including any prepayment premiums or
penalties, during the related Collection Period (less (x) the Master Servicing
Fee and the applicable Servicing Fee and (y) unreimbursed Advances and other
amounts due to the Master Servicer, the Servicers or the Trustee, to the extent
allocable to interest), (ii) any amounts paid by the Servicers with respect to
Prepayment Interest Shortfalls and any Compensating Interest Payment with
respect to the related Prepayment Period, (iii) the portion of any Substitution
Amount paid during the related Prepayment Period allocable to interest and (iv)
all Net Liquidation Proceeds, Insurance Proceeds and other recoveries collected
during the related Prepayment Period, to the extent allocable to interest, as
reduced in each case by unreimbursed interest Advances and other amounts due the
Master Servicer, the Servicers or the Trustee, to the extent allocable to
interest.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: June 25, 2030.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
Inc., or any successor in interest.
LIBOR: 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 A-2, Class M-1, Class M-2 or Class B
Certificate.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
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.
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.
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: Norwest Bank Minnesota, National Association, 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
outstanding principal balance of such Mortgage Loan as of the first day of the
related Collection 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: 0.0075% per annum.
Material Defect: As defined in Section 2.02(c) hereof.
Monthly Excess Cashflow: With respect to any Distribution Date, the sum of
(x) Monthly Excess Interest for such date and (y) the Overcollateralization
Release Amount for such date.
Monthly Excess Interest: With respect to any Distribution Date, the amount
of any Interest Remittance Amount remaining after application pursuant to
clauses (i) through (v) of Section 5.02(b) on such date.
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 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 Negative Amortization: Not applicable.
Mortgage Loan Sale Agreement: The agreement, dated as of April 1, 1998, for
the sale of the Mortgage Loans by Lehman Capital, A Division of Lehman Brothers
Holdings Inc., 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 to reflect the addition of Mortgage Loans to, or the deletion of Mortgage
Loans from, the Trust Fund.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
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 Excess Spread: With respect to any Distribution Date, the fraction,
expressed as a percentage, the numerator of which is equal to the amount, if
any, by which (a) the product of (i) the Aggregate Loan Balance as of the end of
the related Collection Period and (ii) the weighted average (by Scheduled
Principal Balance) of the Net Mortgage Rates exceeds (b) the Interest Remittance
Amount for such Distribution Date, and the denominator of which is the product
of (x) the Aggregate Loan Balance and (y) the actual number of days in the
related Accrual Period divided by 360.
Net Funds Cap: The weighted average (by Scheduled Principal Balance) of the
Net Mortgage Rates of the Mortgage Loans as of the first day of the related
Accrual Period.
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, 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 and the Trustee Fee Rate.
Net Prepayment Interest Shortfall: With respect to any Distribution Date,
the excess, if any, of any Prepayment Interest Shortfalls 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-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Aggregate
Notional Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: 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.
Option One: Option One Mortgage Corporation, as Servicer under the
applicable Servicing Agreement.
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.
Overcollateralization Amount: With respect to any Distribution Date, the
amount, if any, by which (x) the Aggregate Loan Balance as of the last day of
the related Collection Period exceeds (y) the aggregate Certificate Principal
Amount of the Certificates after giving effect to distributions on such
Distribution Date.
Overcollateralization Deficiency: With respect to any Distribution Date,
the amount, if any, by which (x) the Targeted Overcollateralization Amount for
such Distribution Date exceeds (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after giving effect to the
reduction on such Payment Date of the Certificate Principal Amounts of the
Certificates resulting from the distribution of the Principal Remittance Amount
(but not the Extra Principal Distribution Amount) on such Distribution Date, but
prior to allocation of any Applied Loss Amount on such Distribution Date.
Overcollateralization Release Amount: With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the amount, if any, by which (i) the Overcollateralization Amount
for such date, calculated for this purpose on the basis of the assumption that
100% of the Principal Remittance Amount for such date is applied on such date in
reduction of the Certificate Principal Amounts of the Certificates, exceeds (ii)
the Targeted Overcollateralization Amount for such date.
Payahead: With respect to any Mortgage Loan and any Due Date therefor, any
Scheduled Payment received by the applicable Servicer during any Collection
Period in addition to the Scheduled Payment due on such Due Date, intended by
the related Mortgagor to be applied on a subsequent Due Date.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, its 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 the Class X and Class R Certificates, the
Percentage Interest evidenced thereby shall equal the initial Certificate
Principal Amount thereof divided by the initial Class Certificate Principal
Amount of all Certificates of the same Class. With respect to the Class X and
Class R Certificates, the Percentage Interest evidenced thereby shall be 100%.
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 Delinquency Rate: With respect to any Collection Period, the fraction,
expressed as a percentage, the numerator of which is the aggregate outstanding
principal balance of all Mortgage Loans 60 or more days delinquent (including
all foreclosures and REO Properties) as of the close of business on the last day
of such Collection Period, and the denominator of which is the Aggregate Loan
Balance as of the close of business on the last day of such Collection Period.
Premium Mortgage Loan: None.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, 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
and the applicable Servicing Fee 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 Period: The applicable period specified in the applicable
Servicing Agreement (whether or not specifically defined as a "Prepayment
Period") during which amounts required to be remitted by the related Servicer in
respect of Mortgage Loan prepayments on the applicable Servicer Remittance Date
are received by such Servicer.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any, on
an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Distribution Amount: With respect to any Distribution Date, the
sum of (i) the Principal Remittance Amount for such date minus, with respect to
each Distribution Date, the Overcollateralization Release Amount, if any, for
such date and (ii) the Extra Principal Distribution Amount, if any, for such
date.
Principal Only Certificate: None.
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.
Principal Remittance Amount: With respect to any Distribution Date, the sum
of (i) all principal collected (other than Payaheads) or advanced in respect of
Scheduled Payments on the Mortgage Loans during the related Collection Period
(less amounts due to the Master Servicer, the Servicers or the Trustee, to the
extent allocable to principal), (ii) the outstanding principal balance of each
Mortgage Loan that was purchased from the Trust Fund during the related
Prepayment Period, (iii) the portion of any Substitution Amount paid during the
related Prepayment Period allocable to principal, and (iv) all Net Liquidation
Proceeds, Insurance Proceeds and other recoveries collected during the related
Prepayment Period, to the extent allocable to principal, as reduced in each case
by unreimbursed Advances and other amounts due to the Master Servicer, the
Servicers or the Trustee, to the extent allocable to principal.
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 April 27, 1998, together with
the accompanying prospectus dated March 18, 1998, relating to the Class A-1,
Class A-2, Class M-1, Class M-2 and Class B Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan pursuant
to Article II of this Agreement or the Special Servicing 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 amounts advanced by the
Master Servicer or any Servicer (or the Trustee) and not previously reimbursed,
together with any unpaid Master Servicing Fees and Servicing Fees. 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 the applicable Servicer under this Agreement or the
applicable Servicing Agreement (or to the Trustee hereunder).
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:
(b) 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;
(c) 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; (d) 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, 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; (e)
provide that the Trustee's interest therein shall be transferable to any
successor trustee hereunder: and (f) 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.
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 Collection Period in which such substitution occurs
(such amount, a "Substitution Amount"), 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) if the total principal balance of Qualifying Substitute Mortgage Loans in
the Trust is less than 5% of the initial principal balance of the Mortgage
Loans, 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) has a Loan-to-Value Ratio as of the date of such
substitution not greater than that of the related Deleted Mortgage Loan; (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 and (viii) has not been
delinquent for a period of more than 30 days more than twice in the twelve
months immediately preceding such date of substitution. 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 on a loan-by-loan basis, (b) the rate referred to in clause (ii)
above shall be determined on a loan-by-loan basis and (c) the remaining term to
stated maturity referred to in clause (iii) 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: S&P.
Realized Loss: 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, minus (ii) Liquidation Proceeds received, to the extent
allocable to principal, net of amounts that are reimbursable therefrom to the
Master Servicer or any Servicer with respect to such Mortgage Loan (other than
Advances of principal) including expenses of liquidation. In determining whether
a Realized Loss is a Realized Loss of 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, the close of business
on the Business Day immediately preceding such Distribution Date.
Reference Banks: As defined in Section 4.05.
Reimbursement Amount: As defined in Section 5.02.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC pursuant
to Section 10.01(a) hereof. REMIC 1 Regular Interest: Any of the Class T1-1,
Class T1-2 and T1-3 Interests.
REMIC 2 Regular Interest: Any of the Class T2-1, Class T2-2, Class T2-3 and
Class T2-4 Interests.
REMIC 3 Regular Interest: Any of the Class T3-1, Class T3-2, Class T3-3,
Class T3-4, Class T3-5, Class T3-6 and Class T3-7 Interests.
REMIC 4 Regular Interest: Any of the Class T4-1, Class T4-2, Class T4-3,
Class T4-4, Class T4-5, Class T4-6, Class T4-7 and Class T4-8 Interests.
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.
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.
Required Reserve Fund Deposit: With respect to any Distribution Date on
which the Net Excess Spread is less than 0.25%, the amount, if any by which (a)
the product of 0.50% and the Aggregate Loan Balance for such date exceeds (b)
the amount on deposit in the Basis Risk Reserve Fund immediately prior to such
date. With respect to any Distribution Date on which the Net Excess Spread is
equal to or greater than 0.25%, the amount, if any, by which (i) $1,000 exceeds
(ii) the amount on deposit in the Basis Risk Reserve Fund immediately prior to
such date.
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, or any other officer of the Trustee to whom a matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class X or Class R Certificate.
Reuters Screen NYAA Page: The display designated as page "Reuters Screen
NYAA Page" on the Reuters Monitor Money Rates Service (or such other page
selected by the Trustee as may replace the NYAA page on that service for the
purpose of displaying Federal Funds rates).
Rolling Three Month Delinquency Rate: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Distribution Dates) immediately preceding Collection Periods.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
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 Collection Period shall be deemed collectively
to constitute the Scheduled Payment due on such Mortgage Loan in such Collection
Period.
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 Collection Period, whether or not received from the Mortgagor or
advanced by the Master Servicer, and all amounts allocable to unscheduled
principal payments (including Principal Prepayments, Liquidation Proceeds,
Insurance Proceeds and condemnation proceeds, in each case to the extent
identified and applied prior to or during the related 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.
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.
Senior Enhancement Percentage: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the sum of the
aggregate Certificate Principal Amount of the Subordinate Certificates and the
Overcollateralization Amount, in each case after giving effect to distributions
on such Distribution Date, and the denominator of which is the Aggregate Loan
Balance as of the last day of the related Collection Period.
Senior Principal Distribution Amount: With respect to any Distribution Date
(a) prior to the Stepdown Date or with respect to which a Trigger Event has
occurred with respect to such Distribution Date, the Principal Distribution
Amount and (b) on or after the Stepdown Date and as long as a Trigger Event has
not occurred with respect to such Distribution Date, the amount, if any, by
which (x) the aggregate Certificate Principal Amount of the Senior Certificates
immediately prior to such Distribution Date exceeds (y) the lesser of (A) the
product of (i) 65.10% and (ii) the Aggregate Loan Balance as of the last day of
the related Collection Period and (B) the amount, if any, by which (i) the
Aggregate Loan Balance as of the last day of the related Collection Period
exceeds (ii) $5,693,487.03.
Servicer: Any Servicer, including the Special Servicer, that has entered
into any of the Servicing Agreements attached as Exhibit E hereto, or any
successor in interest.
Servicing Agreement: Each Servicing Agreement, including the Special
Servicing Agreement, among a Servicer and Lehman Capital attached hereto as
Exhibit E.
Servicing Fee: The Servicing Fee or, in the case of the Special Servicer,
the Base Servicing Fee, specified in the applicable Servicing Agreement.
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 Servicer: Ocwen Federal Bank FSB, as special servicer under the
Special Servicing Agreement.
Special Servicing Agreement: The Special Servicing Agreement between Lehman
Capital and the Special Servicer dated as of April 1, 1998, attached as part of
Exhibit E hereto.
Special Servicing Compensation Agreement: The agreement attached as Exhibit
L hereto specifying the compensation to which the Special Servicer is entitled,
in addition to the Basic Fee, for its services under the Special Servicing
Agreement.
Standard Rate: With respect to any Distribution Date, the higher of (x) the
rate at which interest accrues on the Class A-1 Certificates and (y) the rate at
which interest accrues on the Class B Certificates, in each case during the
related Accrual Period.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Stepdown Date: The later to occur of (x) the Distribution Date in May 2001
and (y) the first Distribution Date on which the Senior Enhancement Percentage
(calculated for this purpose after giving effect to payments or other recoveries
in respect of the Mortgage Loans during the related Collection Period but before
giving effect to distributions on the Certificates on such Distribution Date) is
greater than to equal to 34.90%.
Subordinate Certificate: Any Class M-1, Class M-2, Class B or Class X
Certificate.
Substitution Amount: As defined in the definition of Qualifying Substitute
Mortgage Loan.
Targeted Overcollateralization Amount: With respect to any Distribution
Date, (x) prior to the Stepdown Date, the product of 1.98% and the Aggregate
Loan Balance as of the Cut-Off Date and (y) on and after the Stepdown Date, the
greater of (i) the product of 3.96% and the Aggregate Loan Balance as of the
last day of the related Collection Period and (ii) $5,693,487.03.
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions.
Telerate Page 120: The display designated as "Page 120" on the Dow Jones
Telerate Service (or such other page selected by the Trustee as may replace Page
120 on that service for the purpose of displaying daily Federal Funds rates).
Termination Price: As defined in Section 7.01 hereof.
Title Insurance Policy: A title insurance policy maintained with respect to
a Mortgage Loan.
Total Distribution Amount: With respect to any Distribution Date, the sum
of the Interest Remittance Amount for such date and the Principal Remittance
Amount for such date.
Transfer Agreement: As defined in the Mortgage Loan Sale Agreement.
Transferor: Each seller of Mortgage Loans to Lehman Capital pursuant to a
Transfer Agreement.
Trigger Event: A Trigger Event will have occurred with respect to any
Distribution Date if the Rolling Three Month Delinquency Rate as of the last day
of the immediately preceding Collection Period equals or exceeds 50% of the
Senior Enhancement Percentage for such Distribution Date.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans, the assignment of the Depositor's rights under
the Mortgage Loan Sale Agreement, such amounts as shall from time to time be
held in the Collection Account, the Certificate Account and any Escrow Account,
the Insurance Policies, any REO Property and the other items referred to in, and
conveyed to the Trustee under, Section 2.01(a).
Trustee: First Union National Bank, 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 Loan Balance as of the first day of the
related Collection Period.
Trustee Fee Rate: 0.00175% per annum.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Class remaining unpaid from previous Distribution Dates, plus
interest accrued thereon at the applicable Certificate Interest Rate (calculated
without giving effect to the Net Funds Cap).
Upper Tier REMIC: REMIC 4.
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, 93% of all
Voting Interests shall be allocated to the Certificates other than the Class X
Certificate, and 7% of all Voting Interests shall be allocated to the Class X
Certificate. Voting Interests shall be allocated among the other Classes of
Certificates (and among the Certificates within each such Class) in proportion
to their Class Certificate Principal Amounts (or Certificate Principal Amounts).
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.
Section 1.03. Calculations Respecting Accrued Interest. Accrued interest,
if any, on any Certificate shall be calculated based upon a 360-day year and the
actual number of days in each Accrual Period.
ARTICLE II.
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans. (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, in trust, all the right,
title and interest of the Depositor in and to the Mortgage Loans. Such
conveyance includes, without limitation, 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 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, any REO Property
and the proceeds thereof, the Depositor's rights under any Insurance Policies
related to the Mortgage Loans, 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.
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, including all rights of Lehman Capital under
the Servicing Agreements and the Transfer Agreements to the extent assigned
thereunder, 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.
(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);
(i) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Trustee;
(ii) with respect to any 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;
(iii) 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 any Mortgage Loan other than a Cooperative
Loan, the original Assignment of Mortgage for each Mortgage
Loan;
(iv) 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;
(v) the original Primary Mortgage Insurance Policy or certificate, if
private mortgage guaranty insurance is required; (vi) with respect to any
Mortgage Loan other than a Cooperative Loan, the original mortgagee title
insurance policy or attorney's opinion of title and abstract of title; (vii) 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
(viii) 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) Assignments of Mortgage 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 Mortgage Loans. Subject to the preceding sentence, as soon as
practicable after the Closing Date, the Trustee, at the expense of the
Depositor, shall cause to be properly recorded in each public recording office
where the Mortgages are recorded each Assignment of Mortgage referred to in
subsection (b)(v) above.
(d) In instances where a Title Insurance Policy is required to be
delivered to 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
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 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.
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 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 on the Closing Date to the Depositor and the Master Servicer an Initial
Certification in the form annexed hereto as Exhibit B-1.
(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, the Master Servicer and the Special Servicer an
Interim Certification in the form annexed hereto as Exhibit B-2 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 any 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 applicable Transferor, or, if such Transferor does
not do so, 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 applicable
Transferor or the Depositor, as applicable, does not so cure such Material
Defect, the applicable Transferor, or, if such Transferor does not do so, the
Depositor, shall repurchase the related Mortgage Loan from the Trust Fund at the
Purchase Price. 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, the Master Servicer and
the Special Servicer a Final Certification substantially in the form annexed
hereto as Exhibit B-3 evidencing the completeness of the Mortgage Files in its
possession or control. (e) Nothing in this Agreement shall be construed to
constitute an assumption by the Trust Fund, the Trustee or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Mortgage Loan or to any Mortgagor.
Section 2.03. Representations and Warranties of the Depositor. (a) The
Depositor hereby represents and warrants to the Trustee, for the benefit of
Certificateholders, 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;
(i) 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;
(ii) 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;
(iii) 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; and
(iv) 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.
(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 and each
Servicer, 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 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 or the
Trustee 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 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 shall 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
Article II, 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 shall
cause the Assignment of Mortgage with respect to such Qualifying Substitute
Mortgage Loan to be recorded if required pursuant to the first sentence of
Section 2.01(c).
(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. 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 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.
Section 2.06. Grant Clause. (a) The initial Holder (other than the
Placement Agent or any nominee thereof) of the Class X Certificate shall have
the right to purchase defaulted Mortgage Loans from the Trust Fund as and to the
extent provided in the Special Servicing Agreement. Such right shall be
transferable to and exercisable by subsequent Holders of the Class X Certificate
only upon satisfaction of the conditions set forth in the Special Servicing
Agreement.
(b) In addition to the purchase option provided under subsection (a) above,
the Special Servicer and the initial Holder (other than the Placement Agent or
any nominee thereof) of the Class X Certificate shall have the right to purchase
Severely Delinquent Loans from the Trust Fund as and to the extent provided in
the Special Servicing Agreement. Such right of such initial Holder shall be
transferable to and exercisable by subsequent Holders of the Class X Certificate
only upon satisfaction of the conditions set forth in the Special Servicing
Agreement. The aggregate of any such purchases of Mortgage Loans pursuant to
this Section 2.07(b) shall not exceed 5% of the Cut-off Date Aggregate Loan
Balance.
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 Amount, as
applicable, or in the Percentage Interests, specified herein. Each Class of
Book-Entry Certificates will be issued in the minimum denominations in
Certificate Principal Amount specified in the Preliminary Statement hereto and
in integral multiples of $1 in excess thereof. The Class X and Class R
Certificates will each be issued as a single Certificate and maintained in
definitive, fully registered form in a denomination equal to 100% of the
Percentage Interest of such Class. The Certificates may be issued in the form of
typewritten certificates.
(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" 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
(i) 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 a Disqualified Organization. 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 neither a Disqualified Organization nor an agent
or nominee acting on behalf of a Disqualified Organization (any such transferee,
a "Permitted Transferee"), 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. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization or an agent
or nominee acting on behalf of a Disqualified Organization, such registration
shall be deemed to be of no legal force or effect whatsoever and such
Disqualified Organization (or such agent or nominee) 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 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 (or an agent or nominee thereof). The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was a Disqualified
Organization (or an agent or nominee thereof) at the time it became a Holder or
any subsequent time it became a Disqualified Organization 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;
(i) 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;
(ii) 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 (iii) 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 Certificate 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 Depositor nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates 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 "Norwest Bank Minnesota, National Association,
as Master Servicer, in trust for the benefit of the Holders of Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1998-4." 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 will 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. The
Master Servicer shall take such actions as are necessary to cause the depository
institution holding the Collection Account to hold such account in the name of
the Trustee (subject to such Master Servicer's right to direct payments and
investments and its rights of withdrawal) under this Agreement. On the Deposit
Date, the entire amount on deposit in the Collection Account (subject to
permitted withdrawals set forth in Section 4.02), other than amounts not
included in the Total Distribution Amount for such Distribution Date, 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;
(i) all payments on account of interest on the Mortgage Loans (other
than payments due prior to the Cut-off Date), including prepayment premiums or
penalties, net of 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;
(ii) any unscheduled payment or other recovery with respect to a
Mortgage Loan not otherwise specified in this paragraph (d), including all
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);
(iii) all Insurance Proceeds;
(v) all Advances made by the Master Servicer or any Servicer
pursuant to Section 5.04; and
(iv) all proceeds of any Mortgage Loan repurchased by the Depositor,
Lehman Capital, the Master Servicer or any other 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,
assumption fees and other incidental fees and charges relating to the Mortgage
Loans (other than prepayment premiums or penalties) 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.
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; 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;
(i) to reimburse itself or any Servicer, following a final liquidation
of a Mortgage Loan, for any amounts advanced 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 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;
(ii) to reimburse itself from Liquidation Proceeds for Liquidation
Expenses and for amounts expended by it pursuant to Sections 9.20 and 9.22(a) 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 right thereto shall be prior to the rights of the Certificateholders;
(iii) 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 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), and to
reimburse itself for any expenses reimbursable to it
pursuant to Section 10.01(c);
(iv) to pay to the Depositor, Lehman Capital, the applicable
Transferor, the Special Servicer or the Directing Holder, as applicable, with
respect to each Mortgage Loan or REO Property acquired in respect thereof that
has been purchased pursuant to this Agreement, all amounts received thereon and
not distributed on the date on which the related repurchase was effected, and to
pay to the applicable Person any Advances to the extent specified in the
definition of Purchase Price;
(v) subject to Section 5.04, to pay to itself income earned on the
investment of funds deposited in the Collection Account;
(vi) 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;
(vii) to make payment to itself and others pursuant to any provision
of this Agreement;
(x) to withdraw funds deposited in error in the Collection
Account;
(viii) to clear and terminate any Collection Account pursuant to
Section 7.02;
(ix) 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
(x) 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.
In connection with withdrawals pursuant to subclauses (i), (ii), (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), (ii),
(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 a written report setting forth the following information,
which information the Master Servicer will determine (on the basis of
information obtained from the Servicers) and deliver to the Trustee no later
than one Business Day prior to such Distribution Date:
(i) the aggregate amount of the distribution to be made on
such Distribution Date to the Holders of each Class of
Certificates, to the extent applicable, allocable to
principal on 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;
(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 Principal Only Certificates) allocable to interest;
(ii) the amount, if any, of any distribution to the Holders of the
Class X Certificate and the Residual Certificate;
(iii) (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 Loan Balance as of the close of business
on the last day of the related Collection Period, after
giving effect to payments allocated to principal reported
under clause (i) above;
(iv) the Class Certificate Principal Amount (or Aggregate Notional
Amount) of each Class of Certificates, to the extent applicable, as of such
Distribution Date after giving effect to payments allocated to principal
reported under clause (i) above, separately identifying any reduction of any of
the foregoing Certificate Principal Amounts due to Applied Loss Amounts:
(v) any Realized Losses realized with respect to the Mortgage Loans
(x) in the applicable Prepayment Period and (y) in the aggregate since the
Cut-off Date;
(vi) the amount of the Master Servicing Fees, Servicing Fees and
Trustee Fee paid during the Collection Period to which such distribution
relates;
(vii) the number and aggregate Scheduled Principal Balance of Mortgage
Loans, as reported to the Trustee by the Master Servicer, (a) remaining
outstanding (b) delinquent 30 to 59 days on a contractual basis, (c) delinquent
60 to 89 days on a contractual basis, (d) delinquent 90 or more days on a
contractual basis, 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;
(viii) 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;
(ix) 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; (x) the aggregate outstanding
Carryforward Interest, Net Prepayment Interest Shortfalls, Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls, if any, if any, for each Class of
Certificates, after giving effect to the distribution made on such Distribution
Date;
(xi) the Certificate Interest Rate applicable to such Distribution
Date with respect to each Class of Certificates;
(xii) 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); and
(xiii) any other "loan-level" information for any Mortgage Loans that
are delinquent 90 or more days on a contractual basis and any REO Property held
by the Trust that is reported by the Master Servicer to the Trustee.
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.
In preparing or furnishing the foregoing information 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: Stanley Labanowski, 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 special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders 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, 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 payment to itself and others pursuant to any provision
of this Agreement;
(i) 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;
(ii) to make distributions to the Certificateholders pursuant to
Article V; and
(v) to clear and terminate the Certificate Account pursuant
to Section 7.02.
(c) The Trustee shall invest, or cause to be invested, funds held in
the Certificate Account 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.
Section 4.05. Determination of LIBOR. (a) If the outstanding Certificates
include any LIBOR Certificates, 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;
(i) 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 Trustee
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 Trustee 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 Trustee are quoting on
such LIBOR Determination Date to leading European banks; and
(ii) 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 Rates applicable to the LIBOR
Certificates 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 Trustee and are able and willing to
provide such quotations to the Trustee 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 Trustee 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 Trustee shall
select an alternative interest rate index over which the Trustee 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. Determination of Fed Funds Average Rate. (a) If the
outstanding Certificates include any Fed Funds Certificates, then with respect
to each Fed Funds Calculation Period the Trustee shall determine the Fed Funds
Average Rate for such Fed Funds Calculation Period by determining the Fed Funds
Rate for each related Fed Funds Business Day as follows:
The Fed Funds Rate will reset on each Fed Funds Business Day (each, a "Fed
Funds Interest Reset Date"). The Fed Funds Rate in effect on each day of each
Fed Funds Calculation Period will be (a) if such day is a Fed Funds Interest
Reset Date, the Fed Funds Rate determined as of such Fed Funds Business Day
(each a "Fed Funds Interest Determination Date"), or (b) if such day is not a
Fed Funds Interest Reset Date, the Fed Funds Rate in effect on the immediately
preceding Fed Funds Interest Reset Date.
(i) the rate with respect to the related Fed Funds Interest
Determination Date (expressed as a percentage per annum)
that appears opposite the caption "Federal Funds Effective"
on Telerate Page 120 (as defined below) as of 11:00 a.m. New
York City time on such Fed Funds Interest Reset Date;
(i) if such rate does not appear on Telerate Page 120 as of 11:00 a.m.
New York City time on such Fed Funds Interest Reset Date, then the Fed Funds
Rate with respect to such Fed Funds Interest Reset Date will be the rate with
respect to the related Fed Funds Interest Determination Date (expressed as a
percentage per annum) that appears on Reuters Screen NYAA Page (as defined
below) as of 11:00 a.m. New York City time on such Fed Funds Interest Reset
Date;
(ii) if such rate does not appear on Reuters Screen NYAA Page as of
11:00 a.m. New York City time on such Fed Funds Interest Reset Date, the Trustee
will request three leading brokers of Federal Funds transactions in New York
City to provide the rate (expressed as a percentage per annum) for the last
transaction in overnight Federal Funds arranged by such broker on the related
Fed Funds Interest Determination Date. If rates are provided by such three
brokers, then the Fed Funds Rate with respect to such Fed Funds Interest Reset
Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth
of one percentage point) of such rates; and
(iii) if fewer than three such rates are provided, then the Fed Funds
rate with respect to such Fed Funds Interest Reset Date will be the Fed Funds
Rate for the preceding Fed Funds Interest Reset Date (or, in the case of the
first Fed Funds Interest Reset Date, the immediately preceding Fed Funds
Business Day on which a rate appeared on Telerate Page 120 as described in (a)
above).
If a rate that initially appears on Telerate Page 120 or the Reuters Screen
NYAA Page, as the case may be, as of 11:00 a.m. New York City time on the
applicable Fed Funds Interest Reset Date is superseded on Telerate Page 120 or
the Reuters Screen NYAA Page, as the case may be, by a corrected rate before
12:00 noon New York City time on such Fed Funds Interest Reset Date, such
corrected rate as so superseded on the applicable page shall be the applicable
rate for calculating the applicable Fed Funds Rate for such Fed Funds Interest
Determination Date.
(b) The establishment of the Fed Funds Average Rate by the Trustee and the
Trustee's subsequent calculation of the Certificate Interest Rate or Rates
applicable to the Fed Funds Certificates 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 the Fed Funds Rate as they appear on
Telerate Page 120 or on the Reuters Screen NYAA Page, as applicable.
The Fed Funds Average Rate for the initial Accrual Period will be the
Initial Fed Funds Average Rate.
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 by any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of a Class
X Certificate, 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, the Residual Certificates will remain
outstanding until the termination of each REMIC and the payment in full of all
other amounts due with respect to the Residual Certificates and at such time
such final payment in retirement of any Residual Certificates 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.
(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 Class 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 Total Distribution Amount for
such date, shall allocate such amount to the interests issued in respect of
REMIC 1, REMIC 2, and REMIC 3, and shall distribute such amount as specified in
this Section.
(b) On each Distribution Date, the Trustee shall distribute the Interest
Remittance Amount for such date in the following order of priority:
(i) to the Trustee, the Trustee Fee for such Distribution
Date;
(i) concurrently, to the Class A-1 and Class A-2 Certificates, in
proportion to the amount of interest distributable on each such Class, Current
Interest for each such Class and such Distribution Date and any Carryforward
Interest for each such Class and such date;
(ii) to the Class M-1 Certificates, Current Interest for such Class
and such Distribution Date;
(iii) to the Class M-2 Certificates, Current Interest for such Class
and such Distribution Date;
(v) to the Class B Certificates, Current Interest for such
Class and such Distribution Date; and
(iv) for application as part of Monthly Excess Cashflow for such
Distribution Date, as provided in subsection (d) of this Section, any Interest
Remittance Amount remaining after application pursuant to clauses (i) through
(v) above.
(c) On each Distribution Date, the Trustee shall distribute the Principal
Distribution Amount for such date as follows:
(i) On each Distribution Date (x) prior to the Stepdown Date or
(y) with respect to which a Trigger Event has occurred, the
Trustee shall distribute the Principal Distribution Amount
for such date in the following order of priority:
(1) to the Class A-1 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(2) to the Class A-2 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(3) to the Class M-1 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(4) to the Class M-2 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(5) to the Class B Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero; and
(6) for application as part of Monthly Excess Cashflow for
such Distribution Date, as provided in subsection (d) of this Section,
any Principal Distribution Amount remaining after application pursuant
to clauses (1) through (5) above.
(i) On each Distribution Date (x) on or after the Stepdown Date and
(y) with respect to which a Trigger Event has not occurred, the Trustee shall
distribute the Principal Distribution Amount for such date in the following
order of priority:
(1) to the Class A-1 and Class A-2 Certificates, an amount
equal to the lesser of (A) the Principal Distribution Amount for such
Distribution Date and (B) the Senior Principal Distribution Amount for
such date, in the following order of priority:
first, to the Class A-1 Certificates, until the
Class Certificate Principal Amount of such Class has been
reduced to zero, and
second, to the Class A-2 Certificates, until the
Class Certificate Principal Amount of such Class has been
reduced to zero;
(2) to the Class M-1 Certificates, an amount equal to the
lesser of (A) the excess of (I) the Principal Distribution Amount for
such Distribution Date over (II) the amount distributed to the Class
A-1 and Class A-2 Certificates on such date pursuant to clause (1)
above and (B) the Class M-1 Principal Distribution Amount for such
date, until the Class Certificate Principal Amount of such Class has
been reduced to zero;
(3) to the Class M-2 Certificates, an amount equal to the
lesser of (A) the excess of (I) the Principal Distribution Amount for
such Distribution Date over (II) the amount distributed to the Class
A-1, Class A-2 and Class M-1 Certificates on such date pursuant to
clauses (1) and (2) above and (B) the Class M-2 Principal Distribution
Amount for such date, until the Class Certificate Principal Amount of
such Class has been reduced to zero;
(4) to the Class B Certificates, an amount equal to the
lesser of (A) the excess of (1) the Principal Distribution Amount for
such Distribution Date over (II) the amount distributed to the Class
A-1, Class A-2, Class M-1 and Class M-2 Certificates on such date
pursuant to clauses (1), (2) and (3) above and (B) the Class B
Principal Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
and
(5) for application as part of Monthly Excess Cashflow for
such Distribution Date, as in subsection (d) of this Section, any
Principal Distribution Amount remaining after application pursuant to
clauses (1) through (4) above.
Notwithstanding the foregoing, on any Distribution Date on which the
Class Certificate Principal Amount of each Class of Certificates
having a higher priority of distribution has been reduced to zero, any
remaining Principal Distribution Amount will be distributed to the
remaining Classes of Class A-1, Class A-2, Class M-1, Class M-2 and
Class B Certificates, in the order of priority set forth above, until
the Class Certificate Principal Amount of each such Class has been
reduced to zero.
(d) On each Distribution Date, the Trustee shall distribute the Monthly
Excess Cashflow for such date in the following order of priority:
(i) to the Basis Risk Reserve Fund, and then, concurrently,
to the Class A-1 and Class A-2 Certificates, in proportion
to any outstanding Basis Risk Shortfall and Unpaid Basis
Risk Shortfall with respect to each such Class, and then to
the Class M-1, Class M-2 and Class B Certificates, in that
order, from the Basis Risk Reserve Fund, in an amount equal
to the unpaid amount of any Basis Risk Shortfall for such
date and any Unpaid Basis Risk Shortfall for such date, as
required by Section 5.08 of this Agreement;
(i) to the extent of Monthly Excess Interest for such Distribution
Date, to fund the Extra Principal Distribution Amount for such date,
(ii) to the Class M-1 Certificates, any Carryforward Interest for such
Class and such date;
(iii) to the Class M-1 Certificates, any Deferred Amount for such
Class and such date;
(v) to the Class M-2 Certificates, any Carryforward Interest
for such Class and such date;
(iv) to the Class M-2 Certificates, any Deferred Amount for such Class
and such date;
(v) to the Class B Certificates, any Carryforward Interest for such
Class and such date;
(vi) to the Class B Certificates, any Deferred Amount for such Class
and such date;
(vii) to the Special Servicer, any Special Servicing Fee, Extended
Special Servicing Fee and Incentive Fee with respect to the related Collection
Period, in each case as defined in the Special Servicing Compensation Agreement;
(x) to the Basis Risk Reserve Fund, an amount equal to the
Required Reserve Fund Deposit;
(viii) to the Class X Certificate, the Class X Distributable Amount
for such Distribution Date, together with any amounts withdrawn from the Basis
Risk Reserve Fund for distribution to the Class X Certificates pursuant to
Section 5.08(c) and (d) on such date;
(ix) to the Directing Holder, if any, on such Distribution Date, the
Directing Holder Servicing Fee for such Distribution Date to the extent such
Directing Holder Servicing Fee is due and payable under Section 5.07 of this
Agreement; and
(x) to the Class R Certificate, any amount remaining on such date
after application pursuant to clauses (i) through (xii) above.
Section 5.03. Allocation of Losses. On each Distribution Date, the Class
Certificate Principal Amount of each Class of Class M-1, Class M-2 and Class B
Certificates will be reduced by the amount of any Applied Loss Amount for such
date, in the following order of priority:
(i) to the Class B Certificates, until the Class Certificate Principal
Amount thereof has been reduced to zero;
(i) to the Class M-2 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero; and
(ii) to the Class M-1 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero.
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 Collection 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 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 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 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. REMIC 1, REMIC 2, REMIC 3 and REMIC 4 Allocations
(a) The initial principal balances of the Class T1-1, Class T1-2 and Class
T1-3 Interests shall equal 98%, 1% and 1%, respectively, of the Cut-off Date
Aggregate Loan Balance. On each Distribution Date, 98% of all collections and
other recoveries allocable to principal of the Mortgage Loans will be allocated
to the Class T1-1 Interest. Remaining amounts allocable to principal of the
Mortgage Loans on such Distribution Date will be allocated first to the Class
T1-3 Interest up to an amount equal to 2% of any amount that represents an
Adjusted Overcollateralization Release Amount with respect to such Distribution
Date and then equally to the Class T1-2 and Class T1-3 Interests. Interest
accruing on the Class T1-3 Interest in respect of each Distribution Date in an
amount equal to 1% of the increase in the Adjusted Overcollateralization Amount
from the immediately preceding Distribution Date will be deferred and added to
the principal balance of the Class T1-3 Interest. The amount of interest accrued
and deferred on the Class T1-3 Interest in accordance with the preceding
sentence in respect of each Distribution Date shall be distributed as principal
on such date to the Class T1-2 Interest.
(b) On each Distribution Date, the Applied Loss Amount for such date shall
be allocated 98% to the Class T1-1 Interest. The remaining 2% of such Applied
Loss Amount shall be allocated to the Class T1-3 Interest to the extent that the
principal balance of the Class T1-3 Interest exceeds 1% of the Aggregate Loan
Balance and then equally between the Class T1-2 Interest and the Class T1-3
Interest.
(c) On each Distribution Date, Net Prepayment Interest Shortfalls shall be
allocated ratably among the Class T1-1, Class T1-2 and Class T1-3 Interests in
proportion to their rights to receive interest on such Distribution Date, and
prepayment premiums and penalties shall be allocated to the Class T1-3 Interest
and treated as additional interest distributable with respect to the Class T1-3
Interest on such Distribution Date.
(d) The initial principal balances of the Class T2-1 Interest, Class T2-2
Interest and Class T2-3 Interest shall equal 98%, 1% and 1%, respectively, of
the Cut-off Date Aggregate Loan Balance. The Class T2-4 shall not have a
principal balance. On each Distribution Date, all collections and other
recoveries allocable to principal of the Mortgage Loans will be allocated 98% to
the Class T1-1 Interest. Remaining amounts allocable to principal of the
Mortgage Loans on such Distribution Date will be allocated first to the Class
T2-3 Interest up to an amount equal to 2% of any amount that represents an
Adjusted Overcollateralization Release Amount for such Distribution Date and
then equally to the Class T2-2 and Class T2-3 Interests. Interest accruing on
the Class T2-3 Interest in respect of such Distribution Date in an amount equal
to 1% of the increase in the Adjusted Overcollateralization Amount from the
immediately preceding Distribution Date will be deferred and added to the
principal balance of the Class T2-3 Interest. The amount of interest accrued and
deferred on the Class T2-3 Interest in accordance with the preceding sentence in
respect of each Distribution Date shall be distributed as principal to the Class
T2-2 Interest.
(e) On each Distribution Date, the Applied Loss Amount for such date shall
be allocated 98% to the Class T2-1 Interest. The remaining 2% of such Applied
Loss Amount shall be allocated to the Class T2-3 Interest to the extent that the
principal balance of the Class T2-3 Interest exceeds 1% of the Aggregate Loan
Balance and then equally between the Class T2-2 Interest and the Class T2-3
Interest.
(f) On each Distribution Date, Net Prepayment Interest Shortfalls shall be
allocated ratably among the Class T2-1, Class T2-2 and the Class T2-3 Interests
in proportion to their rights to receive interest on such Distribution Date, and
prepayment premiums and penalties shall be allocated to the Class T2-3 Interest
and treated as additional interest distributable with respect to the Class T2-3
Interest on such Distribution Date.
(g) On each Distribution Date, the Class T3-4, Class T3-5, Class T3-6,
Class T3-7, and Class T3-8 Interests shall be entitled to receive principal
distributions that correspond to the Principal Distribution Amount paid with
respect to the corresponding class of Interests in REMIC 4 (the Class T4-1,
Class T4-2, Class T4-3, Class T4-4, and Class T4-5 Interests, respectively).
(h) On each Distribution Date, interest that accrues with respect to the
Class T3-1, Class T3-2 and Class T3-3 Interests during the related Accrual
Period shall be distributed as principal on the Class T3-4. Class T3-5, Class
T3-6, Class T3-7, and Class T3-8 Interests to the extent needed to achieve the
Targeted Overcollateralization Amount for such Distribution Date, and, to the
extent not needed for this purpose, shall be distributed with respect to the
Class T3-1. Class T3-2, and Class T3-3 Interests in proportion to their
entitlements to current and accrued undistributed interest. Interest that
accrues on the Class T3-1, Class T3-2, and Class T3-3 Interests shall not itself
bear interest.
(i) On each Distribution Date, the Applied Loss Amount with respect to
REMIC 3 and any Distribution Date shall be allocated as follows:
first, to the Class T3-4 Interest, to the extent that its
principal balance exceeds the principal balance of the Class
T4-1 Interest as of such Distribution Date (after giving
effect to any distributions made on such date);
second, to the Class T3-5 Interest, to the extent that its
principal balance exceeds the principal balance of the Class
T4-2 Interest as of such Distribution Date (after giving
effect to any distributions made on such date);
third, to the Class T3-6 Interest, to the extent that its
principal balance exceeds the principal balance of the Class
T4-3 Interest as of such Distribution Date (after giving
effect to any distributions made on such date);
fourth, to the Class T3-7 Interest, to the extent that its
principal balance exceeds the principal balance of the Class
T4-4 Interest as of such Distribution Date (after giving
effect to any distributions made on such date);
fifth, to the Class T3-8 Interest, to the extent that its
principal balance exceeds the principal balance of the Class
T4-5 Interest as of such Distribution Date (after giving
effect to any distributions made on such date);
sixth, proportionately, to the accrued interest balances of
the Class T3-1, Class T3-2, and Class T3-3 Interests; and
seventh, in a manner that will cause any amount due on each
REMIC 3 Regular Interest to equal the amount due on the
corresponding Class of Regular interests in REMIC 4.
(i) On each Distribution Date, Net Prepayment Interest Shortfalls
shall be allocated ratably among the REMIC 3 Regular Interests according to
their right to receive interest on such Distribution Date, and prepayment
premiums and penalties shall be allocated ratably among the Class T3-1, Class
T3-2 and Class T3-4 Interests in proportion to the interest accruing on those
Interests and shall be treated as additional interest distributable with respect
to those Interests on such Distribution Date.
(j) On each Distribution Date, the Class T4-1, Class T4-2, Class T4-3
and Class T4-4, and Class T4-5 Interests shall be entitled to receive
distributions of principal and interest equal to the interest and principal
distributions required to be paid with respect to the corresponding Class of
Certificates (determined as if the distributions on the Certificates were
computed without regard to amounts distributed under Section 5.02(d)(i) hereof
from the Basis Risk Reserve Fund). On each Distribution Date, interest that
accrues with respect to the Class T4-5, Class T4-6, T4-7, Class T4-8, Class
T4-9, and Class T4-10 Interests during the related Accrual Period shall be
distributed as principal on the Class T4-1, Class T4-2, Class T4-3, Class T4-4,
and Class T4-5 Interests to the extent needed to fund the Excess Principal
Distribution Amount for the corresponding Classes of Certificates, and, to the
extent not needed for this purpose, shall be distributed with respect to the
Class T4-5, Class T4-6, Class T4-7, Class T4-8, Class T4-9, and Class T4-10
Interests in proportion to their entitlement to current and accrued
undistributed interest. Interest that accrues on the Class T4-5, Class T4-6,
Class T4-7, Class T4-8, Class T4-9, and Class T4-10 Interests shall not itself
bear interest.
(k) On each Distribution Date, the Applied Loss Amount with respect to
REMIC 4 and any Distribution Date shall be allocated among the REMIC 4 Regular
Interests in accordance with the allocations provided in Section 5.03 hereof for
the corresponding Classes of Certificates.
(l) On each Distribution Date, Net Prepayment Interest Shortfalls
shall be allocated ratably among the Class T4-5, Class T4-6, Class T4-7, Class
T4-8, Class T4-9, and Class T4-10 Interests in proportion to the interest
accruing on those Interests with resect to such Distribution Date, and
prepayment premiums and penalties shall be allocated ratably among the Class
T4-5, Class T4-6, Class T4-7, Class T4-8, Class T4-9, and Class T4-10 Interests
in proportion to the interest accruing on those interests and shall be treated
as additional interest distributable with respect to those Interests on such
Distribution Date.
Section 5.07. Directing Holder Servicing Fee. REMIC 4 shall pay to the
Directing Holder the Director Holding Servicing Fee as an additional fee for
services rendered as Special Servicer. Such fee shall be due and payable on any
Distribution Date only to the extent that there are amounts remaining after all
amounts required to be distributed with respect to the REMIC 4 Regular Interests
have been made for that Distribution Date. With respect to each Distribution
Date, the Directing Holder Servicing Fee shall equal the sum of the following:
(i) an amount equal to the product of the Class A-1 Certificate
Interest Rate for such Distribution Date and the excess of the Class
T3-4 Interest principal balance over the Class T4-1 Interest principal
balance (before giving effect to any reductions of such balances on
such Distribution Date);
(i) an amount equal to the product of the Class A-2 Certificate
Interest Rate for such Distribution Date and the excess of the Class T3-5
Interest principal balance over the Class T4-2 Interest principal balance
(before giving effect to any reductions of such balances on such Distribution
Date);
(ii) an amount equal to the product of the Class M-1 Certificate
Interest Rate for such Distribution Date and the excess of the Class T3-6
Interest principal balance over the Class T4-3 Interest principal balance
(before giving effect to any reductions of such balances on such Distribution
Date); and (iii) an amount equal to the product of the Class M-2 Certificate
Interest Rate for such Distribution Date and the excess of the Class T3-7
Interest principal balance over the Class T4-4 Interest principal balance
(before giving effect to any reductions of such balances on such Distribution
Date). Section 5. (a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the holders of the Class A-1,
Class A-2, Class M-1, Class M-2 and Class B Certificates, the Basis Risk Reserve
Fund, into which the Depositor shall deposit $1,000. The Basis Risk Reserve Fund
shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including, without limitation, other moneys of the Trustee held pursuant to this
Agreement.
(b) On each Distribution Date on which the Net Excess Spread is less than
0.25%, the Trustee shall transfer the Required Reserve Fund Deposit from the
Certificate Account to the Basis Risk Reserve Fund pursuant to Section
5.02(d)(x). The Trustee shall make withdrawals from the Basis Risk Reserve Fund
to make distributions pursuant to Section 5.02(d)(i).
(c) Funds in the Basis Risk Reserve Fund may be invested in Permitted
Investments. Any earnings on such amounts shall be distributed to the Class X
Certificate pursuant to Section 5.02(d)(xi). The Class X Certificate shall
evidence ownership of the Basis Risk Reserve Fund for federal income tax
purposes and the Holder thereof shall direct the Trustee, in writing, as to
investment of amounts on deposit therein.
(d) Upon termination of the Trust Fund, any amounts remaining in the Basis
Risk Reserve Fund shall be distributed to the Class X Certificateholder pursuant
to Section 5.02(d)(xi).
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, 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 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.
(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 direction of
Holders of Certificates as provided in Section 6.19 hereof;
(i) 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;
(ii) 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
(iii) The Trustee shall not be responsible for any act or omission of
the Master Servicer.
(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) The Trustee shall pay, out of its own funds, any fees assessed by the
Rating Agencies after the Closing Date in connection with maintaining the
ratings of the Certificates. Section 6. 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
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;
(i) 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;
(ii) 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; (iii) 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 Certificate
Principal Amount (or Percentage Interest) 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; and (v) ______ The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, which agents or attorneys shall have any or 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.
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 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 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.
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 and one copy to the
Master Servicer. 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, 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 and one copy to the Master Servicer.
(c) The Holders of more than 50% of the Class Certificate Principal Amount
(or Percentage Interest) of each Class of Certificates may at any time upon 30
days' written notice to the Trustee and to the Depositor 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 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 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. 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 6.08. Merger or Consolidation of Trustee. (a) Notwithstanding any
other provisions hereof, at any time, the Trustee, the Depositor or the
Certificateholders evidencing more than 50% of the Class Certificate Principal
Amount (or Percentage Interest) 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;
(i) 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;
(ii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder; and
(iii) 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. 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;
(i) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense; and
(ii) 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 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. Trustee To Act; Appointment by 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 Certificate Principal Amount (or
Percentage Interest) of each Class of Certificates affected
thereby; or
(i) 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 Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby; or
(ii) 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
(iii) 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
(iv) 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
(v) 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
(vi) 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 Certificate Principal Amount (or Percentage Interest) of each Class of
Certificates; or
(vii) Any Servicer at any time is not either an FNMA- or FHLMC-
approved 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 45 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 Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby,
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) and (ix)
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
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. 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 (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 6.15. Additional Remedies of Trustee Upon Event of Default. 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 6.16. Waiver of Defaults. 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 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 6.17. Notification to Holders. 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 Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby
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 6.18. Directions by Certificateholders and Duties of Trustee During
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.
ARTICLE VII.
PURCHASE AND TERMINATION OF THE
TRUST FUND; PURCHASE OF CERTIFICATES
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of
All Mortgage Loans. (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 and the
disposition of all REO Property and (ii) the sale of the property held by the
Trust Fund in accordance with Section 7.01(b) or (c); 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
Aggregate Loan Balance is less than 10% of the Cut-off Date Aggregate Loan
Balance, Aurora shall have the option to cause the Trust Fund to adopt a plan of
complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all of its
property. Upon exercise of such option, 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 Collection Period immediately preceding the
related Distribution Date to the date of such repurchase and (ii) 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 mutually agreed
upon by the Master Servicer and the Trustee.
(c) On any Distribution Date occurring on or after the Distribution Date on
which the aggregate Certificate Principal Amount of the Senior Certificates is
less than 35% of the Class Certificate Principal Amount thereof as of the
Closing Date, the Class X Certificateholder shall have the option to cause the
Trust Fund to adopt a plan of complete liquidation pursuant to Section
7.03(a)(i) hereof to sell all of its property. Upon exercise of such option, the
property of the Trust Fund shall be sold to the Class X Certificateholder for
the Termination Price.
(d) (i) On any Distribution Date occurring on or after the Distribution
Date on which the aggregate Certificate Principal Amount of the Senior
Certificates is less than 35% of the Class Certificate Principal Amount thereof
as of the Closing Date, Lehman Pass-Through Securities Inc. ("LPTSI") shall,
have the option to purchase all, but not less than all, of the Class A-1, Class
A-2, Class M-1, Class M-2 and Class B Certificates (the "Purchase Certificates")
for a price equal to the outstanding Certificate Principal Amount of each such
Certificate plus interest accrued thereon at the applicable Certificate Interest
Rate and unpaid (the "Acquisition Price"). In order to exercise such option,
LPTSI must deliver to the Trustee written notice of its intent to purchase all
of the Purchase Certificates and of the Distribution Date on which it intends to
do so not less than 20 days prior to such Distribution Date.
(ii) On or before the date of delivery of the notice specified in
paragraph (i) above, LPTSI shall deposit with the Trustee cash, certificates of
deposit or a letter of credit in an amount sufficient to provide for payment of
the Acquisition Price. Such amount shall be paid by the Trustee to Holders of
Purchase Certificates upon surrender for purchase as provided below.
(iii) Notice of any purchase of the Purchase Certificates pursuant to
the provisions of this subsection, specifying the Distribution Date upon which
such purchase shall be made, shall be given promptly by the Trustee by first
class mail to Holders of the Purchase Certificates mailed no later than five
Business Days after the Trustee has received notice from LPTSI of its intent to
exercise its right to repurchase the Purchase Certificates. Such notice shall
specify (A) the Distribution Date upon which the Acquisition Price will be paid
upon transfer of the Purchase Certificates (the "Acquisition Date"), and the
time and place at which any Purchase Certificate held in definitive form by
other than the Clearing Agency (a "Definitive Purchase Certificate") must be
surrendered for cancellation and (B) that the Acquisition Price applicable to
each Purchase Certificate constitutes payment in full therefor, and that no
further amounts in respect of interest or principal will be distributable to the
Holders from whom such Certificates are purchased by LPTSI. 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.
(iv) On the Acquisition Date, the Trustee shall (i) make payment to
each Holder of a Purchase Certificate of the Acquisition Price therefor in the
manner in which distributions are effected under this Agreement and (ii) effect
the transfer of each such Certificate (or interest therein) to LPTSI, which
shall thereafter (unless it transfers such Certificate in accordance with this
Agreement) be the Holder (or Certificate Owner) of such Certificate for all
purposes. Notwithstanding the foregoing, in the event that all of the Holders of
Definitive Purchase Certificates do not surrender their Certificates for
purchase at the time specified in the above-mentioned written notice, the
Trustee shall give a second written notice to such remaining Certificateholders
to surrender their Certificates for purchase. If within ten days after the
second notice any Definitive Purchase 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.
Subject to applicable law, The Trustee shall hold all amounts payable 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
Acquisition Price thereon in accordance with this Section. Notwithstanding that
any Definitive Purchase Certificate has not been surrendered after notice and
deposit of the Acquisition Price as provided above, on the Acquisition Date the
Trustee shall cancel such Certificate and effect a transfer of such Certificate
(or interest therein) to LPTSI, which shall thereafter (unless it transfers such
Certificate in accordance with this Agreement) be the Holder (or Certificate
Owner) of such Certificate for all purposes.
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
upon (x) the sale of the property of the Trust Fund by the Trustee pursuant to
Section 7.01 (c), (y) no later than five Business Days after the Trustee has
received notice from the Class R Certificateholder of its intent to exercise its
right to cause the termination of the Trust Fund pursuant to Section 7.01(b) or
(z) 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.
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
notification by the Special Servicer or the Class X
Certificateholder 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;
(i) 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;
(ii) 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, after payment of, or provision
for any outstanding expenses, distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates 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
(iii) In no event may the final payment on the Certificates or the
final distribution or credit to the Holders of the Residual Certificates 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
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class affected thereby 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.
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 Norwest Bank
Minnesota, National Association, 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 Master Servicer Fidelity Bond and a Master Servicer 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 Master Servicer Errors and
Omissions Insurance Policy and the Master Servicer 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
Servicer 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.
(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 ons 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 (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
Servicing Agreement by the Master Servicer or the related Servicer, the Master
Servicer shall provide for the servicing of the related Mortgage Loans as
follows: (i) upon any such termination of Option One as Servicer, servicing of
the related Mortgage Loans shall be transferred to Aurora, provided that Aurora
exercises its option to acquire such servicing as provided below; (ii) upon any
such termination of Aurora as Servicer, servicing of the related Mortgage Loans
shall be transferred to the Special Servicer, provided that the Special Servicer
exercises its option to acquire such servicing as provided below; and (iii) upon
any such termination of Ocwen, a successor special servicer shall be appointed
as provided in the Special Servicing Agreement. In each such case, servicing of
the related Mortgage Loans shall be performed by the applicable successor in
accordance with the provisions of the Servicing Agreement to which such
successor is a party. In the event that any such successor servicer fails to
notify the Master Servicer within 15 days of such proposed transfer described in
clause (i) or (ii) above of its intention to exercise its option to acquire such
servicing and to service the related Mortgage Loans in accordance with the terms
of the applicable Servicing Agreement, the Master Servicer shall appoint a
successor servicer or special servicer or shall itself (or through an Affiliate)
act as servicer or special servicer of the related Mortgage Loans.
Notwithstanding the foregoing provisions to the extent applicable to
termination of the rights and obligations of the Special Servicer, the Directing
Holder, if any, shall have the rights accorded to it under the Special Servicing
Agreement.
(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 ensure that the Mortgage Loans are
serviced in accordance with the provisions of this Agreement and shall 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 its Servicers for indemnification of the Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
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, Lehman Capital 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.
(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 applicable
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
applicable 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 hereinabove specified, the trust receipt shall be
released by the Trustee or the applicable 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 Lehman Capital 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, as of the Closing Date that:
(i) it is validly existing and in good standing under
the laws of the United States of America as a national banking
association, 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;
(i) 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;
(ii) 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);
(iii) 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;
(iv) 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;
(v) 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;
(vi) 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;
(vii) 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, 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). 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 or the Trustee 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
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
noncoverage 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. Subject to the
provisions of the Special Servicing Agreement, the Master Servicer shall use its
reasonable best efforts to, or to cause the Special 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 (but not including any prepayment premium or penalty) 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. Subject to the provisions of the Special Servicing
Agreement, the Master Servicer shall use its reasonable best efforts to sell,
or, to the extent provided in the applicable Servicing Agreement, cause the
Special 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
Special 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 in connection with the operation of any REO Property in
the Collection Account it maintains.
(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 and other 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 and in the Special Servicing Agreement, 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. Preparation of Tax Returns and Other Reports. (a) The Master
Servicer 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
resulting from errors in the information provided by such Master Servicer (other
than any such information that is derived solely from information provided by a
Servicer).
(b) The Master Servicer shall prepare and file with the Internal Revenue
Service ("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.
The Master Servicer, upon receipt from the IRS of the Notice of Taxpayer
Identification Number Assigned, shall promptly forward a copy of such notice to
the Trustee and the Depositor.
(c) The Depositor shall prepare or cause to be prepared the initial current
report on Form 8-K and thereafter the Master Servicer 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"). The Trustee
will sign each such report on behalf of the Trust Fund. The Master Servicer will
forward a copy of each such report to the Depositor promptly after such report
has been filed with the SEC. The Master Servicer agrees to use its best efforts
to seek to terminate such filing obligation promptly 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 Master Servicer 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.
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, to any Certificateholders (or by the Trustee at the
Master Servicer's expense if the Master Servicer shall fail to provide such
copies to the Certificateholders (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 Certificiate as to Compliance. (a) The
Master Servicer shall deliver to the Trustee and the Rating Agencies on or
before May 31 of each year, commencing on May 31, 1998, 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 Rating Agencies and the Depositor on or
before May 31 of each year, commencing on May 31, 1999 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 Dutes 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.
Section 9.32. Alternative Index. In the event that the Index for any
Mortgage Loan, as specified in the related Mortgage Note, becomes unavailable
for any reason, the Master Servicer shall select an alternative index, which in
all cases shall be an index that constitutes a qualified rate on a regular
interest under the REMIC Provisions, in accordance with the terms of such
Mortgage Note or, if such Mortgage Note does not make provision for the
selection of an alternative index in such event, the Master Servicer shall,
subject to applicable law, select an alternative index based on information
comparable to that used in connection with the original Index and, in either
case, such alternative index shall thereafter be the Index for such Mortgage
Loan.
ARTICLE X.
REMIC ADMINISTRATION
Section 10.01 REMIC Administration. (a) REMIC elections as set forth in the
Preliminary Statement shall be made by the Trustee 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. The regular
interests and residual interest in each REMIC shall be as designated in the
Preliminary Statement.
(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 Master Servicer 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 Master Servicer in fulfilling its duties
hereunder (including its duties as tax return preparer). The Master Servicer
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account.
(d) The Master Servicer shall prepare, and the Trustee shall 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 Master Servicer.
(e) The Master Servicer shall act as Tax Matters Person for each
REMIC. The Master Servicer 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 Master Servicer 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 Master Servicer 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.
(i) 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.
(j) On or before April 15 of each calendar year beginning in 1999, the
Master Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Master Servicer's compliance with the provisions of this
Section 10.01.
(k) The Trustee shall treat the Basis Risk Reserve Fund as an outside
reserve fund within the meaning of Treasury Regulation Section 1.860G-2(h) that
is owned by the Class X Certificateholder and that is not an asset of the REMIC.
The Trustee shall treat the rights of the Class A-1, Class A-2, Class M-1, Class
M-2, and Class B Certificateholders to receive payments from the Basis Risk
Reserve Fund in the event of a Basis Risk Shortfall as rights in an interest
rate cap contract written by the Class X Certificateholder in favor of the Class
A-1, Class A-2, Class M-1, Class M-2, and Class B Certificateholders. Thus, each
Class A-1, Class A-2, Class M-1, Class M-2, and Class B Certificate shall be
treated as representing not only ownership of regular interests in REMIC 4, but
also ownership of an interest in an interest rate cap contract. For purposes of
determining the issue prices of the REMIC 4 regular interests, the Trustee shall
assume that the interest rate cap contract has a value of $1,000.
Section 10.02. Prohibited Transaxtion 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 interests therein 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 any 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 Master Servicer of its duties and
obligations set forth herein, the Master Servicer shall indemnify the Holder of
the related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Master Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor, the Class
X Certificateholder 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 Master Servicer 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 Master Servicer
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 Master Servicer 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).
(b) If the Internal Revenue Service determines that one of the REMICs
established hereunder recognized income from a prohibited transaction within the
meaning of Section 860F(a)(2) of the Code as a result of the lapse of the Class
X Certificateholder's right to effect a Special Termination of the Trust Fund by
purchasing the assets of the Trust Fund, then Lehman Capital shall indemnify the
Trust Fund for any such tax.
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 Special
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 Special Servicer to, dispose of any REO Property within three years 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 Special 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 Special 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 Special 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
or the Special 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. 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
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).
(b) his 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 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 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 any 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 Certificate
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 Certificate 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.
(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 Percentage Interest), 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 any Affiliate
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 9.23(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, First Union National Bank, 230 South Tryon
Street NC1179, Charlotte, North Carolina 28288, Attention: Structured Finance,
and (c) in the case of the Master Servicer, Norwest Bank Minnesota, National
Association, 11000 Broken Land Parkway, Columbia, Maryland 21044; Attention:
Master Servicing, 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. Serverability 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 Section
11.14.
Section 11.12. Special Notices to the Rating Agencies. (a) The Depositor
shall give prompt notice to the Rating Agencies 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;
(i) any Assignment by the Master Servicer of its rights hereunder or
delegation of its duties hereunder;
(ii) the occurrence of any Event of Default described in Section
6.14;
(iii) 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
(iv) the making of a final payment pursuant to Section 7.02.
(v) any termination of the rights and obligations of any Servicer
under the applicable Servicing Agreement.
(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:
Standard & Poor's Rating Services
26 Broadway, 15th Floor
New York, New York 10004
Attention: Residential Mortgages
(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. Lehman Capital agrees that it shall
provide written notice to the Trustee and the Master Servicer thirty days
prior to any transfer or assignment by Lehman Capital 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
Lehman Capital 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;
(i) 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;
(ii) 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;
(iii) 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;
(v) Lehman Capital 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, Lehman Capital 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, Lehman Capital
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, Lehman Capital 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, Lehman
Capital 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, Lehman
Capital 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) Lehman Capital 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.
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:
____________________________
Name: Stanley P. Labanowski
Title: Authorized Signatory
FIRST UNION NATIONAL BANK,
as Trustee
By:
_____________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer
By:
_____________________________
Name:
Title:
Solely for purposes of Section 11.14,
accepted and agreed to by:
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:___________________________________
Name: Joseph J. Kelly
Title: Authorized Signatory
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 April 1, 1998
among Structured Asset Securities Corporation, as Depositor, First
Union National Bank, as Trustee, and Norwest Bank Minnesota, National
Association, as Master Servicer, with respect to Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series
1998-4
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as 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]
FIRST UNION NATIONAL BANK,
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 April 1, 1998
among Structured Asset Securities Corporation, as Depositor, First
Union National Bank, as Trustee, and Norwest Bank Minnesota, National
Association, as Master Servicer, with respect to Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series
1998-4
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the undersigned,
as Trustee, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
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]
FIRST UNION NATIONAL BANK,
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 April 1, 1998
among Structured Asset Securities Corporation, as Depositor, First
Union National Bank, as Trustee, and Norwest Bank Minnesota, National
Association, as Master Servicer, with respect to Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series
1998-4
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the undersigned,
as Trustee, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
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]
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Name:
Title:
EXHIBIT B-4
-----------
FORM OF ENDORSEMENT
Pay to the order of First Union National Bank, as trustee (the "Trustee")
under the Trust Agreement dated as of April 1, 1998, among Structured Asset
Securities Corporation, as Depositor, the Trustee and the Master Servicer
relating to Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-4, 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 April 1, 1998 among
Structured Asset Securities Corporation, as Depositor, Norwest Bank Minnesota,
National Association, 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 purchased. (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), 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 __________ [insert date of transfer of
Residual Certificate to Purchaser] 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, First
Union National Bank, as Trustee and Norwest Bank Minnesota, National
Association, as Master Servicer, dated as of April 1, 1998, no transfer of the
Residual Certificates 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 Residual Certificates.
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 not a Non-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 or (iii) is a Non-U.S.
Person that has delivered to both the transferor and the Trustee an opinion of a
nationally recognized tax counsel to the effect that the transfer of such
Residual Certificate to it is in accordance with the requirements of the Code
and the regulations promulgated thereunder and that such transfer of a Residual
Certificate will not be disregarded for federal income tax purposes. "Non-U.S.
Person" means an individual, corporation, partnership or other person other than
a citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust that is subject to U.S.
federal income tax regardless of the source of its income.
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 Master Servicer
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 __________, 19__.
----------------------------
[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 __________, 19__.
NOTARY PUBLIC
- ------------------------------
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
EXHIBIT D-2
-----------
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 1998-4
-------------
Reference is hereby made to the Trust Agreement dated as of April 1, 1998
(the "Trust Agreement") among Structured Asset Securities Corporation, as
Depositor, Norwest Bank Minnesota, National Association, as Master Servicer and
First Union National Bank, 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 Balance 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 1998-4 (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 April 1, 1998 among the
Depositor, Norwest Bank Minnesota, National Association, as Master
Servicer and First Union National Bank, 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.
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, Norwest Bank Minnesota, National Association, as Master Servicer, and
First Union National Bank, as Trustee, dated as of April 1, 1998, 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 _______________, 199 .
----------------------------
[Investor]
By:_________________________
Name:
Title:
EXHIBIT I
- ---------
MONTHLY REMITTANCE ADVICE
EXHIBIT J
- ---------
MONTHLY ELECTRONIC DATA TRANSMISSION
EXHIBIT K
- ---------
CUSTODIAL AGREEMENT
EXHIBIT L
- ---------
SPECIAL SERVICING COMPENSATION AGREEMENT
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
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 April 1, 1998
TABLE OF CONTENTS
Section Page
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans..................................... 2
1.02. Delivery of Documents...................................... 3
1.03. Review of Documentation.................................... 3
1.04. Representations and Warranties of Lehman Capital........... 3
1.05. Grant Clause............................................... 7
1.06. Assignment by Depositor.................................... 7
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment.................... 8
2.02. Entire Agreement........................................... 8
2.03. Amendment.................................................. 8
2.04. Governing Law.............................................. 9
2.05. Severability of Provisions................................. 9
2.06. Indulgences; No Waivers.................................... 9
2.07. Headings Not to Affect Interpretation...................... 9
2.08. Benefits of Agreement...................................... 9
2.09. Counterparts............................................... 9
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 April, 1998.
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 April 1, 1998, between the Depositor, Norwest Bank
Minnesota, N.A., as Master Servicer and First Union National Bank, 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 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. Seller's Warranties and Servicing Agreement, dated as of January
23, 1998, between Lehman Capital and Option One Mortgage
Corporation;
2. Assignment, Assumption and Recognition Agreement, dated January
29, 1998, among DLJ Mortgage Capital, Inc. ("DLJ"), Lehman Capital,
BNC Mortgage, Inc. ("BNC") and Temple-Inland Mortgage Corporation
pursuant to which DLJ transferred and assigned all of its right,
title and interest in the Master Mortgage Loan Purchase Agreement,
dated as of October 31, 1995, between DLJ, as purchaser, and BNC, as
seller;
3. Purchase and Warranties Agreement, dated as of October 1, 1997,
between Lehman Capital and Long Beach Mortgage Company;
4. Purchase and Warranties Agreement, dated as of December 1, 1997,
between Lehman Capital and Long Beach Mortgage Company;
5. Mortgage Loan Purchase and Warranties Agreement, date as of
February 22, 1998, between Lehman Capital and Chase Manhattan
Mortgage Corporation;
6. Mortgage Loan Purchase and Warranties Agreement, dated as of
February 1, 1998, between Lehman Capital and Pan American Bank, FSB;
and
7. Mortgage Loan Purchase and Warranties Agreement, dated as of
February 1, 1998, between Lehman Capital and Life Bank.
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 the Transfer Agreements, 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. Sales of Mortgage Loan. 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,
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 $759,131,604.23. 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 April 1, 1998 (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
the Transfer Agreements, and delegates to the Depositor all of its obligations
thereunder. Concurrently with the execution hereof, the Depositor tenders the
purchase price of $804,010,843.22. The Depositor hereby accepts such
assignment and delegation, and shall be entitled to exercise all such rights
of Lehman Capital under the Transfer Agreements, as if the Depositor had been
a party to the Transfer Agreements.
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 Transfer Agreements.
(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 Documents. 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 Trust, National Association, Norwest Bank Minnesota, N.A. or
Chase Bank of Texas, N.A., as applicable, as custodian (each a "Custodian")
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 a 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 Representative and Warranties of Lehnan 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;
(i) 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;
(ii) 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;
(iii) 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 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;
(v) 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 incumbrance, 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;
(vi) 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;
(vii) 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;
(viii) 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; and
(ix) 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 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 Natuare 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. (a) 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).
(b) 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
Certificate 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 Certificate 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.
(c) 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 Agreements. 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:_______________________________
Name: Joseph J. Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES
CORPORATION
By: ______________________________
Name: Stanley P. Labanowski
Title: Authorized Signatory
SCHEDULE A
MORTGAGE LOAN SCHEDULE
Execution
SPECIAL SERVICING AGREEMENT
THIS SPECIAL SERVICING AGREEMENT (this "Agreement"), entered into as of
the 1st day of April, 1998, by and between LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and
OCWEN FEDERAL BANK FSB, a federal savings bank ("the Special Servicer"):
RECITALS
WHEREAS, Lehman Capital has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Serviced Mortgage Loans") to Structured Asset
Securities Corporation ("SASCO"), which in turn has conveyed the Serviced
Mortgage Loans to First Union National Bank, as trustee (the "Trustee") under
a trust agreement dated as of April 1, 1998 (the "Trust Agreement"), among the
Trustee, Norwest Bank Minnesota, National Association, as master servicer
("Norwest," and, together with any successor Master Servicer appointed
pursuant to the provisions of the Trust Agreement, the "Master Servicer") and
SASCO.
WHEREAS, multiple classes of Certificates, including the Class X
Certificate, will be issued on the Closing Date pursuant to the Trust
Agreement, and Lehman Pass-Through Securities Inc., or a nominee thereof,
(together with any successor in interest thereto and any permitted assignee or
transferee thereof, the "Directing Holder") is expected to be the initial
registered Holder of the Class X Certificate;
WHEREAS, Lehman Capital desires that the Special Servicer perform the
services with respect to the Serviced Mortgage Loans as provided in this
Agreement (including those provisions that are incorporated by reference
herein), and the Special Servicer has agreed to do so, subject to the
conditions set forth herein.
WHEREAS, Norwest 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 Special Servicer
under this Special 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 Special Servicer
hereby agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this Agreement,
including Exhibit A hereto and any provisions of the Servicing Agreement dated
as of December 1, 1997, between Lehman Capital and the Servicer (the
"Servicing Agreement") incorporated by reference herein, shall have the
meanings ascribed to such terms in the Trust Agreement.
2. Special Servicing. The Special 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 Servicing Agreement, except as otherwise provided herein and on Exhibit A
hereto, and that the provisions of the 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 Special Servicer. The Special
Servicer, including any successor special servicer hereunder, shall be subject
to the supervision of the Master Servicer, which Master Servicer shall be
obligated to ensure that the Special 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 "Owner" (as defined in the Servicing
Agreement) to enforce the obligations of the Special Servicer under the
Servicing Agreement. The Master Servicer shall be entitled to terminate the
rights and obligations of the Special Servicer under this Agreement upon the
failure of the Special Servicer to perform any of its obligations under this
Agreement, after the expiration of any notice and cure periods, if any, as
provided in Section 9.01 of the Servicing Agreement. If the Special Servicer
is in default under this Agreement, after the expiration of any notice and
cure periods, if any, the Master Servicer shall, upon the written direction of
the Directing Holder, terminate the rights and obligations of the Special
Servicer under this Agreement.
Upon prior written notice, the Directing Holder shall have the exclusive
right to terminate the rights and obligations of the Special Servicer under
this Agreement without cause and without payment of any termination fee in
connection with such termination; provided, that any successor special
servicer shall be appointed in the manner provided below.
Notwithstanding anything to the contrary in Sections 9.01, 9.02 and 10.01
of the Servicing Agreement, the Directing Holder shall, within 30 days of the
receipt by the Special Servicer of a copy of any termination notice delivered
by the Master Servicer to the Special Servicer or upon delivery by the
Directing Holder of any such notice pursuant Section 9.02 or upon receipt by
the Directing Holder of any resignation notice given by the Special Servicer,
notify the Master Servicer in writing of the Directing Holder's nominee as
successor special servicer, which nominee shall be appointed as special
servicer by the Master Servicer unless the Master Servicer reasonably objects
to such nominee within 10 days following receipt of such notice. If the Master
Servicer objects to such nominee, then the Master Servicer shall, within such
10-day period, appoint a successor special servicer, which successor shall be
reasonably acceptable to the Directing Holder.
4. No Representations. Neither the Special 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 SPECIAL 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 Special Servicer agree that
this Agreement is a Reconstitution Agreement, and that the date hereof is the
Reconstitution Date, each as defined in the Servicing Agreement. This
Agreement amends the terms and provisions of the Servicing Agreement only with
respect to the Serviced Mortgage Loans identified on Schedule I hereto and
does not purport to amend or modify the Servicing Agreement with respect to
any other loans that are or may become subject to the Servicing Agreement.
9. Notices and Remittances to the Master Servicer. All notices required
to be delivered to the Owner or the Master Servicer under this Agreement shall
be delivered to the Master Servicer at the following address:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Attn: Master Servicing Department, SASCO 1998-4
Copies of all such notices, and all notices to be delivered to the
Directing Holder under this Agreement, shall be delivered to the Directing
Holder at the following address:
Ocwen Asset Investment Corp.
The Forum
Suite 1002
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33410
Attn: Secretary
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
Norwest Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 091-000-019
Account Name: Corporate Trust Clearing
Account Number: 3970771416
For further credit to: 13423000, SASCO 1998-4
10. Termination of Rights of Directing Holder. The parties hereto intend
that the Directing Holder be a third party beneficiary of this Agreement. All
rights of the Directing Holder hereunder and under the Trust Agreement and all
obligations of the other parties hereto with respect to the Directing Holder
shall terminate immediately upon any transfer of the Class X Certificate to
any other Person, unless (i) the Special Servicer consents in writing to the
transfer of such rights and (ii) the Trustee is provided with a letter from
each Rating Agency to the effect that the transfer of the rights of the
Directing Holder to such transferee will not result in the qualification,
withdrawal or downgrade of the ratings then assigned to any Class of
Certificates.
11. Annual Audit Report. On or before April 30 of each year, beginning
with April 30, 1999, Special Servicer shall cause a firm of independent public
accountants (who may also render other services to Special Servicer), which is
a member of the American Institute of Certified Public Accountants, to furnish
a statement to Owner, Directing Holder and Master Servicer, to the effect that
such firm has examined certain documents and records for the preceding
calendar year (or during the period from the date of commencement of such
servicer's duties hereunder until the end of such preceding calendar 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
Special 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.
12. Annual Officer's Certificate. On or before April 30 of each year,
beginning with April 30, 1999, the Special Servicer, at its own expense, will
deliver to the Owner, Directing Holder and Master Servicer a Servicing
Officer's certificate stating, as to each signer thereof, that (i) a review of
the activities of the Special 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 Special 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 Special
Servicer to remedy such default.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:
_________________________________
Name: Joseph J. Kelly
Title: Vice President
OCWEN FEDERAL BANK FSB
By:
_______________________________
Name:
Title:
EXHIBIT A
Modifications to the Servicing Agreement
1. The following is hereby added immediately following the words
"incidental fees and charges" in the definition of "Ancillary
Income" in Article I: ", but not including any premium or penalty
associated with a prepayment of principal of a Mortgage Loan."
2. The definition of "Base Servicing Fee" is hereby amended by deleting
the last sentence therefrom.
3. The definition of "Custodial Agreement" in Article I is hereby
deleted and replaced with the following:
"The custodial agreements relating to custody of the Serviced
Mortgage Loans among: (i) First Trust National Association, as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, (ii) Chase Bank of Texas, N.A., as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, (iii) Norwest Bank, Minnesota,
National Association, as Custodian, First Union National Bank, as
Trustee, and Structured Asset Securities Corporation, each dated as
of April 1, 1998."
4. The following is hereby added immediately following the words
"Special Servicer" in the definition of "Opinion of Counsel" in
Article I: "(except that such counsel must be Independent (as
defined in the Trust Agreement) outside counsel with respect to any
such opinion relating to the REMIC Provisions)"
5. The definition of "Primary Servicer" in Article I is hereby deleted
and replaced with the following:
"Any of Option One Mortgage Corporation, Aurora Loan Services Inc.
or any successor to either of them."
6. The following definitions are hereby added to Article I:
"Monthly Advance: With respect to each Remittance Date and each
Mortgage, an amount equal to the Monthly Payment (with the
interest portion of such Monthly Payment adjusted to the
Mortgage Loan Remittance Rate) which was due on the Mortgage
Loan, and (i) which was delinquent at the close of business on
the immediately preceding Determination Date and (ii) which was
not the subject of a previous Monthly Advance, unless such
Advance would constitute a Nonrecoverable Advance.
"REMIC Provisions: The provisions of the federal income tax law
relating to a REMIC, which appear at Section 860A through 860G
of Subchapter M of Chapter 1, Subtitle A of the Code, and
related provisions, and regulations, rulings or pronouncements
promulgated thereunder, as the foregoing may be in effect from
time to time."
7. The definition of "Remittance Date" in Article I is hereby deleted
and replaced with the following:
"The 18th day (or if such 18th day is not a Business Day, the
first Business Day immediately following) of any month,
following the First Remittance Date."
8. is hereby amended by deleting the first, second and third paragraphs
thereof in their entirety and, in the fourth paragraph thereof,
deleting the following: "(and any applicable Acknowledgement
Agreement)".
9. (a)(i) is deleted in its entirety and replaced with the following:
"(a)(i) Within five business days following a Transfer Date,
the Special Servicer shall reimburse the Primary Servicer for
all principal and interest and Servicing Advances made by such
Primary Servicer and all accrued and unpaid Servicing Fees due
to the Primary Servicer with respect to any Transferred
Mortgage Loan identified on such Notice of Transfer for which
the Primary Servicer has not been reimbursed. Thereafter, such
amounts paid by the Special Servicer, if any, shall be
reimbursed to the Special Servicer in accordance with Section
3.04 hereof."
10. is hereby amended by deleting clause (a) of the third paragraph of
subsection (B) thereof and by adding the following at the end of
such Section:
"(C) In connection with the transfer of any Distressed Mortgage
Loan, (i) the Special Servicer will be responsible for
servicing the Distressed Mortgage Loan from and after the
effective date of transfer of servicing to the Special
Servicer, but shall have no obligation to service such
Distressed Mortgage Loan on or prior to such effective date of
the transfer of servicing, (ii) notwithstanding clause (i)
above, the Special Servicer shall not include the Distressed
Mortgage Loan in its monthly remittance report pursuant to
Section 4.02 for the month in which such transfer is effected
and shall not be obligated to make the Monthly Advance with
respect to such Distressed Mortgage Loan on the Remittance Date
in the month in which such transfer is effected, in each case,
regardless of whether the Remittance Date occurs before or
after the effective date of such transfer, (iii) the amount of
Monthly Advances to be reimbursed to the Servicer by the
Special Servicer hereunder shall include the Monthly Advance
made by the Servicer on such Remittance Date, regardless of
whether the Servicer makes such Monthly Advance before or after
the effective date of such transfer, and (iv) the Special
Servicer shall be entitled to the Base Servicing Fee with
respect to each such Distressed Mortgage Loan for the entire
month in which such transfer occurs.
Promptly after the transfer of any Distressed Mortgage Loan, the
Special Servicer shall use its best reasonable efforts to determine
whether any seller's representation or warranty applicable to such
Mortgage Loan has been breached, and shall notify the Trustee and
the Master Servicer in writing of any possible breach so identified.
The Special Servicer may conclusively rely upon information provided
by Lehman Capital, including copies of any related agreements of
sale, in determining which representations and warranties are
applicable to such Mortgage Loan."
11. The words "Special Servicer, in trust for Lehman Capital, A Division
of Lehman Brothers Holdings, Inc., owner of Residential Mortgage
Loans, Group No. ______, and various Mortgagors" in the first
paragraph of Section 3.03 are hereby deleted and replaced with the
following: "Ocwen Federal Bank FSB, in trust for Norwest Bank
Minnesota, National Association, as master servicer for SASCO
1998-4."
12. (ii) is deleted in its entirety and replaced with the following:
"(ii) to reimburse itself for unreimbursed advances of the
Special Servicer's funds made pursuant to Section 2.05 hereof,
including advances by the Special Servicer to reimburse the
Primary Servicer for principal and interest advances, Servicing
Advances and unpaid servicing fees due to them, if any, the
Special Servicer's right to reimburse itself pursuant to this
subclause (ii) being limited to either (x) amounts received on
the related Transferred Mortgage Loan which represent late
payments of principal and/or interest respecting which any such
advance was made, and related Liquidation Proceeds,
condemnation proceeds, Insurance Proceeds, REO Disposition
Proceeds and other amounts received in respect of the related
Mortgage Loan, it being understood that, in the case of any
such reimbursement, the Special Servicer's right thereto shall
be prior to the rights of the Owner, the Master Servicer, any
Primary Servicer and any Certificateholder or (y) any other
amounts in the Collection Account in the event that such
advances have been deemed to be Nonrecoverable Advances or are
not recovered from recoveries in respect of the related
Transferred Mortgage Loan or REO Property after a final
determination has been made as to what amounts have been or
will be recovered, it being understood that for those
Transferred Mortgage Loans in foreclosure, the Owner shall
reimburse the Special Servicer for Servicing Advances and
advances made pursuant to Section 2.05 hereof through the
completion of the sale of the defaulted Mortgage Loan, or the
foreclosure and disposition of the REO Property;"
13. is hereby amended by deleting clause (iii) in its entirety and
replacing such clause with the following clauses (iii) and (iv):
"(iii) to reimburse itself for Monthly Advances of the Special
Servicer's funds made pursuant to Section 7.03, the Special
Servicer's right to reimburse itself pursuant to this subclause
(iii) being limited to amounts received on the related Mortgage
Loan which represent late payments of principal and/or interest
respecting which any such advance was made, related Liquidation
Proceeds, Insurance Proceeds, condemnation 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 Special Servicer from the Mortgagor or
otherwise relating to such Mortgage Loan, it being understood
that, in the case of any such reimbursement, the Special
Servicer's right thereto shall be prior to the rights of the
Owner, the Master Servicer, any Primary Servicer and any
Certificateholder ; provided, that if the Special Servicer
reasonably determines that any unreimbursed Advance is a
Nonrecoverable Advance, the foregoing limitation shall not
apply thereto;
(i) to reimburse itself for unreimbursed Servicing
Advances, and for any unpaid Base Servicing Fees, the Special Servicer's right
to reimburse itself pursuant to this subclause (viii) with respect to any
Mortgage Loan being limited to related late collections, 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 Special Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Special Servicer's right thereto shall be prior
to the rights of the Owner; provided, that if the Special Servicer reasonably
determines that any unreimbursed Advance is a Nonrecoverable Advance, the
foregoing limitation shall not apply thereto;"
Clauses (iv) through (viii) in Section 3.04 are hereby redesignated
clauses (v) through (ix), as applicable.
14. The words "Special Servicer, in trust for Lehman Capital, A Division
of Lehman Brothers Holdings, Inc., owner of Residential Mortgage
Loans, Group No. ______, and various Mortgagors" in the first
paragraph of Section 3.05 are hereby deleted and replaced with the
following: "Ocwen Federal Bank FSB, in trust for Norwest Bank
Minnesota, National Association, as master servicer for SASCO
1998-4."
15. (a) is deleted in its entirety and replaced with the following:
"(a) Default Management Responsibilities: Subject only to
Accepted Servicing Practices and Section 3.11 below, the
Special Servicer shall have full power and authority to do or
cause to be done any and all things in connection with such
servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing,
the Special Servicer is hereby authorized and empowered by the
Owner (if, in the Special Servicer's reasonable judgment, such
action with respect to the Transferred Mortgage Loans and/or
the Mortgaged Properties is in the best interests of Owner in
accordance with, or is required by, this Agreement, and subject
to Accepted Servicing Practices to take the following actions
(without limitation): (i) prepare, execute and deliver, on
behalf of the Owner with expenses associated therewith being
Servicing Advances hereunder, any and all financing statements,
continuation statements and other documents or instruments
necessary to maintain the lien on each Mortgaged Property and
related collateral; and, subject to the remaining terms and
provisions of this Section, modifications, waivers (including,
without limitation, waivers of any late payment charge in
connection with any delinquent payment on a Transferred
Mortgage Loan), consents, amendments, discounted payoff
agreements, forbearance agreements, cash management agreements
or consents to or with respect to any documents contained in
the related servicing file; and any and all instruments of
satisfaction or cancellation, or of partial or full release or
discharge, and all other instruments comparable to any of the
types of instruments described in this subsection (i), and (ii)
institute and prosecute judicial and non-judicial foreclosures,
suits on promissory notes, indemnities, guaranties or other
loan documents, actions for equitable and/or extraordinary
relief (including, without limitation, actions for temporary
restraining orders, injunctions, and appointment of receivers),
suits for waste, fraud and any and all other tort, contractual
and/or other claims of whatever nature, and to appear in and
file on behalf of the Owner such pleadings or documents as may
be necessary or advisable in any bankruptcy action, state or
federal suit or any other action. In the event that any
Mortgage Loan is in default or, in the judgment of the Special
Servicer, such default is reasonably foreseeable, the Special
Servicer, consistent with Accepted Servicing Practices, may
waive, modify or vary any term of such Mortgage Loan (including
modifications that would change the Mortgage Interest Rate,
defer or forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment
from the related Mortgagor of an amount less than the full
outstanding and unpaid principal balance in final satisfaction
of such Mortgage or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to
any Mortgagor if in the Special Servicer's determination such
waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders
(taking into account any estimated Realized Loss that might
result absent such action). In addition, if, with respect to a
Transferred Mortgage Loan, a default (or any condition
resulting in a default being reasonably foreseeable) is cured
(such Mortgage Loan being referred to herein as a "Performing
Loan"), the Special Servicer may thereafter waiver, modify or
vary terms of such Performing Loan provided that no such action
will (A) decrease the Mortgage Rate on the Performing Loan, (B)
defer or forgive the payment of principal or interest (except
with respect to liquidation of such Performing Loan) or (C)
extend the final maturity date of such Performing Loan,
provided, however, that no such modification shall be permitted
to the extent that it would (a) affect adversely the status of
the Trust Fund as a REMIC or (b) cause the Trust Fund to be
subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.
Notwithstanding anything to the contrary in this Agreement, the
Special Servicer shall not 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; provided, that the foregoing
shall not (i) apply to any Severely Delinquent Loan or (ii)
prohibit the Special Servicer from entering into any agreement
for modification, waiver, forbearance, amendment or discounted
payoff of a Mortgage Loan in accordance with this Agreement
that does not have the effect of waiving any prepayment premium
or penalty or modifying any provision requiring payment
thereof.
Notwithstanding the foregoing, in the event of any conflict
between the provisions of this Section 3.10 and the provisions
of Section 3.11, the provisions of Section 3.11 shall control."
16. (e) is hereby deleted in its entirety and replaced with the
following:
"(e) At any time, the Directing Holder may request that the
Special Servicer take a particular action with respect to a
particular Mortgage Loan, including without limitation
foreclosure, waivers or modifications. Any such request shall
be in writing, a copy of which shall be delivered to the Master
Servicer. If the Special Servicer determines that such
requested action is consistent with Accepted Servicing
Practices, then the Special Servicer may, but is not required
to, comply with such request. Within two Business Days of
receipt of such a request, the Special Servicer shall notify
the Directing Holder whether the Special Servicer intends to
comply with such request. If the Special Servicer declines to
comply with such request (or fails to notify the Directing
Holder of its decision within the two Business Day period),
then the Directing Holder may, at its sole option and upon
written notice to the Special Servicer and the Master Servicer,
purchase the related Mortgage Loan from the Trust Fund at the
Purchase Price (as defined in the Trust Agreement). If the
Directing Holder does not indicate whether it wishes to
exercise this option within two Business Days of receipt of
such notice, then the Directing Holder shall not be entitled to
object to the action taken by the Special Servicer with respect
to such Mortgage Loan." In addition, the Directing Holder may
purchase any Severely Delinquent Mortgage Loan upon written
notice to the Master Servicer and the Special Servicer within
three days of the day on which such Mortgage Loan becomes a
Severely Delinquent Loan.
The Special Servicer shall have the right to purchase any Severely
Delinquent Loan at the Purchase Price (as defined in the Trust
Agreement). The Special Servicer shall send a written notice (the
"Initial Notice") to the Directing Holder advising the Directing
Holder that the Special Servicer intends to purchase a Severely
Delinquent Loan. The Directing Holder shall have the option to (i)
direct the Special Servicer not to purchase any such Severely
Delinquent Loan but to proceed with a particular default resolution
strategy otherwise mutually acceptable to the Special Servicer and
the Directing Holder, (ii) direct the Special Servicer to proceed
with the purchase of such loan on the terms proposed by the Special
Servicer, or (iii) indicate that the Directing Holder intends to
purchase such Severely Delinquent Loan, in which case the Directing
Holder shall have the sole right and option to purchase the Severely
Delinquent Loan at the Purchase Price; provided, however, that if
the Directing Holder fails or refuses to deliver a written notice of
its election to the Special Servicer within two Business Days after
the Special Servicer has sent to the Directing Holder the Initial
Notice, then the Directing Holder shall be deemed to have consented
to the Special Servicer purchasing the Severely Delinquent Loan for
its own account."
17. The following Section 3.11 is hereby added immediately following
Section 3.10:
"Section 3.11 REMIC Provisions.
(b) Unless the Mortgagor is in default with respect to the
related Mortgage Loan or such default is, in the judgment of the Special
Servicer, reasonably foreseeable, the Special 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), change the final
maturity date on such Mortgage Loan, or permit any alteration, substitution or
release of any collateral for such Mortgage Loan.
(c) The Special Servicer shall dispose of any 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 (i) the Owner
shall have been supplied with an Opinion of Counsel to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period (and specifying the period beyond such three-year period for
which the Mortgaged Property may be held) will not result in the imposition of
taxes on "prohibited transactions" of the Trust Fund as defined in section
860F of the Code, or cause the related REMIC to fail to qualify as a REMIC, in
which case the Trust Fund may continue to hold such Mortgaged Property
(subject to any conditions contained in such Opinion of Counsel), or (ii) the
Owner (at the Special Servicer's expense) or the Special Servicer shall have
applied for, not later than 61 days prior to the expiration of such three-year
period, an extension of such three-year period in the manner contemplated by
section 856(e)(3) of the Code, in which case the three-year period shall be
extended by the applicable period. If a period longer than three years is
permitted under the foregoing sentence and is necessary to sell any REO
Property, (i) the Special Servicer shall report monthly to the Owner as to the
progress being made in selling such REO Property and (ii) if, with the written
consent of the Owner, a purchase money mortgage is taken in connection with
such sale, such purchase money mortgage shall name the Special Servicer as
mortgagee, and such purchase money mortgage shall not be held pursuant to this
Agreement, but instead a separate participation agreement between the Special
Servicer and the Owner shall be entered into with respect to such purchase
money mortgage.
Notwithstanding any other provision of this Agreement, no
Mortgaged Property held by a REMIC shall be rented (or allowed
to continue to be rented) or otherwise used for the production
of income by or on behalf of the Trust Fund or sold in such a
manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify at any time as
"foreclosure property" within the meaning of section 860G(a)(8)
of the Code, (ii) subject the Trust Fund to the imposition of
any federal or state income taxes on "net income from
foreclosure property" with respect to such Mortgaged Property
within the meaning of section 860G(c) of the Code, or (iii)
cause the sale of such Mortgaged Property to result in the
receipt by the Trust Fund of any income from non-permitted
assets as described in section 860F(a)(2)(B) of the Code,
unless the Special Servicer has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any
such taxes."
18. The first paragraph of Section 4.01 is hereby deleted and replaced
with the following:
"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 Collection
Period (net of charges against or withdrawals from the
Custodial Account pursuant to Section 3.04), plus (b) all
amounts, if any, which the Servicer is obligated to advance
pursuant to Section 7.03, minus (c) any amounts attributable to
Principal Prepayments, Liquidation Proceeds, Insurance 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 7.03, and minus (d) any amounts attributable to Monthly
Payments collected but due on a due date or 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 Period for such amounts."
19. is hereby amended by deleting the words "Remittance Date" in the
first line of such Section, and substituting the following: "tenth
day of each month, or if such tenth day is not a Business Day, the
immediately preceding Business Day"
20. is hereby amended by deleting the last sentence of each of
subsections (a) and (b) thereof.
21. The following Sections 7.03 and 7.04 are hereby added immediately
following Section 7.02:
"Section 7.03 Monthly Advances and Compensating Interest.
(d) Notwithstanding anything to the contrary herein, the Special
Servicer shall make Monthly Advances (other than Balloon Payments as defined
in the Trust Agreement) on each Remittance Date 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.
(e) Notwithstanding anything to the contrary herein, with respect to
each Principal Prepayment of a Mortgage Loan the Special Servicer shall
deposit in the Custodial Account on a daily basis and retain therein the
Prepayment Interest Shortfall Amount, if any, for the month of distribution.
Such deposit shall be made from the Special Servicer's own funds, without
reimbursement therefor, up to a maximum amount per month equal to the
aggregate of the Base Servicing Fees otherwise payable to the Special Servicer
with respect to such month.
Section 1.02. Special Servicing Compensation. Notwithstanding
anything to the contrary herein, the Special Servicer shall not be entitled to
pay itself any compensation out of amounts collected on or in respect of the
Mortgage Loans other than the Base Servicing Fee and any Ancillary Income, to
the extent provided herein. Any other compensation payable to the Special
Servicer hereunder, including the Special Servicing Fee, the Extended Special
Servicing Fee and the Incentive Fee, shall be payable to the Special Servicer
on each Distribution Date as provided in the Trust Agreement."
22. is hereby deleted in its entirety.
23. The following paragraph is added at the end of Section 10.01:
"Neither the Master Servicer nor any successor special servicer
(including the Owner and the Master Servicer) shall be liable
for any acts or omissions of the Special Servicer or any
predecessor servicer. In particular, neither the Master
Servicer nor any successor special servicer (including the
Owner and the Master Servicer) shall be liable for any
servicing errors or interruptions resulting from any failure of
the Special Servicer to maintain computer and other information
systems that are year-2000 compliant."
24. All references in the Servicing Agreement or in any schedules or
exhibits thereto, including, without limitation, Exhibit I, to the
"Decision Matrix" are hereby deleted in their entirety.
25. The following definition is hereby added:
"Prepayment Period: With respect to the first Remittance Date,
the period beginning on the Cut-off Date and ending on May 1.
With respect to each subsequent Remittance Date, the period
commencing on the second day of the month immediately preceding
the month in which such Remittance Date occurs and ending on
the first day of the month in which such Remittance Date
occurs."
26. The definitions of "Extended Special Servicing Fee," "Incentive Fee,"
"Loss Severity Percentage" and "Special Servicing Fee" are hereby
deleted in their entirety.
27. is hereby deleted in its entirety and replaced with the following:
"Section 5.01 Servicing Compensation. As consideration for
servicing the Transferred Mortgage Loans subject to this
Agreement, the Special Servicer shall be entitled to (i) retain
the Base Servicing fee equal to one-twelfth of (x) the
Servicing Fee Rate and (y) the outstanding principal balance of
such Transferred Mortgage Loan during any month or part thereof
(unless otherwise specified herein) and (ii) receive such
additional compensation as is specified in a separate letter
agreement dated the Closing Date."
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of April, 1998, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and AURORA
LOAN SERVICES INC., a Delaware corporation ("the Servicer"), recites and
provides as follows:
RECITALS
WHEREAS, Lehman Capital has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Serviced Mortgage Loans") on a servicing-retained
basis to Structured Asset Securities Corporation ("SASCO"), which in turn has
conveyed the Serviced Mortgage Loans to First Union National Bank, as trustee
(the "Trustee") under a trust agreement dated as of April 1, 1998 (the "Trust
Agreement"), among the Trustee, Norwest Bank Minnesota, National Association,
as master servicer ("Norwest," and, together with any successor Master
Servicer appointed pursuant to the provisions of the Trust Agreement, the
"Master Servicer") and SASCO.
WHEREAS, Lehman Capital continues to own the servicing rights to the
Serviced Mortgage Loans, and may freely transfer such rights, subject to the
terms hereof.
WHEREAS, Lehman Capital desires that the Servicer service the Serviced
Mortgage Loans, and the Servicer has agreed to do so, subject to the right of
Lehman Capital to terminate the rights and obligations of the Servicer
hereunder at any time and to the other conditions set forth herein.
WHEREAS, Norwest 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 and any provisions of the Flow Servicing Agreement
dated as of September 1, 1997, between Lehman Capital and the Servicer (the
"Flow Servicing Agreement") incorporated by reference herein, shall have the
meanings ascribed to such terms in the Trust 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 Flow
Servicing Agreement, except as otherwise provided herein and on Exhibit A
hereto, and that the provisions of the Flow 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 be obligated to 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
"Owner" (as defined in the Flow Servicing Agreement) to enforce the
obligations of the Servicer under the Flow Servicing Agreement. 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 Flow
Servicing Agreement.
In addition, in the event that Lehman Capital transfers the servicing
rights in respect of the Serviced Mortgage Loans to one or more successor
servicers, the rights and obligations of the Servicer under this Agreement
shall terminate, at the sole option of Lehman Capital, without cause, upon
thirty days written notice to the Servicer, and each successor servicer shall
succeed to the rights and obligations of the Servicer under this Agreement as
of such date. Upon such termination the terminated Servicer shall not be
entitled to the Servicing Fee or any portion thereof, or, except as provided
in the Flow Servicing Agreement, to any other amounts in respect of the
Serviced Mortgage Loans.
The Servicer agrees that, notwithstanding anything to the contrary in the
Flow Servicing Agreement, Lehman Capital is the sole owner of the servicing
rights relating to the Serviced Mortgaged Loans, and the Servicer shall have
no right to transfer the servicing thereof.
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 Flow Servicing Agreement.
9. Notices and Remittances to the Master Servicer. All notices required
-----------------------
to be delivered to the Owner or the Master Servicer under this Agreement shall
be delivered to the Master Servicer at the following address:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Attn: Master Servicing Department, SASCO 1998-4
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
Norwest Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 091-000-019
Account Name: Corporate Trust Clearing
Account Number: 3970771416
For further credit to: 13423000, SASCO 1998-4
10. Errors and Omissions Insurance. The Servicer shall keep in force
------------------------------
during the term of this Agreement a fidelity bond and a policy or policies of
insurance covering errors and omissions in the performance of the Servicer's
obligations under this Agreement. Such fidelity bond and policy pr policies
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.
11. Annual Audit Report. On or before April 30 of each year, beginning
-------------------
with April 30, 1999, Servicer shall 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 a
statement to Owner, Directing Holder and Master Servicer, 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.
12. Annual Officer's Certificate. On or before April 30 of each year,
----------------------------
beginning with April 30, 1999, the Servicer, at its own expense, will deliver
to the Owner, Directing Holder 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.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:
-----------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
AURORA LOAN SERVICES INC.
By:
-----------------------------
Name:
Title:
EXHIBIT A
Modifications to the Flow Servicing Agreement
1. The following is hereby added immediately following the words "incidental
fees and charges" in the definition of "Ancillary Income" in Article I:
", but not including any premium or penalty associated with a prepayment
of principal of a Mortgage Loan."
2. The definition of "Custodial Agreement" in Article I is hereby deleted
and replaced with the following:
"The custodial agreements relating to custody of the Serviced
Mortgage Loans among: (i) First Trust National Association, as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, (ii) Chase Bank of Texas, N.A., as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, and (iii) Norwest Bank Minnesota,
National Association, as Custodian, First Union National Bank, as
Trustee, and Structured Asset Securities Corporation, each dated as
of April 1, 1998."
3. The following definition is hereby added:
"Prepayment Period: With respect to the first Remittance Date, the
period beginning on the Cut-off Date and ending on May 1. With
respect to each subsequent Remittance Date, the period commencing on
the second day of the month immediately preceding the month in which
such Remittance Date occurs and ending on the first day of the month
in which such Remittance Date occurs."
4. The definition of "Monthly Advance" in Article I is hereby amended by
adding at the end of such definition the following: ", 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."
5. The definition of "Qualified Depository" in Article I is hereby deleted
and replaced with the following:
"Any of (i) a depository the accounts of which are insured by the
FDIC and the debt obligations of which are rated AA or better by
Fitch and S&P; (ii) the corporate trust department of any bank the
debt obligations of which are rated at least A-1 or its equivalent
by each of Fitch and S&P; or (iii) the Servicer, unless the Master
Servicer is notified by either Fitch or S&P that the designation of
the Servicer as a Qualified Depository will result in a
qualification, withdrawal or downgrade of the then-current rating of
any of the Certificates."
6. The definition of "Remittance Date" in Article I is hereby deleted and
replaced with the following:
"The 18th day (or if such 18th day is not a Business Day, the first
Business Day immediately following) of any month, following the
First Remittance Date."
7. The definition of "Servicing Advance" in Article I is hereby amended by
adding, immediately after the phrase "but not limited to, the cost of",
the following: "transfer of servicing of Distressed Mortgage Loans to the
Special Servicer pursuant to Section 9.02, and".
8. The first sentence of the definition of "Servicing Fee" in Article I is
hereby deleted and replaced with the following: "The servicing fee shall
be an amount equal to one-twelfth the product of (a) a rate per annum
equal to 0.50% and (b) the outstanding principal balance of such Mortgage
Loan. The obligation of the Master Servicer 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."
9. The fourth and fifth paragraphs of Section 3.01 are hereby deleted and
replaced with the following paragraph:
"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 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 Master Servicer, 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 Master Servicer 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 Master Servicer,
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 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."
10. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.03 are hereby deleted and
replaced with the following: "Norwest Bank Minnesota, National
Association, as master servicer for SASCO 1998-4."
11. is further amended by deleting the word "and" at the end of clause
(viii), replacing the period at the end of clause (ix) with "; and", and
adding the following immediately after clause (ix):
"(x) any principal prepayment penalties received in connection with
the Mortgage Loans."
12. is amended by deleting the word "and" at the end of clause (v), replacing
the period at the end of clause (vi) with "; and", and adding the
following immediately following clauses (vii) and (viii):
"(vii) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 7.03, 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;
(i) 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 Purchaser;"
13. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.05 are hereby deleted and
replaced with the following: "Norwest Bank Minnesota, National
Association, as master servicer for SASCO 1998-4."
14. All references in Section 3.11 to the disposition of REO Properties
within a two year period are hereby deleted and replaced with a three
year period.
15. The first paragraph of Section 4.01 is hereby deleted and replaced with
the following:
"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 amounts, if any, which the Servicer is
obligated to distribute pursuant to Section 7.03, 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 7.03, and minus (d) any amounts attributable
to Monthly Payments collected but due on a due date or 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 Period for such amounts."
16. 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"
17. The third paragraph of Section 5.01 is hereby deleted.
18. The following paragraph is hereby added at the end of Section 9.02:
"On the second Business Day of each month, the Servicer shall orally
inform the Master Servicer and the Special Servicer as to which
Mortgage Loans have become delinquent for a period of 61 days or
more, without giving effect to any grace period permitted by the
related Mortgage Note (each, a "Distressed Mortgage Loan"). No
Mortgage Loan shall be considered to be delinquent for such purpose
by virtue of the related Mortgagor having made payment to a prior
servicer. Any such Mortgage Loan as to which all past due payments
are made prior to the Notice Date shall not be considered to be a
Distressed Mortgage Loan, and the servicing thereof shall not be
transferred as provided below. On the fourth Business Day of each
month (the "Notice Date"), the Servicer shall send by facsimile a
written listing of the Distressed Mortgage Loans to the Master
Servicer, the Trustee and the Custodian, and shall mail to the
Mortgagor of each Mortgage Loan listed in a Transfer Notice a letter
advising each such Mortgagor of the transfer of the servicing of the
related Mortgage Loan to the Special Servicer, in accordance with
the Cranston Gonzales National Affordable Housing Act of 1990;
provided, however, the content and format of such letter shall have
the prior approval of the Special Servicer. The Servicer shall
promptly provide the Special Servicer with copies of all such
notices. The transfer of servicing with respect to each such
Mortgage Loan to the Special Servicer shall be effected by the
Servicer not later than fifteenth day following the applicable
Notice Date (the "Transfer Date"). By the Business Day immediately
following each Notice Date, the Servicer shall provide the Master
Servicer, the Special Servicer, the Trustee and the Custodian with a
certification (the "Transfer Notice") listing the Distressed
Mortgage Loans.
At least five Business Days prior to the Transfer Date, the Servicer
shall deliver, with respect to the Distressed Mortgage Loans listed
on the related Transfer Notice, to the Special Servicer all
Servicing Files, and to the Special Servicer and the Master Servicer
a preliminary loan level tape or other electronic media (a "Report")
in form reasonably acceptable to the Servicer, the Master Servicer
and the Special Servicer. Within two Business Days following such
Transfer Date, the Servicer shall deliver such Report in final form
reasonably acceptable to the Master Servicer and the Special
Servicer, and commensurate with generally acceptable industry
standards, detailing the amount of any unreimbursed Monthly
Advances, Servicing Advances and accrued and unpaid Servicing Fees
on a loan level basis. Should the Master Servicer or the Special
Servicer desire a loan level tape or other electronic media
containing information which is not readily extractable from the
Servicer's servicing system, the Servicer shall diligently cooperate
to make such loan level data available to the Master Servicer and
Special Servicer. In addition, at least five Business Days prior to
the Transfer Date, the Servicer shall transfer to the Special
Servicer any funds held in an Escrow Account or Custodial Account
relating to the Distressed Mortgage Loans listed in the related
Transfer Notice. Upon the successful completion of the transfer of
servicing for Distressed Mortgage Loans, the Special Servicer will
reimburse the Servicer for any unreimbursed Monthly Advances,
Servicing Advances and accrued and unpaid Servicing Fees with
respect to such Distressed Mortgage Loans which have been properly
documented. The Servicer shall be paid, from the Custodial Account,
a termination fee of $25.00 for each Distressed Mortgage Loan
transferred to the Special Servicer.
In connection with the transfer of any Distressed Mortgage Loan, (i)
the Servicer will be responsible for servicing the Distressed
Mortgage Loan until the effective date of transfer of servicing to
the Special Servicer, but shall have no right or obligation to
service such Distressed Mortgage Loan from and after the effective
date of the transfer of servicing to the Special Servicer, (ii)
notwithstanding clause (i) above, the Servicer shall include the
Distressed Mortgage Loan in its monthly remittance report pursuant
to Section 4.02 for the month in which such transfer is effected and
shall be obligated, subject to Section 7.03, to make the Monthly
Advance with respect to such Distressed Mortgage Loan on the
Remittance Date in the month in which such transfer is effected, in
each case, regardless of whether the Remittance Date occurs before
or after the effective date of such transfer, (iii) the amount of
Monthly Advances to be reimbursed to the Servicer by the Special
Servicer hereunder shall include the Monthly Advance described in
clause (ii) above regardless of whether the Servicer makes such
Monthly Advance before or after the effective date of such transfer,
(iv) the Servicer shall, no later than the end of the month in which
such transfer is effected, provide to the Special Servicer loan
level information (in the loan level tape or other electronic media
or other agreed-upon form) regarding the Distressed Mortgage Loan
during the month of such transfer as may be necessary to enable the
Special Servicer to provide such information in its remittance
report for the next following month, and (v) the Servicer shall not
be entitled to the Servicing Fee with regard to any such Distressed
Mortgage Loan for the month in which such transfer occurs."
19. The following paragraph is added at the end of Section 10.01:
"Neither the Master Servicer nor any successor servicer (including
the Owner and the Master Servicer) shall be liable for any acts or
omissions of the Servicer or any predecessor servicer. In
particular, neither the Master Servicer nor any successor servicer
(including the Owner and the Master Servicer) shall be liable for
any servicing errors or interruptions resulting from any failure of
the Servicer to maintain computer and other information systems that
are year-2000 compliant."
20. The following words are hereby added after the words "Attention: Rick
Skogg" in Section 10.06(ii):
"with a copy to:
Aurora Loan Services Inc.
601 Fifth Avenue
P.O. Box 1706
Scottsbluff, Nebraska 69361
Telephone No.: (308) 635-3500
Telecopier No.: (308) 632-4287
Attention: Lee Trautman"
EXECUTION
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of April, 1998, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and OPTION
ONE MORTGAGE CORPORATION, a California corporation ("the Servicer"), recites
and provides as follows:
RECITALS
WHEREAS, Lehman Capital has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Serviced Mortgage Loans") to Structured Asset
Securities Corporation ("SASCO"), which in turn has conveyed the Serviced
Mortgage Loans to First Union National Bank, as trustee (the "Trustee") under
a trust agreement dated as of April 1, 1998 (the "Trust Agreement"), among the
Trustee, Norwest Bank Minnesota, National Association, as master servicer
("Norwest," 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, Norwest 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 and any provisions of the Seller's Warranties and
Servicing Agreement dated as of September 30, 1997, between Lehman Capital and
the Servicer (the "Warranties and Servicing Agreement") incorporated by
reference herein, shall have the meanings ascribed to such terms in the Trust
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 Warranties
and Servicing Agreement, except as otherwise provided herein and on Exhibit A
hereto, and that the provisions of the 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 be obligated to 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 Warranties and Servicing Agreement) to enforce
the obligations of the Servicer under the Warranties and Servicing Agreement.
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 X
of the 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 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:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Attn: Master Servicing Department, SASCO 1998-4
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
Norwest Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 091-000-019
Account Name: Corporate Trust Clearing
Account Number: 3970771416
For further credit to: 13423000, SASCO 1998-4
10. Errors and Omissions Insurance. The Servicer shall keep in force
------------------------------
during the term of this Agreement a fidelity bond and a policy or policies of
insurance covering errors and omissions in the performance of the Servicer's
obligations under this Agreement. Such fidelity bond and policy or policies
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 upon receipt thereof by the Servicer.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:
------------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
OPTION ONE MORTGAGE CORPORATION
By:
------------------------------
Name:
Title:
EXHIBIT A
Modifications to the Warranties and Servicing Agreement
1. All references to "Pool I," "Pool 1," "Pool 2" and "Pool II" in the
Warranties and Servicing Agreement are hereby deleted.
2. The definition of "Custodial Agreement" in Article I is hereby deleted
and replaced with the following:
"The custodial agreements relating to custody of the Serviced
Mortgage Loans among: (i) U.S. Bank Trust National Association, as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, (ii) Chase Bank of Texas, N.A., as
Custodian, First Union National Bank, as Trustee, and Structured
Asset Securities Corporation, and (iii) Norwest Bank Minnesota,
National Association, as Custodian, First Union National Bank, as
Trustee, and Structured Asset Securities Corporation, each dated as
of April 1, 1998."
3. The definition of "Monthly Advance" in Article I is hereby amended by
adding at the end of such definition the following: ", but only to the
extent that such amount is expected, in the reasonable judgment of the
Company, to be recoverable from collections or other recoveries in
respect of such Mortgage Loan."
4. The definition of "Servicing Advance" in Article I is hereby amended by
adding, immediately after the phrase "but not limited to, the cost of",
the following: "transfer of servicing of Delinquent Mortgage Loans to the
Special Servicer pursuant to Section 11.02, and".
5. The word "or" at the beginning of line twelve of the second paragraph in
Section 4.01 is hereby deleted and replaced with a comma, and the
following is hereby added immediately following the words "change the
final maturity date on such Mortgage Loan" in such line twelve: "or
permit any alteration, substitution or release of any collateral for such
Mortgage Loan."
6. The fourth and fifth paragraphs of Section 4.01 are hereby deleted in
their entirety and replaced with the following:
"Notwithstanding anything to the contrary in this Agreement, the
Company shall not 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."
7. The following paragraph is hereby added at the end of Section 4.02:
"Notwithstanding the foregoing, in the event of any conflict between
the provisions of this Section 4.02 and the provisions of Section
11.02, the provisions of Section 11.02 shall control."
8. The words "the Purchaser of Conventional Residential Adjustable and Fixed
Rate Mortgage Loans, Group No. 1997-LB/00" in the first paragraph of
Section 4.04 are hereby deleted and replaced with the following: "Norwest
Bank Minnesota, National Association, as master servicer for SASCO
1998-4."
9. is amended by deleting the word "and" at the end of clause (vi),
replacing the period at the end of clause (vii) with "; and", and adding
the following immediately following clause (viii):
"(viii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 7.03, the Company's right to
reimburse itself pursuant to this subclause (viii) (x) being limited
to amounts received on the related Mortgage Loan which represent
late payments of principal and/or interest respecting which any such
advance was made, related Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, REO Property, and such other amounts as may
be collected by the Company from the Mortgagor or otherwise relating
to such Mortgage Loan, and (y) if, after the liquidation of such
Mortgage Loan, such amounts are insufficient to reimburse the
Company for such unreimbursed Monthly Advances, the Company may seek
reimbursement from other amounts in the Custodial Account, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of the
Purchaser;
10. is further amended by adding, immediately after the words "unreimbursed
Servicing Advances" in the first line of clause (ii), the following: ",
and for any unpaid Servicing Fees,".
11. The words "the Purchaser of Conventional Residential Adjustable and Fixed
Rate Mortgage Loans, Group No. 1997-LB/00" in the first paragraph of
Section 4.06 are hereby deleted and replaced with the following: "Norwest
Bank Minnesota, National Association, as master servicer for SASCO
1998-4."
12. All references in Section 4.15 to the disposition of REO Properties
within a two year period are hereby deleted and replaced with a three
year period.
13. The first paragraph of Section 5.01 is hereby deleted and replaced with
the following:
"On each Remittance Date the Company 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 Determination Date (net of charges against or withdrawals from
the Custodial Account pursuant to Section 4.05), plus (b) all
advances, if any, which the Company is obligated to make pursuant to
Section 7.03, 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 7.04, and minus (d)
any amounts attributable to Monthly Payments collected but due
(giving effect to Section 5.03) on a due date or 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 Period for such amounts."
14. is hereby amended by deleting the words "Remittance Date" in the first
line of such Section, and substituting the following: "tenth day of each
month, or if such tenth day is not a Business Day, the immediately
preceding Business Day,"
15. is hereby deleted in its entirety.
16. is hereby amended by adding the following immediately after the words
"other ancillary fees" in the second paragraph of such Section: ", but
not including any premium or penalty associated with a prepayment of
principal of a Mortgage Loan."
17. The second paragraph of Section 11.02 is hereby deleted in its entirely
and replaced with the following:
"On the second Business Day of each month, the Company shall orally
inform the Master Servicer and the Special Servicer as to which
Mortgage Loans have become delinquent for a period of 61 days or
more, without giving effect to any grace period permitted by the
related Mortgage Note (each, a "Distressed Mortgage Loan"). Any such
Mortgage Loan as to which all past due payments are made prior to
the Notice Date shall not be considered to be a Distressed Mortgage
Loan, and the servicing thereof shall not be transferred as provided
below. On the fourth Business Day of each month (the "Notice Date"),
the Company shall send by facsimile a written listing of the
Distressed Mortgage Loans to the Master Servicer, the Trustee and
the Custodian, and shall mail to the Mortgagor of each Mortgage Loan
listed in a Transfer Notice a letter advising each such Mortgagor of
the transfer of the servicing of the related Mortgage Loan to the
Special Servicer, in accordance with the Cranston Gonzales National
Affordable Housing Act of 1990; provided, however, the content and
format of such letter shall have the prior approval of the Special
Servicer. The Company shall promptly provide the Special Servicer
with copies of all such notices. The transfer of servicing with
respect to each such Mortgage Loan to the Special Servicer shall be
effected by the Company not later than the fifteenth day following
the applicable Notice Date (the "Transfer Date"). By the Business
Day immediately following each Notice Date, the Company shall
provide the Master Servicer, the Special Servicer, the Trustee and
the Custodian with a certification (the "Transfer Notice") listing
the Distressed Mortgage Loans.
At least five Business Days prior to each Transfer Date, the Company
shall deliver, with respect to the Distressed Mortgage Loans listed
on the related Transfer Notice, to the Special Servicer all
Servicing Files, and to the Special Servicer and the Master Servicer
a loan level tape or other electronic media containing loan set-up
information in form reasonably acceptable to the Master Servicer and
the Special Servicer. Within two Business Days following such
Transfer Date, the Servicer shall deliver a final trial balance
(subject to special claims), in form reasonably acceptable to the
Master Servicer and the Special Servicer, and commensurate with
generally acceptable industry standards, detailing the amount of any
unreimbursed Monthly Advances, Servicing Advances and accrued and
unpaid Servicing Fees on a loan level basis. Should the Master
Servicer or the Special Servicer desire a loan level tape or other
electronic media containing information which is not readily
extractable from the Company's servicing system, the Company shall
reasonably cooperate to make such loan level data available to the
Master Servicer and Special Servicer. In addition, no more than two
Business Days after the Transfer Date, the Company shall transfer to
the Special Servicer any funds held in an Escrow Account or
Custodial Account relating to the Distressed Mortgage Loans listed
in the related Transfer Notice. Upon reasonable compliance by the
Company with the provisions of this Section regarding the transfer
of servicing for Distressed Mortgage Loans, the Special Servicer
will reimburse the Company within five Business Days for any
unreimbursed Monthly Advances, Servicing Advances and accrued and
unpaid Servicing Fees with respect to such Distressed Mortgage Loans
which have been properly documented. Notwithstanding anything herein
to the contrary, the transfer of servicing for Distressed Mortgage
Loans shall not require the payment of a termination fee therefor.
In connection with the transfer of any Distressed Mortgage Loan, (i) the
Company will be responsible for servicing the Distressed Mortgage Loan
until the effective date of transfer of servicing to the Special
Servicer, but shall have no right or obligation to service such
Distressed Mortgage Loan from and after the effective date of the
transfer of servicing to the Special Servicer, (ii) notwithstanding
clause (i) above, the Company shall include the Distressed Mortgage Loan
in its monthly remittance report pursuant to Section 5.02 for the month
in which such transfer is effected and shall be obligated, subject to
Section 7.03, to make the Monthly Advance with respect to such Distressed
Mortgage Loan on the Remittance Date in the month in which such transfer
is effected, in each case, regardless of whether the Remittance Date
occurs before or after the effective date of such transfer, (iii) the
amount of Monthly Advances to be reimbursed to the Company by the Special
Servicer hereunder shall include the Monthly Advance described in clause
(ii) above regardless of whether the Company makes such Monthly Advance
before or after the effective date of such transfer, (iv) the Company
shall, no later than the end of the month in which such transfer is
effected, provide to the Special Servicer loan level information (in the
loan level tape or other electronic media or other agreed-upon form)
regarding the Distressed Mortgage Loan during the month of such transfer
as may be necessary to enable the Special Servicer to provide such
information in its remittance report for the next following month, and
(v) the Company shall be entitled to its pro rata portion of the
Servicing Fee with respect to any such Distressed Mortgage Loan for the
month in which such transfer occurs, based on the number of days in such
month that precede the Transfer Date."
18. The following paragraph is added at the end of Section 12.01:
"Neither the Master Servicer nor any successor servicer (including
the Purchaser and the Master Servicer) shall be liable for any acts
or omissions of the Company or any predecessor servicer. In
particular, neither the Master Servicer nor any successor servicer
(including the Purchaser and the Master Servicer) shall be liable
for any servicing errors or interruptions resulting from any failure
of the Company to maintain computer and other information systems
that are year-2000 compliant."
19. The following definition is hereby added:
"Prepayment Period: With respect to the first Remittance Date, the
-----------------
period beginning on the Cut-off Date and ending on May 1. With
respect to each subsequent Remittance Date, the period commencing on
the second day of the month immediately preceding the month in which
such Remittance Date occurs and ending on the first day of the month
in which such Remittance Date occurs."
