SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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)
November 20, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under
the Trust Agreement, dated as of November 1, 1998, providing
for the issuance of Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-10)
Structured Asset Securities Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware 333-47499 74-2440850
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State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
A. The Registrant registered issuances of Structured Asset
Securities Corporation Mortgage Pass-Through Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration
File No. 333-47499) (the "Registration Statement"). Pursuant to the
Registration Statement, the Registrant issued $241,452,178 in aggregate
principal amount of Class A, Class AP, Class AX, Class B-1, Class B-2, Class
B-3 and Class R Certificates of its Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-10 on November 20, 1998. A
Current Report on Form 8-K was filed on December 4, 1998 (the "Original Form
8-K"), to satisfy an undertaking, contained in the definitive Prospectus dated
March 18, 1998, as supplemented by the Prospectus Supplement dated November
16, 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 November 1,
1998, between Structured Asset Securities Corporation, as depositor (the
"Depositor") and U.S. Bank National Association, as trustee (the "Trustee").
The "Certificates" consist of the following classes: Class A, Class AP, Class
AX, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class
R. The Certificates evidence all the beneficial ownership interest in a trust
fund (the "Trust Fund") that consists primarily of a pool of fixed rate, fully
amortizing, conventional, first lien residential mortgage loans (the "Mortgage
Loans") with an aggregate outstanding principal balance of $243,400,122 as of
November 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.
This Current Report on Form 8-K/A is being filed to amend Exhibit
4.1 (the Trust Agreement) and Exhibit 99.1 (the Mortgage Loan Sale and
Assignment Agreement) attached to the Original Form 8-K and correct
typographical errors therein.
<PAGE>
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated November 16, 1998, between
Structured Asset Securities Corporation and Lehman
Brothers Inc.*
4.1 Trust Agreement, dated as of November 1, 1998, between
Structured Asset Securities Corporation, as Depositor,
and U.S. Bank National Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of
November 1, 1998, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc. and Structured Asset
Securities Corporation.
99.2 Seller's Warranties and Servicing Agreement, dated as of
November 1, 1998, among Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as purchaser, Cendant
Mortgage Corporation, as seller, and Cendant Residential
Mortgage Trust, as seller.*
99.3 Mortgage Loan Purchase Agreement, dated as of November 1,
1998, among Lehman Capital, A Division of Lehman Brothers
Holdings Inc., Cendant Mortgage Corporation and Cendant
Residential Mortgage Trust.*
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* Incorporated by reference to the Registrant's Current Report on Form
8-K dated November 20, 1998, filed with the Securities and Exchange Commission
on December 4, 1998 (File No. 333-47499).
<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/ Stanley Labanowski
----------------------------
Name: Stanley Labanowski
Title: Authorized Signatory
Dated: December 10, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
4.1 Trust Agreement, dated as of November 1, 1998,
between Structured Asset Securities Corporation,
as Depositor and U.S. Bank National Association,
as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement,
dated as of November 1, 1998, between Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. and Structured Asset Securities
Corporation.
===============================================================================
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of November 1, 1998
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-10
===============================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.01. Definitions.....................................................................................2
Section 1.02. Calculations Respecting Mortgage Loans.........................................................25
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans...........................25
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation for Trust Fund....................27
Section 2.03. Representations and Warranties of the Depositor................................................28
Section 2.04. Discovery of Breach............................................................................30
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.........................................30
Section 2.06. Grant Clause...................................................................................31
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates...............................................................................32
Section 3.02. Registration...................................................................................32
Section 3.03. Transfer and Exchange of Certificates..........................................................33
Section 3.04. Cancellation of Certificates...................................................................35
Section 3.05. Replacement of Certificates....................................................................35
Section 3.06. Persons Deemed Owners..........................................................................36
Section 3.07. Temporary Certificates.........................................................................36
Section 3.08. Appointment of Paying Agent....................................................................36
Section 3.09. Book-Entry Certificates........................................................................37
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted]......................................................................................38
Section 4.02. [Omitted]......................................................................................38
Section 4.03. Reports to Certificateholders..................................................................38
Section 4.04. Certificate Account............................................................................41
Section 4.05. Determination of LIBOR.........................................................................41
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally........................................................................43
Section 5.02. Distributions from the Certificate Account.....................................................43
Section 5.03. Allocation of Realized Losses..................................................................46
Section 5.04. Trustee Advances...............................................................................48
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee..............................................................................48
Section 6.02. Certain Matters Affecting the Trustee..........................................................49
Section 6.03. Trustee Not Liable for Certificates............................................................50
Section 6.04. Trustee May Own Certificates...................................................................50
Section 6.05. Eligibility Requirements for Trustee...........................................................51
Section 6.06. Resignation and Removal of Trustee.............................................................51
Section 6.07. Successor Trustee..............................................................................51
Section 6.08. Merger or Consolidation of Trustee.............................................................52
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.......................................52
Section 6.10. Authenticating Agents..........................................................................54
Section 6.11. Indemnification of Trustee.....................................................................54
Section 6.12. Fees and Expenses of Trustee...................................................................55
Section 6.13. Collection of Monies...........................................................................55
Section 6.14. Trustee To Act; Appointment of Successor.......................................................56
Section 6.15. Additional Remedies of Trustee Upon Event of Default...........................................57
Section 6.16. Waiver of Defaults.............................................................................57
Section 6.17. Notification to Holders........................................................................58
Section 6.18. Directions by Certificateholders and Duties of Trustee During Event of Default.................58
Section 6.19. Action Upon Certain Failures of the Servicer and Upon Event of Default.........................58
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of All Mortgage Loans.................59
Section 7.02. Procedure Upon Termination of Trust Fund.......................................................59
Section 7.03. Additional Trust Fund Termination Requirements.................................................60
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders................................................................61
Section 8.02. Access to List of Holders......................................................................62
Section 8.03. Acts of Holders of Certificates................................................................62
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents..............................................63
Section 9.02. Preparation of Tax Returns and Other Reports...................................................63
Section 9.03. Release of Mortgage Files......................................................................64
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration...........................................................................64
Section 10.02. Prohibited Transactions and Activities.........................................................66
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status.........................66
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment........................................................67
Section 11.02. Entire Agreement...............................................................................67
Section 11.03. Amendment......................................................................................67
Section 11.04. Voting Rights..................................................................................68
Section 11.05. Provision of Information.......................................................................68
Section 11.06. Governing Law..................................................................................69
Section 11.07. Notices........................................................................................69
Section 11.08. Severability of Provisions.....................................................................69
Section 11.09. Indulgences; No Waivers........................................................................69
Section 11.10. Headings Not To Affect Interpretation..........................................................69
Section 11.11. Benefits of Agreement..........................................................................70
Section 11.12. Special Notices to the Rating Agencies.........................................................70
Section 11.13. Counterparts...................................................................................71
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 Sale and 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
Schedule A Mortgage Loan Schedule
</TABLE>
<PAGE>
This TRUST AGREEMENT, dated as of November 1, 1998 (the "Agreement"),
is by and between STRUCTURED ASSET SECURITIES CORPORATION, a Delaware
corporation, as depositor (the "Depositor"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and 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 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 is 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 (or describes) the Class designation,
Interest Rate, initial Class Principal Amount and minimum denomination for
each Class of Certificates comprising the interests in the Trust Fund created
hereunder.
<PAGE>
<TABLE>
<CAPTION>
Initial Certificate Minimum
Class Designation Interest Rate Principal Amount Denominations
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<S> <C> <C> <C>
Class A 6.65% $ 232,448,000.00 $100,000
Class AP 0.00 1,213,078.69 100,000
Class AX 6.65 (1) (2)
Class B1 6.65 4,382,000.00 100,000
Class B2 6.65 2,435,000.00 100,000
Class B3 6.65 974,000.00 100,000
Class B4 6.65 852,000.00 250,000
Class B5 6.65 487,000.00 250,000
Class B6 6.65 608,943.30 250,000
Class R 6.65 100.00 100
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(1) The Class AX Certificates will 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 (weighted on the basis of the Scheduled Principal Balance of
such Mortgage Loans as of the first day of the related Accrual
Period) over 6.65%, and the denominator of which is 6.65%, and (y)
the aggregate Scheduled Principal Balance of the Premium Mortgage
Loans as of the first day of the related Due Period.
(2) The Class AX Certificates will be issued in minimum percentage
interests of 4.55%.
</TABLE>
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $243,400,121.99.
In consideration of the mutual agreements herein contained, the
Depositor 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: As defined in the Sale and Servicing
Agreement.
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: Not applicable.
Accrual Amount: Not applicable.
Accrual Certificate: None.
Accrual Component: None.
Accrual Period: With respect to any Distribution Date and any Class
of Certificates (other than any Class of Principal Only Certificates), the
one-month period beginning immediately following the end of the preceding
Accrual Period (or from the Cut-off Date, in the case of the first Accrual
Period) and ending on the last day of the month preceding the month in which
such Distribution Date occurs.
Accrued Certificate Interest: As to any Class of Certificates (other
than the Class AP Certificates) and any Distribution Date, the product of the
Interest Rate for such Class of Certificates and the Class Principal Amount
(or Aggregate Notional Amount) of such Class of Certificates immediately
preceding such Distribution Date, as reduced by (i) such Class's allocable
share of the interest portion of any Excess Losses for such date and, after
the Credit Support Depletion Date, any Realized Losses for such date, (ii)
such Class's allocable share of any Relief Act Reduction for such date and
(iii) any Deferred Interest allocated to such Class on such date, in each case
allocable among the Senior Certificates (other than the Class AP Certificates)
and the Subordinate Certificates pro rata based on the Accrued Certificate
Interest otherwise distributable thereon. 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 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 the
Servicer pursuant to the Sale and Servicing Agreement (or by the Trustee
hereunder).
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 Notional Amount: With respect to the Class AX
Certificates, the 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: With respect to any Distribution
Date, the percentage equivalent of the fraction, the numerator of which is the
sum of the Class Principal Amounts of the Subordinate Certificates immediately
prior to such date and the denominator of which is the Non-AP Pool Balance for
such date.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of the fraction, the numerator of which is 6.65% minus the Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
6.65%. As to any Non-Discount Mortgage Loan, 0.000%.
AP Principal Distribution Amount: With respect to any Distribution
Date, 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 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
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 that was finally
liquidated during the applicable Prepayment Period), representing or
allocable to recoveries of principal of such Mortgage Loan received
during the applicable Prepayment Period and (3) the principal portion
of all proceeds of the purchase of any Mortgage Loan (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 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.
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 any Distribution Date, the sum
of the following amounts:
(i) the total amount of all cash received by the Servicer and
remitted to the Trustee on the related Deposit Date (including
proceeds of any Insurance Policy and any other credit support
relating to such Mortgage Loans), plus all Advances made by the
Servicer (or the Trustee) for such Distribution Date, any
Compensating Interest Payment for such date and any amounts paid by
the Servicer in respect of Prepayment Interest Shortfalls 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 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
Servicer after the applicable Prepayment Period; and
(e) all fees and amounts due or reimbursable to the
Servicer pursuant to the terms of this Agreement or the Sale and
Servicing Agreement; and
(ii) 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
purchased by the Seller, the Depositor or any other Person).
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: The first Distribution Date on
which the 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 losses (as reported by the Servicer to the
Trustee) 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 A, Class AP, Class
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 States of Minnesota or New Jersey, are authorized or obligated by law
or executive order to be closed.
Cendant Entities: As defined in Section 2.03(b).
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 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 AP Deferred Amount: As to any Distribution Date on or prior to
the Credit Support Depletion Date, the aggregate of the applicable AP
Percentage of the principal portion of each Realized Loss on a Discount
Mortgage Loan, other than 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)(iv).
Class B Certificate: Any Class B1, Class B2, Class B3, Class B4,
Class B5 or Class B6 Certificate.
Class Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such
Distribution Date by the aggregate Certificate Principal Amount of all
Certificates immediately prior to such date.
Class Principal Amount: With respect to each Class of Certificates
other than any Class of Notional Certificates, the aggregate of the
Certificate Principal Amounts of all Certificates of such Class at the date of
determination. With respect to each Class of Notional Certificates, zero.
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: November 20, 1998.
CMC: As defined in Section 2.03(b).
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: Not applicable.
Compensating Interest Payment: With respect to any Distribution Date,
the amount paid by the Servicer in respect of Prepayment Interest Shortfalls
pursuant to Section 4.04 (viii) of the Sale and Servicing Agreement.
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: Any Mortgage Loan secured by Cooperative Shares and
a Proprietary Lease.
Cooperative Loan Documents: As specified in the Sale and Servicing
Agreement.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
Credit Support Depletion Date: The first 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.
CRMT: As defined in Section 2.03(b).
Cut-off Date: November 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 18th day of
the month in which such Distribution Date occurs or, if such 18th day is not a
Business Day, the next succeeding Business Day.
Depositor: Structured Asset Securities Corporation, 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
Business Day immediately preceding the related Deposit Date.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate
less than 6.65% 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
December 1998.
Due Date: With respect to any Mortgage Loan, the date in each month
on which a Scheduled Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an
account at a depository institution or trust company whose commercial paper or
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trustee or any other federal or state chartered
depository institution or trust company, acting in its fiduciary capacity, in
a manner acceptable to the Trustee and the Rating Agencies. Eligible Accounts
may bear interest.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States of
America or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in,
certificates of deposits of, or bankers' acceptances issued by, any
depository institution or trust company (including U.S. subsidiaries
of foreign depositories and the Trustee or any agent of the Trustee,
acting in its respective commercial capacity) incorporated or
organized under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
or state banking authorities, so long as at the time of investment
or the contractual commitment providing for such investment the
commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal
subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or
deposit institution, as the case may be) have been rated by each
Rating Agency in its highest short-term rating category or one of
its two highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct
Obligations or securities guaranteed by GNMA, FNMA or FHLMC with any
registered broker/dealer subject to Securities Investors' Protection
Corporation jurisdiction or any commercial bank insured by the FDIC,
if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed obligation rated by each Rating Agency in its highest
short-term rating category;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States
of America or any state thereof which have a credit rating from each
Rating Agency, at the time of investment or the contractual
commitment providing for such investment, at least equal to one of
the two highest 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;
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 escrow account established and maintained by the
Servicer pursuant to the Sale and Servicing Agreement.
Event of Default: An event described in Section 10.01 of the Sale and
Servicing Agreement, which pursuant to such agreement is a default by the
Servicer and entitles the Trustee to terminate such Servicer.
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.
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 Servicer to the Trustee.
Fraud Loss Limit: As of any Distribution Date after the Cut-off Date
(x) prior to the first anniversary of the Cut-off Date, $4,868,002.44, 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.
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
Servicer, the Trustee 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 or the Servicer in determining whether any
Certificates are registered to an Affiliate of the Depositor or the 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.
Initial LIBOR Rate: None.
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 Distribution Amount: Not applicable.
Interest Rate: With respect to each Class of Certificates, the
applicable per annum rate set forth or described in the Preliminary Statement
hereto.
Interest Shortfall: With respect to any Class of Certificates and any
Distribution Date, any Accrued Certificate Interest not distributed (or added
to principal) with respect to any previous Distribution Date, other than any
Net Prepayment Interest Shortfalls.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Distribution Date: February 25, 2031.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers
Holdings Inc., or any successor in interest.
LIBOR: The per annum rate determined pursuant to Section 4.05 on the
basis of London interbank offered rate quotations for one-month Eurodollar
deposits, as such quotations may appear on the display designated as page
"LIUS01M" on the Bloomberg Financial Markets Commodities News (or such other
page as may replace such page on that service for the purpose of displaying
London interbank offered quotations of major banks).
LIBOR Certificate: None.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
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 Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan, including any
amounts remaining in the related Escrow Account.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of
the principal balance of such Mortgage Loan at origination, or such other date
as is specified, to the Original Value thereof.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Maintenance: With respect to any Cooperative Unit, the rent or fee
paid by the Mortgagor to the Cooperative Corporation pursuant to the
Proprietary Lease.
Material Defect: As defined in Section 2.02(c) hereof.
Moody's: Moody's Investors Service, Inc., or any successor in
interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Exhibit B-1 to the
Sale and Servicing Agreement pertaining to a particular Mortgage Loan required
to be delivered to the Trustee or its 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 Negative Amortization: Not applicable.
Mortgage Loan Sale and Assignment Agreement: The agreement, dated as
of November 1, 1998, for the sale of the Mortgage Loans by Lehman Capital, A
Division of Lehman Brothers Holdings Inc., to the Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended from
time to time 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 Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan.
Mortgaged Property: Either of (x) the fee simple interest in real
property, together with improvements thereto including any exterior
improvements to be completed within 120 days of disbursement of the related
Mortgage Loan proceeds, or (y) in the case of a Cooperative Loan, the related
Cooperative Shares and Proprietary Lease, securing the indebtedness of the
Mortgagor under the related Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization Certificate: None.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage
Loan, the related Liquidation Proceeds net of unreimbursed expenses incurred
in connection with liquidation or foreclosure and unreimbursed Advances,
Servicing Advances 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 Servicing 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 aggregate of all Compensating Interest Payments made by the Servicer
in respect of such shortfalls.
Non-AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of the fraction, the numerator of which is the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is 6.65%. As to any
Non-Discount Mortgage Loan, 100%.
Non-AP Pool Balance: As to any Distribution Date, the sum of, as to
each Mortgage Loan, the product of the applicable Non-AP Percentage and the
Scheduled Principal Balance of such Mortgage Loan for such Distribution Date.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage
Rate equal to or greater than 6.65% per annum.
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 AX Certificate.
Notional Component: None.
Notional Component Amount: None.
Offering Document: Either of the Prospectus or the private
placement memorandum dated November 16, 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 or the Servicer but which must be Independent
outside counsel with respect to any such opinion of counsel concerning the
transfer of any Residual Certificate or concerning certain matters with
respect to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the taxation, or the federal income tax status, of each REMIC.
Original Credit Support Percentage: With respect to each Class of
Subordinate Certificates, the Credit Support Percentage for such Class on the
Closing Date.
Original Subordinate Amount: The Subordinate Amount on the Closing
Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, 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 AX Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal
Amount thereof divided by the initial Class Principal Amount of all
Certificates of the same Class. With respect to any Class 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.
Premium Mortgage Loan. Any Mortgage Loan with a Net Mortgage Rate
greater than 6.65% per annum.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the difference between (i) one full
month's interest at the applicable Mortgage Rate (giving effect to any
applicable Relief Act Reduction), as reduced by the Servicing Fee Rate, on the
outstanding principal balance of such Mortgage Loan immediately prior to such
prepayment and (ii) the amount of interest actually received with respect to
such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to any Distribution Date, the
calendar month immediately preceding the month in which such Distribution Date
occurs.
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 AP Certificate.
Principal Prepayment: Any Mortgagor payment of principal or other
recovery of principal on a Mortgage Loan (other than a Payahead) 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 Accepted Servicing
Practices.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated November 16, 1998,
together with the accompanying prospectus dated March 18, 1998, relating to
the Class A, Class AP, Class AX, Class B1, Class B2, Class B3 and Class R
Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan
pursuant to this Agreement, an amount equal to the sum of (a) 100% of the
unpaid principal balance of such Mortgage Loan 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. The 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 Servicer under the Sale and Servicing Agreement, as well
as any unreimbursed Servicing Advances and accrued and unpaid 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: A "Qualified Substitute Mortgage
Loan" as defined in the Sale and Servicing Agreement. Whenever a Qualifying
Substitute Mortgage Loan is substituted for a Deleted Mortgage Loan pursuant
to this Agreement, the party effecting such substitution shall certify such
qualification in writing to the Trustee.
Rating Agency: Each of DCR and Moody's.
Realized Loss: (a) With respect to each Liquidated Mortgage Loan, an
amount equal to (i) the unpaid principal balance of such Mortgage Loan as of
the date of liquidation, plus (ii) interest at the applicable Net Mortgage
Rate from the date as to which interest was last paid up to the last day of
the month of such liquidation, minus (iii) Liquidation Proceeds received, to
the extent allocable to principal, net of amounts that are reimbursable to the
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: With respect to any Cooperative Loan, an
agreement between the related Cooperative Corporation and the originator of
such Mortgage Loan to establish the rights of such originator in the related
Cooperative Property.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
in which such Distribution Date occurs.
Redemption Certificate: None.
Reference Banks: None.
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of interest collectible thereon as a
result of application of the Solders' and Sailors' Civil Relief Act of 1940,
as amended, any amount by which interest collectible on such Mortgage Loan for
the Due Date in the related Due Period is less than interest accrued thereon
for the applicable one-month period at the Mortgage Rate without giving effect
to such reduction.
REMIC: Each pool of 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.
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.
Sale and Servicing Agreement: The Sellers' Warranties and Servicing
Agreement dated as of November 1, 1998, among Lehman Capital, a division of
Lehman Brothers Holdings Inc., Cendant Mortgage Corporation and Cendant
Residential Mortgage Trust.
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 Balance: With respect to (i) any Mortgage Loan as
of any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal
payments due on or before the Cut-off Date, whether or not received, less an
amount equal to principal payments due after the Cut-off Date and on or before
the Due Date in the related Due Period, whether or not received from the
Mortgagor or advanced by the Servicer, and all amounts allocable to
unscheduled principal payments (including Principal Prepayments, Net
Liquidation Proceeds, Insurance Proceeds and condemnation proceeds, in each
case to the extent identified and applied prior to or during the applicable
Prepayment Period) and (ii) any REO Property as of any Distribution Date, the
Scheduled Principal Balance of the related Mortgage Loan on the Due Date
immediately preceding the date of acquisition of such REO Property by or on
behalf of the Trustee (reduced by any amount applied as a reduction of
principal on the Mortgage Loan). With respect to any Mortgage Loan and the
Cut-off Date, as specified in the Mortgage Loan Schedule.
Security Agreement: With respect to any Cooperative Loan, the
agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note that defines the terms of the security
interest in such Cooperative Shares and the related Proprietary Lease.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or any successor in interest.
Senior Certificate: Any Class A, Class AP, Class AX or Class R
Certificate.
Senior Percentage: With respect to any Distribution Date, the
percentage equivalent of the fraction, the numerator of which is the Class
Principal Amount of the Class A and Class R Certificates immediately prior to
such date and the denominator of which is the Non-AP Pool Balance for such
date.
Senior Prepayment Percentage: With respect to any Distribution Date
occurring during the five years beginning on the first Distribution Date,
100%. With respect to any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date, the 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 exceeds the initial Senior Percentage, the Senior Prepayment
Percentage on such Distribution Date will once again equal 100% for such
Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage 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 Subordinate Amount immediately prior to
such Distribution Date or (ii) cumulative Realized Losses with respect to the
Mortgage Loans exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original Subordinate
Amount, (b) with respect to the Distribution Date on the sixth anniversary of
the first Distribution Date, 35% of the Original Subordinate Amount, (c) with
respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinate Amount, (d) with respect to
the Distribution Date on the eighth anniversary of the first Distribution
Date, 45% of the Original Subordinate Amount, and (e) with respect to the
Distribution Date on the ninth anniversary of the first Distribution Date, 50%
of the Original Subordinate Amount.
Senior Principal Distribution Amount: With respect to any
Distribution Date, the sum of the following amounts:
(i) the product of (a) the 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 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 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 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 (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 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 Senior
Prepayment Percentage for such date and the Scheduled Principal
Balance (multiplied by the applicable Non-AP Percentage) of such
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: Cendant Mortgage Corporation or any successor in interest.
Servicing Advance: Any expenditures incurred by the Servicer in
connection with the servicing of a Mortgage Loan that is eligible for
reimbursement under the Sale and Servicing Agreement, other than an Advance of
principal and/or interest.
Servicing Fee: The Servicing Fee specified in the Sale and Servicing
Agreement.
Servicing Fee Rate: As specified in the Sale and Servicing Agreement.
Servicing Officer: Any officer of the Servicer involved in or
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Trustee, as such list may be amended from time to time.
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 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 Servicer to the Trustee.
Special Hazard Loss Limit: As of the Cut-off Date, $2,434,001.22,
which amount 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 outstanding principal balances of the Mortgage Loans; (ii) twice the
outstanding principal balance of the Mortgage Loan having the highest
outstanding principal balance, and (iii) the aggregate outstanding principal
balances of the Mortgage Loans secured by Mortgaged Properties located in the
single California postal zip code area having the highest aggregate
outstanding 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 since the Closing Date.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Subordinate Amount: As to any Distribution Date, the excess of the
Non-AP Pool Balance for such date over the Class Principal Amount of the Class
A Certificates immediately prior to such date.
Subordinate Certificate: Any Class B Certificate.
Subordinate Certificate Writedown Amount: As to any Distribution
Date, the amount by which (i) the sum of the Class Principal Amounts of all
the Certificates (after giving effect to the distribution of principal and the
application of Realized Losses in reduction of the Certificate Principal
Amounts of the Certificates on such Distribution Date) exceeds (ii) the
aggregate Scheduled Principal Balance of the Mortgage Loans at the close of
the related Due Period.
Subordinate Class Percentage: With respect to any Distribution Date
and any Class of Subordinate Certificates, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such
Distribution Date by the aggregate Certificate Principal Amount of all
Subordinate Certificates
immediately prior to such date.
Subordinate Percentage: With respect to any Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date, the difference between 100% and the Senior Prepayment Percentage for
such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date, the sum of the following:
(i) the product of (a) the 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 due during the
related Due Period;
(ii) the product of (a) the 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 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 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 (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 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; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
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 and Assignment Agreement, such amounts as
shall from time to time be held in 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: U.S. Bank National Association, not in its individual
capacity but solely as Trustee, or any successor in interest, or if any
successor trustee or any co-trustee shall be appointed as herein provided,
then such successor trustee and such co-trustee, as the case may be.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
99% of all Voting Interests shall be allocated to the Certificates other than
the Class AX Certificates and 1% of all Voting Interests shall be allocated to
the Class AX Certificates. Voting Interests allocated to the Class 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 Principal Amounts (or
Certificate Principal Amounts).
Section 1.02. Calculations Respecting Mortgage Loans. Calculations required to
be made pursuant to this Agreement with respect to any Mortgage Loan in the
Trust Fund shall be made based upon current information as to the terms of the
Mortgage Loans and reports of payments received from the Mortgagor on such
Mortgage Loans and payments to be made to the Trustee as supplied to the
Trustee by the Servicer. The Trustee shall not be required to recompute,
verify or recalculate the information supplied to it by the 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, 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 Certificate Account and all amounts from time to time
credited to and the proceeds of the Certificate Account, any REO Property and
the proceeds thereof, the Depositor's rights under any Insurance Policies
related to the Mortgage Loans, the Depositor's security interest in any
collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any Additional Collateral, and any proceeds of the foregoing,
to have and to hold, in trust; and the Trustee declares that, subject to the
review provided for in Section 2.02, it has received and shall hold the Trust
Fund, as trustee, in trust, for the benefit and use of the Holders of the
Certificates and for the purposes and subject to the terms and conditions set
forth in this Agreement, and, concurrently with such receipt, has caused to be
executed, authenticated and delivered to or upon the order of the Depositor,
in exchange for the Trust Fund, Certificates in the authorized denominations
evidencing the entire ownership of the Trust Fund.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest
under the Mortgage Loan Sale and Assignment Agreement, which include all of
the Depositor's rights and interests under the Sale and Servicing Agreement,
and delegates its obligations under the Mortgage Loan Sale and Assignment
Agreement, which include the obligations of Lehman Capital under the Sale and
Servicing Agreement, (which rights and interest have been assigned and which
obligations have been delegated to the Depositor by Lehman Capital pursuant to
the Mortgage Loan Sale and Assignment Agreement) to the Trustee. The Trustee
hereby accepts such assignment and delegation, and shall be entitled to
exercise all such rights of the Depositor under the Mortgage Loan Sale and
Assignment Agreement and the Sale and Servicing Agreement as if, for such
purpose, it were the Depositor.
(b) In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, or cause to be delivered to and
deposited with, the Trustee, and/or any custodian acting on the Trustee's
behalf, if applicable, the documents or instruments with respect to each
Mortgage Loan (each a "Mortgage File") so transferred and assigned as are
specified in the Sale and Servicing Agreement.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-4 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) Assignments of Mortgage shall be recorded; provided, however,
that such Assignments need not be recorded if, in the Opinion of Counsel
(which must be Independent counsel) acceptable to the Trustee and the Rating
Agencies, recording in such states is not required to protect the Trustee's
interest in the related Mortgage Loans. Subject to the preceding sentence, as
soon as practicable after the Closing Date, the Trustee shall, or shall cause
its custodian, at the expense of the Depositor, to cause to be properly
recorded in each public recording office where the Mortgages are recorded each
Assignment of Mortgage.
(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 referenced documents, herewith delivers or causes to be
delivered to the Trustee an Officer's Certificate which shall include a
statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the custodial account
maintained by the Servicer pursuant to the Sale and Servicing Agreement have
been so deposited. All original documents that are not delivered to the
Trustee shall be held by the 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 (by it or by its custodian) of the Mortgage Files
pertaining to the Mortgage Loans listed on the Mortgage Loan Schedule, subject
to any defects or exception noted in the Initial Certification (as defined
below) and further subject to the Trustee's review thereof as specified
herein. The Trustee or its custodian executed and delivered as of November 12,
1998, an initial certification (the "Initial Certification") certifying as to
its receipt of the documents required to be delivered pursuant to the Sale and
Servicing Agreement.
(b) Within 45 days after the Closing Date, the Trustee or its
custodian will, 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 an Interim Certification in the form annexed hereto
as Exhibit B-2 to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan prepaid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all of the applicable documents specified in Section
2.01(b) are in its possession and (ii) such documents have been reviewed by it
and appear to relate to such Mortgage Loan. The Trustee or its custodian 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 its 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 its 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 its custodian,
shall promptly identify the Mortgage Loan to which such Material Defect
relates in the Interim Certificate delivered to the Depositor (and to the
Trustee). Within 90 days of its receipt of such notice, the applicable Cendant
Entity, or, if such Cendant Entity does not do so, the Depositor shall be
required to cure such Material Defect (and, in such event, the Depositor shall
provide the Trustee with an Officer's Certificate confirming that such cure
has been effected). If the applicable Cendant Entity or the Depositor, as
applicable, does not so cure such Material Defect, the applicable Cendant
Entity, or, if such Cendant Entity does not do so, the Depositor, shall
repurchase the related Mortgage Loan from the Trust Fund at the Purchase
Price. Within the two year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02,
substitute for such Mortgage Loan a Qualifying Substitute Mortgage Loan
subject to the provisions of Section 2.05. The failure of the Trustee or its
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 its
custodian, shall deliver to the Depositor a Final Certification substantially
in the form annexed hereto as Exhibit B-3 evidencing the completeness of the
Mortgage Files in its possession or control.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor. Section 2.03. Representations and Warranties of the Depositor. (a)
The Depositor hereby represents and warrants to the Trustee, for the benefit
of Certificateholders, as of the Closing Date or such other date as is
specified, that:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation
and existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, to enter
into and perform its obligations under this Agreement, and to create
the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Depositor or its
properties or the certificate of incorporation or bylaws of the
Depositor;
(iii) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any
other action in respect of, any state, federal or other governmental
authority or agency, except such as has been obtained, given,
effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by
the Trustee, constitutes a valid and binding obligation of the
Depositor enforceable against it in accordance with its terms except
as such enforceability may be subject to (A) applicable bankruptcy
and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally and (B) general principles of
equity regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened or likely to be asserted
against or affecting the Depositor, before or by any court,
administrative agency, arbitrator or governmental body (A) with
respect to any of the transactions contemplated by this Agreement or
(B) with respect to any other matter which in the judgment of the
Depositor will be determined adversely to the Depositor and will if
determined adversely to the Depositor materially and adversely affect
it or its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its obligations
under this Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Depositor was the sole owner of
record and holder of each Mortgage Loan, and the Depositor had good
and marketable title thereto, and had full right to transfer and sell
each Mortgage Loan to the Trustee free and clear, subject only to (1)
liens of current real property taxes and assessments not yet due and
payable and, if the related Mortgaged Property is a condominium unit,
any lien for common charges permitted by statute, (2) covenants,
conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage
acceptable to mortgage lending institutions in the area in which the
related Mortgaged Property is located and specifically referred to in
the lender's Title Insurance Policy or attorney's opinion of title
and abstract of title delivered to the originator of such Mortgage
Loan, and (3) such other matters to which like properties are
commonly subject which do not, individually or in the aggregate,
materially interfere with the benefits of the security intended to be
provided by the Mortgage, of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and had
full right and authority, subject to no interest or participation of,
or agreement with, any other party, to sell and assign each Mortgage
Loan pursuant to this Agreement.
(b) The representations and warranties of CMC and Cendant Residential
Mortgage Trust ("CRMT" and, together with CMC, the "Cendant Entities") with
respect to the related Mortgage Loans in the Sale and Servicing Agreement,
which have been assigned to the Trustee hereunder, were made as of the date
specified in the Sale and Servicing 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 either Cendant Entity under the Sale
and Servicing Agreement and (ii) a representation or warranty of Lehman
Capital under the Mortgage Loan Sale and Assignment Agreement, the only right
or remedy of the Trustee or of any Certificateholder shall be the Trustee's
right to enforce the obligations of such Cendant Entity under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale and Assignment Agreement are applicable only to facts or
conditions that arise or events that occur subsequent to the date as of which
the representation and warranties with respect to the related Mortgage Loans
in the Sale and Servicing Agreements were made, and which do not constitute a
breach of any representation or warranty made by either Cendant Entity in
Section 3.02 of the Sale and Servicing Agreement. The Trustee acknowledges
that Lehman Capital shall have no obligation or liability with respect to any
breach of a representation or warranty made by it with respect to the Mortgage
Loans if the fact, condition or event constituting such breach also
constitutes a breach of a representation or warranty made by either Cendant
Entity in Section 3.02 of the Sale and Servicing Agreement, without regard to
whether such Cendant Entity fulfills its contractual obligations in respect of
such representation or warranty. The Trustee further acknowledges that the
Depositor shall have no obligation or liability with respect to any breach of
any representation or warranty with respect to the Mortgage Loans (except as
set forth in Section 2.03(a)(vi)) under any circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that
the representations and warranties set forth in Section 2.03 and the
representations and warranties of the Cendant Entities and Lehman Capital and
assigned to the Trustee 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, or the Trustee of a breach of any of the representations and
warranties set forth in Section 2.03 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 party. Within 90 days of the discovery
of such breach with respect to the representations and warranties given to the
Trustee by the Depositor or given by Lehman Capital and assigned to the
Trustee, the Depositor or Lehman Capital, as applicable, shall either (a) cure
such breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Qualifying Substitute Mortgage Loan for the affected Mortgage Loan. In the
event of discovery of a breach of any representation and warranty of either
Cendant Entity assigned to the Trustee, the Trustee shall enforce its rights
under the Sale and Servicing Agreement for the benefit of Certificateholders.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.
(a) With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Article II, by either Cendant Entity pursuant to the Sale and Servicing
Agreement or by Lehman Capital pursuant to the Mortgage Loan Sale and
Assignment 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 Certificate Account. The
Trustee, upon receipt of the full amount of the applicable purchase price for
a Deleted Mortgage Loan, or upon receipt of the Mortgage File for a Qualifying
Substitute Mortgage Loan substituted for a Deleted Mortgage Loan (and any
applicable Substitution Amount), shall release or cause to be released and
reassign to the Depositor, the applicable Cendant Entity or Lehman Capital, as
applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Trustee (or its custodian) at the Depositor's expense, and the
Trustee shall have no further responsibility with respect to the Mortgage File
relating to such Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or its custodian) pursuant to the terms of this
Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor, the
applicable Cendant Entity or Lehman Capital, as applicable, must deliver to
the Trustee (or its custodian) the Mortgage File for the Qualifying Substitute
Mortgage Loan containing the documents set forth in Section 2.01(b) along with
a written certification certifying as to the delivery of such Mortgage File
and containing the granting language set forth in Section 2.01(a); and (ii)
the Depositor, the applicable Cendant Entity or Lehman Capital, as applicable,
will be deemed to have made with respect to such Qualified Substitute Mortgage
Loan each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. As soon as practicable after the delivery of
any Qualifying Substitute Mortgage Loan hereunder, the Trustee, at the expense
of the Depositor and 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
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. Each
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 any Class of Residual Certificates may be issued in
any denomination in excess of the minimum denomination.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Each Certificate
shall, on original issue, be authenticated by the Trustee upon the order of
the Depositor upon receipt by the Trustee of the Mortgage Files described in
Section 2.01. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or the
Authenticating Agent, if any, by manual signature, and such certification upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Depositor to the Trustee or
the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in
this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and
hereby accepts its appointment as, Certificate Registrar in respect of the
Certificates and shall maintain books for the registration and for the
transfer of Certificates (the "Certificate Register"). The Trustee may appoint
a bank or trust company to act as Certificate Registrar. A registration book
shall be maintained for the Certificates collectively. The Certificate
Registrar may resign or be discharged or removed and a new successor may be
appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Trustee and the appointment of a successor Trustee. The
Certificate Registrar may appoint, by a written instrument delivered to the
Holders, 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 for registration of transfer or exchange shall be cancelled and
retained in accordance with normal retention policies with respect to
cancelled certificates maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or
(ii) the Trustee or any Authenticating Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and there
is delivered to the Trustee or the Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Depositor and any Authenticating Agent that such
destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and the Trustee or any Authenticating
Agent shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee and Authenticating Agent may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or the Authenticating Agent)
connected therewith. Any replacement Certificate issued pursuant to this
Section 3.05 shall constitute complete and indefeasible evidence of ownership
in the applicable Trust Fund, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of
Section 3.09 with respect to Book-Entry Certificates, the Depositor, the
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 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 Paying Agent, the Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including
the making of distributions on the Book-Entry Certificates) as the
authorized representatives of the Certificate Owners and the Clearing
Agency shall be responsible for crediting the amount of such
distributions to the accounts of such Persons entitled thereto, in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement, the provisions
of this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Unless and until Definitive Certificates are
issued pursuant to Section 3.09(c), the initial Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal of and interest on
the Book-Entry Certificates to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders
is required under this Agreement, unless and until Definitive Certificates
shall have been issued to Certificate Owners pursuant to Section 3.09(c), the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Principal Amount of a
Class of Book-Entry Certificates identified as such to the Trustee by an
Officer's Certificate from the Clearing Agency advise the Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Trustee shall notify or cause the Certificate Registrar to
notify the Clearing Agency to effect notification to all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Book-Entry Certificates by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue the Definitive Certificates.
Neither the Depositor nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable, with respect to such
Definitive Certificates and the Trustee shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted].
Section 4.02. [Omitted].
Section 4.03. Reports to Certificateholders. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail
to each Certificateholder and each Rating Agency a written report setting
forth the following information, which information the Trustee will determine
on the basis of, with respect to the Mortgage Loans, data which the Servicer
will provide to the Trustee or its designee prior to the Deposit Date:
(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;
(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 Principal Amount of
any Class of Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holder of a
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be
made by or on behalf of the 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 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 Servicing 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 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);
(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 Servicer to the Trustee; and
(xvi) with respect to each liquidated REO Property, the loan
number, the Net Liquidiation Proceeds and the outstanding principal
balance of the related Mortgage Loan.
In the case of information furnished pursuant to subclauses (i), (ii)
and (viii) above, the amounts shall be expressed as a dollar amount per $1,000
of original principal amount of Certificates.
In preparing or furnishing the foregoing information the Trustee
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 it by the Servicer, and the Trustee 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, the
Trustee shall, to the extent that such information has been provided to the
Trustee by the Servicer, provide, or cause to be provided, (or, to the extent
that such information or documentation is not required to be provided by the
Servicer under the Servicing Agreement, shall use reasonable efforts to obtain
such information and documentation from the 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 Trustee shall be
entitled to be reimbursed by such Certificateholder for such Trustee'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.
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 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 distributions to the Certificateholders pursuant
to Article V; and
(iv) 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.
Section 4.05. Determination of LIBOR. (a) If the outstanding
Certificates include any LIBOR Certificates, then on each LIBOR Determination
Date the Trustee shall determine LIBOR on the basis of the offered LIBOR
quotations of the Reference Banks as of 11:00 a.m. London time on such LIBOR
Determination Date as follows:
(i) If on any LIBOR Determination Date two or more of the
Reference Banks provide such offered quotations, LIBOR for the next
Accrual Period will be the arithmetic mean of such offered quotations
(rounding such arithmetic mean if necessary to the nearest five
decimal places);
(ii) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Accrual Period will be whichever is the higher of (x) LIBOR as
determined on the previous LIBOR Determination Date or (y) the
Reserve Interest Rate. The "Reserve Interest Rate" will be either (A)
the rate per annum which the Trustee determines to be the arithmetic
mean (rounding such arithmetic mean if necessary to the nearest five
decimal places) of the one-month Eurodollar lending rates that New
York City banks selected by the Trustee are quoting, on the relevant
LIBOR Determination Date, to the principal London offices of at least
two leading banks in the London interbank market or (B) in the event
that the Trustee can determine no such arithmetic mean, the lowest
one-month Eurodollar lending rate that the New York City banks
selected by the Trustee are quoting on such LIBOR Determination Date
to leading European banks; and
(iii) If on any LIBOR Determination Date the Trustee is required
but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (ii) above, LIBOR for the next Accrual Period
will be LIBOR as determined on the previous LIBOR Determination Date,
or, in the case of the first LIBOR Determination Date, the Initial
LIBOR Rate.
(b) The establishment of LIBOR by the Trustee and the Trustee's
subsequent calculation of the Certificate Interest Rate or Rates applicable to
the LIBOR Certificates for the relevant Accrual Period, in the absence of
manifest error, will be final and binding. In all cases, the Trustee may
conclusively rely on quotations of LIBOR for the Reference Banks as such
quotations appear on the display designated "LIUS01M" on the Bloomberg
Financial Markets Commodities News.
(c) As used herein, "Reference Banks" shall mean four leading banks
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) whose quotations appear on the "Bloomberg Screen LIUS01M Index
Page" (as described in the definition of LIBOR) on the applicable LIBOR
Determination Date and (iii) which have been designated as such by the Trustee
and are able and willing to provide such quotations to the Trustee on each
LIBOR Determination Date. The Reference Banks initially shall be: Barclay's
plc, Bank of Tokyo, National Westminster Bank and Trust Company and Bankers
Trust Company. If any of the initial Reference Banks should be removed from
the Bloomberg Screen LIUS01M Index Page or in any other way fail to meet the
qualifications of a Reference Bank, the Trustee shall use its best efforts to
designate alternate Reference Banks.
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 AX Certificates, a Percentage Interest of not less than 4.55%, 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 Principal Amounts (or initial
Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
and shall distribute such amount to the Holders of record of each Class of
Certificates in the following order of priority:
(i) to each Class of Senior Certificates other than the Class AP
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;
provided, however, that any shortfall in available amounts shall be
allocated among the Classes of Senior Certificates in proportion to
the amount of Accrued Certificate Interest (as so reduced) that would
otherwise be distributable thereon;
(ii) to each Class of Senior Certificates other than the Class
AP Certificates, any outstanding Interest Shortfall for such Class
and such Distribution Date; provided, however, that any shortfall in
available amounts shall be allocated among the Classes of Senior
Certificates in proportion to the Interest Shortfall for each such
Class on such Distribution Date;
(iii) to the Senior Certificates other than the Class AX
Certificates, in reduction of their Class Principal Amounts,
concurrently, as follows:
(A) sequentially to the Class A and Class R Certificates,
in that order, the Senior Principal Distribution Amount for such
Distribution Date, until the Class Principal Amount of each such
Class has been reduced to zero; and
(B) to the Class AP Certificates, the AP Principal
Distribution Amount for such Distribution Date, until the Class
Principal Amount thereof has been reduced to zero;
(iv) to the Class AP Certificates, the Class AP Deferred Amount
for such Distribution Date, until the Class Principal Amount thereof
has been reduced to zero; provided, however, that (A) distributions
pursuant to this priority shall not exceed the aggregate Subordinate
Principal Distribution Amount for such date; and (B) such amounts
will not reduce the Class Principal Amounts of such Classes; and
(v) 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;
(vi) to the Class B1 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(vii) to the Class B1 Certificates, in reduction of the Class
Principal Amount thereof, such Class's Subordinate Class Percentage
of the 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;
(viii) 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;
(ix) to the Class B2 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(x) to the Class B2 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
Distribution Date, except as provided in Section 5.02(c), until the
Class Principal Amount thereof has been reduced to zero;
(xi) 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;
(xii) to the Class B3 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(xiii) to the Class B3 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
Distribution Date, except as provided in Section 5.02(c), until the
Class Principal Amount thereof has been reduced to zero;
(xiv) 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;
(xv) to the Class B4 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(xvi) to the Class B4 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of the 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;
(xvii) 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;
(xviii) to the Class B5 Certificates, any Interest Shortfall for
such Class on such Distribution Date;
(xix) to the Class B5 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
Distribution Date, except as provided in Section 5.02(c), until the
Class Principal Amount Balance thereof has been reduced to zero;
(xx) 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;
(xxi) to the Class B6 Certificates, any Interest Shortfall for
such Class on such Distribution Date; and
(xxii) to the Class B6 Certificates, in reduction of the
Certificate Principal Amount thereof, such Class's Subordinate Class
Percentage of the 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 shall be allocated on each
Distribution Date to the Certificates other than the Class AP Certificates pro
rata based on the Accrued Certificate Interest otherwise distributable
thereon.
(c) (i) If on any Distribution Date the Credit Support Percentage for
the Class B1 Certificates is less than the Original Credit Support Percentage
for such Class, then, notwithstanding anything to the contrary in Section
5.02(a), no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in
respect of the Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates
on such Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date
the Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on
such Distribution Date.
Any amount not distributed in respect of any Class on any
Distribution Date pursuant to the immediately preceding paragraph will be
allocated among the remaining Classes of Subordinate Certificates in
proportion to their respective Class 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 shall not reduce the Class
Principal Amount of the Class R Certificate.
Section 5.03. Allocation of Realized Losses. (a) On any Distribution
Date, the principal portion of each Realized Loss other than any Excess Loss
shall be allocated as follows:
(i) the applicable AP Percentage of the principal portion of any
such Realized Loss shall be allocated to the Class AP Certificates
until the Class Certificate Principal Amount thereof has been reduced
to zero; and
(ii) the applicable Non-AP Percentage of the principal portion
of any such Realized Loss shall be allocated in the following order
of priority:
first, to the Class B6 Certificates, until the Class
Principal Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class
Principal Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Class
Principal Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class
Principal Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class
Principal Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class
Principal Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates, pro rata,
in accordance with their Class Principal Amounts; provided, that
any such loss allocated to any Class of Accrual Certificates
shall be allocated (subject to Section 5.03(c)) on the basis of
the lesser of (x) the Class Principal Amount thereof immediately
prior to the applicable Distribution Date and (y) the Class
Principal 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 shall be allocated as follows: (1) the AP Percentage of any
such loss shall be allocated to the Class AP Certificates, and (2) the Non-AP
Percentage of any such loss shall be allocated among the Classes of
Certificates other than the Class AP Certificates, pro rata, based on the
respective Class Certificate Principal Amounts thereof; provided, that any
such loss allocated to any Class of Accrual Certificates shall be allocated
(subject to Section 5.03(c)) on the basis of the lesser of (x) the Class
Principal Amount thereof immediately prior to the applicable Distribution Date
and (y) the Class Principal Amount thereof on the Closing Date (as reduced by
any Realized Losses previously allocated thereto).
(c) Any Realized Losses allocated to a Class of Certificates pursuant
to Section 5.03(a) or (b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph 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 immediately 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 AP Certificates on such Distribution Date shall be
taken into account in determining distributions in respect of any Class AP
Deferred Amount for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Class
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class
to which any portion of such Realized Loss had previously been allocated shall
be entitled to receive, on the Distribution Date in the month following the
month in which such recovery is received, its pro rata share (based on the
Class Principal Amount thereof) of such recovery, up to the amount of the
portion of such Realized Loss previously allocated to such Class. In the event
that the total amount of such recovery exceeds the amount of Realized Loss
allocated to the outstanding Classes in accordance with the preceding
provisions, each outstanding Class of Certificates shall be entitled to
receive its pro rata share of the amount of such excess, up to the amount of
any unrecovered Realized Loss previously allocated to such Class. Any such
recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not
otherwise allocated to any Class of Certificates, pursuant to this subsection
shall be treated as Principal Prepayments for purposes of this Agreement.
Section 5.04. Trustee Advances. In the event that the Servicer fails
for any reason to make an Advance required to be made by it pursuant to the
Sale and Servicing Agreement on or before the Deposit Date, the Trustee shall,
on or before the related Distribution Date, deposit in the Certificate Account
an amount equal to the excess of (a) Advances required to be made by the
Servicer that would have been deposited in such Certificate Account over (b)
the amount of any Advance made by the 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 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, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Any permissive
right of the Trustee provided for in this Agreement shall not be construed as
a duty of the Trustee. If an Event of Default has occurred and has not
otherwise been cured or waived, the Trustee shall exercise such of the rights
and powers vested in it by this Agreement and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs unless the Trustee
is acting as Servicer, in which case it shall use the same degree of care and
skill as the Servicer under the Sale and Servicing Agreement.
(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 Servicer, to the Trustee pursuant to this
Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful
misconduct. No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the 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 Servicer (i) to remit funds (or to
make Advances) or (ii) to furnish information to the Trustee when
required to do so by the Sale and Servicing Agreement, 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
(iv) The Trustee shall not be responsible for any act or
omission of the Servicer. In particular, the Trustee shall not 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.
(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 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.
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 Percentage Interest of each Class
of Certificates; provided, however, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability or payment of such estimated expenses as a condition to
proceeding. The reasonable expense thereof shall be paid by the
Holders requesting such investigation;
(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;
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 Certificate Account, any Escrow Account or any other fund
or account maintained with respect to the Certificates.
Section 6.04. Trustee May Own Certificates. The Trustee and any
Affiliate or agent of the Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may transact banking and trust
with the other parties hereto with the same rights it would have if it were
not Trustee or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution insured by the FDIC and
(ii) a corporation or national banking association, organized and doing
business under the laws of any State or the United States of America,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such corporation
or national banking association publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then, for the purposes of this Section, the combined
capital and surplus of such corporation or national banking association shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified
in Section 6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor. 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 and one copy to the successor trustee. 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 and one copy to the successor trustee.
(c) The Holders of more than 50% of the aggregate Percentage
Interests 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 and one copy
to the Trustee so removed; 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 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 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 Depositor 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 Depositor.
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 aggregate Percentage Interests 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 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. 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, to the extent that indemnification is not provided by the
Servicer pursuant to the Sale and Servicing Agreement 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 or under the Mortgage Loan Sale and Assignment
Agreement or the Sale and Servicing Agreement, provided that:
(i) to the extent that the indemnification provisions of the
Sale and Servicing Agreement indemnify the Trustee, as assignee of
the "Purchaser" thereunder, for such loss, liability or expense, the
Trustee has first made reasonable efforts to enforce any applicable
provisions in such Sale and Servicing Agreement for indemnification
or reimbursement of the Trustee (as "Purchaser") by the Servicer (it
being understood and agreed that "reasonable efforts" shall, without
limitation, (A) not require that the Trustee have brought suit
against the Servicer to enforce such indemnification provisions
before making a claim against the assets of the Trust Fund and (B)
have been satisfied if the Trustee shall have made demand on the
Servicer for such indemnification, but the Servicer is unable to
satisfy such demand due to its insolvency)
(ii) with respect to any such claim, the Trustee shall have
given the Depositor and the Holders written notice thereof promptly
after the Trustee shall have knowledge thereof;
(iii) while maintaining control over its own defense, the
Trustee shall cooperate and consult fully with the Depositor in
preparing such defense; and
(iv) notwithstanding anything to the contrary in this Section
6.11, the Trust Fund shall not be liable for settlement of any such
claim by the Trustee entered into without the prior consent of the
Depositor, which consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense
under any environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be
entitled to receive, and is authorized to pay to itself the amount of income
or gain earned from the investment of funds in the Certificate Account. The
Trustee shall be entitled to reimbursement of reasonable disbursements and
expenses made or incurred by the Trustee in accordance with the provisions of
this Agreement, the Mortgage Loan Sale and Assignment Agreement or the Sale
and Servicing Agreement, but not for (i) any such expense, disbursement or
advance as may arise from the Trustee's negligence or willful misconduct or
(ii) any amount expressly required under this Agreement to be paid by the
Trustee from its own funds.
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 Servicer, the Trustee shall request the Servicer to make such distribution
as promptly as practicable or legally permitted. If the Trustee shall
subsequently receive any such amount, it may withdraw such request.
Section 6.14. Trustee To Act; Appointment of Successor. (a) If an
Event of Default under the Sale and Servicing Agreement 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
the Sale and Servicing Agreement the Trustee, by notice in writing to the
Servicer may, and shall, if so directed by Certificateholders evidencing more
than 50% of the aggregate Percentage Interests of each Class of Certificates,
terminate all of the rights and obligations of the Servicer under the Sale and
Servicing Agreement and in and to the Mortgage Loans and the proceeds thereof.
On or after the receipt by the Servicer of such written notice, all authority
and power of the Servicer, and only in its capacity as Servicer under the Sale
and Servicing 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 the Sale and Servicing Agreement; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
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.
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 Servicer upon such
Servicer's failure to remit funds on the Deposit Date.
(b) On and after the time the Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee
receives the resignation of the Servicer evidenced by an Opinion of Counsel
pursuant to the applicable provisions of the Sale and Servicing Agreement, the
Trustee, unless another servicer shall have been appointed, shall be the
successor in all respects to the Servicer in its capacity as such under the
Sale and Servicing 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 Servicer under the Sale and Servicing Agreement,
including the obligation to make Advances; provided, however, that any failure
to perform such duties or responsibilities caused by the Servicer's failure to
provide information required by the Sale and Servicing 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 Servicer prior to the
issuance of any notice of termination. In the Trustee's capacity as such
successor, the Trustee shall have the same limitations on liability herein
granted to the Servicer. As compensation therefor, the Trustee shall be
entitled to receive all compensation payable to the Servicer under the Sale
and Servicing Agreement, including the applicable portion of the 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, 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 Servicer as are set forth in the
Sale and Servicing Agreement, as the successor to such Servicer under the Sale
and Servicing Agreement in the assumption of all of the responsibilities,
duties or liabilities of a servicer, like the Servicer. Any entity designated
by the Trustee as a successor 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 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 Servicer. 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 Servicer shall cooperate with the Trustee and any successor
servicer in effecting the termination of the Servicer's responsibilities and
rights hereunder including, without limitation, notifying Mortgagors of the
assignment of the servicing functions and providing the Trustee and successor
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and the transfer to the Trustee or such successor servicer, as
applicable, all amounts which shall at the time be or should have been
deposited by the Servicer in the Certificate 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 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 Servicer to deliver, or any
delay in delivering, cash, documents or records to it, (ii) the failure of the
Servicer to cooperate as required by the Sale and Servicing Agreement, (iii)
the failure of the Servicer to deliver the Mortgage Loan data to the Trustee
as required by the Sale and Servicing Agreement or (iv) restrictions imposed
by any regulatory authority having jurisdiction over the 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 Servicer in the performance of its obligations under the Sale and
Servicing Agreement, 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, any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement, and, to the extent that
such default related to the Servicer's obligation to make any Advance, the
Trustee shall not be obligated to make such Advance, notwithstanding anything
to the contrary in 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
Servicer or appointment of a successor to the 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
During Event of Default. Subject to the provisions of Section 8.01 hereof,
during the continuance of any Event of Default, Holders of Certificates
evidencing not less than 25% of the aggregate Percentage Interests 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 Servicer or any successor servicer from its rights and
duties as 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 Servicer and Upon
Event of Default. In the event that the Trustee shall have actual knowledge of
any action or inaction of the Servicer that would become an Event of Default
upon the Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Servicer. Fall all purposes of the Agreement, in
the absence of actual knowledge by a Responsible Officer of the Trustee, the
Trustee shall not be deemed to have knowledge of any failure of the Servicer
or any other Event of Default unless notified thereof in writing by the
Servicer or by a Certificateholder.
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans. (a) The obligations and responsibilities of
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as set forth in Section 7.02), 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); 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 Distribution 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 5% 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 mutually
agreed upon by the Servicer and 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 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 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, and subsequently receives, an Opinion
of Counsel, 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 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
aggregate Percentage Interests 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
Certificate Registrar and the Trustee that neither the Depositor, 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. 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.
(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, 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 in reliance thereon, whether or not notation of such action is
made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents.
Until all amounts distributable in respect of the Certificates have been
distributed in full, the Trustee (or its custodian) shall retain possession
and custody of each Mortgage File in accordance with and subject to the terms
and conditions of this Agreement; provided, that documents relating to any
Additional Collateral may be held by a custodian on behalf of the Trustee.
Section 9.02. 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 the information furnished by the Servicer or calculated by the
Trustee in accordance with this Agreement pursuant to instructions given by
the Depositor, and 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 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 disseminate
to Certificateholders Form 1099s (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law.
(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.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee shall 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 or regulation, and will file such reports electronically with
the Securities and Exchange Commission (the "SEC"). The Trustee shall sign
each such report on behalf of the Trust Fund, and shall forward a copy of each
such report to the Depositor promptly after such report has been filed with
the SEC. The Trustee shall use its best efforts to seek to terminate such
filing obligation promptly after the period during which such filings are
required under the Securities Exchange Act of 1934. Promptly after filing a
Form 15 or other applicable form with the SEC in connection with such
termination, the 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.
Section 9.03. Release of Mortgage Files. (a) Upon becoming aware of
the payment in full of any Mortgage Loan, or upon receipt by the 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 Servicer will immediately notify the Trustee (or its 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 Certificate Account maintained by the Trustee pursuant to
Section 4.04 have been or will be so deposited) of a Servicing Officer and
shall request the Trustee (or its custodian) to deliver to the Servicer the
related Mortgage File. Upon receipt of such certification and request, the
Trustee (or its custodian) shall promptly release the related Mortgage File to
the Servicer and the Trustee shall have no further responsibility with regard
to such Mortgage File. Upon any such payment in full, the Trustee authorizes
the Servicer 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 Certificate
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, the Trustee (or its custodian) shall execute such documents as
shall be prepared and furnished to the Trustee by the Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution
of any such proceedings. The Trustee (or its custodian) shall, upon request of
the Servicer and delivery to the Trustee (or its 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 Servicer.
Such trust receipt shall obligate the Servicer to return the Mortgage File to
the Trustee (or its custodian) when the need therefor by the 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 specified
above, the trust receipt shall be released by the Trustee (or its custodian)
to the Servicer.
(c) The Trustee covenants and agrees that it will comply with all
relevant laws and regulations governing the custody, processing, release and
delivery of the Mortgage Loan documents within its possession or control.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) An election shall be made by
the Trustee to treat the Trust Fund as a REMIC under the Code. Such election
shall 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, the
Certificates other than the Class R 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).
(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, 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, 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 has received an
Opinion of Counsel (at the expense of the party seeking to take such action)
to the effect that the contemplated action will not endanger such 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
or its designee, 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 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 Certificate 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 to the extent permitted by the Sale and Servicing
Agreement.
(j) The Trustee shall not 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 confirming the Trustee's
compliance with the provisions of this Section 10.01.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor, 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 any REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the 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 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).
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 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 and the Trustee with the consent of the Holders of not less than
66-2/3% of the aggregate Percentage Interests of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall be made unless the Trustee receives an Opinion of
Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of any REMIC as a REMIC or cause a tax to
be imposed on such REMIC; and provided further, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate,
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentages of Class 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 aggregate
Percentage Interests 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 the Sale and
Servicing Agreement, the Trustee shall not consent to any amendment of the
Sale and 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 Percentage Interests,
Certificates owned by the Depositor, the Trustee or Servicer or Affiliates
thereof are not to be counted so long as such Certificates are owned by the
Depositor, the Trustee or the 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 9.02(c) and (ii) a copy of any other document incorporated by
reference in the Prospectus. Any reasonable out-of-pocket expenses incurred by
the Trustee in providing copies of such documents shall be reimbursed by the
Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to
be delivered by first class mail to the Depositor, Attention: Contract
Finance, a copy of the report delivered to Certificateholders pursuant to
Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
received by (a) in the case of the Depositor, Structured Asset Securities
Corporation, 200 Vesey Street, 12th Floor, New York, New York 10285,
Attention: Mark Zusy, (b) in the case of the Trustee, U.S. Bank National
Association, 180 East Fifth Street, St. Paul, Minnesota 55101, Attention:
Structured Finance, 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. (a) 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
paragraph (b) of this Section 11.11.
(b) Notwithstanding any provision herein to the contrary, the parties
to this Agreement agree that it is appropriate, in furtherance of the intent
of such parties as set forth herein, that the Servicer receive the benefit of
the provisions of Section 9.03 hereof and of this Section 11.11 as an intended
third party beneficiary of this Agreement of the extent of such provisions.
The Trustee shall have the same obligations to the Servicer under Section 9.03
hereof as if the Servicer were a party to this Agreement, and the Servicer
shall have the same rights and remedies to enforce the provisions of Section
9.03 hereof and this Section 11.11 as if the Servicer were a party to this
Agreement.
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) the appointment of any successor to the Servicer pursuant
to Section 6.14;
(iii) the making of a final payment pursuant to Section 7.02;
(iv) resignation of the Trustee; and
(v) any Event of Default under the Sale and Servicing Agreement.
(b) All notices to the Rating Agencies provided for this Section
shall be in writing and sent by first class mail, telecopy or overnight
courier, as follows:
If to DCR, to:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
38th Floor
Chicago, Illinois 60603
Attention: Residential
MBS/SASCO 1998-10
If to Moody's, to:
Moody's Investors Service
99 Church Street, 4th Floor
New York, New York 10007
Attention: Keith Wofford
(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.
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee 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 J. Kelly
----------------------
Name: Joseph J. Kelly
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ C. Hatfield
----------------------
Name: C. Hatfield
Title: Vice President
<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 November
1, 1998 between Structured Asset Securities Corporation, as
Depositor, and U.S. Bank, National Association, as Trustee,
with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as [Custodian on behalf of
the] Trustee, hereby certifies that it (or its custodian) has received the
documents listed in Section 2.01(b) of the Trust Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Schedule A, to the Trust
Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Trust
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Trust Agreement and the Trust Agreement sections cross-referenced
therein.
[[Custodian], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Name:
Title:
<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 November
1, 1998 between Structured Asset Securities Corporation, as
Depositor, and U.S. Bank, National Association, as Trustee,
with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the documents identified above and has
determined that each such document appears regular on its face and appears to
relate to the Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement including, but
not limited to, Section 2.02(b).
[[Custodian], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Name:
Title:
<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 November
1, 1998 between Structured Asset Securities Corporation, as
Depositor, and U.S. Bank, National Association, as Trustee,
with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the documents listed above and has
determined that each such document appears to be complete and, based on an
examination of such documents, the information set forth in the Mortgage Loan
Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is
qualified in all respects by the terms of said Trust Agreement.
[[Custodian], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT B-4
FORM OF ENDORSEMENT
Pay to the order of U.S. Bank National Association, as trustee (the
"Trustee") under the Trust Agreement dated as of November 1, 1998, between
Structured Asset Securities Corporation, as Depositor, and the Trustee
relating to Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10, 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 November 1, 1998 between
Structured Asset Securities Corporation, as Depositor, and you, as Trustee
(the "Trust Agreement"), the undersigned 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:
(a) Mortgage Loan paid in full. (The 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.)
(b) The Mortgage Loan is being foreclosed.
(c) Mortgage Loan substituted. (The 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.)
(d) Mortgage Loan repurchased. (The Servicer hereby certifies that
the Purchase Price has been credited to the Certificate Account pursuant to
the Trust Agreement.)
(e) 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") between Structured Asset Securities
Corporation, as Depositor, and U.S. Bank National Association, as Trustee,
dated as of November 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
SALE AND SERVICING AGREEMENT
<PAGE>
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1998-10
Reference is hereby made to the Trust Agreement dated as of November
1, 1998 (the "Trust Agreement") between Structured Asset Securities
Corporation, as Depositor, and U.S. Bank National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Trust Agreement.
This letter relates to $_________ initial Certificate 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 November 1, 1998 between the
Depositor and U.S. Bank National Association, as Trustee (the
"Trustee"), a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any
person purchasing any of the Privately Offered Certificates from us a
notice advising such purchaser that resales of the Privately Offered
Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited
Investor, we will be required to furnish to the Trustee and the
Depositor a certification from such transferee in the form hereof to
confirm that the proposed sale is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in
the Privately Offered Certificates, and we and any account for which
we are acting are each able to bear the economic risk of such
investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional
Accredited Investor) as to each of which we exercise sole investment
discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that
in accordance with ERISA, the Code and the Exemption, no Plan as to
which the Purchaser, the Depositor, the 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") between Structured Asset Securities Corporation,
as Depositor, and U.S. Bank National Association, as Trustee, dated as of
November 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>
SCHEDULE A
MORTGAGE LOAN SCHEDULE
<PAGE>
==============================================================================
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 November 1, 1998
==============================================================================
<PAGE>
TABLE OF CONTENTS
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.............................................................8
2.04. Governing Law.........................................................8
2.05. Severability of Provisions............................................9
2.06. Indulgences; No Waivers...............................................9
2.07. Headings Not to Affect Interpretation.................................9
2.08. Benefits of Agreement.................................................9
2.09. Counterparts..........................................................9
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
<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 November, 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 November 1, 1998, between the Depositor and U.S.
Bank, National Association, as Trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to each of the Sellers' Warranties and Servicing
Agreement, dated as of November 1, 1998 (the "Sale and Servicing Agreement"),
between Lehman Capital, Cendant Mortgage Corporation ("CMC") and Cendant
Residential Mortgage Trust ("CRMT" and, together with CMC, the "Sellers"), the
Sellers sold to Lehman Capital, and Lehman Capital purchased from the Sellers,
certain mortgage loans identified on the Mortgage Loan Schedule attached
hereto as Schedule A (the "Mortgage Loans"), and CMC agreed to service such
Mortgage Loans according to the provisions thereof;
WHEREAS, pursuant to each Sale and Servicing Agreement, the parties
thereto agreed that, following the execution of such agreement, Lehman Capital
would (i) sell the Mortgage Loans to the Depositor, and (ii) assign all of its
rights and interest under the Sale and Servicing Agreement, and delegate all
of its obligations thereunder, to the Depositor, as if the Depositor had been
a party to the Sale and Servicing Agreement;
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; and
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 Sale and Servicing Agreement, and to
delegate all of its obligations thereunder, to the Depositor.
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 $243,400,122. 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 November 1, 1998 (other
than payments of principal and interest due on or before such date), and all
such payments due after such date but received prior to such date and intended
by the related Mortgagors to be applied after such date, together with all of
Lehman Capital's right, title and interest in and to each related account and
all amounts from time to time credited to and the proceeds of such account,
any REO Property and the proceeds thereof, Lehman Capital's rights under any
Insurance Policies related to the Mortgage Loans, and Lehman Capital's
security interest in any collateral pledged to secure the Mortgage Loans,
including the Mortgaged Properties, any Additional Collateral and any proceeds
of the foregoing.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
the Sale and Servicing Agreement, and delegates to the Depositor all of its
obligations under the Sale and Servicing Agreement. Concurrently with the
execution hereof, the Depositor tenders the purchase price of $243,400,122
(including accrued interest). The Depositor hereby accepts such assignment and
delegation, and shall be entitled to exercise all such rights of Lehman
Capital under the Sale and Servicing Agreement, as if the Depositor had been a
party to the Sale and Servicing Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such transfer
--------------------
and assignment of the Mortgage Loans hereunder, Lehman Capital does hereby
deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the Sale and Servicing
Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
-----------------------
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by U.S. Bank Trust National Association (the "Trustee"), or its custodian. The
Trustee or its custodian is required to review, within 45 days following the
Closing Date, the Mortgage File. If in the course of such review the Trustee
or its custodian identifies any Material Defect, Lehman Capital shall be
obligated to cure such defect or to repurchase the related Mortgage Loan from
the Depositor (or, at the direction of and on behalf of the Depositor, from
the Trust Fund), or to substitute a Qualifying Substitute Mortgage Loan
therefor, in each case to the same extent and in the same manner as the
Depositor is obligated to the Trustee and the Trust Fund under Section 2.02(c)
of the Trust Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a)
---------------------------------------------------
Lehman Capital hereby represents and warrants to the Depositor that as of the
date hereof that:
(i) Lehman Capital is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and
has full corporate power and authority to own its property, to carry on its
business as presently conducted, and to enter into and perform its obligations
under this Agreement;
(ii) the execution and delivery by Lehman Capital of this Agreement
have been duly authorized by all necessary corporate action on the part of
Lehman Capital; neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or constitute
a default under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on Lehman Capital or its
properties or the certificate of incorporation or bylaws of Lehman Capital;
(iii) the execution, delivery and performance by Lehman Capital of
this Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except such as has been
obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by Lehman
Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally and (B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law; and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted against or
affecting Lehman Capital, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter which
in the judgment of Lehman Capital will be determined adversely to Lehman
Capital and will if determined adversely to Lehman Capital materially and
adversely affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect its ability to perform its
obligations under this Agreement.
(b) The representations and warranties of the Sellers with respect to the
related Mortgage Loans in the Sale and Servicing Agreement were made as of the
date specified in the Sale and Servicing 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 either Seller under the Sale and
Servicing 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 the applicable Seller 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 or conditions that arise or events that
occur subsequent to the date as of which the representation and warranties
with respect to the related Mortgage Loans in the Sale and Servicing
Agreements were made, and which do not constitute a breach of any
representation or warranty made by either Seller in Section 3.02 of the Sale
and Servicing 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
either Seller in Section 3.02 of the Sale and Servicing Agreement, without
regard to whether such Seller 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. All individual insurance polices contain a
standard mortgagee clause naming the related Seller and its successors and
assigns as mortgagee, and all premiums thereon have been paid. Each Mortgage
obligates the related Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or regulation, each
Mortgagor has been given an opportunity to choose the carrier of the required
hazard insurance, provided the policy is not a "master" or "blanket" hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the
insurer, is in full force and effect, and will be in full force and effect and
inure to the benefit of the Depositor upon the consummation of the
transactions contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled, subordinated
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release, cancellation,
subordination or recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is subject
only to: (1) liens of current real property taxes and assessments not yet due
and payable and, if the related Mortgaged Property is a condominium unit, any
lien for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as
of the date of recording of such Mortgage acceptable to mortgage lending
institutions in the area in which the related Mortgaged Property is located
and specifically referred to in the lender's Title Insurance Policy or
attorney's opinion of title and abstract of title delivered to the originator
of such Mortgage Loan, and (3) such other matters to which like properties are
commonly subject which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by the
Mortgage. Any security agreement, chattel mortgage or equivalent document
related to, and delivered to the Trustee in connection with, a Mortgage Loan
establishes a valid, subsisting and enforceable first lien on the property
described therein and the Depositor has full right to sell and assign the same
to the Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of record
and holder of each Mortgage Loan, and Lehman Capital had good and marketable
title thereto, and has full right to transfer and sell each Mortgage Loan to
the Depositor free and clear, except as described in paragraph (v) above, of
any encumbrance, equity, participation interest, lien, pledge, charge, claim
or security interest, and has full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
each Mortgage Loan pursuant to this Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is covered
by either (i) an attorney's opinion of title and abstract of title the form
and substance of which is generally acceptable to mortgage lending
institutions originating mortgage loans in the locality where the related
Mortgaged Property is located or (ii) an ALTA mortgagee Title Insurance Policy
or other generally acceptable form of policy of insurance, issued by a title
insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the originator of the Mortgage Loan, and its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan (subject only to the exceptions
described in paragraph (v) above. If the Mortgaged Property is a condominium
unit located in a state in which a title insurer will generally issue an
endorsement, then the related Title Insurance Policy contains an endorsement
insuring the validity of the creation of the condominium form of ownership
with respect to the project in which such unit is located. With respect to any
Title Insurance Policy, the originator is the sole insured of such mortgagee
Title Insurance Policy, such mortgagee Title Insurance Policy is in full force
and effect and will inure to the benefit of the Depositor upon the
consummation of the transactions contemplated by this Agreement, no claims
have been made under such mortgagee Title Insurance Policy and no prior holder
of the related Mortgage, including Lehman Capital, has done, by act or
omission, anything that would impair the coverage of such mortgagee Title
Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage Loan.
There is no proceeding pending for the total or partial condemnation of any
Mortgaged Property (or, in the case of a Cooperative Loan, the related
cooperative unit) and each such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, so
as to have a material adverse effect on the value of the related Mortgaged
Property as security for the related Mortgage Loan or the use for which the
premises were intended;
(ix) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company,
or similar institution which is supervised and examined by a Federal or State
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 of the National Housing Act; 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 either Seller under Section 3.02 of the Sale and
Servicing Agreement, the party discovering such breach shall give prompt
written notice to the other party. Within 60 days of the discovery of any such
breach, Lehman Capital shall either (a) cure such breach in all material
respects, (b) repurchase such Mortgage Loan or any property acquired in
respect thereof from the Depositor at the applicable Purchase Price or (c)
within the two year period following the Closing Date, substitute a Qualifying
Substitute Mortgage Loan for the affected Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of Lehman
------------
Capital's right, title and interest in and to Mortgage Loans and other
property conveyed pursuant to this Agreement shall constitute, and shall be
construed as, a sale of such property and not a grant of a security interest
to secure a loan. However, if such conveyance is deemed to be in respect of a
loan, it is intended that: (1) the rights and obligations of the parties shall
be established pursuant to the terms of this Agreement; (2) Lehman Capital
hereby grants to the Depositor a first priority security interest in all of
Lehman Capital's right, title and interest in, to and under, whether now owned
or hereafter acquired, such Mortgage Loans and other property; and (3) this
Agreement shall constitute a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the
------------------------
right, upon notice to but without the consent of Lehman Capital, to assign, in
whole or in part, its interest under this Agreement, with respect to the
Mortgage Loans to the Trustee, and the Trustee then shall succeed to all
rights of the Depositor under this Agreement. All references to the Depositor
in this Agreement shall be deemed to include its assignee or designee,
specifically including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement
-----------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
-----------------
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 2.03. Amendment. (a) This Agreement may be amended from time to
---------
time by Lehman Capital and the Depositor, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund, the Trust Agreement or
this Agreement in any Offering Document; or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions with respect to matters or questions
arising under this Agreement or (iv) to add, delete, or amend any provisions
to the extent necessary or desirable to comply with any requirements imposed
by the Code and the REMIC Provisions. No such amendment effected pursuant to
clause (iii) of the preceding sentence shall adversely affect in any material
respect the interests of any Holder. Any such amendment shall be deemed not to
adversely affect in any material respect any Holder, if the Trustee receives
written confirmation from each Rating Agency that such amendment will not
cause such Rating Agency to reduce the then current rating assigned to the
Certificates (and any Opinion of Counsel requested by the Trustee in
connection with any such amendment may rely expressly on such confirmation as
the basis therefor).
(b) This Agreement may also be amended from time to time by Lehman
Capital and the Depositor with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which
are required to be distributed on any Certificate without, the consent of the
Holder of such Certificate or (ii) reduce the aforesaid percentages of Class
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected
thereby. For purposes of this paragraph, references to "Holder" or "Holders"
shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.
(c) It shall not be necessary for the consent of Holders under this
Section 2.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
Section 2.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 2.05. Severability of Provisions. If any one or more of the
----------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 2.06. Indulgences; No Waivers. Neither the failure nor any delay
------------------------
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 2.07. Headings Not to Affect Interpretation. The headings
-----------------------------------------
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 2.08. Benefits of 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 J. Kelly
---------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
STRUCTURED ASSET SECURITIES CORPORATION
By: /s/ Stanley Labanowski
---------------------------
Name: Stanley Labanowski
Title: Vice President
<PAGE>
SCHEDULE A
MORTGAGE LOAN SCHEDULE
