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)
October 30, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the Trust
Agreement, dated as of October 1, 1998, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-ALS1)
Structured Asset Securities Corporation
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-47499 7 4-2440850
- --------------------------- ------------ -------------------
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
- -------------------- ----------
(Address of Principal (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)
<PAGE>
Item 5. Other Events
------------
The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Act"), by a Registration Statement on Form S-3 (Registration File No.
333-47499) (the "Registration Statement"). Pursuant to the Registration
Statement, the Registrant issued $147,286,911 in aggregate principal amount of
Class 1-A, Class 1-AP, Class 1-AX, Class 2-A, Class 2-AP, Class 2-AX, Class
B1, Class B2, Class B3 and Class R Certificates of its Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1998-ALS1 on
October 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 October 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 October 1, 1998,
among Structured Asset Securities Corporation, as depositor (the "Depositor"),
Aurora Loan Services Inc., as master servicer, and The Chase Manhattan Bank,
as trustee (the "Trustee"). The "Certificates" consist of the following
classes: Class 1-A, Class 1-AP, Class 1-AX, Class 2-A, Class 2-AP, Class 2-AX,
Class B1, Class B2, Class B3, Class B4, Class B5, Class B6 and Class R. The
Certificates evidence all the beneficial ownership interest in a trust fund
(the "Trust Fund") that consists primarily of two pools of fixed rate, fully
amortizing, conventional, first lien residential mortgage loans (the "Mortgage
Loans") with an aggregate outstanding principal balance of $150,293,262.68 as
of October 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.
<PAGE>
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated October 27, 1998, between Structured Asset
Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of October 1, 1998, among Structured Asset
Securities Corporation, as Depositor, Aurora Loan Services Inc., as
Master Servicer, and The Chase Manhattan Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of October 1,
1998, between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as Seller, and Structured Asset Securities Corporation, as
Purchaser.
99.2 Servicing Agreement, dated as of October 1, 1998, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., and Aurora
Loan Services Inc., as servicer.
99.3* 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/Joseph Kelly
--------------------------
Name: Joseph Kelly
Title: Vice President
Dated: November 13, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ---------- ----------- --------
1.1 Terms Agreement, dated October 27, 1998, between
Structured Asset Securities Corporation and
Lehman Brothers Inc.
4.1 Trust Agreement, dated as of October 1, 1998,
among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master
Servicer, and The Chase Manhattan Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement,
dated as of October 1, 1998, between Lehman
Capital, A Division of Lehman Brothers Holdings
Inc., as Seller, and Structured Asset Securities
Corporation, as Purchaser.
99.2 Servicing Agreement, dated as of October 1, 1998,
between Lehman Capital, A Division of Lehman
Brothers Holdings Inc., and Aurora Loan Services
Inc., as servicer.
99.3* 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.
- --------------------
* 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-ALS1
TERMS AGREEMENT
Dated: October 27, 1998
To: Structured Asset Securities Corporation, as Depositor under the Trust
Agreement dated as of October 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-ALS1.
- ------------------
Terms of the Series 1998-ALS1 Certificates: Structured Asset Securities
- ------------------------------------------
Corporation, Series 1998-ALS1 Mortgage Pass-Through Certificates, Class 1-A,
Class 1-AP, Class 1-AX, Class 2-A, Class 2-AP, Class 2-AX, Class B1, Class B2,
Class B3, Class B4, Class B5, Class B6 and Class R (the "Certificates") will
evidence, in the aggregate, the entire beneficial ownership interest in a
trust fund (the "Trust Fund"). The primary assets of the Trust Fund consist of
two pools of fixed rate, conventional, first lien residential mortgage loans
(the "Mortgage Loans"). Only the Class 1-A, Class 1-AP, Class 1-AX, Class 2-A,
Class 2-AP, Class 2-AX, Class B1, Class B2, Class B3 and Class R Certificates
(the "Offered Certificates") are being sold pursuant to the terms hereof.
Registration Statement: File Number 333-47499.
- ---------------------
Certificate Ratings: It is a condition of Closing that at the Closing Date:
- -------------------
the Class 1-A and Class 2-A Certificates be rated "AAA" by each of Duff &
Phelps Credit Rating Co. ("DCR"), Fitch IBCA, Inc. ("Fitch"), and Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P,"
which together with DCR and Fitch, the "Rating Agencies"); the Class 1-AP,
Class 1-AX, Class 2-AP, and Class 2-AX Certificates be rated "AAA" by each of
DCR and Fitch and "AAAr" by S&P; the Class B1 Certificates be rated "AA" by
each of DCR and Fitch; the Class B2 Certificates be rated "A" by each of DCR
and Fitch; and the Class B3 Certificates be rated "BBB" by each of DCR and
Fitch.
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
<PAGE>
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: October 1, 1998.
- ------------
Closing Date: 10:00 A.M., New York time, on or about October 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.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/Stanley Labanowski
--------------------------
Name: Stan Labanowski
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/Joseph Kelly
-----------------------
Name: Joseph Kelly
Title: Vice President
<PAGE>
Schedule 1
Iniyisl
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
- ----- ----------- ----------- -----------
Class 1-A $55,999,000 6.90% 100.18750%
Class 1-AP 419,252 0.00% 60.00000%
Class 1-AX (2) 6.90% 20.70000%
Class 2-A 79,029,000 6.90% 100.00000%
Class 2-AP 566,559 0.00% 70.00000%
Class 2-AX (2) 6.90% 13.80000%
Class B1 6,764,000 6.90% 99.59375%
Class B2 3,005,000 6.90% 97.75000%
Class B3 1,504,000 6.90% 91.18750%
Class R 100 6.90% 100.00000%
- ------------------------------------------------------------------------------
(1) Approximate.
(2) The Class 1-AX and Class 2-AX Certificates will have no Certificate
Principal Amount and will accrue interest on a calculated aggregate
Notional Amount described in the Prospectus Supplement.
==============================================================================
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
AURORA LOAN SERVICES INC., as Master Servicer,
and
THE CHASE MANHATTAN BANK, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of October 1, 1998
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-ALS1
==============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions..............................................2
Section 1.02. Calculations Respecting Mortgage Loans..................29
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance
of Mortgage Loans.......................................29
Section 2.02. Acceptance of Trust Fund by Trustee: Review of
Documentation for Trust Fund............................32
Section 2.03. Representations and Warranties of the Depositor.........33
Section 2.04. Discovery of Breach.....................................34
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans..35
Section 2.06. Grant Clause............................................35
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates........................................36
Section 3.02. Registration............................................37
Section 3.03. Transfer and Exchange of Certificates...................37
Section 3.04. Cancellation of Certificates............................40
Section 3.05. Replacement of Certificates.............................40
Section 3.06. Persons Deemed Owners...................................40
Section 3.07. Temporary Certificates..................................40
Section 3.08. Appointment of Paying Agent.............................41
Section 3.09. Book-Entry Certificates.................................41
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account......................................42
Section 4.02. Application of Funds in the Collection Account..........44
Section 4.03. Reports to Certificateholders...........................46
Section 4.04. Certificate Account.....................................48
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally.................................49
Section 5.02. Distributions from the Certificate Account..............50
Section 5.03. Allocation of Realized Losses...........................55
Section 5.04. Advances by Master Servicer and Trustee.................56
Section 5.05. Compensating Interest Payments..........................57
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee.......................................57
Section 6.02. Certain Matters Affecting the Trustee...................60
Section 6.03. Trustee Not Liable for Certificates.....................61
Section 6.04. Trustee May Own Certificates............................61
Section 6.05. Eligibility Requirements for Trustee....................61
Section 6.06. Resignation and Removal of Trustee......................62
Section 6.07. Successor Trustee.......................................62
Section 6.08. Merger or Consolidation of Trustee......................63
Section 6.09. Appointment of Co-Trustee, Separate Trustee
or Custodian............................................63
Section 6.10. Authenticating Agents...................................65
Section 6.11. Indemnification of Trustee..............................65
Section 6.12. Fees and Expenses of Trustee............................66
Section 6.13. Collection of Monies....................................66
Section 6.14. Events of Default; Trustee To Act; Appointment
of Successor............................................66
Section 6.15. Additional Remedies of Trustee Upon Event of Default....70
Section 6.16. Waiver of Defaults......................................70
Section 6.17. Notification to Holders.................................70
Section 6.18. Directions by Certificateholders and Duties of
Trustee During Event of Default.........................70
Section 6.19. Action Upon Certain Failures of the Master Servicer
and Upon Event of Default...............................71
Section 6.20. Preparation of Tax Returns and Other Reports............71
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans.......................72
Section 7.02. Procedure Upon Termination of Trust Fund................72
Section 7.03. Additional Trust Fund Termination Requirements..........73
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders.........................74
Section 8.02. Access to List of Holders...............................75
Section 8.03. Acts of Holders of Certificates.........................75
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER
SERVICER
Section 9.01. Duties of the Master Servicer...........................76
Section 9.02. Master Servicer Fidelity Bond and Master Servicer
Errors and Omissions Insurance Policy...................76
Section 9.03. Master Servicer's Financial Statements and
Related Information.....................................77
Section 9.04. Power to Act; Procedures................................77
Section 9.05. Servicing Agreements Between the Master Servicer and
Servicers; Enforcement of Servicers' Obligations........79
Section 9.06. Collection of Taxes, Assessments and Similar Items......79
Section 9.07. Termination of Servicing Agreements; Successor
Servicers...............................................80
Section 9.08. Master Servicer Liable for Enforcement..................80
Section 9.09. No Contractual Relationship Between Servicers and
Trustee or Depositor....................................80
Section 9.10. Assumption of Servicing Agreement by Trustee............81
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements............81
Section 9.12. Release of Mortgage Files...............................81
Section 9.13. Documents, Records and Funds in Possession of
Master Servicer To Be Held for Trustee..................82
Section 9.14. Representations and Warranties of the Master Servicer...83
Section 9.15. Closing Certificate and Opinion.........................86
Section 9.16. Standard Hazard and Flood Insurance Policies............86
Section 9.17. Presentment of Claims and Collection of Proceeds........86
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies..86
Section 9.19. Trustee To Retain Possession of Certain Insurance
Policies and Documents..................................87
Section 9.20. Realization Upon Defaulted Mortgage Loans...............87
Section 9.21. Compensation to the Master Servicer.....................87
Section 9.22. REO Property............................................88
Section 9.23. [Omitted]...............................................88
Section 9.24. Reports to the Trustee..................................89
Section 9.25. Annual Officer's Certificate as to Compliance...........89
Section 9.26. Annual Independent Accountants' Servicing Report........90
Section 9.27. Merger or Consolidation.................................90
Section 9.28. Resignation of Master Servicer..........................90
Section 9.29. Assignment or Delegation of Duties by
the Master Servicer.....................................90
Section 9.30. Limitation on Liability of the Master
Servicer and Others.....................................91
Section 9.31. Indemnification; Third-Party Claims.....................91
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration....................................92
Section 10.02. Prohibited Transactions and Activities..................93
Section 10.03. Indemnification with Respect to Certain Taxes
and Loss of REMIC Status................................94
Section 10.04. REO Property............................................94
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment.................95
Section 11.02. Entire Agreement........................................95
Section 11.03. Amendment...............................................95
Section 11.04. Voting Rights...........................................96
Section 11.05. Provision of Information................................97
Section 11.06. Governing Law...........................................97
Section 11.07. Notices.................................................97
Section 11.08. Severability of Provisions..............................97
Section 11.09. Indulgences; No Waivers.................................98
Section 11.10. Headings Not To Affect Interpretation...................98
Section 11.11. Benefits of Agreement...................................98
Section 11.12. Special Notices to the Rating Agencies..................98
Section 11.13. Counterparts............................................99
Section 11.14. Transfer of Servicing...................................99
<PAGE>
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreement
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
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
<PAGE>
This TRUST AGREEMENT, dated as of October 1, 1998 (the "Agreement"), is
by and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation,
as depositor (the "Depositor"), AURORA LOAN SERVICES INC., as master servicer
(the "Master Servicer"), and THE CHASE MANHATTAN BANK, a New York Banking
Corporation with its main office in New York, New York, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and 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.
The following table sets forth 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.
<PAGE>
<TABLE>
<CAPTION>
Class Designation Certificate Interest Initial Certificate Minimum
Rate Principal Amount Denominations
----------------- --------------------- -------------------- -------------
<S> <C> <C> <C>
Class 1-A 6.90% $55,999,000.00 $100,000
Class 1-AP 0.00 419,252.00 100,000
Class 1-AX 6.90 (1) (2)
Class 2-A 6.90 79,029,000.00 100,000
Class 2-AP 0.00 566,559.00 100,000
Class 2-AX 6.90 (1) (2)
Class B1 6.90 6,764,000.00 100,000
Class B2 6.90 3,005,000.00 100,000
Class B3 6.90 1,504,000.00 100,000
Class B4 6.90 751,000.00 250,000
Class B5 6.90 751,000.00 250,000
Class B6 6.90 1,504,349.96 250,000
Class R 6.90 100.00 100
</TABLE>
- ---------------------------
(1) The Class 1-AX and Class 2-AX Certificates will each accrue interest on
an Aggregate Notional Amount equal, as to any Distribution Date, to the
product of (x) the fraction, the numerator of which is the excess of the
weighted average of the Net Mortgage Rates of the Premium Mortgage Loans
in Pool 1, in the case of the Class 1-AX Certificates, or in Pool 2, in
the case of the Class 2-AX Certificates, (weighted on the basis of the
Scheduled Principal Balance of such Mortgage Loans as of the first day of
the related Accrual Period) over 6.90%, and the denominator of which is
6.90%, and (y) the aggregate Schedule Principal Balance of the Premium
Mortgage Loans in Pool 1, in the case of the Class 1-AX Certificates, or
in Pool 2, in the case of the Class 2-AX Certificates, as of the first
day of the related Accrual Period.
(2) The Class 1-AX and Class 2-AX Certificates will be issued in minimum
denominations in Notional Amount of $500,000 and $725,000, respectively.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $150,293,262.70.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
-----------
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
----------------------------
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that service or master service mortgage loans
of the same type and quality as such Mortgage Loan in the jurisdiction where
the related Mortgaged Property is located, to the extent applicable to the
Trustee or the Master Servicer or (y) as provided in the applicable Servicing
Agreement, to the extent applicable to the Servicer.
Accountant: A person engaged in the practice of accounting who (except
----------
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accretion Directed Certificate: None.
------------------------------
Accretion Termination Date: The first Distribution Date following the
--------------------------
Credit Support Depletion Date.
Accrual Amount: As to any Class of Accrual Certificates and each
---------------
Distribution Date through the Credit Support Depletion Date, the sum of (x)
any amount of Accrued Certificate Interest allocable to such Class pursuant to
Section 5.02(a)(ii) on such Distribution Date and (y) any Interest Shortfall
allocable to such Class pursuant to Section 5.02(a)(iii) on such Distribution
Date. As to any Class of Accrual Certificates and each Distribution Date after
the Credit Support Depletion Date, zero.
Accrual Certificate: None.
-------------------
Accrual Component: None.
-----------------
Accrued Certificate Interest: As to any Class of Certificates and any
----------------------------
Distribution Date, the product of the Certificate Interest Rate for such Class
of Certificates and the Class Certificate Principal Amount (or Aggregate
Notional Amount) of such Class of Certificates immediately preceding such
Distribution Date, as reduced by such Class's share of the interest portion of
(i) any Excess Losses for such Distribution Date and (ii) any Relief Act
Reduction, in each case allocable among the Class A Certificates of the
related Certificate Group pro rata based on the Accrued Certificate Interest
otherwise distributable thereto, and allocable to the Subordinate Certificates
pro rata based on interest accrued on their respective Apportioned Principal
Balances. Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Additional Collateral: None.
---------------------
Adjustable Rate Mortgage Loan: None.
-----------------------------
Advance: An advance of the aggregate of payments of principal and
-------
interest (net of the Master Servicing Fee and the Servicing Fee) on one or
more Mortgage Loans that were due on the Due Date in the related Due Period
and not received as of the close of business on the related Determination
Date, required to be made by or on behalf of the Master Servicer and any
Servicer (or by the Trustee) pursuant to Section 5.04.
Affiliate: With respect to any specified Person, any other Person
--------
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate 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 the Class 1-AX and Class 2-AX
-------------------------
Certificates, the applicable aggregate notional amount described in the
Preliminary Statement hereto.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
-----------------------------
Balances for all Mortgage Loans at any date of determination.
Aggregate Subordinate Percentage: The sum of the Class Certificate
--------------------------------
Principal Amounts of the Subordinate Certificates divided by the sum of the
Non-AP Pool Balance for both Mortgage Pools.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
--------------------------
the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
---------
hereto.
AP Percentage: As to any Discount Mortgage Loan in either Mortgage Pool,
-------------
the percentage equivalent of a fraction, the numerator of which is 6.90% minus
the Net Mortgage Rate of such Discount Mortgage Loan and the denominator of
which is 6.90%. As to any Premium Mortgage Loan in either Mortgage Pool,
0.000%.
AP Principal Distribution Amount: For any Distribution Date and for each
--------------------------------
Certificate Group, the sum of the following amounts:
(i) the applicable AP Percentage of the principal portion of each
Scheduled Payment (without giving effect to any Debt Service Reduction
occurring prior to the Bankruptcy Coverage Termination Date) on each
Mortgage Loan in the related Mortgage Pool due during the related Due
Period;
(ii) the applicable AP Percentage of each of the following amounts:
(1) each Principal Prepayment collected on a Mortgage Loan in the related
Mortgage Pool during the applicable Prepayment Period, (2) each other
unscheduled collection, including Insurance Proceeds and net Liquidation
Proceeds (other than with respect to any Mortgage Loan in the related
Mortgage Pool that was finally liquidated during the applicable
Prepayment Period), representing or allocable to recoveries of principal
of such Mortgage Loan in the related Mortgage Pool received during the
applicable Prepayment Period and (3) the principal portion of all
proceeds of the purchase of any Mortgage Loan in the related Mortgage
Pool (or, in the case of a permitted substitution, amounts representing a
principal adjustment) actually received by the Trustee with respect to
the applicable Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the applicable AP
Percentage of the related net Liquidation Proceeds allocable to
principal; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Apportioned Principal Balance: As to any Class of Subordinate
-----------------------------
Certificates, the Class Certificate Principal Amount of such Class multiplied
by a fraction, the numerator of which is the applicable Group Subordinate
Amount and the denominator of which is the sum of the Group Subordinate
Amounts.
Appraised Value: With respect to any Mortgage Loan, the amount set forth
---------------
in an appraisal made in connection with the origination of such Mortgage Loan
as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
----------------------
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the
same jurisdiction, if permitted by law; provided, however, that the Trustee
shall not be responsible for determining whether any such assignment is in
recordable form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
--------------------
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
------------------
on behalf of the Depositor.
Available Distribution Amount: As to each Mortgage Pool and on any
----------------------------
Distribution Date, the sum of the following amounts:
(1) the total amount of all cash received by the Master Servicer
through the Remittance Date and deposited by the Master Servicer by the
Deposit Date for such Distribution Date on the Mortgage Loans of such
Mortgage Pool (including proceeds of any Insurance Policy and any other
credit support relating to such Mortgage Loans), plus all Advances made
by the Master Servicer or any Servicer (or the Trustee) for such
Distribution Date, any Compensating Interest Payment for such date and
Mortgage Pool and any amounts paid by any Servicer in respect of
Prepayment Interest Shortfalls in respect of the related Mortgage Loans
for such date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest collected
but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received by the applicable
Servicer after the applicable Prepayment Period (together with any
interest payments received with such prepayments to the extent that
they represent the payment of interest accrued on the related
Mortgage Loans for the period subsequent to the applicable
Prepayment Period);
(d) any other unscheduled collection, including Net Liquidation
Proceeds and Insurance Proceeds, received by the Master Servicer
after the applicable Prepayment Period; and
(e) all fees and amounts due or reimbursable to the Master
Servicer or any Servicer pursuant to the terms of this Agreement or
the applicable Servicing Agreement;
(f) any Prepayment Penalty Amounts; and
(g) any Prepayment Interest Excess.
(2) any other payment made by any Servicer, the Seller, the
Depositor, or any other Person with respect to such Distribution Date
(including the Purchase Price with respect to any Mortgage Loan
repurchased by the Seller, the Depositor or any other Person).
Balloon Mortgage Loan: Any Mortgage Loan having an original term to
---------------------
maturity that is shorter than its amortization schedule, and a final Scheduled
Payment that is disproportionately large in comparison to other Scheduled
Payments.
Balloon Payment: The final Scheduled Payment in respect of a Balloon
---------------
Mortgage Loan.
Bankruptcy: As to any Person, the making of an assignment for the benefit
----------
of creditors, the filing of a voluntary petition in bankruptcy, adjudication
as a bankrupt or insolvent, the entry of an order for relief in a bankruptcy
or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator, dissolution, or termination, as the case may be, of
such Person pursuant to the provisions of either the United States Bankruptcy
Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: As to each Mortgage Pool, the
------------------------------------
Distribution Date on which the related Bankruptcy Loss Limit has been reduced
to zero (or less than zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $100,000, which amount
--------------------
shall be reduced from time to time by the amount of Bankruptcy Losses
allocated to the Certificates.
Bankruptcy Losses: Any Realized Losses (as reported by the applicable
-----------------
Servicer to the Master Servicer) arising from a proceeding under the United
States Bankruptcy Code or any other similar state law or other proceeding with
respect to the Mortgagor of or Mortgaged Property under a Mortgage Loan,
including, without limitation, any such loss arising from (a) the difference
between (i) the principal amount that would have been due under the original
scheduled payments of principal and interest due on the related Mortgage Loan
and (ii) the value established in the relevant court with respect to such
Mortgaged Property, including without limitation a Deficient Valuation, or (b)
a Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
--------------------
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
----------------
Property.
Book-Entry Certificates: Beneficial interests in Certificates designated
-----------------------
as "Book-Entry Certificates" in this Agreement, ownership and transfers of
which shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class 1-A, Class 1-AP, Class 1-AX, Class 2-A, Class 2-AP,
Class 2-AX, Class B1, Class B2 and Class B3 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 Colorado, or (iii) with respect to any Remittance Date or any
Servicer reporting date, the States specified in the definition of "Business
Day" in the applicable Servicing Agreement, are authorized or obligated by law
or executive order to be closed.
Certificate: Any one of the certificates signed and countersigned by the
-----------
Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in accordance
-------------------
with the provisions of Section 4.04.
Certificate Group: The Group 1 Certificates or the Group 2 Certificates,
-----------------
as applicable.
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 Notional Certificate, at the time of determination, the maximum specified
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth
on the face of such Certificate (plus, in the case of any Negative
Amortization Certificate, any Deferred Interest allocated thereto on previous
Distribution Dates, and plus, in the case of any Accrual Certificate, its
Percentage Interest of any related Accrual Amount for each previous
Distribution Date), less the amount of all principal distributions previously
made with respect to such Certificate, all Realized Losses allocated to such
Certificate, and, in the case of a Subordinate Certificate, any Subordinate
Certificate Writedown Amount allocated to such Certificate. For purposes of
Article V hereof, unless specifically provided to the contrary, Certificate
Principal Amounts shall be determined as of the close of business of the
immediately preceding Distribution Date, after giving effect to all
distributions made on such date. Notional Certificates are issued without
Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
----------------------------------------------
and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
-----------------
Class: All Certificates bearing the same class designation.
-----
Class A Certificate: Any Class 1-A, Class 1-AP, Class 1-AX, Class 2-A,
-------------------
Class 2-AP, and Class 2-AX Certificate.
Class AP Deferred Amount: As to any Distribution Date on or prior to the
------------------------
Credit Support Depletion Date and each of the Class 1-AP and Class 2-AP
Certificates, the aggregate of the applicable AP Percentage of the principal
portion of each Realized Loss on a Discount Mortgage Loan in the related
Mortgage Pool, other than, in each case, an Excess Loss, to be allocated to
such Class of Certificates on such Distribution Date or previously allocated
to such Class of Certificates and not yet paid to the Holders of such Class of
Certificates pursuant to Section 5.02(a)(v).
Class AP Certificate: Any Class 1-AP or Class 2-AP Certificate.
--------------------
Class AX Certificate: Any Class 1-AX or Class 2-AX Certificate.
--------------------
Class B Certificate: Any Class B1, Class B2, Class B3, Class B4, Class B5
-------------------
or Class B6 Certificate.
Class Certificate Principal Amount: With respect to a Class of
----------------------------------
Certificates other than any Class of Notional Certificates, the aggregate of
the Certificate Principal Amounts of all Certificates of such Class at the
date of determination.
Class Percentage: For each Class of Subordinate Certificates, for each
----------------
Distribution Date, the percentage obtained by dividing the Class Certificate
Principal Amount of such Class immediately prior to such Distribution Date by
the aggregate Certificate Principal Amount of all Certificates immediately
prior to such date.
Clearing Agency: An organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust
Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
---------------------------
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Closing Date: October 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.
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, if paid by the Master Servicer,
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.
Component: None.
---------
Component Certificate: None.
---------------------
Component Interest Rate: None.
-----------------------
Component Principal Amount: Not applicable.
--------------------------
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 Loan: None.
----------------
Cooperative Loan Documents: Not applicable.
--------------------------
Cooperative Property: Not applicable.
--------------------
Cooperative Shares: Not applicable.
------------------
Cooperative Unit: Not applicable.
----------------
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 450 West 33rd
Street, New York, New York 10001, Attention: Structured Finance Services.
Credit Support Depletion Date: The Distribution Date on which, giving
-----------------------------
effect to all distributions on such date, the aggregate Certificate Principal
Amount of the Subordinate Certificates is reduced to zero.
Credit Support Percentage: As to any Class of Subordinate Certificates
-------------------------
and any Distribution Date, the sum of the Class Percentages of all Classes of
Certificates that rank lower in priority than such Class.
Custodial Agreement: The custodial agreement attached as Exhibit K
-------------------
hereto, and any custodial agreement subsequently executed by the Trustee
substantially in the form thereof.
Custodian: The custodian appointed by the Trustee pursuant to a Custodial
---------
Agreement, and any successor thereto.
Cut-off Date: October 1, 1998.
------------
Cut-off Date Aggregate Principal Balance: With respect to the Mortgage
----------------------------------------
Loans in the Trust Fund on the Closing Date, the Aggregate Principal Balance
for all such Mortgage Loans as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
---
Debt Service Reduction: With respect to any Mortgage Loan, a reduction of
----------------------
the Scheduled Payment that the related Mortgagor is obligated to pay on any
Due Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.
Deferred Interest: With respect to any Class of Negative Amortization
-----------------
Certificates and any Distribution Date, the lesser of (x) the applicable
Interest Distribution Amount for such date (without giving effect to any
Deferred Interest) and (y) the aggregate Mortgage Loan Negative Amortization,
if any, for the related Due Period.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
-------------------
court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, which
valuation results from a proceeding under Bankruptcy law or any similar
proceeding.
Definitive Certificate: A Certificate of any Class issued in definitive,
----------------------
fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
---------------------
Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Deposit Date: With respect to each Distribution Date, the Business Day
------------
immediately preceding such Distribution Date.
Depositor: Structured Asset Securities Corporation, a Delaware
---------
corporation having its principal place of business in New York, or its
successors in interest.
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.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate less
----------------------
than 6.90% per annum.
Disqualified Organization: Either (i) the United States, (ii) any state
-------------------------
or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative
described in section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed
by section 511 of the Code, (vii) any organization described in section
1381(a)(2)(C) of the Code, (viii) any "electing large partnership" described
in section 775 of the Code, or (ix) any other entity designated as a
Disqualified Organization by relevant legislation amending the REMIC
Provisions and in effect at or proposed to be effective as of the time of the
determination. In addition, a corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month, or, if such 25th day is
-----------------
not a Business Day, the next succeeding Business Day commencing in November
1998.
Due Date: With respect to any Mortgage Loan, the date on which a
--------
Scheduled Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period commencing
----------
on the second day of the month preceding the month in which such Distribution
Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
----------------
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an
account at a depository institution or trust company whose commercial paper or
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trustee or any other federal or state chartered
depository institution or trust company, acting in its fiduciary capacity, in
a manner acceptable to the Trustee and the Rating Agencies. Eligible Accounts
may bear interest.
Eligible Investments: Any one or more of the following obligations or
--------------------
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America
or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories and the Trustee or any agent of the Trustee, acting in its
respective commercial capacity) incorporated or organized under the laws
of the United States of America or any state thereof and subject to
supervision and examination by federal or state banking authorities, so
long as at the time of investment or the contractual commitment providing
for such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the
case of a depository institution or trust company which is the principal
subsidiary of a holding company, the commercial paper or other short-term
debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in
its highest short-term rating category or one of its two highest
long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by each Rating Agency in its highest short-term rating
category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America
or any state thereof which have a credit rating from each Rating Agency,
at the time of investment or the contractual commitment providing for
such investment, at least equal to one of the two highest 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
Principal Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such
securities will not be Eligible Investments if they are published as
being under review with negative implications from either Rating Agency;
(v) commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof)
rated by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the
United States of America or its agencies or instrumentalities (which
obligations are backed by the full faith and credit of the United States
of America) held by a custodian in safekeeping on behalf of the holders
of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or
investment, (A) rated in the highest rating category by each Rating
Agency or (B) that would not adversely affect the then current rating by
either Rating Agency of any of the Certificates. Such investments in this
subsection (viii) may include money market mutual funds, including,
without limitation, the VISTA U.S. Government Money Market Fund or any
other fund for which The Chase Manhattan Bank (the "Bank"), the Trustee
or an affiliate thereof serves as an investment advisor, administrator,
shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (i) the Bank or an affiliate thereof charges and
collects fees and expenses from such funds for services rendered, (ii)
the Bank or an affiliate thereof charges and collects fees and expenses
for services rendered pursuant to this Agreement, and (iii) services
performed for such funds and pursuant to this Agreement may converge at
any time. The Trustee specifically authorizes the Bank or an affiliate
thereof to charge and collect from the Trustee such fees as are collected
from all investors in such funds for services rendered to such funds (but
not to exceed investment earnings thereon);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
----------------------------
Escrow Account: Any account established and maintained by the applicable
--------------
Servicer pursuant to the applicable Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
----------------
in Section 6.14(a).
Excess Loss: Any Bankruptcy Loss, or portion thereof, in excess of the
-----------
then-applicable Bankruptcy Loss Limit, any Fraud Loss, or portion thereof, in
excess of the then-applicable Fraud Loss Limit, and any Special Hazard Loss,
or portion thereof, in excess of the then-applicable Special Hazard Loss
Limit.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
----
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
----
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Scheduled Distribution Date: January 25, 2029.
---------------------------------
Financial Intermediary: A broker, dealer, bank or other financial
----------------------
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
Fitch: Fitch IBCA, Inc., or any successor in interest.
-----
FNMA: The Federal National Mortgage Association, a federally chartered
----
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Fraud Loss: Any Realized Loss on a Mortgage Loan sustained by reason of a
----------
default arising from fraud, dishonesty or misrepresentation in connection with
the related Mortgage Loan, as reported by the applicable Servicer to the
Master Servicer.
Fraud Loss Limit: As of any Distribution Date after the Cut-off Date (x)
----------------
prior to the first anniversary of the Cut-off Date, $4,508,798, less the
aggregate of the Fraud Losses since the Cut-off Date, and (y) from the first
to the fourth anniversary of the Cut-off Date, an amount equal to (1) the
lesser of (a) the Fraud Loss Limit as of the most recent anniversary of the
Cut-off Date and (b) 2% (from the first to but excluding the second
anniversary of the Cut-off Date) or 1% (from and including the second, third
and fourth anniversary of the Cut-off Date) of the aggregate principal balance
of all the Mortgage Loans as of the most recent anniversary of the Cut-off
Date less (2) the aggregate of Fraud Losses since the most recent anniversary
of the Cut-off Date. On or after the fifth anniversary of the Cut-off Date,
the Fraud Loss Limit shall be zero.
GNMA: The Government National Mortgage Association, a wholly owned
----
corporate instrumentality of the United States within HUD.
Group 1: All of the Group 1 Certificates.
-------
Group 1 Certificate: Any Class 1-A, Class 1-AP or Class 1-AX Certificate.
-------------------
Group 2: All of the Group 2 Certificates.
-------
Group 2 Certificate: Any Class 2-A, Class 2-AP, Class 2-AX or Class R
-------------------
Certificate.
Group Subordinate Amount: As to any Mortgage Pool and any Distribution
------------------------
Date, the excess of the Non-AP Pool Balance of such Mortgage Pool over the sum
of the Class Certificate Principal Amounts of the Group 1 Certificates, in the
case of Pool 1, or Group 2 Certificates, in the case of Pool 2.
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 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.
Insurance Policy: Any Primary Mortgage Insurance Policy and any standard
----------------
hazard insurance policy, earthquake insurance policy or title insurance policy
relating to the Mortgage Loans or the Mortgaged Properties, to be in effect as
of the Closing Date or thereafter during the term of this Agreement.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
------------------
Policy, other than amounts (i) to cover expenses incurred by or on behalf of
the Servicer in connection with procuring such proceeds, (ii) to be applied to
restoration or repair of the related Mortgaged Property or (iii) required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note.
Interest Accrual Period: With respect to any Distribution Date and any
-----------------------
Class of Certificates (other than any Class of Principal Only Certificates),
the one-month period beginning immediately following the end of the preceding
Interest Accrual Period (or from the Cut-off Date, in the case of the first
Interest Accrual Period) and ending on the last day of the month preceding the
month in which such Distribution Date occurs.
Interest Distribution Amount: Not applicable.
----------------------------
Interest Shortfall: With respect to any Class of Certificates and any
------------------
Distribution Date, any Accrued Certificate Interest not distributed (or added
to principal) other than any Net Prepayment Interest Shortfalls.
Intervening Assignments: The original intervening assignments of the
-----------------------
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Maturity Date: October 25, 2030.
-----------------------------
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.
Master Servicer: Aurora Loan Services Inc., or any successor in interest,
---------------
or if any successor master servicer shall be appointed as herein provided,
then such successor master servicer.
Master Servicing Fee: As to any Distribution Date and each Mortgage Loan,
--------------------
an amount equal to the product of the Master Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the
related Due Period. The Master Servicing Fee for any Mortgage Loan shall be
payable in respect of any Distribution Date solely from the interest portion
of the Scheduled Payment or other payment or recovery with respect to such
Mortgage Loan.
Master Servicing Fee Rate: 0.02% per annum.
-------------------------
Material Defect: As defined in Section 2.02(c) hereof.
---------------
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
--------
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Section 2.01(b)
-------------
pertaining to a particular Mortgage Loan required to be delivered to the
Trustee or the Custodian pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
-------------
indebtedness secured by each such Mortgage conveyed, transferred, sold,
assigned to or deposited with the Trustee pursuant to Section 2.01 or Section
2.05, including without limitation, each Mortgage Loan listed on the Mortgage
Loan Schedule, as amended from time to time.
Mortgage Loan Sale Agreement: The agreement, dated as of October 1, 1998,
----------------------------
for the sale of the Mortgage Loans by Lehman Brothers Holdings Inc., doing
business as 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 pursuant to Section 2.02.
Mortgage Note: The note or other evidence of the indebtedness of a
-------------
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Either of Pool 1 or Pool 2.
-------------
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
-------------
interest accrues on such Mortgage Loan.
Mortgaged Property: The fee simple interest in real property, together
------------------
with the improvements thereto including any exterior improvements to be
completed within 120 days of disbursement of the related Mortgage Loan
proceeds, securing the indebtedness of the Mortgagor under the related
Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
---------
Negative Amortization Certificate: None.
---------------------------------
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
------------------------
the related Liquidation Proceeds net of unreimbursed expenses incurred in
connection with liquidation or foreclosure and unreimbursed Advances,
Servicing Advances or Servicing Fees, 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-AP Percentage: As to any Discount Mortgage Loan in either Mortgage
-----------------
Pool, the percentage equivalent of the fraction, the numerator of which is the
Net Mortgage Rate of such Discount Mortgage Loan and the denominator of which
is 6.90%. As to any Premium Mortgage Loan in either Mortgage Pool, 100%.
Non-AP Pool Balance: As to each Mortgage Pool and any Distribution Date,
-------------------
the applicable Non-AP Percentage of each Mortgage Loan included in such
Mortgage Pool.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
--------------------------
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
----------------------------
Non-U.S. Person: Any 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 state thereof, including for this purpose, the District
of Columbia; an estate that is subject to U.S. federal income tax regardless
of the source of its income; or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States trustees have authority to control all substantial
decisions of the trust.
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: Any Class 1-AX or Class 2-AX Certificate.
--------------------
Notional Component: None.
------------------
Notional Component Amount: None.
-------------------------
Offering Document: Either of the Prospectus or the private placement
-----------------
memorandum dated October 27, 1998 relating to the Class B4, Class B5 and Class
B6 Certificates.
Officer's Certificate: A certificate signed by the Chairman of the Board,
---------------------
any Vice Chairman, the President, any Vice President or any Assistant Vice
President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
------------------
in form and substance to the Trustee, and who may be in-house or outside
counsel to the Depositor, the Master Servicer or a Servicer but which must be
Independent outside counsel with respect to any such opinion of counsel
concerning the transfer of any Residual Certificate or concerning certain
matters with respect to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the taxation, or the federal income tax status, of
each REMIC.
Original Credit Support Percentage: For a Class of Subordinate
----------------------------------
Certificates, the Credit Support Percentage for such Class of Certificates on
the Closing Date.
Original Group Subordinate Amount: As to any Mortgage Pool, the Group
--------------------------------
Subordinate Amount for such Mortgage Pool on the Cut-off Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
--------------
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
-----------
Percentage Interest: With respect to any Certificate, 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 a Class 1-AX or Class 2-AX Certificate,
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 any Class 1-AX
or Class 2-AX Certificate, the Percentage Interest evidenced thereby shall be
as specified on the face thereof.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Placement Agent: Lehman Brothers Inc.
--------------
Plan Asset Regulations: The Department of Labor regulations set forth in
----------------------
29 C.F.R. 2510.3-101.
Pool 1: The aggregate of the fully amortizing Mortgage Loans having
------
original terms to maturity not less than 15 years or greater than 30 years as
identified on the Mortgage Loan Schedule.
Pool 2: The aggregate of the fully amortizing Mortgage Loans having
------
original terms to maturity not less than 15 years or greater than 30 years as
identified on the Mortgage Loan Schedule.
Premium Mortgage Loan. Any Mortgage Loan with a Net Mortgage Rate equal
---------------------
to or greater than 6.90% per annum.
Prepayment Interest Excess: With respect to any Principal Prepayment in
--------------------------
full received from the first day through the sixteenth day of any calendar
month, all amounts paid in respect of interest on such Principal Prepayment.
Prepayment Interest Shortfall: With respect to any Distribution Date and
-----------------------------
(x) any Principal Prepayment in part (other than any such prepayment received
on the first of the month) and (y) any Principal Prepayment in full received
on or after the seventeenth day of the month preceding the month of such
Distribution Date, but on or before the last day of the month preceding the
month of such Distribution Date, the difference between (i) one full month's
interest at the applicable Mortgage Rate (giving effect to any applicable
Relief Act Reduction), as reduced by the Master Servicing Fee Rate 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 Penalty Amounts: With respect to any Distribution Date, all
-------------------------
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Distribution Date and a partial
-----------------
Principal Prepayment, the period from the second day of the month preceding
the month of such Distribution Date to the first day of the month of such
Distribution Date. With respect to any Distribution Date and a full Principal
Prepayment, the period from the seventeenth day of the month preceding the
month of such Distribution Date to the sixteenth day of the month of such
Distribution Date.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any,
---------------------------------
on an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedules: Not applicable.
--------------------------
Principal Only Certificate: Any Class 1-AP or Class 2-AP Certificate.
--------------------------
Principal Prepayment: Any Mortgagor payment of principal (other than a
--------------------
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled
Due Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note or the applicable Servicing
Agreement.
Proceeding: Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
Prospectus: The prospectus supplement dated October 27, 1998, together
----------
with the accompanying prospectus dated March 18, 1998, relating to the Class
1-A, Class 1-AP, Class 1-AX, Class 2-A, Class 2-AP, Class 2-AX, Class B1,
Class B2, Class B3 and Class R Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan
--------------
pursuant to Article II of this Agreement, an amount equal to the sum of (a)
100% of the unpaid principal balance of such Mortgage Loan and (b) accrued
interest thereon at the Mortgage Rate, from the date as to which interest was
last paid to (but not including) the Due Date immediately preceding the
related Distribution Date and (c) any unreimbursed Advances or Servicing
Advances by the Master Servicer or any Servicer (or the Trustee, if
applicable). The Master Servicer or the applicable Servicer (or the Trustee,
if applicable) shall be reimbursed from the Purchase Price for any Mortgage
Loan or related REO Property for any Advances made with respect to such
Mortgage Loan that are reimbursable to the Master Servicer or such Servicer
under this Agreement or the related Servicing Agreement, as well as any
unreimbursed Servicing Advances and accrued and unpaid Master Servicing Fees
or Servicing Fees, as applicable.
Qualified GIC: A guaranteed investment contract or surety bond providing
-------------
for the investment of funds in the Collection Account or the Certificate
Account and insuring a minimum, fixed or floating rate of return on
investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two
highest rating categories or, if such insurance company has no long-term
debt, whose claims paying ability is rated by each Rating Agency in one
of its two highest rating categories, and whose short-term debt is rated
by each Rating Agency in its highest rating category;
(b) provide that the Trustee may exercise all of the rights under
such contract or surety bond without the necessity of taking any action
by any other Person;
(c) provide that if at any time the then current credit standing of
the obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds would result in a
downgrading of any rating of the Certificates, the Trustee shall
terminate such contract without penalty and be entitled to the return of
all funds previously invested thereunder, together with accrued interest
thereon at the interest rate provided under such contract to the date of
delivery of such funds to the Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Collection Account or the
Certificate Account, as the case may be, not later than the Business Day
prior to any Distribution Date.
Qualified Insurer: An insurance company duly qualified as such under the
-----------------
laws of the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability
is rated by each Rating Agency in its highest rating category or whose
selection as an insurer will not adversely affect the rating of the
Certificates.
Qualifying Substitute Mortgage Loan: In the case of a Mortgage Loan
-----------------------------------
substituted for a Deleted Mortgage Loan, a Mortgage Loan that, on the date of
substitution, (i) has a Scheduled Principal Balance (together with that of any
other mortgage loan substituted for the same Deleted Mortgage Loan) as of the
Due Date in the month in which such substitution occurs not in excess of the
Scheduled Principal Balance of the related Deleted Mortgage Loan, provided,
however, that, to the extent that the Scheduled Principal Balance of such
Mortgage Loan is less than the Scheduled Principal Balance of the related
Deleted Mortgage Loan, then such differential in principal amount, together
with interest thereon at the applicable Mortgage Rate net of the Master
Servicing Fee and the applicable Servicing Fee from the date as to which
interest was last paid through the end of the Due Period in which such
substitution occurs, shall be paid by the party effecting such substitution to
the Trustee for deposit into the Certificate Account, and shall be treated as
a Principal Prepayment hereunder; (ii) has a Net Mortgage Rate not lower than
the Net Mortgage Rate of the related Deleted Mortgage Loan; (iii) 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: Each of DCR, Fitch and S&P..
-------------
Realized Loss: (a) with respect to each Liquidated Mortgage Loan, an
-------------
amount equal to (i) the unpaid principal balance of such Mortgage Loan as of
the date of liquidation, plus (ii) interest at the applicable Net Mortgage
Rate from the date as to which interest was last paid up to the last day of
the month of such liquidation, minus (iii) Liquidation Proceeds received, net
of amounts that are reimbursable to the Master Servicer with respect to such
Mortgage Loan (other than Advances of principal and interest) including
expenses of liquidation, and (b) with respect to each Mortgage Loan that has
become the subject of a Deficient Valuation, the difference between the unpaid
principal balance of such Mortgage Loan immediately prior to such Deficient
Valuation and the unpaid principal balance of such Mortgage Loan as reduced by
the Deficient Valuation. In determining whether a Realized Loss is a Realized
Loss of interest or principal, Liquidation Proceeds shall be allocated, first,
to payment of expenses related to such Liquidated Mortgage Loan, then to
accrued unpaid interest and finally to reduce the principal balance of the
Mortgage Loan.
Recognition Agreement: Not applicable.
---------------------
Record Date: With respect to any Distribution Date, the close of business
-----------
on the last Business Day of the month immediately preceding the month in which
such Distribution Date occurs.
Redemption Certificate: None.
----------------------
Reference Banks: None.
--------------
Reimbursement Amount: As defined in Section 5.02.
--------------------
Relief Act Reduction: With respect to any Mortgage Loan as to which there
--------------------
has been a reduction in the amount of interest collectible thereon as a result
of application of the Solders' and Sailors' Civil Relief Act of 1940, as
amended, any amount by which interest collectible on such Mortgage Loan for
the Due Date in the related Due Period is less than interest accrued thereon
for the applicable one-month period at the Mortgage Rate without giving effect
to such reduction.
REMIC: The assets in the Trust Fund designated as a REMIC pursuant to
-----
Section 10.01(a) hereof.
REMIC Provisions: The provisions of the federal income tax law relating
----------------
to real estate mortgage investment conduits, which appear at sections 860A
through 86OG of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations, including proposed regulations and rulings, and
administrative pronouncements promulgated thereunder, as the foregoing may be
in effect from time to time.
Remittance Date: The day in each month on which each Servicer is required
--------------
to remit payments to the account maintained by the Master Servicer, as
specified in the related Servicing Agreement, which in the case of each
Servicer is the 18th day of each month (or if such 18th day is not a Business
Day, the preceding Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
------------
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the
REMIC Provisions.
Reserve Interest Rate: Not applicable.
---------------------
Residual Certificate: Any Class R Certificate.
--------------------
Responsible Officer: When used with respect to the Trustee, any Vice
-------------------
President, Assistant Vice President, the Secretary, any assistant secretary,
the Treasurer, or any assistant treasurer, working in its corporate trust
department and having direct responsibility for the administration of this
Agreement.
Restricted Certificate: Any Class B4, Class B5 or Class B6 Certificate.
----------------------
Rounding Account: Not applicable.
----------------
S&P: Standard & Poor's Rating Services, a division of the McGraw-Hill
---
Companies, Inc., or any successor in interest.
Scheduled Amount: Not applicable.
----------------
Scheduled Certificate: None.
---------------------
Scheduled Component: None.
-------------------
Scheduled Payment: Each scheduled payment of principal and interest (or
-----------------
of interest only, if applicable) to be paid by the Mortgagor on a Mortgage
Loan, as reduced (except where otherwise specified herein) by the amount of
any related Debt Service Reduction (excluding all amounts of principal and
interest that were due on or before the Cut-off Date whenever received) and,
in the case of an REO Property, an amount equivalent to the Scheduled Payment
that would have been due on the related Mortgage Loan if such Mortgage Loan
had remained in existence. In the case of any bi-weekly payment Mortgage Loan,
all payments due on such Mortgage Loan during any Due Period shall be deemed
collectively to constitute the Scheduled Payment due on such Mortgage Loan in
such Due Period.
Scheduled Principal Amount: As to any Distribution Date, an amount equal
--------------------------
to the amount described in clause (i)(b) of the definition of Senior Principal
Distribution Amount.
Scheduled Principal Balance: (i) With respect to any Mortgage Loan as of
---------------------------
any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal
payments due on or before the Cut-off Date, whether or not received, less an
amount equal to principal payments due after the Cut-off Date and on or before
the Due Date in the related Due Period, whether or not received from the
Mortgagor or advanced by the Master Servicer, and all amounts allocable to
unscheduled principal payments (including Principal Prepayments, Net
Liquidation Proceeds, Insurance Proceeds and condemnation proceeds, in each
case to the extent identified and applied prior to or during the applicable
Prepayment Period) and (ii) with respect to 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 the Trustee (reduced by any amount applied as a reduction of
principal on the Mortgage Loan).
Security Agreement: Not applicable.
------------------
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc., or
------
any successor in interest.
Senior Certificate: Any Class 1-A, Class 1-AP, Class 1-AX, Class 2-A,
------------------
Class 2-AP, Class 2-AX, or Class R Certificate.
Senior Percentage: With respect to each Mortgage Pool and any
-----------------
Distribution Date, the percentage equivalent of the fraction, the numerator of
which is the sum of the Class Certificate Principal Amounts of the Group 1
Certificates, in the case of Pool 1, and the Group 2 Certificates, in the case
of Pool 2, immediately prior to such date and the denominator of which is the
related Non-AP Pool Balance for such date.
Senior Prepayment Percentage: With respect to each Mortgage Pool and any
----------------------------
Distribution Date occurring during the five years beginning on the first
Distribution Date, 100%. The Senior Prepayment Percentage for each Mortgage
Pool and for any Distribution Date occurring on or after the fifth anniversary
of the first Distribution Date will be the related Senior Percentage plus the
following percentage of the related Subordinate Percentage for such
Distribution Date: for any Distribution Date in the first year thereafter,
70%; for any Distribution Date in the second year thereafter, 60%; for any
Distribution Date in the third year thereafter, 40%; for any Distribution Date
in the fourth year thereafter, 20%; and for any subsequent Distribution Date,
0%; provided, however, that if on any of the foregoing Distribution Dates the
Senior Percentage for either Mortgage Pool exceeds the initial Senior
Percentage for such Mortgage Pool, the Senior Prepayment Percentage for both
Mortgage Pools on such Distribution Date will once again equal 100% for such
Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage for either Mortgage Pool below the level in effect for the most
recent prior period set forth in the paragraph above shall be effective on any
Distribution Date if, as of the first Distribution Date as to which any such
decrease applies, (i) the average outstanding principal balance on such
Distribution Date and for the preceding five Distribution Dates of all
Mortgage Loans that were delinquent 60 days or more (including for this
purpose any Mortgage Loans in foreclosure and the Scheduled Payments that
would have been due on Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust Fund if the related Mortgage
Loan had remained in existence) is greater than or equal to 50% of the
applicable Group Subordinate Amount immediately prior to such Distribution
Date or (ii) cumulative Realized Losses with respect to the Mortgage Loans in
either Mortgage Pool exceed (a) with respect to the Distribution Date on the
fifth anniversary of the first Distribution Date, 30% of the related Original
Group Subordinate Amount, (b) with respect to the Distribution Date on the
sixth anniversary of the first Distribution Date, 35% of the related Original
Group Subordinate Amount, (c) with respect to the Distribution Date on the
seventh anniversary of the first Distribution Date, 40% of the related
Original Group Subordinate Amount, (d) with respect to the Distribution Date
on the eighth anniversary of the first Distribution Date, 45% of the related
Original Group Subordinate Amount, and (e) with respect to the Distribution
Date on the ninth anniversary of the first Distribution Date, 50% of the
related Original Group Subordinate Amount.
Senior Principal Distribution Amount: For each Certificate Group and any
------------------------------------
Distribution Date, the sum of the following amounts:
(i) the product of (a) the related Senior Percentage for such date
and (b) the principal portion (multiplied by the applicable Non-AP
Percentage) of each Scheduled Payment (without giving effect to any Debt
Service Reduction occurring prior to the Bankruptcy Coverage Termination
Date), on each Mortgage Loan in the related Mortgage Pool due during the
related Due Period;
(ii) the product of (a) the related Senior Prepayment Percentage for
such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the related
Prepayment Period, (2) each other unscheduled collection, including
Insurance Proceeds and Liquidation Proceeds (other than with respect to
any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period), representing or
allocable to recoveries of principal received during the related
Prepayment Period, and (3) the principal portion of all proceeds of the
purchase of any Mortgage Loan in the related Mortgage Pool (or, in the
case of a permitted substitution, amounts representing a principal
adjustment) actually received by the Trustee during the related
Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the lesser of (a) the
related net Liquidation Proceeds allocable to principal (multiplied by
the applicable Non-AP Percentage) and (b) the product of the related
Senior Prepayment Percentage for such date and the Scheduled Principal
Balance (multiplied by the applicable Non-AP Percentage) of such related
Mortgage Loan at the time of liquidation; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Servicer: Aurora Loan Services Inc., that has entered into any of the
--------
Servicing Agreements attached as Exhibit E hereto, or any successor in
interest.
Servicing Advances: Expenditures incurred by the Servicer in connection
------------------
with the liquidation or foreclosure of a Mortgage Loan which are eligible for
reimbursement under the Servicing Agreement.
Servicing Agreement: Each Servicing Agreement between the Servicer and
-------------------
the Seller, dated as of October 1, 1998, attached hereto as Exhibit E.
Servicing Fee: The Servicing Fee specified in the applicable Servicing
-------------
Agreement (which shall include any Prepayment Interest Excess).
Servicing Fee Rate: With respect to any Servicer, as specified in the
------------------
applicable Servicing Agreement.
Servicing Officer: Any officer of the Master Servicer involved in or
-----------------
responsible for the administration and servicing or master servicing of the
Mortgage Loans whose name appears on a list of servicing officers furnished by
the Master Servicer to the Trustee, as such list may from time to time be
amended.
Special Hazard Loss: With respect to the Mortgage Loans, (x) any Realized
-------------------
Loss arising out of any direct physical loss or damage to a Mortgaged Property
which is caused by or results from any cause, exclusive of any loss covered by
a hazard policy or a flood insurance policy required to be maintained in
respect of such Mortgaged Property and any loss caused by or resulting from
(i) normal wear and tear, (ii) conversion or other dishonest act on the part
of the Trustee, the Master Servicer, any Servicer or any of their agents or
employees, or (iii) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues, or (y) any
Realized Loss arising from or related to the presence or suspected presence of
hazardous wastes, or hazardous substances on a Mortgaged Property unless such
loss is covered by a hazard policy or flood insurance policy required to be
maintained in respect of such Mortgaged Property, in any case, as reported by
the applicable Servicer to the Master Servicer.
Special Hazard Loss Limit: As of the Cut-off Date, $5,062,820, which
-------------------------
amounts shall be reduced from time to time to an amount equal on any
Distribution Date to the lesser of (a) the greatest of (i) 1% of the aggregate
of the Scheduled Principal Balances of the Mortgage Loans; (ii) twice the
Scheduled Principal Balance of the Mortgage Loan in the related Mortgage Pool
having the highest Scheduled Principal Balance, and (iii) the aggregate
Scheduled Principal Balances of the Mortgage Loans secured by Mortgaged
Properties located in the single California postal zip code area having the
highest aggregate Scheduled Principal Balance of Mortgage Loans of any such
postal zip code area and (b) the Special Hazard Loss Limit as of the Closing
Date less the amount, if any, of Special Hazard Losses incurred with respect
to Mortgage Loans in the related Mortgage Pool since the Closing Date.
Startup Day: The day designated as such pursuant to Section 10.01(b)
-----------
hereof.
Subordinate Certificate: Any Class B Certificate.
-----------------------
Subordinate Certificate Writedown Amount: As to any Distribution Date,
----------------------------------------
the amount by which (i) the sum of the Class Certificate Principal Amounts of
all the Certificates (after giving effect to the distribution of principal and
the application of Realized Losses in reduction of the Certificate Principal
Amounts of the Certificates on such Distribution Date) exceeds (ii) the
aggregate Scheduled Principal Balance of the Mortgage Loans on the first day
of the month of such Distribution Date.
Subordinate Class Percentage: With respect to any Distribution Date and
----------------------------
any Class of Subordinate Certificates, the percentage obtained by dividing the
Class Certificate Principal Amount of such Class immediately prior to such
Distribution Date by the aggregate Certificate Principal Amount of all
Subordinate Certificates immediately prior to such date.
Subordinate Percentage: With respect to each Mortgage Pool and any
----------------------
Distribution Date, the difference between 100% and the related Senior
Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to each Mortgage Pool and
---------------------------------
any Distribution Date, the difference between 100% and the related Senior
Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: For each Certificate Group and
-----------------------------------------
any Distribution Date, the sum of the following:
(i) the product of (a) the related Subordinate Percentage for such
date and (b) the principal portion (multiplied by the applicable Non-AP
Percentage) of each Scheduled Payment (without giving effect to any Debt
Service Reduction occurring prior to the applicable Bankruptcy Coverage
Termination Date) on each Mortgage Loan in the related Mortgage Pool due
during the related Due Period;
(ii) the product of (a) the related Subordinate Prepayment
Percentage for such date and (b) each of the following amounts
(multiplied by the applicable Non-AP Percentage): (1) each Principal
Prepayment on the Mortgage Loans in the related Mortgage Pool collected
during the related Prepayment Period, (2) each other unscheduled
collection, including Insurance Proceeds and Net Liquidation Proceeds
(other than with respect to any Mortgage Loan in the related Mortgage
Pool that was finally liquidated during the related Prepayment Period),
representing or allocable to recoveries of principal received during the
related Prepayment Period, and (3) the principal portion of all proceeds
of the purchase of any Mortgage Loan in the related Mortgage Pool (or, in
the case of a permitted substitution, amounts representing a principal
adjustment) actually received by the Trustee during the related
Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan in the related Mortgage Pool that was finally
liquidated during the related Prepayment Period, the related net
Liquidation Proceeds allocable to principal (multiplied by the applicable
Non-AP Percentage) less any related amount paid pursuant to subsection
(iii) of the definition of Senior Principal Distribution Amount for the
related Certificate Group; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
TAC Amount: Not applicable.
----------
TAC Certificate: None.
---------------
TAC Component: None.
-------------
Tax Matters Person: The "tax matters person" as specified in the REMIC
------------------
Provisions.
Termination Price: As defined in Section 7.01 hereof.
-----------------
Title Insurance Policy: A title insurance policy maintained with respect
----------------------
to a Mortgage Loan.
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, 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: The Chase Manhattan Bank, not in its individual capacity but
-------
solely as Trustee, or any successor in interest, or if any successor trustee
or any co-trustee shall be appointed as herein provided, then such successor
trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the product
-----------
of the Trustee Fee Rate and the aggregate Scheduled Principal Balance of the
related Mortgage Loans as of the first day of the related Due Period. The
Trustee Fee shall be calculated separately, by Mortgage Pool.
Trustee Fee Rate: 0.0125% per annum.
----------------
Undercollateralized Amount: As defined in Section 5.02(e)(ii).
--------------------------
Undercollateralized Group: Any Mortgage Pool as to which the sum of the
-------------------------
Class Certificate Principal Amounts of the Group 1 Certificates (in the case
of Pool 1) or the Group 2 Certificates (in the case of Pool 2) is greater than
the Non-AP Pool Balance of the Mortgage Loans in such Mortgage Pool (after
giving effect to distributions to be made on such Distribution Date).
Unscheduled Principal Amount: As to any Distribution Date, the sum of the
----------------------------
amounts described in clauses (ii)(b) and (iii) (without regard to the
reference in clause (iii) to the "Senior Prepayment Percentage") of the
definition of Senior Principal Distribution Amount.
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,
98% of all Voting Interests shall be allocated to the Certificates other than
the Class 1-AX and 2-AX Certificates, 1% of all Voting Interests shall be
allocated to the Class 1-AX Certificates and 1% of all Voting Interests shall
be allocated to the Class 2-AX Certificates. Voting Interests allocated to the
Class 1-AX and Class 2-AX Certificates shall be allocated among the
Certificates of such Class in proportion to their Percentage Interests. 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
--------------------------------------
equired to be made pursuant to this Agreement with respect to any Mortgage
Loan in the Trust Fund shall be made based upon current information as to the
terms of the Mortgage Loans and reports of payments received from the
Mortgagor on such Mortgage Loans and payments to be made to the Trustee as
supplied to the Trustee by the Master Servicer. The Trustee shall not be
required to recompute, verify or recalculate the information supplied to it by
the Master Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
-----------------------------------------------------
Mortgage Loans. (a) Concurrently with the execution and delivery of this
- --------------
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Trustee, without recourse, subject to Section
2.02, 2.04, 2.05 and 2.06, in trust, all the right, title and interest of the
Depositor in and to the Mortgage Loans. 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, and the Depositor's security interest in any collateral
pledged to secure the Mortgage Loans, including the Mortgaged Properties and
any Additional Collateral and any proceeds of the foregoing, to have and to
hold, in trust; and the Trustee declares that, subject to the review provided
for in Section 2.02, it has received and shall hold the Trust Fund, as
trustee, in trust, for the benefit and use of the Holders of the Certificates
and for the purposes and subject to the terms and conditions set forth in this
Agreement, and, concurrently with such receipt, has caused to be executed,
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Trust Fund, Certificates in the authorized denominations evidencing
the entire ownership of the Trust Fund.
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 the Seller
under the Servicing Agreement to the extent assigned under the Mortgage Loan
Sale Agreement, and delegates its obligations thereunder. The Trustee hereby
accepts such assignment and delegation, and shall be entitled to exercise all
rights of the Depositor under the Mortgage Loan Sale Agreement as if, for such
purpose, it were the Depositor. The foregoing sale, transfer, assignment, set
over, deposit and conveyance does not and is not intended to result in
creation or assumption by the Trustee of any obligation of the Depositor, the
Seller, or any other Person in connection with the Mortgage Loans or any other
agreement or instrument relating thereto except as specifically set forth
herein.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Trustee, and/or any custodian acting on the Trustee's behalf, if
applicable, the following documents or instruments with respect to each
Mortgage Loan (each a "Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage Note
endorsed without recourse in proper form to the order of the Trustee, or
in blank (in each case, with all necessary intervening endorsements as
applicable);
(ii) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Trustee;
(iii) with respect to 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;
(iv) The original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans, or, as to any
assumption, modification or substitution agreement which cannot be
delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such assumption, modification or
substitution agreement has been delivered for recordation, a photocopy of
such assumption, modification or substitution agreement, pending delivery
of the original thereof, together with an Officer's Certificate of the
Depositor certifying that the copy of such assumption, modification or
substitution agreement delivered to the Trustee (or its custodian) is a
true copy and that the original of such agreement has been forwarded to
the public recording office;
(v) with respect to any Mortgage Loan, the original Assignment of
Mortgage for each Mortgage Loan;
(vi) If applicable, such original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument (each, an
"Intervening Assignment"), as may be necessary to show a complete chain
of assignment from the originator, or, in the case of an Intervening
Assignment that has been lost, a written Opinion of Counsel acceptable to
the Trustee that such original Intervening Assignment is not required to
enforce the Trustee's interest in the Mortgage Loans;
(vii) the original Primary Mortgage Insurance Policy or certificate,
if private mortgage guaranty insurance is required;
(viii) with respect to any Mortgage Loan, the original mortgagee
title insurance policy or attorney's opinion of title and abstract of
title; and
(ix) the original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage or as to any security
agreement, chattel mortgage or their equivalent that cannot be delivered
on or prior to the Closing Date because of a delay caused by the public
recording office where such document has been delivered for recordation,
a photocopy of such document, pending delivery of the original thereof,
together with an Officer's Certificate of the Depositor certifying that
the copy of such security agreement, chattel mortgage or their equivalent
delivered to the Trustee (or its custodian) is a true copy and that the
original of such document has been forwarded to the public recording
office;
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 (but in no event more than 3 months
thereafter except to the extent delays are caused by the applicable recording
office), the Trustee, at the expense of the Depositor and with the cooperation
of the Servicer, shall cause to be properly recorded by the Servicer in each
public recording office where the 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, or to the applicable Custodian on behalf of the
Trustee, under clause (b)(viii) above and is not so delivered, the Depositor
will provide a copy of such Title Insurance Policy to the Trustee as promptly
as practicable after the execution and delivery hereof, but in any case within
180 days of the Closing Date.
(e) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Trustee, or to the
applicable Custodian on behalf of the Trustee, an Officer's Certificate which
shall include a statement to the effect that all amounts received in connection
with such prepayment that are required to be deposited in the applicable
Collection Account pursuant to Section 4.01 have been so deposited. All original
documents that are not delivered to the Trustee shall be held by the Master
Servicer or the applicable Servicer in trust for the benefit of the Trustee and
the Certificateholders.
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 to the Depositor and the Master Servicer on
the Closing Date an Initial Certification in the form annexed hereto as
Exhibit B-1 (or in the form annexed to the applicable Custodial Agreement as
Exhibit B-1, as applicable).
(b) Within 45 days after the Closing Date, the applicable Custodian will,
on behalf of the Trustee and for the benefit of Holders of the Certificates,
review each Mortgage File to ascertain that all required documents set forth
in Section 2.01 have been received and appear on their face to contain the
requisite signatures by or on behalf of the respective parties thereto, and
shall deliver to the Depositor and the Master Servicer an Interim
Certification in the form annexed hereto as Exhibit B-2 (or in the form
annexed to the applicable Custodial Agreement as Exhibit B-2, as applicable)
to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan prepaid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all of the applicable documents specified in Section
2.01(b) are in its possession and (ii) such documents have been reviewed by it
and appear to relate to such Mortgage Loan. The Trustee, or the applicable
Custodian on behalf of the Trustee, shall make sure that the documents are
executed and endorsed, but shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other
papers to determine that the same are valid, binding, legally effective,
properly endorsed, genuine, enforceable or appropriate for the represented
purpose or that they have actually been recorded or are in recordable form or
that they are other than what they purport to be on their face. Neither the
Trustee nor any Custodian shall have any responsibility for verifying the
genuineness or the legal effectiveness of or authority for any signatures of
or on behalf of any party or endorser.
(c) If in the course of the review described in paragraph (b) above the
Trustee or the applicable Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear
regular on its face (i.e., is mutilated, damaged, defaced, torn or otherwise
physically altered) or appears to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule (each, a "Material Defect"), the
Trustee, or the applicable Custodian on behalf of the Trustee, shall promptly
identify the Mortgage Loan to which such Material Defect relates in the
Interim Certificate delivered to the Depositor or the Master Servicer (and to
the Trustee). Within 90 days of its receipt of such notice, the Depositor
shall be required to cure such Material Defect (and, in such event, the
Depositor shall provide the Trustee with an Officer's Certificate confirming
that such cure has been effected). If the Depositor does not so cure such
Material Defect, it shall, if a loss has been incurred with respect to such
Mortgage Loan that would, if such Mortgage Loan were not purchased from the
Trust Fund, constitute a Realized Loss, and such loss is attributable to the
failure of the Depositor to cure such Material Defect, repurchase the related
Mortgage Loan from the Trust Fund at the Purchase Price. A loss shall be
deemed to be attributable to the failure of the Depositor to cure a Material
Defect if, as determined by the Depositor, upon mutual agreement acting in
good faith, absent such Material Defect, such loss would not have been
incurred. Within the two year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02,
substitute for such Mortgage Loan a Qualifying Substitute Mortgage Loan
subject to the provisions of Section 2.05. The failure of the Trustee or the
applicable Custodian to give the notice contemplated herein within 45 days
after the Closing Date shall not affect or relieve the Depositor of its
obligation to repurchase any Mortgage Loan pursuant to this Section 2.02 or
any other Section of this Agreement requiring the repurchase of Mortgage Loans
from the Trust Fund.
(d) Within 180 days following the Closing Date, the Trustee, or the
applicable Custodian, shall deliver to the Depositor and the Master Servicer a
Final Certification substantially in the form annexed hereto as Exhibit B-3
(or in the form annexed to the applicable Custodial Agreement as Exhibit B-3,
as applicable) evidencing the completeness of the Mortgage Files in its
possession or control, with any exceptions noted thereto.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
(f) Each of the parties hereto acknowledge that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications thereof, as provided in this Section 2.02.
Section 2.03. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor hereby represents and warrants to the Trustee, for the benefit of
Certificateholders, and the Master Servicer, as of the Closing Date or such
other date as is specified, that:
(a) 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;
(b) 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;
(c) 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;
(d) 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;
(e) 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;
(f) 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.
Section 2.04. Discovery of Breach. It is understood and agreed that the
-------------------
representations and warranties set forth in Section 2.03 and the
representations and warranties of the Seller set forth in the Mortgage Loan
Sale Agreement and assigned to the Trustee by the Depositor hereunder 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 such breach with respect to the
representations and warranties, the Depositor or the Seller, 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.
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 or by the Seller pursuant to the Mortgage Loan Sale 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, shall release or cause to be released and reassign to
the Depositor or the Seller, 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 the Depositor 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 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 the
representations and warranties set forth in Section 2.03(f). As soon as
practicable after the delivery of any Qualifying Substitute Mortgage Loan
hereunder, the Trustee, at the expense of the Depositor and with the
cooperation of the Servicer, shall cause the Assignment of Mortgage with
respect to such Qualifying Substitute Mortgage Loan to be recorded by the
Servicer 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 2.06. Grant Clause. It is intended that the conveyance of the
------------
Depositor's right, title and interest in and to property constituting the
Trust Fund pursuant to this Agreement shall constitute, and shall be construed
as, a sale of such property and not a grant of a security interest to secure a
loan. However, if such conveyance is deemed to be in respect of a loan, it is
intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) the Depositor hereby
grants to the Trustee for the benefit of the Holders of the Certificates a
first priority security interest in all of the Depositor's right, title and
interest in, to and under, whether now owned or hereafter acquired, the Trust
Fund and all proceeds of any and all property constituting the Trust Fund to
secure payment of the Certificates; and (3) this Agreement shall constitute a
security agreement under applicable law. If such conveyance is deemed to be in
respect of a loan and the Trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person holding any Certificate, the
security interest created hereby shall continue in full force and effect and
the Trustee shall be deemed to be the collateral agent for the benefit of such
Person, and all proceeds shall be distributed as herein provided.
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable in
----------------
registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Principal
Amount, as applicable, or in the Percentage Interests, specified herein. Each
Class of Book-Entry Certificates will be issued in the minimum denominations
in Certificate Principal Amount (or Notional Amount) specified in the
Preliminary Statement hereto and in integral multiples of $1 in excess
thereof. Each Class of Non-Book Entry Certificates other than the Residual
Certificate will be issued in definitive, fully registered form in the minimum
denominations in Certificate Principal Amount specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. The
Residual Certificate will be issued as a single Certificate and maintained in
definitive, fully registered form in a minimum denomination equal to 100% of
the Percentage Interest of such Class. The Certificates may be issued in the
form of typewritten certificates. One Certificate of each Class of
Certificates other than the Residual Certificates may be issued in any
denomination in excess of the minimum denomination.
(b) The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the
Depositor upon receipt by the Trustee of the Mortgage Files described in
Section 2.01. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or the
Authenticating Agent, if any, by manual signature, and such certification upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Depositor to the Trustee or
the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in
this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
------------
accepts its appointment as, Certificate Registrar in respect of the
Certificates and shall maintain books for the registration and for the
transfer of Certificates (the "Certificate Register"). The Trustee may appoint
a bank or trust company to act as Certificate Registrar. A registration book
shall be maintained for the Certificates collectively. The Certificate
Registrar may resign or be discharged or removed and a new successor may be
appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Trustee and the appointment of a successor Trustee. The
Certificate Registrar may appoint, by a written instrument delivered to the
Holders and the Master Servicer, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
-------------------------------------
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any registration of transfer of
Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number
of new Certificates of the same Class, in authorized denominations,
representing in the aggregate the same Certificate Principal Amount as the
Certificate surrendered, upon surrender of the Certificate to be exchanged at
the office of the Certificate Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by such Holder or his duly
authorized attorney in such form as is satisfactory to the Certificate
Registrar. Certificates delivered upon any such exchange will evidence the
same obligations, and will be entitled to the same rights and privileges, as
the Certificates surrendered. No service charge shall be made to a
Certificateholder for any exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any exchange of
Certificates. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, and the Trustee or the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth
thereon and agrees that it will transfer such a Certificate only as provided
herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that
takes delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the Depositor
or the Placement Agent, an affiliate (as defined in Rule 144(a)(1) under
the 1933 Act) of the Depositor or the Placement Agent or (y) being made
to a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act") by a transferor who has
provided the Trustee with a certificate in the form of Exhibit F hereto;
and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the Act
by a transferor who furnishes to the Trustee a letter of the transferee
substantially in the form of Exhibit G hereto.
(d) (i) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and
the Depositor to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund
being deemed to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken in
the Agreement; provided, however, that the Trustee will not require such
certificate or opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee has rendered an opinion to the
effect that the purchase and holding of an ERISA-Restricted Certificate by a
Plan or a Person that is purchasing or holding such a Certificate with the
assets of a Plan will not constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code. The preparation and delivery of the
certificate and opinions referred to above shall not be an expense of the
Trust Fund, the Trustee or the Depositor. Notwithstanding the foregoing, no
opinion or certificate shall be required for the initial issuance of the
ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of Certificate.
(f) Notwithstanding anything to the contrary contained herein, no
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate
in connection with the conduct of a trade or business within the United States
and has furnished the transferor and the Trustee with an effective Internal
Revenue Service Form 4224 or successor form at the time and in the manner
required by the Code (any such person who is not covered by clause (A) or (B)
above is referred to herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto
as Exhibit D-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization, an agent or nominee acting
on behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder
(any such transferee, a "Permitted Transferee"), and the proposed transferor
shall deliver to the Trustee an affidavit in substantially the form attached
hereto as Exhibit D-2. In addition, the Trustee may (but shall have no
obligation to) require, prior to and as a condition of any such transfer, the
delivery by the proposed transferee of an Opinion of Counsel, addressed to the
Depositor and the Trustee satisfactory in form and substance to the Depositor,
that such proposed transferee or, if the proposed transferee is an agent or
nominee, the proposed beneficial owner, is not a Disqualified Organization,
agent or nominee thereof, or Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall
be deemed to be of no legal force or effect whatsoever and such Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder shall
not be deemed to be a Certificateholder for any purpose hereunder, including,
but not limited to, the receipt of distributions on such Residual Certificate.
The Trustee shall not be under any liability to any person for any
registration or transfer of a Residual Certificate to a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder or for
the maturity of any payments due on such Residual Certificate to the Holder
thereof or for taking any other action with respect to such Holder under the
provisions of the Agreement, so long as the transfer was effected in
accordance with this Section 3.03(f), unless the Trustee shall have actual
knowledge at the time of such transfer or the time of such payment or other
action that the transferee is a Disqualified Organization, agent or nominee
thereof, or Non-permitted Foreign Holder. The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder at the
time it became a Holder or any subsequent time it became a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder, all
payments made on such Residual Certificate at and after either such times (and
all costs and expenses, including but not limited to attorneys' fees, incurred
in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Trustee shall be paid and delivered to the last
preceding Holder of such Residual Certificate.
If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 3.03(f),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this
Section 3.03(f), the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of such registration of
transfer of such Residual Certificate. The Trustee shall be under no liability
to any Person for any registration of transfer of a Residual Certificate that
is in fact not permitted by this Section 3.03(f), for making any payment due
on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered upon receipt of the affidavit described in
the preceding paragraph of this Section 3.03(f).
(g) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions
of this section.
Section 3.04. Cancellation of Certificates. Any Certificate surrendered
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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
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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
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3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the
books of the Certificate Registrar as the owner of such Certificate for the
purpose of receiving distributions pursuant to Sections 5.01 and 5.02 and for
all other purposes whatsoever, and neither the Depositor, the Master Servicer,
the Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
----------------------
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in
exchange therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same
Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
---------------------------
Paying Agent (which may be the Trustee) for the purpose of making
distributions to Certificateholders hereunder. The Trustee shall cause such
Paying Agent to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums held by it for the payment to Certificateholders in an Eligible Account
in trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to the Certificateholders. All funds remitted by the
Trustee to any such Paying Agent for the purpose of making distributions shall
be paid to Certificateholders on each Distribution Date and any amounts not so
paid shall be returned on such Distribution Date to the Trustee. If the Paying
Agent is not the Trustee, the Trustee shall cause to be remitted to the Paying
Agent on or before the Business Day prior to each Distribution Date, by wire
transfer in immediately available funds, the funds to be distributed on such
Distribution Date. Any Paying Agent shall be either a bank or trust company or
otherwise authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
-----------------------
Certificates, upon original issuance, shall be issued in the form of one or
more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Book-Entry
Certificates, except as provided in Section 3.09(c). Unless Definitive
Certificates have been issued to Certificate Owners of Book-Entry Certificates
pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Depositor, the Master Servicer, the Paying Agent, the
Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate Owners
and the Clearing Agency shall be responsible for crediting the amount of
such distributions to the accounts of such Persons entitled thereto, in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement, the provisions of
this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants. Unless and until Definitive Certificates are issued
pursuant to Section 3.09(c), the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal of and interest on the Book-Entry
Certificates to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class 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 Transferor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates all references herein to obligations
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable, with
respect to such Definitive Certificates and the Trustee shall recognize the
holders of the Definitive Certificates as Certificateholders hereunder.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account. (a) On the Closing Date, the Master
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Servicer shall open and shall thereafter maintain an account held in trust
(the "Collection Account"), entitled "Aurora Loan Services Inc., as Master
Servicer, in trust for the benefit of the Holders of Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1998-ALS1."
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. On
each Deposit Date, the entire amount on deposit in the Collection Account
(subject to permitted withdrawals set forth in Section 4.02), excluding such
amounts not included in the Available Distribution Amount for such
Distribution Date pursuant to clauses (a) through (g) of paragraph (1) of the
definition thereof, shall be remitted to the Trustee for deposit into the
Certificate Account by wire transfer in immediately available funds. The
Master Servicer, at its option, may choose to make daily remittances from the
Collection Account to the Trustee for deposit into the Certificate Account.
(d) The Master Servicer shall deposit or cause to be deposited into the
Collection Account, no later than the Business Day following the Closing Date,
any amounts representing Scheduled Payments on the Mortgage Loans due after
the Cut-off Date and received by the Master Servicer on or before the Closing
Date. Thereafter, the Master Servicer shall deposit or cause to be deposited
in the Collection Account on the applicable Remittance Date the following
amounts received or payments made by it (other than in respect of principal of
and interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) all payments on account of principal, including Principal
Prepayments and late collections, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
(other than payments due prior to the Cut-off Date), net of the Servicing
Fee and Master Servicing Fee with respect to each such Mortgage Loan, but
only to the extent of the amount permitted to be withdrawn or withheld
from the Collection Account in accordance with Sections 5.04 and 9.21;
(iii) any unscheduled payment or other recovery with respect to a
Mortgage Loan not otherwise specified in this paragraph (d), including
all Net Liquidation Proceeds with respect to the Mortgage Loans and REO
Property, and all amounts received in connection with the operation of
any REO Property, net of any unpaid Servicing Fees and Master Servicing
Fees with respect to such Mortgage Loans (but only to the extent of the
amount permitted to be withdrawn or withheld from the Collection Account
in accordance with Sections 5.04 and 9.21);
(iv) all Insurance Proceeds;
(v) all Advances made by the Master Servicer or any Servicer
pursuant to Section 5.04; and
(vi) all proceeds of any Mortgage Loan repurchased by the Depositor,
the Seller, 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 or assumption fees need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer or the applicable Servicer as additional servicing
compensation. If the Master Servicer deposits in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from such Collection Account. In the event the Master Servicer does not
provide written direction to the Trustee pursuant to this Section, all funds
on deposit in the Collection Account shall remain uninvested.
Section 4.02. Application of Funds in the Collection Account. The Master
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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;
(ii) to reimburse itself or any Servicer for any Servicing Advances
made by it or by such Servicer that it determines in good faith will not
be recoverable from amounts representing late recoveries of payments of
principal or interest respecting the particular Mortgage Loan as to which
such Servicing Advance was made or from Liquidation Proceeds or Insurance
Proceeds with respect to such Mortgage Loan, it being understood, in the
case of any such reimbursement, that such Master Servicer's or Servicer's
right thereto shall be prior to the rights of the Certificateholders;
(iii) to reimburse itself 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 or Servicer's right thereto shall be prior to the
rights of the Certificateholders;
(iv) in the event it has elected not to pay itself the Master
Servicing Fee out of any Mortgagor payment on account of interest or
other recovery with respect to a particular Mortgage Loan prior to the
deposit of such Mortgagor payment or recovery in the Collection Account,
to pay to itself the Master Servicing Fee for each Distribution Date and
any unpaid Master Servicing Fees for prior Distribution Dates, as reduced
pursuant to Section 5.05, from any Mortgagor payment as to interest or
such other recovery with respect to that Mortgage Loan, as is permitted
by this Agreement;
(v) to reimburse itself or any Servicer for expenses incurred by and
recoverable by or reimbursable to it or such Servicer pursuant to Section
9.04, 9.06, 9.16 or 9.22(a), and to reimburse itself for any expenses
reimbursable to it pursuant to Section 10.01(c);
(vi) to pay to the Depositor or to the Seller, as applicable, with
respect to each Mortgage Loan or REO Property acquired in respect thereof
that has been repurchased by the Depositor 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;
(vii) subject to Section 5.04, to pay to itself income earned on the
investment of funds deposited in the Collection Account;
(viii) to make payments to the Trustee for deposit into the
Certificate Account in the amounts and in the manner provided for in
Section 4.04;
(ix) to make payment to itself and others pursuant to any provision
of this Agreement;
(x) to withdraw funds deposited in error in the Collection Account;
(xi) to clear and terminate any Collection Account pursuant to
Section 7.02;
(xii) 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
(xiii) 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 the Servicing Agreement.
Each Servicer shall be entitled to retain as additional servicing
compensation any Prepayment Penalty Amounts or Prepayment Interest Excess.
In connection with withdrawals pursuant to subclauses (i), (iii), (iv)
and (vi) above, the Master Servicer's or Servicer's entitlement thereto is
limited to collections or other recoveries on the related Mortgage Loan. The
Master Servicer shall therefore keep and maintain a separate accounting for
each Mortgage Loan it master services for the purpose of justifying any
withdrawal from the Collection Account it maintains pursuant to such subclause
(i), (iii), (iv) and (vi).
Section 4.03. Reports to Certificateholders. (a) On each Distribution
-----------------------------
Date, the Trustee shall deliver or cause to be delivered by first class mail
to each Certificateholder a written report setting forth the following
information, by Mortgage Pool and Certificate Group (on the basis of Mortgage
Loan level information obtained from the Servicers):
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates, other
than any Class of Notional Certificates, 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 in each
Mortgage Pool;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (other
than any Class of Principal Only Certificates) allocable to interest,
including any Accrual Amount added to the Class Certificate Principal
Amount of any Class of Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holders of the
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Master Servicer or any Servicer (or the Trustee) with
respect to such Distribution Date, (B) the aggregate amount of such
Advances actually made, and (C) the amount, if any, by which (A) above
exceeds (B) above;
(v) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the close of business on the last day of the related Due Period,
after giving effect to payments allocated to principal reported under
clause (i) above;
(vi) 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 (and to the addition of any
Accrual Amount in the case of any Class of Accrual Certificates),
separately identifying any reduction of any of the foregoing Certificate
Principal Amounts due to Realized Losses:
(vii) any Realized Losses realized with respect to the Mortgage
Loans (x) in the applicable Prepayment Period and (y) in the aggregate
since the Cut-off Date, stating separately the amount of Special Hazard
Losses, Fraud Losses and Bankruptcy Losses and the aggregate amount of
such Realized Losses, and the remaining Special Hazard Loss Amount, Fraud
Loss Amount and Bankruptcy Loss Amount;
(viii) the amount of the Master Servicing Fees, Servicing Fees and
Trustee Fee paid during the Due Period to which such distribution
relates;
(ix) the number and aggregate Scheduled Principal Balance of
Mortgage Loans, as reported to the Trustee by the Master Servicer, (a)
remaining outstanding (b) delinquent one month, (c) delinquent two
months, (d) delinquent three or more months, and (e) as to which
foreclosure proceedings have been commenced as of the close of business
on the last Business Day of the calendar month immediately preceding the
month in which such Distribution Date occurs;
(x) the deemed principal balance of each REO Property as of the
close of business on the last Business Day of the calendar month
immediately preceding the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the principal balance of such
Mortgage Loan and the number of such Mortgage Loans as of the close of
business on the Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the
preceding calendar month, the Scheduled Principal Balance of each Deleted
Mortgage Loan, and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Interest Shortfalls and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) 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
(xv) any other "loan-level" information for any Mortgage Loans that
are delinquent three or more months and any REO Property held by the
Trust that is reported by the Master Servicer to the Trustee.
In the case of information furnished pursuant to subclauses (i), (ii) and
(viii) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.
The foregoing information and reports shall be prepared and determined by
the Trustee based solely on Mortgage Loan data provided to the Trustee by the
Master Servicer no later than four Business Days prior to the Distribution
Date. In preparing or furnishing the Mortgage Loan data to the Trustee, the
Master Servicer shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Property
that has been provided to the Master Servicer by each Servicer, and the Master
Servicer shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to be
delivered by first class mail to the Depositor a copy of the above-described
written report, to the following address: Mortgage Finance Group, Lehman
Brothers Inc., Three World Financial Center, 200 Vesey Street, New York, New
York, 10285, Attention: Joseph J. Kelly, or to such other address as the
Depositor may designate.
(b) Upon the reasonable advance written request of any Certificateholder
that is a savings and loan, bank or insurance company, which request, if
received by the Trustee, will be promptly forwarded to the Master Servicer,
the Master Servicer shall provide, or cause to be provided, (or, to the extent
that such information or documentation is not required to be provided by a
Servicer under the applicable Servicing Agreement, shall use reasonable
efforts to obtain such information and documentation from such Servicer, and
provide) to such Certificateholder such reports and access to information and
documentation regarding the Mortgage Loans as such Certificateholder may
reasonably deem necessary to comply with applicable regulations of the Office
of Thrift Supervision or its successor or other regulatory authorities with
respect to investment in the Certificates; provided, however, that the Master
Servicer shall be entitled to be reimbursed by such Certificateholder for such
Master Servicer's actual expenses incurred in providing such reports and
access.
(c) Within 90 days, or such shorter period as may be required by statute
or regulation, after the end of each calendar year, the Trustee shall send to
each Person who at any time during the calendar year was a Certificateholder
of record, and make available to Certificate Owners (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report
summarizing the items provided to Certificateholders pursuant to Section
4.03(a) on an annual basis as may be required to enable such Holders to
prepare their federal income tax returns. Such information shall include the
amount of original issue discount accrued on each Class of Certificates and
information regarding the expenses of the Trust Fund. The Master Servicer
shall provide the Trustee with such information as is necessary for the
Trustee to prepare such reports.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
-------------------
maintain in its name, as trustee, a 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 payments to itself and others
pursuant to any provision of this Agreement;
(iii) to make payments of the Master Servicing Fee (to the extent
not already withheld or withdrawn from the Collection Account by the
Master Servicer) to the Master Servicer;
(iv) to make distributions to the Certificateholders pursuant to
Article V; and
(v) to clear and terminate the Certificate Account pursuant to
Section 7.02.
(c) The Trustee may invest, or cause to be invested, funds held in the
Certificate Account, which funds, if invested, shall be invested in Eligible
Investments (which may be obligations of the Trustee). All such investments
must mature no later than the next Distribution Date, and shall not be sold or
disposed of prior to their maturity. All such Eligible Investments will be
made in the name of the Trustee (in its capacity as such) or its nominee. All
income and gain realized from any such investment shall be compensation for
the Trustee and shall be subject to its withdrawal on order from time to time.
The amount of any losses incurred in respect of any such investments shall be
paid by the Trustee for deposit in the Certificate Account out of its own
funds, without any right of reimbursement therefor, immediately as realized.
Funds held in the Certificate Account that are not invested shall be held in
cash.
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
-----------------------
respecting the final distribution on the Certificates, on each Distribution
Date the Trustee or the Paying Agent shall make distributions in accordance
with this Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date to any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of the
Class 1-AX or Class 2-AX Certificates, an initial Notional Amount of not less
than $500,000 or $725,000, respectively, 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
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Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
with respect to each Mortgage Pool, and shall distribute such amount to itself
(in the case of clause (i)) and to the Holders of record of each Class of
Certificates in the following order of priority:
(i) from the Available Distribution Amount for each Mortgage Pool,
to the Trustee, the Trustee Fee allocable to such Pool for such
Distribution Date;
(ii) from the Available Distribution Amount for each Mortgage Pool,
to each Class of Senior Certificates in the related Certificate Group
(other than any Class of Principal Only Certificates), the Accrued
Certificate Interest thereon for such Distribution Date, as reduced by
such Class's allocable share of any Net Prepayment Interest Shortfalls
for the related Mortgage Pool for such Distribution Date; provided,
however, that any shortfall in available amounts for each Mortgage Pool
shall be allocated between the Classes of the related Certificate Group
in proportion to the amount of Accrued Certificate Interest (as so
reduced) that would otherwise be distributable thereon;
(iii) From the Available Distribution Amount for each Mortgage Pool,
to each Class of Senior Certificates in the related Certificate Group
(other than any Class of Principal Only Certificates), any related
Interest Shortfall for such Distribution Date; provided, however, that
any shortfall in available amounts for each Mortgage Pool shall be
allocated between the Classes of the related Certificate Group in
proportion to the Interest Shortfall for each such Class on such
Distribution Date;
(iv) from the remaining Available Distribution Amount for the
related Mortgage Pool, to the Senior Certificates of each Certificate
Group, other than the Class 1-AX and Class 2-AX Certificates, as follows:
(A) to the Class 1-A and Class 1-AP Certificates, from the
Available Distribution Amount for Pool 1 for such Distribution Date,
in reduction of their respective Class Certificate Principal
Amounts, concurrently, as follows:
(1) to the Class 1-A Certificates, the Senior Principal
Distribution Amount for Pool 1 for such Distribution Date,
until the Class Certificate Principal Amount thereof has been
reduced to zero; and
(2) to the Class 1-AP Certificates, the AP Distribution
Amount for Pool 1 for such Distribution Date, until the Class
Certificate Principal Amount thereof has been reduced to zero;
(B) to the Class 2-A, Class 2-AP and Class R Certificates, from
the Available Distribution Amount for Pool 2 for such Distribution
Date, in reduction of their respective Class Certificate Principal
Amounts, concurrently, as follows:
(1) sequentially, to the Class 2-A and Class R
Certificates, in that order, the Senior Principal Distribution
Amount for Pool 2 for such Distribution Date, until the Class
Certificate Principal Amount of each such Class has been
reduced to zero; and
(2) to the Class 2-AP Certificates, the AP Principal
Distribution Amount for Pool 2 for such Distribution Date,
until the Class Certificate Principal Amount thereof has been
reduced to zero;
(v) to the Class 1-AP and Class 2-AP Certificates, to the extent of
the remaining Available Distribution Amount for both Mortgage Pools, the
Class AP Deferred Amount for such Class and Distribution Date, until the
Class Certificate Principal Amount thereof has been reduced to zero;
provided, however, that (A) distributions pursuant to this priority shall
not exceed the aggregate Subordinate Principal Distribution Amount for
both Mortgage Pools for such date; (B) such amounts will not reduce the
Class Certificate Principal Amounts of such Classes; and (C) in the event
the aggregate Subordinate Principal Distribution Amount for both Mortgage
Pools is insufficient to fully pay the Class AP Deferred Amount for the
Class 1-AP and Class 2-AP Certificates, such amount shall be distributed
pro rata to such Classes on the basis of their respective Class AP
Deferred Amounts; and
(vi) from the remaining Available Distribution Amount for both
Mortgage Pools, subject to the prior distribution of amounts pursuant to
Section 5.02(e) in the case of clauses (C), (F), (I), (L), (O) and (R)
below, to the Subordinated Certificates, as follows:
(A) to the Class B1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(B) to the Class B1 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(C) to the Class B1 Certificates, in reduction of the Class
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Certificate Principal Balance thereof has been reduced to zero;
(D) to the Class B2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(E) to the Class B2 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(F) to the Class B2 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Class Certificate Principal Amount thereof has been reduced to
zero;
(G) to the Class B3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(H) to the Class B3 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(I) to the Class B3 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Class Certificate Principal Amount thereof has been reduced to
zero;
(J) to the Class B4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(K) to the Class B4 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(L) to the Class B4 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Certificate Principal Balance thereof has been reduced to zero;
(M) to the Class B5 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(N) to the Class B5 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(O) to the Class B5 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Class Principal Balance thereof has been reduced to zero;
(P) to the Class B6 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls
for such Distribution Date;
(Q) to the Class B6 Certificates, any Interest Shortfall for
such Class on such Distribution Date; and
(R) to the Class B6 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of each Subordinate Principal Distribution Amount for
such Distribution Date, except as provided in Section 5.02(c), until
the Certificate Principal Balance thereof has been reduced to zero.
(b) Net Prepayment Interest Shortfalls for a Mortgage Pool will be
allocated to the Class A Certificates of the related Certificate Group and the
Subordinate Certificates pro rata based on (i) in the case of such Class A
Certificates, the Accrued Certificate Interest otherwise distributable
thereon; and (ii) in the case of the Classes of Subordinate Certificates,
interest accrued on the related Apportioned Principal Balances.
(c) (i) If on any Distribution Date the Credit Support Percentage for the
Class B1 Certificates is less than the Original Credit Support Percentage for
such Class, then, notwithstanding anything to the contrary in Section 5.02(a),
no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in
respect of the Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates
on such Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Component, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date
the Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on
such Distribution Date.
Any amount not distributed in respect of any Class on any Distribution
Date pursuant to the immediately preceding paragraph will be allocated among
the remaining Subordinate Classes in proportion to their respective
Certificate Principal Amounts.
(d) On each Distribution Date, the Trustee shall distribute to the holder
of the Class R Certificate any remaining Available Distribution Amount for
such Distribution Date after application of all amounts described in paragraph
(a) of this Section 5.02. Any distributions made to the Class R
Certificateholder pursuant to this paragraph (d) shall not reduce the Class
Certificate Principal Amount of the Class R Certificate.
(e) (i) On each Distribution Date prior to the Credit Support Depletion
Date but on or after the date on which the Class Certificate Principal Amount
of the Group 1 Certificates (other than the Class 1-AP Certificates) or the
Class Certificate Principal Amount of the Group 2 Certificates (other than the
Class 2-AP Certificates) has been reduced to zero, amounts otherwise
distributable as principal on each Class of Subordinate Certificates pursuant
to Section 5.02(a)(vi), in reverse order of priority, in respect of such
Class's Subordinate Class Percentage of the Subordinate Principal Distribution
Amount for the Mortgage Pool relating to such retired Certificates, will be
distributed as principal to the remaining Group 1 or Group 2 Certificates (as
applicable), provided that on such Distribution Date (a) the Aggregate
Subordinate Percentage for such Distribution Date is less than 200% of the
Aggregate Subordinate Percentage as of the Cut-off Date or (b) the average
outstanding principal balance of the Mortgage Loans in either Mortgage Pool
which are delinquent 60 days or more over the last six months as a percentage
of the related Group Subordinate Amount is greater than or equal to 50%.
(ii) If, on any Distribution Date a Certificate Group constitutes an
Undercollateralized Group, all amounts otherwise distributable as
principal on the Subordinate Certificates, in reverse order of priority
(other than amounts necessary to pay Class AP Deferred Amounts or unpaid
Interest Shortfalls) (or, following the Credit Support Depletion Date,
such other amounts described in the following sentence), will be
distributed as principal to the Class A Certificates (other than the
Class AP and Class AX Certificates) of the Undercollateralized Group,
until the aggregate Class Certificate Principal Amount of such Class A
Certificates of the Undercollateralized Group equals the Non-AP Pool
Balance of the related Mortgage Pool (such amounts, "Undercollateralized
Amounts"). In the event that a Certificate Group constitutes an
Undercollateralized Group on any Distribution Date following the Credit
Support Depletion Date, Undercollateralized Amounts will be paid from the
excess of the Available Distribution Amount of the other Mortgage Pool
remaining after all required amounts have been distributed to the Class A
Certificates of such other Certificate Group. In addition, the amount of
any unpaid Interest Shortfalls with respect to an Undercollateralized
Group on any Distribution Date (including any Interest Shortfalls for
such Distribution Date) will be distributed to the Class A Certificates
(other than any Principal Only Certificates) of the Undercollateralized
Group prior to the payment of any Undercollateralized Amount from amounts
otherwise distributable as principal on the Subordinate Certificates, in
reverse order of priority (or, following the Credit Support Depletion
Date, as provided in the preceding sentence).
Section 5.03. Allocation of Realized Losses. (a) On any Distribution
----------------------------
Date, the applicable Non-AP Percentage of the principal portion of each
Realized Loss (other than any Excess Loss) in respect of a Mortgage Loan shall
be allocated in the following order of priority:
first, to the Class B6 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Component
Principal Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates of the related
Certificate Group, pro rata, in accordance with their Class
Certificate Principal Amounts; provided, that any such loss
allocated to any Class of Accrual Certificates shall be allocated
(subject to Section 5.03(c)) on the basis of the lesser of (x) the
Class Certificate Principal Amount thereof immediately prior to the
applicable Distribution Date and (y) the Class Certificate Principal
thereof on the Closing Date (as reduced by any Realized Losses
previously allocated thereto).
(b) With respect to any Distribution Date, the principal portion of any
Excess Loss in respect of a Mortgage Loan in either Mortgage Pool shall be
allocated, pro rata, to the Group 1 Certificates (in the case of a Realized
Loss in Pool 1) or Group 2 Certificates (in the case of a Realized Loss in
Pool 2) and among the Classes of Subordinate Certificates based on the
respective Class Certificate Principal Amounts thereof; provided, that any
such loss allocated to any Class of Accrual Certificates (and any Accrual
Component) shall be allocated (subject to Section 5.03(c)) on the basis of the
lesser of (x) the Class Certificate Principal Amount thereof immediately prior
to the applicable Distribution Date and (y) the Class Certificate Principal
Amount thereof on the Closing Date (as reduced by any Realized Losses
previously allocated thereto).
(c) Any Realized Losses allocated to a Class of Certificates pursuant to
Section 5.03(a) or (b) shall be allocated among the Certificates of such Class
in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph (c) shall be
accomplished by reducing the Certificate Principal Amount of the related
Certificates on the related Distribution Date in accordance with Section
5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03 shall
be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion
thereof, after giving effect to distributions made on such Distribution Date,
except that the aggregate amount of Realized Losses to be allocated to the
Class 1-AP and Class 2-AP Certificates on such Distribution Date will be taken
into account in determining distributions in respect of any Class 1-AP
Deferred Amount or Class 2-AP Deferred amount, as applicable for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Certificate
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class
to which any portion of such Realized Loss had previously been allocated shall
be entitled to receive, on the Distribution Date in the month following the
month in which such recovery is received, its pro rata share (based on the
Class Certificate Principal Amount thereof) of such recovery, up to the amount
of the portion of such Realized Loss previously allocated to such Class. In
the event that the total amount of such recovery exceeds the amount of
Realized Loss allocated to the outstanding Classes in accordance with the
preceding provisions, each outstanding Class of Certificates shall be entitled
to receive its pro rata share of the amount of such excess, up to the amount
of any unrecovered Realized Loss previously allocated to such Class. Any such
recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not
otherwise allocated to any Class of Certificates, pursuant to this subsection
shall be treated as Principal Prepayments for purposes of this Agreement.
Section 5.04. Advances by Master Servicer and Trustee. (a) Advances shall
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be made in respect of each Deposit Date as provided herein. If, on any
Determination Date, the Master Servicer determines that any Scheduled Payments
due during the related Due Period (other than Balloon Payments) have not been
received, the Master Servicer shall, or cause the applicable Servicer to,
advance such amount, less an amount, if any, to be set forth in an Officer's
Certificate to be delivered to the Trustee on such Determination Date, which
if advanced the Master Servicer or the applicable Servicer has determined
would not be recoverable from amounts received with respect to such Mortgage
Loan, including late payments, Liquidation Proceeds, Insurance Proceeds or
otherwise. If the Master Servicer determines that an Advance is required, it
shall on the Deposit Date immediately following such Determination Date either
(i) remit to the Trustee from its own funds (or funds advanced by the
applicable Servicer) for deposit in the Certificate Account immediately
available funds in an amount equal to such Advance, (ii) cause to be made an
appropriate entry in the records of the Collection Account that funds in such
account being held for future distribution or withdrawal have been, as
permitted by this Section 5.04, used by the Master Servicer to make such
Advance, and remit such immediately available funds to the Trustee for deposit
in the Certificate Account or (iii) make Advances in the form of any
combination of clauses (i) and (ii) aggregating the amount of such Advance.
Any funds being held in the Collection Account for future distribution to
Certificateholders and so used shall be replaced by the Master Servicer from
its own funds by remittance to the Trustee for deposit in the Certificate
Account on or before any future Deposit Date to the extent that funds in the
Certificate Account on such Deposit Date shall be less than payments to
Certificateholders required to be made on the related Distribution Date. The
Master Servicer and each Servicer shall be entitled to be reimbursed from the
Collection Account for all Advances made by it as provided in Section 4.02.
(b) In the event that the Master Servicer fails for any reason to make an
Advance required to be made pursuant to Section 5.04 on or before the Deposit
Date, the Trustee, as successor Master Servicer pursuant to Section 6.14,
shall, on or before the related Distribution Date, deposit in the Certificate
Account an amount equal to the excess of (a) Advances required to be made by
the Master Servicer or any Servicer that would have been deposited in such
Certificate Account over (b) the amount of any Advance made by the Master
Servicer or any Servicer with respect to such Distribution Date; provided,
however, that the Trustee shall be required to make such Advance only if it is
not prohibited by law from doing so and it has determined that such Advance
would be recoverable from amounts to be received with respect to such Mortgage
Loan, including late payments, Liquidation Proceeds, Insurance Proceeds, or
otherwise. The Trustee shall be entitled to be reimbursed from the Certificate
Account for Advances made by it pursuant to this Section 5.04 as if it were
the Master Servicer.
Section 5.05. Compensating Interest Payments. The amount of the Aggregate
------------------------------
Master Servicing Compensation payable to the Master Servicer in respect of any
Distribution Date shall be reduced by the amount of any Compensating Interest
Payment for such Distribution Date, but only to the extent such Compensating
Interest Payment is not actually made by a Servicer on the applicable
Remittance Date. Such amount shall not be treated as an Advance and shall not
be reimbursable to the Master Servicer.
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
-----------------
continuance of an Event of Default (of which a Responsible Officer of the
Trustee shall have actual knowledge), undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. Any
permissive right of the Trustee provided for in this Agreement shall not be
construed as a duty of the Trustee. If an Event of Default (of which a
Responsible Officer of the Trustee shall have actual knowledge) has occurred
and has not otherwise been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement and use the same degree
of care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own affairs unless the
Trustee is acting as Master Servicer, in which case it shall use the same
degree of care and skill as the Master Servicer hereunder.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they are in the form required by this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer, to the Trustee pursuant to
this Agreement, and shall not be required to recalculate or verify any
numerical information furnished to the Trustee pursuant to this Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful
misconduct. No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of Holders of Certificates as
provided in Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from
a failure by the Master Servicer (i) to remit funds (or to make Advances)
or (ii) to furnish information to the Trustee when required to do so)
unless a Responsible Officer of the Trustee has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Holders of the Certificates and this Agreement;
(iii) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Master
Servicer in accordance with the terms of this Agreement; and
(iv) The Trustee shall not be responsible for any act or omission of
the Master Servicer.
(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 not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer or any Servicer under this
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Master Servicer in accordance with the terms of this Agreement.
(g) Subject to Section 4.04, the Trustee shall not be held liable by
reason of any insufficiency in any account (including without limitation the
Collection Amount) held by or on behalf of the Trustee resulting from any
investment loss on any Eligible Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
(h) Except as otherwise provided herein, the Trustee shall have no duty
(A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any re-recording, re-filing or
re-depositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or
any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund other than from funds available in the
Collection Account or the Certificate Account, or (D) to confirm or verify the
contents of any reports or certificates of the Master Servicer delivered to
the Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.
(i) The Trustee shall pay, out of its own funds, but not to exceed in the
aggregate $3,000 per calendar year, one-half of any fees assessed by the
Rating Agencies after the Closing Date in connection with maintaining the
ratings of the Certificates. Any additional fees in excess of such amounts
shall be paid by the Depositor.
(j) The Trustee shall not be liable in its individual capacity for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(k) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall not be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including, but not limited to, lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.
Section 6.02. Certain Matters Affecting the Trustee. Except as otherwise
-------------------------------------
provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors, opinion of counsel or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any advice of its
counsel or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(iii) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(iv) Unless an Event of Default shall have occurred and be
continuing, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document (provided the same appears regular on its
face), unless requested in writing to do so by Holders of at least a
majority in Class Certificate Principal Amount (or Aggregate Notional
Amount) of each Class of Certificates; provided, however, that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expense or liability or payment of such estimated expenses as a condition
to proceeding. The reasonable expense thereof shall be paid by the
Holders requesting such investigation;
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, or attorneys, which agents, custodians or attorneys shall
have any and all of the rights, powers, duties and obligations of the
Trustee conferred on them by such appointment provided that the Trustee
shall continue to be responsible for its duties and obligations hereunder
to the extent provided herein, and provided further that the Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by the Trustee;
(vi) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto, in each case at
the request, order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
(vii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act; and
(viii) The Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust Fund created hereby or the
powers granted hereunder.
Section 6.03. Trustee Not Liable for Certificates. The Trustee makes no
-----------------------------------
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates) or 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. The Trustee shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be
issued hereunder. Except as otherwise provided herein, the Trustee shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder or to record this
Agreement.
Section 6.04. Trustee May Own Certificates. The Trustee and any Affiliate
----------------------------
or agent of the Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may transact banking and trust with the
other parties hereto with the same rights it would have if it were not Trustee
or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee hereunder
------------------------------------
shall at all times be (i) an institution insured by the FDIC and (ii) a
corporation or national banking association, organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of
such corporation or national banking association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section
6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may at
----------------------------------
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor and the Master Servicer. Upon
receiving such notice of resignation, the Depositor will promptly appoint a
successor trustee by written instrument, one copy of which instrument shall be
delivered to the resigning Trustee, one copy to the successor trustee 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 Aggregate Notional Amount) 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 6.08. Merger or Consolidation of Trustee. Any Person into which
----------------------------------
the Trustee may be merged or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided that such
Person shall be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.
--------------------------------------------------------
(a) Notwithstanding any other provisions hereof, at any time, the Trustee, the
Depositor or the Certificateholders evidencing more than 50% of the Class
Certificate Principal Amount (or Aggregate Notional Amount) of each Class of
Certificates shall each have the power from time to time to appoint one or
more Persons to act either as co-trustees jointly with the Trustee, or as
separate trustees, or as custodians, for the purpose of holding title to,
foreclosing or otherwise taking action with respect to any Mortgage Loan
outside the state where the Trustee has its principal place of business where
such separate trustee or co-trustee is necessary or advisable (or the Trustee
has been advised by the Master Servicer that such separate trustee or
co-trustee is necessary or advisable) under the laws of any state in which a
property securing a Mortgage Loan is located or for the purpose of otherwise
conforming to any legal requirement, restriction or condition in any state in
which a property securing a Mortgage Loan is located or in any state in which
any portion of the Trust Fund is located. The separate Trustees, co-trustees,
or custodians so appointed shall be trustees or custodians for the benefit of
all the Certificateholders and shall have such powers, rights and remedies as
shall be specified in the instrument of appointment; provided, however, that
no such appointment shall, or shall be deemed to, constitute the appointee an
agent of the Trustee. The obligation of the Trustee to make Advances pursuant
to Section 5.04 and 6.14 hereof shall not be affected or assigned by the
appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations, including the
holding of title to the Trust Fund or any portion thereof in any such
jurisdiction, shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally liable
by reason of any act or omission of any other trustee or custodian
hereunder; and
(iv) the Trustee or the Certificateholders evidencing more than 50%
of the Aggregate Voting Interests of the Certificates may at any time
accept the resignation of or remove any separate trustee, co-trustee or
custodian, so appointed by it or them, if such resignation or removal
does not violate the other terms of this Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee, co-trustee or custodian shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision
of this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee.
(d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. The Trustee shall
not be responsible for any action or inaction of any separate trustee,
co-trustee or custodian. If any separate trustee, co-trustee or custodian
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the co-trustees
to the extent, and in accordance with the standards, specified in Section 6.12
hereof (which compensation shall not reduce any compensation payable to the
Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one or
---------------------
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation
organized and doing business under the laws of the United States of America or
of any state, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision
or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency business of
any Authenticating Agent, shall continue to be the Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent
by giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment
to the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.10.
No Authenticating Agent shall have responsibility or liability for any action
taken by it as such at the direction of the Trustee. Any Authenticating Agent
shall be entitled to reasonable compensation for its services and, if paid by
the Trustee, it shall be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its directors,
--------------------------
officers, employees and agents shall be entitled to indemnification from the
Trust Fund for any loss, liability or expense incurred in connection with any
legal proceeding and incurred without negligence or willful misconduct on
their part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder, including the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor, the Master Servicer and the Holders written notice thereof
promptly after the Trustee shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense; and
(iii) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by
the Trustee entered into without the prior consent of the Depositor,
which consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be entitled
----------------------------
to the Trustee Fee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), to the extent
provided herein, and in addition, the Trustee shall be entitled to receive,
and is authorized to pay to itself the amount of income or gain earned from
the investment of funds in the Certificate Account.
Section 6.13. Collection of Monies. Except as otherwise expressly
--------------------
provided in this Agreement, the Trustee may demand payment or delivery of, and
shall receive and collect, all money and other property payable to or
receivable by the Trustee pursuant to this Agreement. The Trustee shall hold
all such money and property received by it as part of the Trust Fund and shall
distribute it as provided in this Agreement. If the Trustee shall not have
timely received amounts to be remitted with respect to the Mortgage Loans from
the Master Servicer, the Trustee shall request the Master Servicer to make
such distribution as promptly as practicable or legally permitted. If the
Trustee shall subsequently receive any such amount, it may withdraw such
request.
Section 6.14. Events of Default; Trustee To Act; Appointment of
-------------------------------------------------
Successor. (a) The occurrence of any one or more of the following events shall
- --------
constitute an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Trustee the
Mortgage Loan data sufficient to prepare the reports described in Section
4.03(a) which continues unremedied for a period of one Business Day after
the date upon which written notice of such failure shall have been given
to such Master Servicer by the Trustee or to such Master Servicer and the
Trustee by the Holders of not less than 25% of the Class Certificate
Principal Amount (or Aggregate Notional Amount) of each Class of
Certificates affected thereby; or
(ii) Any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of such Master Servicer contained in this
Agreement which continues unremedied for a period of 30 days (or 15 days,
in the case of a failure to maintain any Insurance Policy required to be
maintained pursuant to this Agreement) after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to such Master Servicer by the Trustee, or to such Master
Servicer and the Trustee by the Holders of not less than 25% of the Class
Certificate Principal Amount (or Aggregate Notional Amount) of each Class
of Certificates affected thereby; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Master Servicer, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days or any Rating
Agency reduces or withdraws or threatens to reduce or withdraw the rating
of the Certificates because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to such Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all
or substantially all of its assets, or consolidate with or merge into
another entity or shall permit another entity to consolidate or merge
into it, such that the resulting entity does not meet the criteria for a
successor servicer as specified in Section 9.27 hereof; or
(vii) If a representation or warranty set forth in Section 9.14
hereof shall prove to be incorrect as of the time made in any respect
that materially and adversely affects the interests of the
Certificateholders, and the circumstance or condition in respect of which
such representation or warranty was incorrect shall not have been
eliminated or cured within 60 days after the date on which written notice
of such incorrect representation or warranty shall have been given to the
Master Servicer by the Trustee, or to the Master Servicer and the Trustee
by the Holders of not less than 25% of the Aggregate Certificate
Principal Amount of each Class of Certificates; or
(viii) A sale or pledge of the any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Class Certificate
Principal Amount (or Aggregate Notional Amount) of each Class of
Certificates;
(ix) Any Servicer at any time is not either an FNMA- or FHLMC-
approved Seller/Servicer, and the Master Servicer has not terminated the
rights and obligations of such Servicer under the applicable Servicing
Agreement and replaced such Servicer with an FNMA- or FHLMC-approved
servicer within 30 days of the absence of such approval; or
(x) Any failure of the Master Servicer to remit to the Trustee any
payment required to be made to the Trustee for the benefit of
Certificateholders under the terms of this Agreement, including any
Advance, on any Deposit Date.
If an Event of Default described in clauses (i) through (ix) of this
Section 6.14 shall occur, then, in each and every case, subject to applicable
law, so long as any such Event of Default shall not have been remedied within
any period of time prescribed by this Section 6.14, the Trustee, by notice in
writing to the Master Servicer may, and shall, if so directed by
Certificateholders evidencing more than 50% of the Class Certificate Principal
Amount (or Aggregate Notional Amount) of each Class of Certificates, terminate
all of the rights and obligations of the Master Servicer hereunder and in and
to the Mortgage Loans and the proceeds thereof. If an Event of Default
described in clause (x) of this Section 6.14 shall occur, then, in each and
every case, subject to applicable law, the Trustee, by notice in writing to
the Master Servicer, shall promptly terminate all of the rights and
obligations of the Master Servicer hereunder and in and to the Mortgage Loans
and the proceeds thereof. On or after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer, and only
in its capacity as Master Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee
pursuant to and under the terms of this Agreement; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Master Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether
to complete the transfer and endorsement or assignment of the Mortgage Loans
and related documents or otherwise. The defaulting Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the defaulting
Master Servicer's responsibilities and rights hereunder as Master Servicer
including, without limitation, notifying Mortgagors of the assignment of the
master servicing function and providing the Trustee or its designee all
documents and records in electronic or other form reasonably requested by it
to enable the Trustee or its designee to assume the defaulting Master
Servicer's functions hereunder and the transfer to the Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Collection Account
maintained by such defaulting Master Servicer and any other account or fund
maintained with respect to the Certificates or thereafter received with
respect to the Mortgage Loans. The Master Servicer being terminated shall bear
all costs of a master servicing transfer, including but not limited to those
of the Trustee reasonably allocable to specific employees and overhead, legal
fees and expenses, accounting and financial consulting fees and expenses, and
costs of amending the Agreement, if necessary.
Notwithstanding the termination of its activities as Master Servicer,
each terminated Master Servicer shall continue to be entitled to reimbursement
to the extent provided in Section 4.02(i), (ii), (iii), (iv), (v), (vi),
(vii), (ix) and (xi) to the extent such reimbursement relates to the period
prior to such Master Servicer's termination.
If any Event of Default shall occur, the Trustee shall promptly notify
the Rating Agencies of the nature and extent of such Event of Default. The
Trustee shall immediately give written notice to the Master Servicer upon such
Master Servicer's failure to remit funds on the Deposit Date.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee
receives the resignation of the Master Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.29, the Trustee, unless another master servicer
shall have been appointed, shall be the successor in all respects to the
Master Servicer in its capacity as such under this Agreement and the
transactions set forth or provided for herein and shall have all the rights
and powers and be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Master Servicer
hereunder, including the obligation to make Advances; provided, however, that
any failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by this Agreement shall not
be considered a default by the Trustee hereunder. In addition, the Trustee
shall have no responsibility for any act or omission of the Master Servicer
prior to the issuance of any notice of termination and shall have no liability
relating to the representations and warranties of the Master Servicer set
forth in Section 9.14. In the Trustee's capacity as such successor, the
Trustee shall have the same limitations on liability herein granted to the
Master Servicer. As compensation therefor, the Trustee shall be entitled to
receive all compensation payable to the Master Servicer under this Agreement,
including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution servicer, master servicer, servicing or mortgage
servicing institution having a net worth of not less than $15,000,000 and
meeting such other standards for a successor master servicer as are set forth
in this Agreement, as the successor to such Master Servicer in the assumption
of all of the responsibilities, duties or liabilities of a master servicer,
like the Master Servicer. Any entity designated by the Trustee as a successor
master servicer may be an Affiliate of the Trustee; provided, however, that,
unless such Affiliate meets the net worth requirements and other standards set
forth herein for a successor master servicer, the Trustee, in its individual
capacity shall agree, at the time of such designation, to be and remain liable
to the Trust Fund for such Affiliate's actions and omissions in performing its
duties hereunder. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted to the
Master Servicer hereunder. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate
any such succession and may make other arrangements with respect to the
servicing to be conducted hereunder which are not inconsistent herewith. The
Master Servicer shall cooperate with the Trustee and any successor master
servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
Mortgagors of the assignment of the master servicing functions and providing
the Trustee and successor master servicer, as applicable, all documents and
records in electronic or other form reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and the transfer to the
Trustee or such successor master servicer, as applicable, all amounts which
shall at the time be or should have been deposited by the Master Servicer in
the Collection Account and any other account or fund maintained with respect
to the Certificates or thereafter be received with respect to the Mortgage
Loans. Neither the Trustee nor any other successor master servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof caused by
(i) the failure of the Master Servicer to deliver, or any delay in delivering,
cash, documents or records to it, (ii) the failure of the Master Servicer to
cooperate as required by this Agreement, (iii) the failure of the Master
Servicer to deliver the Mortgage Loan data to the Trustee as required by this
Agreement or (iv) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default.
----------------------------------------------------
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as
trustee of an express trust, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no
remedy provided for by this Agreement shall be exclusive of any other remedy,
and each and every remedy shall be cumulative and in addition to any other
remedy, and no delay or omission to exercise any right or remedy shall impair
any such right or remedy or shall be deemed to be a waiver of any Event of
Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
------------------
Interests of Certificateholders may waive any default or Event of Default by
the Master Servicer in the performance of its obligations hereunder, except
that a default in the making of any required deposit to the Certificate
Account that would result in a failure of the Trustee to make any required
payment of principal of or interest on the Certificates may only be waived
with the consent of 100% of the affected Certificateholders. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the Master
-----------------------
Servicer or appointment of a successor to the Master Servicer, in each case as
provided herein, the Trustee shall promptly mail notice thereof by first class
mail to the Certificateholders at their respective addresses appearing on the
Certificate Register. The Trustee shall also, within 45 days after the
occurrence of any Event of Default known to the Trustee, give written notice
thereof to Certificateholders, unless such Event of Default shall have been
cured or waived prior to the issuance of such notice and within such 45-day
period.
Section 6.18. Directions by Certificateholders and Duties of Trustee
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During Event of Default. Subject to the provisions of Section 8.01 hereof,
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during the continuance of any Event of Default, Holders of Certificates
evidencing not less than 25% of the Class Certificate Principal Amount (or
Aggregate Notional Amount) of each Class of Certificates may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement; provided, however, that the Trustee shall be under no
obligation to pursue any such remedy, or to exercise any of the trusts or
powers vested in it by this Agreement (including, without limitation, (i) the
conducting or defending of any administrative action or litigation hereunder
or in relation hereto and (ii) the terminating of the Master Servicer or any
successor master servicer from its rights and duties as master servicer
hereunder) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance
with an Opinion of Counsel, determines that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith determines
that the action or proceeding so directed would involve it in personal
liability or be unjustly prejudicial to the non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Master Servicer and
-------------------------------------------------------
Upon Event of Default. In the event that the Trustee shall have actual
- --------------------
knowledge of any action or inaction of the Master Servicer that would become
an Event of Default upon the Master Servicer's failure to remedy the same
after notice, the Trustee shall give notice thereof to the Master Servicer.
Section 6.20. Preparation of Tax Returns and Other Reports. (a) The
--------------------------------------------
Trustee shall prepare or cause to be prepared on behalf of the Trust Fund,
based upon information calculated in accordance with this Agreement pursuant
to instructions given by the Depositor, and the Trustee shall file, federal
tax returns and appropriate state income tax returns and such other returns as
may be required by applicable law relating to the Trust Fund, and the Trustee
shall forward copies to the Depositor of all such returns and Form 1099
information and such other information within the control of the Trustee as
the Depositor may reasonably request in writing, and shall forward to each
Certificateholder such forms and furnish such information within the control
of the Trustee as are required by the Code and the REMIC Provisions to be
furnished to them, and will prepare and file annual reports required by
applicable state authorities, will file copies of this Agreement with the
appropriate state authorities as may be required by applicable law, and will
prepare and disseminate to Certificateholders Form 1099 (or otherwise furnish
information within the control of the Trustee) to the extent required by
applicable law. The Master Servicer will indemnify the Trustee for any
liability of or assessment against the Trustee resulting from any error in any
of such tax or information returns directly resulting from errors in the
information provided by such Master Servicer (other than information that is
derived solely from information provided by a Servicer).
(b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall promptly forward a copy of such notice to the Master
Servicer and the Depositor.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee will prepare or cause to
be prepared Form 10-Ks and Form 10-Qs (if necessary), or monthly current
reports on Form 8-K, on behalf of the Trust Fund, as may be required by
applicable law, for filing with the Securities and Exchange Commission (the
"SEC"), and the Trustee will sign each such report on behalf of the Trust. The
Trustee will forward a copy of each such report to the Depositor promptly
after such report has been filed with the SEC. The Trustee agrees to use its
best efforts to seek to terminate such filing obligation after the period
during which such filings are required under the Securities Exchange Act of
1934. Promptly after filing a Form 15 or other applicable form with the SEC in
connection with such termination, the Trustee shall deliver to the Depositor a
copy of such form together with copies of confirmations of receipt by the SEC
of each report filed therewith on behalf of the Trust Fund.
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of
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All Mortgage Loans. (a) The respective obligations and responsibilities of the
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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 Scheduled Principal Balance of the Mortgage Loans is less than 10%
of the Cut-off Date Aggregate Principal Balance, the Depositor may 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. The property of the Trust Fund
shall be sold at a price (the "Termination Price") equal to: (i) 100% of the
unpaid principal balance of each Mortgage Loan on the day of such purchase
plus interest accrued thereon at the applicable Mortgage Rate with respect to
any Mortgage Loan to the Due Date in the Due Period immediately preceding the
related Distribution Date to the date of such repurchase 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
appointed by the Master Servicer with the consent of the Trustee.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of any
----------------------------------------
termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
(x) no later than five Business Days after the Trustee has received notice
from the Depositor of its intent to exercise its right to cause the
termination of the Trust Fund pursuant to Section 7.01(b) or (y) upon the
final payment or other liquidation of the last Mortgage Loan or REO Property
in the Trust Fund. Such notice shall specify (A) the Distribution Date upon
which final distribution on the Certificates of all amounts required to be
distributed to Certificateholders pursuant to Section 5.02 will be made upon
presentation and surrender of the Certificates at the Corporate Trust Office,
and (B) that the Record Date otherwise applicable to such Distribution Date is
not applicable, distribution being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified.
The Trustee shall give such notice to the Master Servicer and the Certificate
Registrar at the time such notice is given to Holders of the Certificates.
Upon any such termination, the duties of the Certificate Registrar with
respect to the Certificates shall terminate and the Trustee shall terminate,
or request the Master Servicer to terminate, the Collection Account it
maintains, the Certificate Account and any other account or fund maintained
with respect to the Certificates, subject to the Trustee's obligation
hereunder to hold all amounts payable to Certificateholders in trust without
interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to
contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all
amounts distributable to such Holders for the benefit of such Holders. No
interest shall accrue on any amount held by the Trustee and not distributed to
a Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance
with this Section.
(c) Any reasonable expenses incurred by the Trustee in connection with
any termination or liquidation of the Trust Fund shall be paid from proceeds
received from the liquidation of the Trust Fund.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The
----------------------------------------------
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks (at the request of the Master
Servicer), and subsequently receives, an Opinion of Counsel (at the expense of
the Master Servicer), addressed to the Trustee to the effect that the failure
of the Trust Fund to comply with the requirements of this Section 7.03 will
not (i) result in the imposition of taxes on any REMIC under the REMIC
Provisions or (ii) cause any REMIC established hereunder to fail to qualify as
a REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, the Trustee (upon (x) the sale of the
property of the Trust Fund by the Trustee pursuant to Section 7.01(b) or
(y) notification by the Depositor that it intends to exercise its option
to cause the termination of the Trust Fund) shall adopt a plan of
complete liquidation of the Trust Fund on behalf of each REMIC, meeting
the requirements of a qualified liquidation under the REMIC Provisions;
(ii) The sale of the assets of the Trust Fund pursuant to Section
7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time of
making of the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates,
the Trustee shall make final distributions of principal and interest on
the Certificates in accordance with Section 5.02 and distribute or
credit, or cause to be distributed or credited, to the 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
(iv) 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 Aggregate Notional Amount) of
Certificates of each Class shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the cost, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for sixty days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and no direction inconsistent with such
written request has been given such Trustee during such sixty-day period by
such Certificateholders; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and
the Trustee, that no one or more Holders of Certificates shall have any right
in any manner whatever by virtue or by availing of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other of such Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not acting
------------------------
as Certificate Registrar, the Certificate Registrar will furnish or cause to
be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred
to as "Applicants") apply in writing to the Trustee, and such application
states that the Applicants desire to communicate with other Holders with
respect to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
of such application, afford such Applicants reasonable access during the
normal business hours of the Trustee to the most recent list of
Certificateholders held by the Trustee or shall, as an alternative, send, at
the Applicants' expense, the written communication proffered by the Applicants
to all Certificateholders at their addresses as they appear in the Certificate
Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Master Servicer, the Certificate Registrar and the Trustee that neither the
Depositor, the Master Servicer, the Certificate Registrar nor the Trustee
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request, demand,
-------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders or Certificate Owner, if the
Holder is a Clearing Agency, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where expressly required herein,
to the Master Servicer. Such instrument or instruments (as the action embodies
therein and evidenced thereby) are herein sometimes referred to as an "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agents shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee and
Master Servicer, if made in the manner provided in this Section. Each of the
Trustee and Master Servicer shall promptly notify the other of receipt of any
such instrument by it, and shall promptly forward a copy of such instrument to
the other.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments or deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the individual executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Master Servicer, nor the
Depositor shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every
future Holder of the same Certificate and the Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Master Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer. The Certificateholders, by
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their purchase and acceptance of the Certificates, appoint Aurora Loan
Services Inc., as Master Servicer. For and on behalf of the Depositor, the
Trustee and the Certificateholders, the Master Servicer shall master service
the Mortgage Loans in accordance with the provisions of this Agreement and the
provisions of the applicable Servicing Agreement.
Section 9.02. Master Servicer Fidelity Bond and Master Servicer Errors
--------------------------------------------------------
and Omissions Insurance Policy. (a) The Master Servicer, at its expense, shall
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maintain in effect a Fidelity Bond and an Errors and Omissions Insurance
Policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations
hereunder. The Errors and Omissions Insurance Policy and the Fidelity Bond
shall be in such form and amount that would meet the requirements of FNMA or
FHLMC if it were the purchaser of the Mortgage Loans. The Master Servicer
shall (i) require each Servicer to maintain an Errors and Omissions Insurance
Policy and a Fidelity Bond in accordance with the provisions of the applicable
Servicing Agreement, (ii) cause each Servicer to provide to the Master
Servicer certificates evidencing that such policy and bond is in effect and to
furnish to the Master Servicer any notice of cancellation, non-renewal or
modification of the policy or bond received by it, as and to the extent
provided in the applicable Servicing Agreement, and (iii) furnish copies of
the certificates and notices referred to in clause (ii) to the Trustee upon
its request. The Fidelity Bond and Errors and Omissions Insurance Policy may
be obtained and maintained in blanket form.
(b) The Master Servicer shall promptly report to the Trustee any material
changes that may occur in the Master Servicer Fidelity Bond or the Master
Servicer Errors and Omissions Insurance Policy and shall furnish to the
Trustee, on request, certificates evidencing that such bond and insurance
policy are in full force and effect. The Master Servicer shall promptly report
to the Trustee all cases of embezzlement or fraud, if such events involve
funds relating to the Mortgage Loans. The total losses, regardless of whether
claims are filed with the applicable insurer or surety, shall be disclosed in
such reports together with the amount of such losses covered by insurance. If
a bond or insurance claim report is filed with any of such bonding companies
or insurers, the Master Servicer shall promptly furnish a copy of such report
to the Trustee. Any amounts relating to the Mortgage Loans collected by the
Master Servicer under any such bond or policy shall be promptly remitted by
the Master Servicer to the Trustee for deposit into the Certificate Account.
Any amounts relating to the Mortgage Loans collected by any Servicer under any
such bond or policy shall be remitted to the Master Servicer to the extent
provided in the applicable Servicing Agreement.
Section 9.03. Master Servicer's Financial Statements and Related
--------------------------------------------------
Information. For each year this Agreement is in effect, the Master Servicer
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shall submit to the Trustee, each Rating Agency and the Depositor a copy of
its annual unaudited financial statements on or prior to May 31 of each year.
Such financial statements shall include a balance sheet, income statement,
statement of retained earnings, statement of additional paid-in capital,
statement of changes in financial position and all related notes and schedules
and shall be in comparative form, certified by a nationally recognized firm of
Independent Accountants to the effect that such statements were examined and
prepared in accordance with generally accepted accounting principles applied
on a basis consistent with that of the preceding year.
Section 9.04. Power to Act; Procedures. (a) The Master Servicer shall
------------------------
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, and
each Servicer shall have full power and authority (to the extent provided in
the applicable Servicing Agreement) to do any and all things that it may deem
necessary or desirable in connection with the servicing and administration of
the Mortgage Loans, including but not limited to the power and authority (i)
to execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion
of the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable; provided that the Master Servicer shall
not take, or knowingly permit any Servicer to take, any action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor, the Trustee and the Certificateholders under this Agreement. The
Master Servicer shall represent and protect the interests of the Trust Fund in
the same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan and
shall not make or permit any Servicer to make any modification, waiver or
amendment of any term of any Mortgage Loan that would cause the Trust Fund to
fail to qualify as a REMIC or result in the imposition of any tax under
Section 860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the
name of a Servicer, and each Servicer, to the extent such authority is
delegated to such Servicer by the Master Servicer under the applicable
Servicing Agreement, is hereby authorized and empowered by the Trustee when
the Master Servicer or a Servicer, as the case may be, believes it appropriate
in its best judgment and in accordance with Accepted Servicing Practices and
the applicable Servicing Agreement, to execute and deliver, on behalf of
itself and the Certificateholders, the Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. The Trustee shall furnish
the Master Servicer, upon request, with any powers of attorney empowering the
Master Servicer or any Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
to foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the applicable Servicing Agreement and
this Agreement, and the Trustee shall execute and deliver such other
documents, as the Master Servicer may request, necessary or appropriate to
enable the Master Servicer to master service and administer the Mortgage Loans
and carry out its duties hereunder, in each case in accordance with Accepted
Servicing Practices (and the Trustee shall have no liability for misuse of any
such powers of attorney by the Master Servicer or any Servicer). If the Master
Servicer or the Trustee has been advised that it is likely that the laws of
the state in which action is to be taken prohibit such action if taken in the
name of the Trustee or that the Trustee would be adversely affected under the
"doing business" or tax laws of such state if such action is taken in its
name, then upon request of the Trustee, the Master Servicer shall join with
the Trustee in the appointment of a co-trustee pursuant to Section 6.09
hereof. In the performance of its duties hereunder, the Master Servicer shall
be an independent contractor and shall not, except in those instances where it
is taking action in the name of the Trustee, be deemed to be the agent of the
Trustee.
(b) In master servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures, and shall cause each Servicer to employ
procedures (including, but not limited to, collection procedures), consistent
with the applicable Servicing Agreement. Consistent with the foregoing, the
Master Servicer may, and may permit any Servicer to, in its discretion (i)
waive any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the due
dates for payments due on a Mortgage Note for a period not greater than 120
days; provided, however, that the maturity of any Mortgage Loan shall not be
extended past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. In the event of any extension
described in clause (ii) above, the Master Servicer shall make or cause to be
made Advances on the related Mortgage Loan in accordance with the provisions
of Section 5.04 on the basis of the amortization schedule of such Mortgage
Loan without modification thereof by reason of such extension. Notwithstanding
anything to the contrary in this Agreement, the Master Servicer shall not,
unless default by the related Mortgagor is, in the reasonable judgment of the
Master Servicer, imminent, permit any modification, waiver or amendment of any
material term of any Mortgage Loan (including but not limited to the interest
rate, the principal balance, the amortization schedule, or any other term
affecting the amount or timing of payments on the Mortgage Loan or the
collateral therefor) unless the Master Servicer shall have provided or caused
to be provided to the Trustee an Opinion of Counsel in writing to the effect
that such modification, waiver or amendment would not be treated as giving
rise to a new debt instrument for federal income tax purposes and would not
adversely affect the status of the REMIC.
Section 9.05. Servicing Agreements Between the Master Servicer and
----------------------------------------------------
Servicers; Enforcement of Servicers' Obligations. (a) Each Servicing Agreement
- -----------------------------------------------
requires the applicable Servicer to service the Mortgage Loans in accordance
with the provisions thereof. References in this Agreement to actions taken or
to be taken by the Master Servicer include actions taken or to be taken by a
Servicer on behalf of the Master Servicer. Any fees and other amounts payable
to such Servicers shall be deducted from amounts remitted to the Master
Servicer by the applicable Servicer and shall not be an obligation of the
Trust.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
terminate the rights and obligations of such Servicer thereunder and either
act as servicer of the related Mortgage Loans or enter into a Servicing
Agreement with a successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Servicing
Agreements and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor initially
only (i) from a general recovery resulting from such enforcement only to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed,
and then, to the extent that such amounts are insufficient to reimburse the
Master Servicer for the costs of such enforcement, (iii) from the Collection
Account.
Section 9.06. Collection of Taxes, Assessments and Similar Items. (a) To
--------------------------------------------------
the extent provided in the applicable Servicing Agreement, the Master Servicer
shall cause each Servicer to establish and maintain one or more custodial
accounts at a depository institution (which may be a depository institution
with which the Master Servicer or any Servicer establishes accounts in the
ordinary course of its servicing activities), the accounts of which are
insured to the maximum extent permitted by the FDIC (each, an "Escrow
Account") and shall deposit therein any collections of amounts received with
respect to amounts due for taxes, assessments, water rates, Standard Hazard
Insurance Policy premiums or any comparable items for the account of the
Mortgagors. Withdrawals from any Escrow Account may be made (to the extent
amounts have been escrowed for such purpose) only in accordance with the
applicable Servicing Agreement. Each Servicer shall be entitled to all
investment income not required to be paid to Mortgagors on any Escrow Account
maintained by such Servicer. The Master Servicer shall make (or cause to be
made) to the extent provided in the applicable Servicing Agreement advances to
the extent necessary in order to effect timely payment of taxes, water rates,
assessments, Standard Hazard Insurance Policy premiums or comparable items in
connection with the related Mortgage Loan (to the extent that the Mortgagor is
required, but fails, to pay such items), provided that it has determined that
the funds so advanced are recoverable from escrow payments, reimbursement
pursuant to Section 4.02(v) or otherwise.
(b) Costs incurred by the Master Servicer or by Servicers in effecting
the timely payment of taxes and assessments on the properties subject to the
Mortgage Loans may be added to the amount owing under the related Mortgage
Note where the terms of the Mortgage Note so permit; provided, however, that
the addition of any such cost shall not be taken into account for purposes of
calculating the distributions to be made to Certificateholders. Such costs, to
the extent that they are unanticipated, extraordinary costs, and not ordinary
or routine costs shall be recoverable by the Master Servicer pursuant to
Section 4.02(v).
Section 9.07. Termination of Servicing Agreements; Successor Servicers.
--------------------------------------------------------
(a) The Master Servicer shall be entitled to terminate the rights and
obligations of any Servicer under the applicable Servicing Agreement in
accordance with the terms and conditions of such Servicing Agreement and
without any limitation by virtue of this Agreement; provided, however, that in
the event of termination of any Servicing Agreement by the Master Servicer or
the related Servicer, the Master Servicer shall either act as Servicer of the
related Mortgage Loans, or enter into a Servicing Agreement with a successor
Servicer.
(b) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces. The Master Servicer shall use reasonable efforts to have the
successor Servicer assume liability for the representations and warranties
made by the terminated Servicer in respect of the related Mortgage Loans, and
in the event of any such assumption by the successor Servicer, the Trustee or
the Master Servicer, as applicable, may, in the exercise of its business
judgment, release the terminated Servicer from liability for such
representations and warranties.
Section 9.08. Master Servicer Liable for Enforcement. Notwithstanding any
--------------------------------------
Servicing Agreement, the Master Servicer shall remain obligated and liable to
the Trustee and the Certificateholders in accordance with the provisions of
this Agreement, to the extent of its obligations hereunder, without diminution
of such obligation or liability by virtue of such Servicing Agreements or
arrangements. The Master Servicer shall 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, the Seller and the Master Servicer, and the Trustee and the
Depositor shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to such Servicer
except as set forth in Section 9.10 hereof.
Section 9.10. Assumption of Servicing Agreement by Trustee. (a) In the
--------------------------------------------
event the Master Servicer shall for any reason no longer be the Master
Servicer (including by reason of any Event of Default under this Agreement),
the Trustee shall thereupon assume all of the rights and obligations of such
Master Servicer hereunder and under each Servicing Agreement entered into with
respect to the Mortgage Loans. The Trustee, its designee or any successor
master servicer appointed by the Trustee shall be deemed to have assumed all
of the Master Servicer's interest herein and therein to the same extent as if
such Servicing Agreement had been assigned to the assuming party, except that
the Master Servicer shall not thereby be relieved of any liability or
obligations of the Master Servicer under such Servicing Agreement accruing
prior to its replacement as Master Servicer, and shall be liable to the
Trustee, and hereby agrees to indemnify and hold harmless the Trustee from and
against all costs, damages, expenses and liabilities (including reasonable
attorneys' fees) incurred by the Trustee as a result of such liability or
obligations of the Master Servicer and in connection with the Trustee's
assumption (but not its performance, except to the extent that costs or
liability of the Trustee are created or increased as a result of negligent or
wrongful acts or omissions of the Master Servicer prior to its replacement as
Master Servicer) of the Master Servicer's obligations, duties or
responsibilities thereunder; provided that the Master Servicer shall not
indemnify or hold harmless the Trustee against negligent or wrongful acts or
omissions of the Trustee.
(b) The Master Servicer that has been terminated shall, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the
assuming party all documents and records relating to each Servicing Agreement
and the related Mortgage Loans and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of each Servicing Agreement to the assuming party.
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements. To the extent
--------------------------------------------
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.
Section 9.12. Release of Mortgage Files. (a) Upon becoming aware of the
-------------------------
payment in full of any Mortgage Loan, or the receipt by the Master Servicer of
a notification that payment in full has been escrowed in a manner customary
for such purposes for payment to Certificateholders on the next Distribution
Date, the Master Servicer will, or will cause the applicable Servicer to,
promptly notify the Trustee (or the applicable Custodian) by a certification
(which certification shall include a statement to the effect that all amounts
received in connection with such payment that are required to be deposited in
the Collection Account maintained by the Master Servicer pursuant to Section
4.01 have been or will be so deposited) of a Servicing Officer and shall
request the Trustee or the applicable Custodian, to deliver to the applicable
Servicer the related Mortgage File. Upon receipt of such certification and
request, the Trustee or the applicable Custodian (with the consent, and at the
direction of the Trustee), shall promptly release the related Mortgage File to
the applicable Servicer and the Trustee shall have no further responsibility
with regard to such Mortgage File. Upon any such payment in full, the Master
Servicer is authorized, and each Servicer, to the extent such authority is
delegated to such Servicer by the Master Servicer under the applicable
Servicing Agreement, is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction
or assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Collection Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with Accepted Servicing Practices and
the applicable Servicing Agreement, the Trustee shall execute such documents
as shall be prepared and furnished to the Trustee by the Master Servicer, or
by a Servicer (in form reasonably acceptable to the Trustee) and as are
necessary to the prosecution of any such proceedings. The Trustee or the
Custodian, shall, upon request of the Master Servicer, or of a Servicer, and
delivery to the Trustee or the applicable Custodian, of a trust receipt signed
by a Servicing Officer substantially in the form of Exhibit C, release the
related Mortgage File held in its possession or control to the Master Servicer
(or the applicable Servicer). Such trust receipt shall obligate the Master
Servicer or applicable Servicer to return the Mortgage File to the Trustee or
Custodian, as applicable, when the need therefor by the Master Servicer or
applicable Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that herein above specified, the trust receipt shall be
released by the Trustee or the Custodian, as applicable, to the Master
Servicer (or the applicable Servicer).
Section 9.13. Documents, Records and Funds in Possession of Master
----------------------------------------------------
Servicer To Be Held for Trustee. (a) The Master Servicer shall transmit, or
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cause the applicable Servicer to transmit, to the Trustee such documents and
instruments coming into the possession of the Master Servicer or such Servicer
from time to time as are required by the terms hereof to be delivered to the
Trustee. Any funds received by the Master Servicer or by a Servicer in respect
of any Mortgage Loan or which otherwise are collected by the Master Servicer
or by a Servicer as Liquidation Proceeds or Insurance Proceeds in respect of
any Mortgage Loan shall be held for the benefit of the Trustee and the
Certificateholders subject to the Master Servicer's right to retain or
withdraw from the Collection Account the Master Servicing Fee and other
amounts provided in this Agreement, and to the right of each Servicer to
retain its Servicing Fee as provided in the applicable Servicing Agreement.
The Master Servicer shall, and shall (to the extent provided in the applicable
Servicing Agreement) cause each Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners
of any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or
other regulatory authority, such access to be afforded without charge but only
upon reasonable request in writing and during normal business hours at the
offices of the Master Servicer designated by it. In fulfilling such a request
the Master Servicer shall not be responsible for determining the sufficiency
of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, or any Servicer, in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master
Servicer, or by any Servicer, for and on behalf of the Trustee and the
Certificateholders and shall be and remain the sole and exclusive property of
the Trustee; provided, however, that the Master Servicer and each Servicer
shall be entitled to setoff against, and deduct from, any such funds any
amounts that are properly due and payable to the Master Servicer or such
Servicer under this Agreement or the applicable Servicing Agreement.
(c) The Master Servicer hereby acknowledges that concurrently with the
execution of this Agreement, the Trustee shall own or, to the extent that a
court of competent jurisdiction shall deem the conveyance of the Mortgage
Loans from the Seller to the Depositor not to constitute a sale, the Trustee
shall have a security interest in the Mortgage Loans and in all Mortgage Files
representing such Mortgage Loans and in all funds now or hereafter held by, or
under the control of, a Servicer or the Master Servicer that are collected by
any Servicer or the Master Servicer in connection with the Mortgage Loans,
whether as scheduled installments of principal and interest or as full or
partial prepayments of principal or interest or as Liquidation Proceeds or
Insurance Proceeds or otherwise, and in all proceeds of the foregoing and
proceeds of proceeds (but excluding any fee or other amounts to which a
Servicer is entitled under its Servicing Agreement, or the Master Servicer or
the Depositor is entitled to hereunder); and the Master Servicer agrees that
so long as the Mortgage Loans are assigned to and held by the Trustee, all
documents or instruments constituting part of the Mortgage Files, and such
funds relating to the Mortgage Loans which come into the possession or custody
of, or which are subject to the control of, the Master Servicer or any
Servicer shall be held by the Master Servicer or such Servicer for and on
behalf of the Trustee as the Trustee's agent and bailee for purposes of
perfecting the Trustee's security interest therein as provided by the
applicable Uniform Commercial Code or other laws.
(d) The Master Servicer agrees that it shall not, and shall not authorize
any Servicer to, create, incur or subject any Mortgage Loans, or any funds
that are deposited in any custodial account, Escrow Account or the Collection
Account, or any funds that otherwise are or may become due or payable to the
Trustee, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, nor assert by legal action or otherwise any
claim or right of setoff against any Mortgage Loan or any funds collected on,
or in connection with, a Mortgage Loan.
Section 9.14. Representations and Warranties of the Master Servicer. (a)
----------------------------------------------------
The Master Servicer hereby represents and warrants to the Depositor and the
Trustee, for the benefit of the Certificateholders, as of the Closing Date
that:
(i) it is validly existing and in good standing under the
jurisdiction of its formation, and as Master Servicer has full power and
authority to transact any and all business contemplated by this Agreement
and to execute, deliver and comply with its obligations under the terms
of this Agreement, the execution, delivery and performance of which have
been duly authorized by all necessary corporate action on the part of the
Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any administrative decree or order
to which it is subject or (C) constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material contract, agreement or other
instrument to which the Master Servicer is a party or by which it is
bound or to which any of its assets are subject, which violation, default
or breach would materially and adversely affect the Master Servicer's
ability to perform its obligations under this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
in general, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency to the extent that any such default
would materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any agreement
or instrument or subject to any charter provision, bylaw or any other
corporate restriction or any judgment, order, writ, injunction, decree,
law or regulation that may materially and adversely affect its ability as
Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this
Agreement or the performance by the Master Servicer of its obligations
under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is an FNMA- and FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders (if any) as have been obtained;
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
and
(x) the Master Servicer has obtained an Errors and Omissions
Insurance Policy and a Fidelity Bond in accordance with Section 9.02,
each of which is in full force and effect, and each of which provides at
least such coverage as is required hereunder.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 9.14 shall survive the execution and delivery of
this Agreement. The Master Servicer shall indemnify the Depositor and the
Trustee and hold them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Master Servicer's
representations and warranties contained in Section 9.14(a). Notwithstanding
anything in this Agreement to the contrary, the Master Servicer shall not be
liable for special, indirect or consequential losses or damages of any kind
whatsoever (including, but not limited to, lost profits). It is understood and
agreed that the enforcement of the obligation of the Master Servicer set forth
in this Section to indemnify the Depositor and the Trustee as provided in this
Section constitutes the sole remedy (other than as set forth in Section 6.14)
of the Depositor and the Trustee, respecting a breach of the foregoing
representations and warranties. Such indemnification shall survive any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by either the Depositor, the Master
Servicer 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
by each Servicer, standard fire and casualty insurance and, where applicable,
flood insurance, all in accordance with the provisions of this Agreement and
the related Servicing Agreement, as applicable. It is understood and agreed
that such insurance shall be with insurers meeting the eligibility
requirements set forth in the applicable Servicing Agreement and that no
earthquake or other additional insurance is to be required of any Mortgagor or
to be maintained on property acquired in respect of a defaulted loan, other
than pursuant to such applicable laws and regulations as shall at any time be
in force and as shall require such additional insurance.
Pursuant to Section 4.01, any amounts collected by the Master Servicer,
or by any Servicer, under any insurance policies maintained pursuant to this
Section 9.16 (other than amounts to be applied to the restoration or repair of
the property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into
the Collection Account, subject to withdrawal pursuant to Section 4.02. Any
cost incurred by the Master Servicer or any Servicer in maintaining any such
insurance if the Mortgagor defaults in its obligation to do so shall be added
to the amount owing under the Mortgage Loan where the terms of the Mortgage
Loan so permit; provided, however, that the addition of any such cost shall
not be taken into account for purposes of calculating the distributions to be
made to Certificateholders and shall be recoverable by the Master Servicer or
such Servicer pursuant to Section 4.02(v).
Section 9.17. Presentment of Claims and Collection of Proceeds. The
------------------------------------------------
Master Servicer shall, or shall cause each Servicer (to the extent provided in
the applicable Servicing Agreement) to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies
with respect to the Mortgage Loans, and take such actions (including the
negotiation, settlement, compromise or enforcement of the insured's claim) as
shall be necessary to realize recovery under such policies. Any proceeds
disbursed to the Master Servicer (or disbursed to a Servicer and remitted to
the Master Servicer) in respect of such policies or bonds shall be promptly
deposited in the Collection Account upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition requisite to the presentation of claims on
the related Mortgage Loan to the insurer under any applicable Insurance Policy
need not be so deposited (or remitted).
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies. (a)
------------------------------------------------------
The Master Servicer shall not take, or permit any Servicer (consistent with
the applicable Servicing Agreement) to take, any action that would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any
loss which, but for the actions of such Master Servicer or Servicer, would
have been covered thereunder. The Master Servicer shall use its best
reasonable efforts to keep in force and effect, or to cause each Servicer to
keep in force and effect (to the extent that the Mortgage Loan requires the
Mortgagor to maintain such insurance), primary mortgage insurance applicable
to each Mortgage Loan in accordance with the provisions of this Agreement and
the related Servicing Agreement, as applicable. The Master Servicer shall not,
and shall not permit any Servicer to, cancel or refuse to renew any such
Primary Mortgage Insurance Policy that is in effect at the date of the initial
issuance of the Certificates and is required to be kept in force hereunder
except in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any Primary Mortgage Insurance Policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 4.01, any amounts collected by the Master Servicer or any
Servicer under any Primary Mortgage Insurance Policies shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 4.02.
Section 9.19. Trustee To Retain Possession of Certain Insurance Policies
----------------------------------------------------------
and Documents. The Trustee (or its custodian, if any, as directed by the
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Trustee), shall retain possession and custody of the originals of the Primary
Mortgage Insurance Policies or certificate of insurance if applicable and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect
of the Certificates have been distributed in full and the Master Servicer
otherwise has fulfilled its obligations under this Agreement, the Trustee (or
its custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or its custodian, if any, as
directed by the Trustee), upon the execution or receipt thereof the originals
of the Primary Mortgage Insurance Policies and any certificates of renewal
thereof, and such other documents or instruments that constitute portions of
the Mortgage File that come into the possession of the Master Servicer from
time to time.
Section 9.20. Realization Upon Defaulted Mortgage Loans. The Master
-----------------------------------------
Servicer shall use its reasonable best efforts to, or to cause each Servicer
to, foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments, all in accordance with the applicable
Servicing Agreement.
Section 9.21. Compensation to the Master Servicer. The Master Servicer
-----------------------------------
shall (i) be entitled, at its election, either (a) to pay itself the Master
Servicing Fee, as reduced pursuant to Section 5.05, in respect of the Mortgage
Loans out of any Mortgagor payment on account of interest prior to the deposit
of such payment in the Collection Account it maintains or (b) to withdraw from
the Collection Account, subject to Section 5.05, the Master Servicing Fee to
the extent permitted by Section 4.02(iv). The Master Servicer shall also be
entitled, at its election, either (a) to pay itself the Master Servicing Fee
in respect of each delinquent Mortgage Loan master serviced by it out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 4.02 or (b) to withdraw
from the Collection Account it maintains the Master Servicing Fee in respect
of each Liquidated Mortgage Loan to the extent of such Liquidation Proceeds or
other recoveries, to the extent permitted by Section 4.02. Servicing
compensation in the form of assumption fees, if any, late payment charges, as
collected, if any, or otherwise (including any Prepayment Penalty Amount)
shall be retained by the Master Servicer (or the applicable Servicer) and
shall not be deposited in the Collection Account. If the Master Servicer does
not retain or withdraw the Master Servicing Fee from the Collection Account as
provided herein, the Master Servicer shall be entitled to direct the Trustee
to pay the Master Servicing Fee to such Master Servicer by withdrawal from the
Certificate Account to the extent that payments have been received with
respect to the applicable Mortgage Loan. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement. Pursuant to Section 4.01(e), all income and gain realized from any
investment of funds in the Collection Account shall be for the benefit of the
Master Servicer as additional compensation. The provisions of this Section
9.21 are subject to the provisions of Section 6.14(b).
Section 9.22. REO Property. (a) In the event the Trust Fund acquires
------------
ownership of any REO Property in respect of any Mortgage Loan, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee, on
behalf of the Certificateholders. The Master Servicer shall use its reasonable
best efforts to sell, or, to the extent provided in the applicable Servicing
Agreement, cause the applicable Servicer to sell, any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable, but in all
events within the time period, and subject to the conditions set forth in
Article X hereof. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall protect and conserve, or cause the applicable Servicer
to protect and conserve, such REO Property in the manner and to such extent
required by the applicable Servicing Agreement, subject to Article X hereof.
(b) The Master Servicer shall deposit or cause to be deposited all funds
collected and received by it, or recovered from any Servicer, in connection
with the operation of any REO Property in the Collection Account.
(c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Advances as well as any unpaid Master Servicing Fees or
Servicing Fees from Liquidation Proceeds received in connection with the final
disposition of such REO Property; provided, that any such unreimbursed
Advances as well as any unpaid Master Servicing Fees or Servicing Fees may be
reimbursed or paid, as the case may be, prior to final disposition, out of any
net rental income or other net amounts derived from such REO Property.
(d) The Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the applicable
Servicer as provided above, shall be deposited in the Collection Account on or
prior to the Determination Date in the month following receipt thereof (and
the Master Servicer shall provide prompt written notice to the Trustee upon
such deposit) and be remitted by wire transfer in immediately available funds
to the Trustee for deposit into the Certificate Account on the next succeeding
Deposit Date.
Section 9.23. [Omitted]
Section 9.24. Reports to the Trustee. (a) Not later than 30 days after
----------------------
each Distribution Date, the Master Servicer shall forward to the Trustee a
statement, deemed to have been certified by a Servicing Officer, setting forth
the status of the Collection Account maintained by the Master Servicer as of
the close of business on the related Distribution Date, indicating that all
distributions required by this Agreement to be made by the Master Servicer
have been made (or if any required distribution has not been made by the
Master Servicer, specifying the nature and status thereof) and showing, for
the period covered by such statement, the aggregate of deposits into and
withdrawals from the Collection Account maintained by the Master Servicer.
Copies of such statement shall be provided by the Master Servicer to the
Depositor, Attention: Contract Finance, and, upon request, any
Certificateholders (or by the Trustee at the Master Servicer's expense if the
Master Servicer shall fail to provide such copies (unless (i) the Master
Servicer shall have failed to provide the Trustee with such statement or (ii)
the Trustee shall be unaware of the Master Servicer's failure to provide such
statement)).
(b) Not later than two Business Days following each Distribution Date,
the Master Servicer shall deliver to the Person designated by the Depositor,
in a format consistent with other electronic loan level reporting supplied by
the Master Servicer in connection with similar transactions, "loan level"
information with respect to the Mortgage Loans as of the related Determination
Date, to the extent that such information has been provided to the Master
Servicer by the Servicers or by the Depositor.
Section 9.25. Annual Officer's Certificate as to Compliance. (a) The
---------------------------------------------
Master Servicer shall deliver to the Trustee and the Rating Agencies on or
before May 31 of each year, commencing on May 31, 1999, 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 Duties by the Master Servicer.
---------------------------------------------------------
Except as expressly provided herein, the Master Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed
by the Master Servicer hereunder; provided, however, that the Master Servicer
shall have the right without the prior written consent of the Trustee, the
Depositor or the Rating Agencies to delegate or assign to or subcontract with
or authorize or appoint an Affiliate of the Master Servicer to perform and
carry out any duties, covenants or obligations to be performed and carried out
by the Master Servicer hereunder. In no case, however, shall any such
delegation, subcontracting or assignment to an Affiliate of the Master
Servicer relieve the Master Servicer of any liability hereunder. Notice of
such permitted assignment shall be given promptly by the Master Servicer to
the Depositor and the Trustee. If, pursuant to any provision hereof, the
duties of the Master Servicer are transferred to a successor master servicer,
the entire amount of the Master Servicing Fees and other compensation payable
to the Master Servicer pursuant hereto, including amounts payable to or
permitted to be retained or withdrawn by the Master Servicer pursuant to
Section 9.21 hereof, shall thereafter be payable to such successor master
servicer.
Section 9.30. Limitation on Liability of the Master Servicer and Others.
----------------------------------------------------------
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Trustee or
the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Master
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its
obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Master Servicer
shall be under no obligation to appear in, prosecute or defend any legal
action that is not incidental to its duties to master service the Mortgage
Loans in accordance with this Agreement and that in its opinion may involve it
in any expenses or liability; provided, however, that the Master Servicer may
in its sole discretion undertake any such action that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund and the
Master Servicer shall be entitled to be reimbursed therefor out of the
Collection Account it maintains as provided by Section 4.02.
The Master Servicer shall not be liable for any acts or omissions of any
Servicer. In particular, the Master Servicer shall not be liable for any
servicing errors or interruptions resulting from any failure of any Servicer
to maintain computer and other information systems that are year-2000
compliant.
Section 9.31. Indemnification; Third-Party Claims. The Master Servicer
-----------------------------------
grees to indemnify the Depositor and the Trustee, and hold them harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liability, fees and
expenses that the Depositor and the Trustee may sustain as a result of the
failure of the Master Servicer to perform its duties and master service the
Mortgage Loans in compliance with the terms of this Agreement. The Depositor
and the Trustee shall immediately notify the Master Servicer if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans
entitling the Depositor or the Trustee to indemnification hereunder, whereupon
the Master Servicer shall assume the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it
or them in respect of such claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) An election will be made by the
--------------------
Trustee to treat the Trust Fund as a REMIC under the Code. Such election will
be made on Form 1066 or other appropriate federal tax or information return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of such election, each Class A
Certificate and each Class B Certificate shall be designated as the "regular
interests" in the REMIC and the Class R Certificate shall be designated as the
"residual interest" in the REMIC.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.
(d) The Trustee shall prepare, sign and file, all of each REMIC's federal
and state tax and information returns as such REMIC's direct representative.
The expenses of preparing and filing such returns shall be borne by the
Trustee.
(e) The Trustee shall act as Tax Matters Person for each REMIC. The
Trustee or its designee shall perform on behalf of each REMIC all reporting
and other tax compliance duties that are the responsibility of such REMIC
under the Code, the REMIC Provisions, or other compliance guidance issued by
the Internal Revenue Service or any state or local taxing authority. Among its
other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person
or organization and (ii) to the Certificateholders such information or reports
as are required by the Code or REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause the REMIC to take any action necessary to
create or maintain the status of such REMIC as a REMIC under the REMIC
Provisions and shall assist each other as necessary to create or maintain such
status. Neither the Trustee, the Master Servicer nor the Holder of any
Residual Certificate shall take any action, cause the REMIC to take any action
or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of such REMIC as a REMIC or (ii) result in the imposition
of a tax upon such REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions set forth on Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless the Trustee and the Master Servicer have
received an Opinion of Counsel (at the expense of the party seeking to take
such action) to the effect that the contemplated action will not endanger such
status or result in the imposition of such a tax. In addition, prior to taking
any action with respect to the REMIC or the assets therein, or causing such
REMIC to take any action, which is not expressly permitted under the terms of
this Agreement, any Holder of a Residual Certificate will consult with the
Trustee and the Master Servicer, or their respective designees, in writing,
with respect to whether such action could cause an Adverse REMIC Event to
occur with respect to such REMIC, and no such Person shall take any such
action or cause such REMIC to take any such action as to which the Trustee or
the Master Servicer has advised it in writing that an Adverse REMIC Event
could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the
Residual Certificate in such REMIC or, if no such amounts are available, out
of other amounts held in the Collection Account, and shall reduce amounts
otherwise payable to holders of regular interests in such REMIC, as the case
may be.
(h) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to each REMIC on a calendar year and on an accrual
basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) Upon the request of any Rating Agency, the Trustee shall deliver to
such Rating Agency an Officer's Certificate stating the Trustee's compliance
with the provisions of this Section 10.01.
Section 10.02. Prohibited Transactions and Activities. Neither the
--------------------------------------
Depositor, the Master Servicer nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of each REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in
the Certificate Account for gain, nor accept any contributions to the REMIC
after the Closing Date, unless it has received an Opinion of Counsel (at the
expense of the party causing such sale, disposition, or substitution) that
such disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the Certificates other
than the Residual Certificates as the regular interests therein, (b) affect
the distribution of interest or principal on the Certificates, (c) result in
the encumbrance of the assets transferred or assigned to the Trust Fund
(except pursuant to the provisions of this Agreement) or (d) cause such REMIC
to be subject to a tax on prohibited transactions or prohibited contributions
pursuant to the REMIC Provisions.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of
---------------------------------------------------------
REMIC Status. (a) In the event that the REMIC fails to qualify as a REMIC,
- ------------
loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Holder of the
Residual Certificate against any and all losses, claims, damages, liabilities
or expenses ("Losses") resulting from such negligence; provided, however, that
the Trustee shall not be liable for any such Losses attributable to the action
or inaction of the Master Servicer, the Depositor, or the Holder of such
Residual Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which
the Trustee has relied. The foregoing shall not be deemed to limit or restrict
the rights and remedies of the Holder of such Residual Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action
or omission that is taken in accordance with and in compliance with the
express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent
performance by the Trustee of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).
Section 10.04. REO Property. (a) Notwithstanding any other provision of
------------
this Agreement, the Master Servicer, acting on behalf of the Trustee
hereunder, shall not, and shall, to the extent provided in the applicable
Servicing Agreement, not permit any Servicer to, rent, lease, or otherwise
earn income on behalf of any REMIC with respect to any REO Property which
might cause such REO Property to fail to qualify as "foreclosure" property
within the meaning of section 860G(a)(8) of the Code or result in the receipt
by any REMIC of any "income from non-permitted assets" within the meaning of
section 860F(a)(2) of the Code or any "net income from foreclosure property"
which is subject to tax under the REMIC Provisions unless the Master Servicer
has advised, or has caused the applicable Servicer to advise, the Trustee in
writing to the effect that, under the REMIC Provisions, such action would not
adversely affect the status of the REMIC as a REMIC and any income generated
for such REMIC by the REO Property would not result in the imposition of a tax
upon such REMIC.
(b) The Master Servicer shall make, or shall cause the applicable
Servicer to make, reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Master Servicer shall, or shall cause
the applicable Servicer to, dispose of any REO Property within three years
from the end of the calendar year of its acquisition by the Trust Fund unless
the Trustee has received a grant of extension from the Internal Revenue
Service to the effect that, under the REMIC Provisions and any relevant
proposed legislation and under applicable state law, the REMIC may hold REO
Property for a longer period without adversely affecting the REMIC status of
such REMIC or causing the imposition of a Federal or state tax upon such
REMIC. If the Trustee has received such an extension, then the Trustee, or the
Master Servicer, acting on its behalf hereunder, shall, or shall cause the
applicable Servicer to, continue to attempt to sell the REO Property for its
fair market value for such period longer than three years as such extension
permits (the "Extended Period"). If the Trustee has not received such an
extension and the Trustee, or the Master Servicer acting on behalf of the
Trustee hereunder, or the applicable Servicer is unable to sell the REO
Property within 33 months after its acquisition by the Trust Fund or if the
Trustee has received such an extension, and the Trustee, or the Master
Servicer acting on behalf of the Trustee hereunder, is unable to sell the REO
Property within the period ending three months before the close of the
Extended Period, the Master Servicer shall, or shall cause the applicable
Servicer to, before the end of the three year period or the Extended Period,
as applicable, (i) purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Master Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
---------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
----------------
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time to
---------
time by the Depositor, the Master Servicer and the Trustee, without notice to
or the consent of any of the Holders, (i) to cure any ambiguity, (ii) to cause
the provisions herein to conform to or be consistent with or in furtherance of
the statements made with respect to the Certificates, the Trust Fund or this
Agreement in any Offering Document; or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein, (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, nor shall such
amendment effected pursuant to clause (iii) of such sentence adversely affect
in any material respect the interests of any Holder. 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) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of not less than 66-2/3% of the Class 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 the REMIC as a REMIC or cause a tax to be imposed on such REMIC; and
provided further, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which
are required to be distributed on any Certificate, without the consent of the
Holder of such Certificate or (ii) reduce the aforesaid percentages of Class
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 Aggregate Notional Amount) of each Class of Certificates affected
thereby. For purposes of this paragraph, references to "Holder" or "Holders"
shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing Agreement,
the Trustee shall not consent to any amendment of any Servicing Agreement
except pursuant to the standards provided in this Section with respect to
amendment of this Agreement.
Section 11.04. Voting Rights. Except to the extent that the consent of
-------------
all affected Certificateholders is required pursuant to this Agreement, with
respect to any provision of this Agreement requiring the consent of
Certificateholders representing specified percentages of aggregate outstanding
Certificate Principal Amount (or Notional Amount), Certificates owned by the
Depositor, the Master Servicer, the Trustee or any Servicer or Affiliates
thereof are not to be counted so long as such Certificates are owned by the
Depositor, the Master Servicer, the Trustee or any Servicer or Affiliates
thereof.
Section 11.05. Provision of Information. (a) For so long as any of the
------------------------
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee
in providing such information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or
documents requested, (i) a copy (excluding exhibits) of any report on Form 8-K
or Form 10-K filed with the Securities and Exchange Commission pursuant to
Section 6.20(c) and (ii) a copy of any other document incorporated by
reference in the Prospectus. Any reasonable out-of-pocket expenses incurred by
the Trustee in providing copies of such documents shall be reimbursed by the
Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail to the Depositor, Attention: Contract Finance, a
copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given when received
by (a) in the case of the Depositor, Structured Asset Securities Corporation,
200 Vesey Street, 12th Floor, New York, New York 10285, Attention: Mark Zusy,
(b) in the case of the Trustee, The Chase Manhattan Bank, 450 West 33rd
Street, New York, New York 10001-2697, Attention: Structured Finance Services,
and (c) in the case of the Master Servicer, Aurora Loan Services Inc., 2530
South Parker Road, Suite 601, Aurora, Colorado 80014; 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. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any delay
-----------------------
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
-------------------------------------
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in the
---------------------
Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of
the Certificates, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement, except to the extent specified in 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;
(ii) any Assignment by the Master Servicer of its rights hereunder
or delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer pursuant
to Section 6.14 and any resignation of the Master Servicer hereunder;
(v) the appointment of any successor to any Master Servicer pursuant
to Section 6.14; and
(vi) the making of a final payment pursuant to Section 7.02.
(b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to DCR, to:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
38th Floor
Chicago, Illinois 60603
Attention: Residential
MBS/SASCO 1998-ALS1
If to Fitch, to:
Fitch IBCA, Inc.
1201 East 7th Street
Powell, Wyoming 82435
Attention: Residential Mortgage Surveillance
If to S&P, to:
Standard & Poor's Rating Services
25 Broadway, 12th 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. The Seller agrees that it shall
---------------------
provide written notice to the Trustee and the Master Servicer thirty days
prior to any transfer or assignment by the Seller of its rights under any
Servicing Agreement or of the servicing thereunder or delegation of its rights
or duties thereunder or any portion thereof to any Person other than the
initial Servicer under such Servicing Agreement. In addition, the ability of
the Seller to transfer or assign its rights and delegate its duties under any
Servicing Agreement or to transfer the servicing thereunder to a successor
servicer shall be subject to the following conditions:
(i) Such successor servicer must be qualified to service loans for
FNMA or FHLMC;
(ii) Such successor servicer must satisfy the seller/servicer
eligibility standards in the applicable Servicing Agreement, exclusive of
any experience in mortgage loan origination, and must be reasonably
acceptable to the Master Servicer, whose approval shall not be
unreasonably withheld;
(iii) Such successor servicer must execute and deliver to the
Trustee and the Master Servicer an agreement, in form and substance
reasonably satisfactory to the Trustee and the Master Servicer, that
contains an assumption by such successor servicer of the due and punctual
performance and observance of each covenant and condition to be performed
and observed by the Servicer under the applicable Servicing Agreement;
(iv) There must be delivered to the Trustee a letter from each
Rating Agency to the effect that such transfer of servicing will not
result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates;
(v) The Seller shall, at its cost and expense, take such steps, or
cause the terminated Servicer to take such steps, as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of
the Mortgage Loans to such successor servicer, including, but not limited
to, the following: (A) to the extent required by the terms of the
Mortgage Loans and by applicable federal and state laws and regulations,
the Seller shall cause the prior Servicer to timely mail to each obligor
under a Mortgage Loan any required notices or disclosures describing the
transfer of servicing of the Mortgage Loans to the successor servicer;
(B) prior to the effective date of such transfer of servicing, the Seller
shall cause the prior Servicer to transmit to any related insurer
notification of such transfer of servicing; (C) on or prior to the
effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to deliver to the successor servicer all Mortgage Loan
Documents and any related records or materials; (D) on or prior to the
effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to transfer to the successor servicer, or, if such
transfer occurs after a Remittance Date but before the next succeeding
Deposit Date, to the Master Servicer, all funds held by the Servicer in
respect of the Mortgage Loans; (E) on or prior to the effective date of
such transfer of servicing, the Seller shall cause the prior Servicer to,
after the effective date of the transfer of servicing to the successor
servicer, continue to forward to such successor servicer, within one
Business Day of receipt, the amount of any payments or other recoveries
received by the prior Servicer, and to notify the successor servicer of
the source and proper application of each such payment or recovery; and
(F) the Seller shall cause the prior Servicer to, after the effective
date of transfer of servicing to the successor servicer, continue to
cooperate with the successor servicer to facilitate such transfer in such
manner and to such extent as the successor servicer may reasonably
request.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee and the Master Servicer
have caused their names to be signed hereto by their respective officers
hereunto duly authorized as of the day and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By: /s/Joseph Kelly
---------------------------
Name: Joseph Kelly
Title: Authorized Signatory
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/Kimberly K. Costa
--------------------------------
Name: Kimberly K. Costa
Title: Assistant Vice-President
AURORA LOAN SERVICES INC., as Master
Servicer
By: /s/Ralph Lenzi
-------------------------------
Name: Ralph Lenzi
Title: Co-CEO
Solely for purposes of Section 11.14,
accepted and agreed to by:
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/Jack Desens
----------------------------
Name: Jack Desens
Title: Authorized Signatory
<PAGE>
EXHIBIT A
---------
FORMS OF CERTIFICATES
<PAGE>
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 October 1, 1998
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as [Custodian on behalf of
the] Trustee, hereby certifies that it (or its custodian) has received the
documents listed in Section 2.01(b) of the Trust Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Schedule A, to the Trust
Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Trust
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Trust Agreement and the Trust Agreement sections cross-referenced
therein.
[[Custodian], on behalf of]
THE CHASE MANHATTAN BANK,
as Trustee
By:_______________________________
Name:
Title:
<PAGE>
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 October 1, 1998
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule
I hereto, it has reviewed the documents identified above and has determined
that each such document appears regular on its face and appears to relate to
the Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement including, but
not limited to, Section 2.02(b).
[[Custodian], on behalf of]
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________________
Name:
Title:
<PAGE>
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 October 1, 1998
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule
I hereto, it has reviewed the documents listed above and has determined that
each such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement.
[[Custodian], on behalf of]
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________
Name:
Title:
<PAGE>
EXHIBIT B-4
-----------
FORM OF ENDORSEMENT
Pay to the order of The Chase Manhattan Bank, as trustee (the "Trustee")
under the Trust Agreement dated as of October 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-ALS1, without recourse.
--------------------------------------
[current signatory on note]
By:___________________________________
Name:
Title:
<PAGE>
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 October 1, 1998 among
Structured Asset Securities Corporation, as Depositor, Aurora Loan Services
Inc., as Master Servicer, and you, as Trustee (the "Trust Agreement"), the
undersigned Master Servicer hereby requests a release of the Mortgage File
held by you as Trustee with respect to the following described Mortgage Loan
for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
1. Mortgage Loan paid in full. (The Master Servicer
hereby certifies that all amounts received in connection with the loan have
been or will be credited to the Collection Account or the Certificate Account
(whichever is applicable) pursuant to the Trust Agreement.)
2. The Mortgage Loan is being foreclosed.
3. Mortgage Loan substituted. (The Master Servicer
hereby certifies that a Qualifying Substitute Mortgage Loan has been assigned
and delivered to you along with the related Mortgage File pursuant to the
Trust Agreement.)
4. Mortgage Loan repurchased. (The Master Servicer
hereby certifies that the Purchase Price has been credited to the Collection
Account or the Certificate Account (whichever is applicable) pursuant to the
Trust Agreement.)
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased or
substituted for a Qualifying Substitute Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned
when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Trust Agreement.
-------------------------------------
[Name of Master Servicer]
By:__________________________________
Name:
Title: Servicing Officer
<PAGE>
EXHIBIT D-1
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes and
says:
1. _______ That he [she] is [title of officer] ________________________
of [name of Purchaser] _________________________________________ (the
"Purchaser"), a _______________________ [description of type of entity] duly
organized and existing under the laws of the [State of __________] [United
States], on behalf of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is ______________.
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
__________________ [date of transfer], and that the Purchaser is not acquiring
a Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form
of this affidavit. For these purposes, a "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of
any of the foregoing (other than an instrumentality if all of its activities
are subject to tax and a majority of its board of directors is not selected by
such governmental entity), any cooperative organization furnishing electric
energy or providing telephone service to persons in rural areas as described
in Code Section 1381(a)(2)(C), any "electing large partnership" within the
meaning of Section 775 of the Code, or any organization (other than a farmers'
cooperative described in Code Section 521) that is exempt from federal income
tax unless such organization is subject to the tax on unrelated business
income imposed by Code Section 511.
4. That the Purchaser is not, and on __________________ [date of
transfer] will not be, and is not and on such date will not be investing the
assets of, an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject to Code Section
4975 or a person or entity that is using the assets of any employee benefit
plan or other plan to acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among Structured Asset Securities
Corporation, The Chase Manhattan Bank, as Trustee and Aurora Loan Services
Inc., as Master Servicer, dated as of October 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 a U.S. Person or (ii) is a Non-U.S. Person
that holds a Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or successor form
at the time and in the manner required by the Code. "Non-U.S. Person" 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 state
thereof, including for this purpose, the District of Columbia, or an estate
that is subject to U.S. federal income tax regardless of the source of its
income, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States trustees have authority to control all substantial decisions of
the trust.
11. That the Purchaser agrees to such amendments of the Trust Agreement
as may be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent thereof,
a Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the Trust
Agreement.
<PAGE>
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__.
<PAGE>
EXHIBIT D-2
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
-------------------
Date
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no
actual knowledge that such affidavit is not true and has no reason to believe
that the information contained in paragraph 7 thereof is not true, and has no
reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to a Residual Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to
pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT E
---------
SERVICING AGREEMENT
<PAGE>
EXHIBIT F
---------
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1998-ALS1
---------------------------------------
Reference is hereby made to the Trust Agreement dated as of October 1,
1998 (the "Trust Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer and The Chase
Manhattan 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: __________________, ________
<PAGE>
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-ALS1 (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 an exemption from registration in accordance
with Rule 904 of Regulation S under the Securities Act, (D) pursuant to
the exemption from registration provided by Rule 144 under the Securities
Act, or (E) 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 October 1, 1998 among the Depositor, Aurora Loan Services
Inc., as Master Servicer and The Chase Manhattan 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.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that in
accordance with ERISA, the Code and the Exemption, no Plan as to which
the Purchaser, the Depositor, any Servicer or Master Servicer or the
Trustee is a party in interest or disqualified person, and no person
acting on behalf of such a Plan may acquire such Certificate unless the
acquisition would constitute an exempt transaction under a statutory
exemption or any of the administrative exemptions issued by the U.S.
Department of Labor.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Trust Agreement.
<PAGE>
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:
<PAGE>
EXHIBIT H
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"), a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account"
(as such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee and
the Depositor shall be entitled to rely, to the effect that the purchase or
holding of such Certificate by the Investor will not result in the assets of
the Trust Fund being deemed to be plan assets and subject to the prohibited
transaction provisions of ERISA or the Code and will not subject the Trustee
or the Depositor to any obligation in addition to those undertaken by such
entities in the Trust Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer, and The Chase
Manhattan Bank, as Trustee, dated as of October 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.
<PAGE>
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:
ATTEST:
- ---------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named
_________________, known or proved to me to be the same person who executed
the foregoing instrument and to be the _________________ of the Investor, and
acknowledged that he executed the same as his free act and deed and the free
act and deed of the Investor.
Subscribed and sworn before me this _____ day of ___________ 199__.
----------------------------------
NOTARY PUBLIC
My commission expires the
____ day of __________, 19__.
<PAGE>
EXHIBIT I
---------
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT J
-----------
MONTHLY ELECTRONIC DATA TRANSMISSION
<PAGE>
EXHIBIT K
---------
CUSTODIAL AGREEMENT
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
<PAGE>
SCHEDULE B
----------
PRINCIPAL AMOUNT SCHEDULES
[Not Applicable]
==============================================================================
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 October 1, 1998
==============================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans...............................................2
1.02. Delivery of Documents................................................2
1.03. Review of Documentation..............................................2
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..............................7
2.02. Entire Agreement.....................................................7
2.03. Amendment............................................................7
2.04. Governing Law........................................................8
2.05. Severability of Provisions...........................................8
2.06. Indulgences; No Waivers..............................................8
2.07. Headings Not to Affect Interpretation................................9
2.08. Benefits of Agreement................................................9
2.09. Counterparts.........................................................9
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
<PAGE>
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 October, 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 October 1, 1998, among the Depositor, Aurora Loan
Services Inc., as Master Servicer, and The Chase Manhattan Bank, as Trustee
(the "Trustee").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Purchase Agreement (Servicing Released),
dated March 23, 1998 (the "Transfer Agreement"), between Lehman Capital and
Aurora Loan Services Inc. (the "Transferor"), Lehman Capital has purchased
from the Transferor certain mortgage loans identified on the Mortgage Loan
Schedule attached hereto as Exhibit A;
WHEREAS, the 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 Agreement, and to delegate
all of its obligations thereunder, to the Depositor; and
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that the
Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Lehman Capital and the Depositor agree as
follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution and
----------------------
delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse,
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 $150,293,262.68. 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 October 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
<PAGE>
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 Agreement, and delegates to the Depositor all of its obligations
thereunder. Concurrently with the execution hereof, the Depositor tenders the
purchase price of $150,293,261. The Depositor hereby accepts such assignment
and delegation, and shall be entitled to exercise all such rights of Lehman
Capital under the Transfer Agreement, as if the Depositor had been a party to
the Transfer Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such transfer
---------------------
and assignment of the Mortgage Loans hereunder, Lehman Capital does hereby
deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the Transfer Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
-----------------------
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by LaSalle National Bank, as custodian (the "Custodian") for the Depositor.
The Custodian is required to review, within 45 days following the Closing
Date, each applicable Mortgage File. If in the course of such review the
Custodian identifies any Material Defect, Lehman Capital shall be obligated to
cure such defect or to repurchase the related Mortgage Loan from the Depositor
(or, at the direction of and on behalf of the Depositor, from the Trust Fund),
or to substitute a Qualifying Substitute Mortgage Loan therefor, in each case
to the same extent and in the same manner as the Depositor is obligated to the
Trustee and the Trust Fund under Section 2.02(c) of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a)
------------------------------------------------
Lehman Capital hereby represents and warrants to the Depositor that as of the
date hereof that:
(i) Lehman Capital is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry
on its business as presently conducted, and to enter into and perform its
obligations under this Agreement;
<PAGE>
(ii) the execution and delivery by Lehman Capital of this Agreement
have been duly authorized by all necessary corporate action on the part
of Lehman Capital; neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
Lehman Capital or its properties or the certificate of incorporation or
bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency, except
such as has been obtained, given, effected or taken prior to the date
hereof;
(iv) this Agreement has been duly executed and delivered by Lehman
Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency
laws and other similar laws affecting the enforcement of the rights of
creditors generally and (B) general principles of equity regardless of
whether such enforcement is considered in a proceeding in equity or at
law; and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted against
or affecting Lehman Capital, before or by any court, administrative
agency, arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the judgment of Lehman Capital will be determined
adversely to Lehman Capital and will if determined adversely to Lehman
Capital materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect its
ability to perform its obligations under this Agreement.
(b) The representations and warranties of the Transferor with
respect to the Mortgage Loans in the 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 the Transferor under the 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 Transferor in the 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
<PAGE>
Transferor in such Transfer Agreement, without regard to whether the
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
<PAGE>
Mortgaged Property). The lien of the Mortgage is subject only to: (1)
liens of current real property taxes and assessments not yet due and
payable and, if the related Mortgaged Property is a condominium unit, any
lien for common charges permitted by statute, (2) covenants, conditions
and restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related Mortgaged
Property is located and specifically referred to in the lender's Title
Insurance Policy or attorney's opinion of title and abstract of title
delivered to the originator of such Mortgage Loan, and (3) such other
matters to which like properties are commonly subject which do not,
individually or in the aggregate, materially interfere with the benefits
of the security intended to be provided by the Mortgage. Any security
agreement, chattel mortgage or equivalent document related to, and
delivered to the Trustee in connection with, a Mortgage Loan establishes
a valid, subsisting and enforceable first lien on the property described
therein and the Depositor has full right to sell and assign the same to
the Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of
record and holder of each Mortgage Loan, and Lehman Capital had good and
marketable title thereto, and has full right to transfer and sell each
Mortgage Loan to the Depositor free and clear, except as described in
paragraph (v) above, of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has full right and
authority, subject to no interest or participation of, or agreement with,
any other party, to sell and assign each Mortgage Loan pursuant to this
Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is covered
by either (i) an attorney's opinion of title and abstract of title the
form and substance of which is generally acceptable to mortgage lending
institutions originating mortgage loans in the locality where the related
Mortgaged Property is located or (ii) an ALTA mortgagee Title Insurance
Policy or other generally acceptable form of policy of insurance, issued
by a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the originator of the Mortgage
Loan, and its successors and assigns, as to the first priority lien of
the Mortgage in the original principal amount of the Mortgage Loan
(subject only to the exceptions described in paragraph (v) above). If the
Mortgaged Property is a condominium unit located in a state in which a
title insurer will generally issue an endorsement, then the related Title
Insurance Policy contains an endorsement insuring the validity of the
creation of the condominium form of ownership with respect to the project
in which such unit is located. With respect to any Title Insurance
Policy, the originator is the sole insured of such mortgagee Title
Insurance Policy, such mortgagee Title Insurance Policy is in full force
and effect and will inure to the benefit of the Depositor upon the
consummation of the transactions contemplated by this Agreement, no
claims have been made under such mortgagee Title Insurance Policy and no
prior holder of the related Mortgage, including Lehman Capital, has done,
by act or omission, anything that would impair the coverage of such
mortgagee Title Insurance Policy;
<PAGE>
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage
Loan. There is no proceeding pending for the total or partial
condemnation of any Mortgaged Property (or, in the case of a Cooperative
Loan, the related cooperative unit) and each such property is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado
or other casualty, so as to have a material adverse effect on the value
of the related Mortgaged Property as security for the related Mortgage
Loan or the use for which the premises were intended;
(ix) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding
that under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a
Federal or State authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act; and
(xi) Each Mortgage Loan is a "qualified mortgage" within the meaning
of Section 860G of the Code and Treas. Reg. ss.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 Transferor in the 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.
<PAGE>
Section 1.06. Assignment by Depositor. The Depositor shall have the
-----------------------
right, upon notice to but without the consent of Lehman Capital, to assign, in
whole or in part, its interest under this Agreement with respect to the
Mortgage Loans to the Trustee, and the Trustee then shall succeed to all
rights of the Depositor under this Agreement. All references to the Depositor
in this Agreement shall be deemed to include its assignee or designee,
specifically including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
---------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
----------------
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 2.03. Amendment. (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
<PAGE>
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 Agreement. Nothing in this Agreement, express
---------------------
or implied, shall give to any Person, other than the parties to this Agreement
and their successors hereunder, any benefit or any legal or equitable right,
power, remedy or claim under this Agreement.
Section 2.09. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Lehman Capital and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of
the date first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/Joseph Kelly
-----------------------------------
Name: Joseph Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/Stanley Labanowski
------------------------------------
Name: Stanley Labanowski
Title: Vice President
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the
1st day of October, 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 The Chase Manhattan Bank, as trustee
(the "Trustee") under a trust agreement dated as of October 1, 1998 (the "Trust
Agreement"), among the Trustee, Aurora Loan Services Inc., as master servicer
("Aurora," and together with any successor Master Servicer appointed pursuant
to the provisions of the Trust Agreement, the "Master Servicer") and SASCO.
WHEREAS, Lehman Capital 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, Aurora, acting as Master Servicer, 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. In addition, all of the
representations, warranties, covenants, agreements and indemnities made by the
Servicer (or by any successor servicer) to the "Owner" under the Flow Servicing
Agreement are hereby deemed made to the Master Servicer as if the Master
Servicer were the "Owner" and all such representations, warranties, covenants,
agreements and indemnities shall inure to the benefit of the Master Servicer;
provided, however, that notwithstanding the foregoing, the Master Servicer
shall have (i) no right or interest in the "Reconstituted Termination Fee"
referred to in Section 7.06 of the Flow Servicing or the "Additional
Remittance" referred to in Section 7.07 of the Flow Servicing Agreement and
(ii) no right to terminate the Servicer, except as expressly set forth herein.
Nothing contained herein is intended to result in the creation or assumption by
the Master Servicer of any obligation of the "Owner" or any Person under the
Flow Servicing Agreement or any other agreement or instrument relating thereto
except as specifically set forth herein. The Master Servicer shall be entitled
to terminate the rights and obligations of the Servicer under this Agreement
upon the failure of the Servicer to perform any of its obligations under this
Agreement, as provided in Article IX of the 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 Reconstituted 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:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado
Attn: Master Servicing Department, SASCO 1998-ALS1
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
The Chase Manhattan Bank
New York, New York
ABA#: 021-000-021
Account Name: Aurora Loan Services Inc. Master Servicing
Payment Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 1998-ALS1
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 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 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 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.
<PAGE>
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/Joseph Kelly
Name: Joseph J. Kelly
Title: Authorized Signatory
AURORA LOAN SERVICES INC.
By: /s/Leo C. Trautman
Name: Leo C. Trautman
Title: Executive Vice President
<PAGE>
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 agreement relating to custody of the Serviced
Mortgage Loans among LaSalle National Bank, as Custodian, The Chase
Manhattan Bank, as Trustee, and Structured Asset Securities
Corporation, dated as of October 1, 1998."
3. The definition of "Custodian" in Article I is hereby deleted and
replaced with the following:
"LaSalle National Bank, as Custodian pursuant to a Custodial
Agreement, and any successor thereto."
4. The following definition is hereby added:
"Prepayment Interest Excess Amount: With respect to any Principal
Prepayment in full of a Mortgage Loan received from the first day
through the sixteenth day of any calendar month, all amounts paid in
respect of interest on such Principal Prepayment."
5. The definition of "Prepayment Interest Shortfall Amount" is hereby
deleted and replaced with the following:
"Prepayment Interest Shortfall Amount: With respect to (x)
any Principal Prepayment in part (other than any such prepayment
received on the first of the month) and (y) any Principal Prepayment
in full received on or after the seventeenth day of the month
preceding the month of such Distribution Date, but on or before the
last day of the month preceding the month of such Distribution Date,
the difference between (i) one full month's interest at the applicable
Mortgage Rate (giving effect to any applicable Relief Act Reduction),
as reduced by the Reconstituted Servicing Fee, 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."
6. The following definition is hereby added:
"Prepayment Period: With respect to any Distribution Date and
a partial Principal Prepayment, the period from the second day of the
month preceding the month of such Distribution Date to the first day
of the month of such Distribution Date. With respect to any
Distribution Date and a full Principal Prepayment, the period from the
seventeenth day of the month preceding the month of such Distribution
Date to the sixteenth day of the month of such Distribution Date."
7. 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."
8. 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."
9. The following definition is hereby added:
"Reconstituted Servicing Fee: An amount equal to (1)
one-twelfth the product of (a) a rate per annum equal to 0.30% and (b)
the outstanding principal balance of such Mortgage Loan and (2) any
Prepayment Interest Excess Amounts. The obligation of the Master
Servicer to pay the Reconstituted Servicing Fee is limited to, and the
Reconstituted 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."
10. 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 preceding) of any month, following the
First Remittance Date."
11. The definition of "Servicing Fee" in Article I is hereby deleted.
12. 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."
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 3.03 are hereby
deleted and replaced with the following: "Aurora Loan Services Inc.,
as master servicer for SASCO 1998-ALS1."
14. Section 3.04 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;
(viii) to reimburse itself for unreimbursed Servicing
Advances, and for any unpaid Reconstituted 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;"
15. 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: "Aurora Loan Services Inc.,
as master servicer for SASCO 1998-ALS1."
16. 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.
17. 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."
18. Section 4.02 is hereby amended by deleting the words "Remittance Date"
in the first line of such Section, and substituting the following:
"tenth Business Day of each month"
19. The third paragraph of Section 5.01 is hereby deleted.
20. Section 5.02 is hereby deleted.
21. All references to the "Servicing Fee" (other than the definition of
"Servicing Fee" in Article I) shall be deemed to refer to the
"Reconstituted Servicing Fee" pursuant to Section 7.03.
22. 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."
23. 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: Leo C. Trautman, Jr."
