SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
February 26, 1999
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the Trust
Agreement, dated as of February 1, 1999, providing for the issuance of
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1999-ALS1)
Structured Asset Securities Corporation
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-68513 74-2440850
--------------------------- ----------- -------------------
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
200 Vesey Street
New York, New York 10285
------------------------------ --------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (212) 526-5594
No Change
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
------------
The Registrant registered issuances of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-68513) (the
"Registration Statement"). Pursuant to the Registration Statement, the
Registrant issued $284,147,098 in aggregate principal amount of Class 1-A, Class
1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class 3-AP, Class 3-AX,
Class B1, Class B2, Class B3 and Class R Certificates of its Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1999-ALS1 on
February 26, 1999. This Current Report on Form 8-K is being filed to satisfy an
undertaking, contained in the definitive Prospectus dated January 15, 1999, as
supplemented by the Prospectus Supplement dated February 24, 1999 (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 February 1, 1999, among
Structured Asset Securities Corporation, as depositor (the "Depositor"), Aurora
Loan Services Inc., as master servicer, and The Chase Manhattan Bank, as trustee
(the "Trustee"). The "Certificates" consist of the following classes: Class 1-A,
Class 1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class 3-AP, Class
3-AX, Class B1, Class B2, Class B3, Class B4, Class B5, Class B6 and Class R.
The Certificates evidence all the beneficial ownership interest in a trust fund
(the "Trust Fund") that consists primarily of three pools of fixed rate,
conventional, first lien residential mortgage loans (the "Mortgage Loans") with
an aggregate outstanding principal balance of $288,773,612.87 as of February 1,
1999, together with certain other assets. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Trust
Agreement.
<PAGE>
Item 7. Financial Statements; PRO FORMA Financial Information and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated February 24, 1999, between Structured Asset
Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of February 1, 1999, among Structured Asset
Securities Corporation, as Depositor, Aurora Loan Services Inc., as
Master Servicer, and The Chase Manhattan Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of February 1,
1999, between Lehman Capital, A Division of Lehman Brothers Holdings
Inc., as Seller, and Structured Asset Securities Corporation, as
Purchaser.
99.2 Servicing Agreement, dated as of February 1, 1999, between Lehman
Capital, A Division of Lehman Brothers Holdings Inc., and Aurora Loan
Services Inc., as servicer.
99.3* Flow Servicing Agreement, dated as of September 1, 1997, between
Lehman Capital, A Division of Lehman Brothers Holdings Inc., and
Aurora Loan Services Inc., as servicer.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/Joseph J. Kelly
----------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
Dated: March 12, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Terms Agreement, dated February 24,
1999, between Structured Asset
Securities Corporation and Lehman
Brothers Inc.
4.1 Trust Agreement, dated as of
February 1, 1999, among Structured
Asset Securities Corporation, as
Depositor, Aurora Loan Services
Inc., as Master Servicer, and The
Chase Manhattan Bank, as Trustee.
99.1 Mortgage Loan Sale and Assignment
Agreement, dated as of February 1,
1999, between Lehman Capital, A
Division of Lehman Brothers
Holdings Inc., as Seller, and
Structured Asset Securities
Corporation, as Purchaser.
99.2 Servicing Agreement, dated as of
February 1, 1999, between Lehman
Capital, A Division of Lehman
Brothers Holdings Inc., and Aurora
Loan Services Inc., as servicer.
99.3* Flow Servicing Agreement, dated as
of September 1, 1997, between
Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and
Aurora Loan Services Inc., as
servicer.
____________________
* Incorporated by reference to the Depositor's Current Report on Form 8-K
dated March 30, 1998, filed with the Securities and Exchange Commission on
April 14, 1998 (File No. 333-47499).
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-ALS1
TERMS AGREEMENT
---------------
Dated: February 24, 1999
To: Structured Asset Securities Corporation, as Depositor under the Trust
Agreement dated as of February 1, 1999 (the "Trust Agreement").
Re: Underwriting Agreement Standard Terms dated as of April 16, 1996 (the
"Standard Terms," and together with this Terms Agreement, the "Agreement").
Series Designation: Series 1999-ALS1.
- ------------------
Terms of the Series 1999-ALS1 Certificates: Structured Asset Securities
- -----------------------------------------------
Corporation, Series 1999-ALS1 Mortgage Pass-Through Certificates, Class 1-A,
Class 1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class 3-AP, Class
3-AX, Class B1, Class B2, Class B3, Class B4, Class B5, Class B6 and Class R
(the "Certificates") will evidence, in the aggregate, the entire beneficial
ownership interest in a trust fund (the "Trust Fund"). The primary assets of the
Trust Fund consist of two pools of fixed rate, conventional, first lien
residential mortgage loans (the "Mortgage Loans"). Only the Class 1-A, Class
1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class 3-AP, Class 3-AX,
Class B1, Class B2, Class B3 and Class R Certificates (the "Offered
Certificates") are being sold pursuant to the terms hereof.
Registration Statement: File Number 333-68513.
- ----------------------
Certificate Ratings: It is a condition of Closing that at the Closing Date: the
- --------------------
Class 1-A, Class 2-A and Class 3-A Certificates be rated "AAA" by each of Duff &
Phelps Credit Rating Co. ("DCR"), Fitch IBCA, Inc. ("Fitch"), and Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P,"
which together with DCR and Fitch, the "Rating Agencies"); the Class 1-AP, Class
2-AP, Class 2-AX, Class 3-AP and Class 3-AX Certificates be rated "AAA" by each
of DCR and Fitch and "AAAr" by S&P; the Class B1 Certificates be rated "AA" by
each of DCR, Fitch and S&P; the Class B2 Certificates be rated "A" by DCR; and
the Class B3 Certificates be rated "BBB" by DCR.
Terms of Sale of Offered Certificates: The Depositor agrees to sell to Lehman
- --------------------------------------
Brothers Inc. (the "Underwriter") and the Underwriter agrees to purchase from
the Depositor, the Offered Certificates in the principal amounts and prices set
forth on Schedule 1 annexed hereto. The purchase price for the Offered
Certificates shall be the Purchase Price Percentage set forth in Schedule 1 plus
accrued interest at the initial interest rate per annum from and including the
Cut-off Date up to, but not including, the Closing Date.
The Underwriter will offer the Offered Certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale.
Cut-off Date: February 1, 1999.
- ------------
Closing Date: 10:00 A.M., New York time, on or about February 26, 1999. On the
- ------------
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between the
Depositor and the Underwriter in accordance with its terms.
LEHMAN BROTHERS INC.
By: /s/Stanley P. Labanowski
---------------------------------
Name: Stanley P. Labanowski
Title: Vice President
Accepted:
STRUCTURED ASSET SECURITIES
CORPORATION
By: /s/Joseph J. Kelly
----------------------------
Name: Joseph J. Kelly
Title: Vice President
<PAGE>
Schedule 1
Certificate Purchase
Initial Certificate Interest Price
Class Principal Amount(1) Rate Percentage
Class 1-A $152,951,000 6.90% 100.70312%
Class 1-AP 933,405 0.00% 60.00000%
Class 2-A 76,965,000 6.75% 100.41900%
Class 2-AP 784,915 0.00% 70.00000%
Class 2-AX (2) 0.15% 0.37500%
Class 3-A 33,914,000 6.55% 100.29000%
Class 3-AP 844,678 0.00% 65.00000%
Class 3-AX (2) 0.35% 0.87500%
Class B1 8,662,000 6.90% 99.20042%
Class B2 6,351,000 6.90% 97.49896%
Class B3 2,741,000 6.90% 91.58269%
Class R 100 6.90% 100.00000%
- ---------------
1) Approximate.
2) The Class 2-AX and Class 3-AX Certificates will have no Certificate
Principal Amount and will accrue interest on a calculated aggregate
National Amount described in the Prospectus Supplement.
================================================================================
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
AURORA LOAN SERVICES INC., as Master Servicer,
and
THE CHASE MANHATTAN BANK, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of February 1, 1999
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-ALS1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................2
Section 1.02. Calculations Respecting Mortgage Loans........................29
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund;
Conveyance of Mortgage Loans..............................29
Section 2.02. Acceptance of Trust Fund by Trustee:
Review of Documentation for Trust Fund....................32
Section 2.03. Representations and Warranties of the Depositor...............33
Section 2.04. Discovery of Breach...........................................35
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans........35
Section 2.06. Grant Clause..................................................36
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates..............................................36
Section 3.02. Registration..................................................37
Section 3.03. Transfer and Exchange of Certificates.........................37
Section 3.04. Cancellation of Certificates..................................40
Section 3.05. Replacement of Certificates...................................40
Section 3.06. Persons Deemed Owners.........................................40
Section 3.07. Temporary Certificates........................................40
Section 3.08. Appointment of Paying Agent...................................41
Section 3.09. Book-Entry Certificates.......................................41
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account............................................43
Section 4.02. Application of Funds in the Collection Account................44
Section 4.03. Reports to Certificateholders.................................46
Section 4.04. Certificate Account...........................................49
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally.......................................50
Section 5.02. Distributions from the Certificate Account....................50
Section 5.03. Allocation of Realized Losses.................................55
Section 5.04. Advances by Master Servicer and Trustee.......................57
Section 5.05. Compensating Interest Payments................................58
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee.............................................58
Section 6.02. Certain Matters Affecting the Trustee.........................60
Section 6.03. Trustee Not Liable for Certificates...........................61
Section 6.04. Trustee May Own Certificates..................................62
Section 6.05. Eligibility Requirements for Trustee..........................62
Section 6.06. Resignation and Removal of Trustee............................62
Section 6.07. Successor Trustee.............................................63
Section 6.08. Merger or Consolidation of Trustee............................63
Section 6.09. Appointment of Co-Trustee,
Separate Trustee or Custodian.............................64
Section 6.10. Authenticating Agents.........................................65
Section 6.11. Indemnification of Trustee....................................66
Section 6.12. Fees and Expenses of Trustee..................................66
Section 6.13. Collection of Monies..........................................67
Section 6.14. Events of Default; Trustee To Act;
Appointment of Successor..................................67
Section 6.15. Additional Remedies of Trustee Upon Event of Default..........70
Section 6.16. Waiver of Defaults............................................71
Section 6.17. Notification to Holders.......................................71
Section 6.18. Directions by Certificateholders and Duties of
Trustee During Event of Default...........................71
Section 6.19. Action Upon Certain Failures of the Master Servicer and
Upon Event of Default.....................................71
Section 6.20. Preparation of Tax Returns and Other Reports..................71
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or
Liquidation of All Mortgage Loans.........................72
Section 7.02. Procedure Upon Termination of Trust Fund......................73
Section 7.03. Additional Trust Fund Termination Requirements................74
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders...............................75
Section 8.02. Access to List of Holders.....................................75
Section 8.03. Acts of Holders of Certificates...............................76
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer.................................77
Section 9.02. Master Servicer Fidelity Bond and
Master Servicer Errors and Omissions Insurance Policy.....77
Section 9.03. Master Servicer's Financial Statements and
Related Information.......................................78
Section 9.04. Power to Act; Procedures......................................78
Section 9.05. Servicing Agreements Between the Master Servicer and
Servicers; Enforcement of Servicers' Obligations..........79
Section 9.06. Collection of Taxes, Assessments and Similar Items............80
Section 9.07. Termination of Servicing Agreements; Successor Servicers......80
Section 9.08. Master Servicer Liable for Enforcement........................81
Section 9.09. No Contractual Relationship Between Servicers and
Trustee or Depositor......................................81
Section 9.10. Assumption of Servicing Agreement by Trustee..................81
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements..................82
Section 9.12. Release of Mortgage Files.....................................82
Section 9.13. Documents, Records and Funds in Possession of
Master Servicer To Be Held for Trustee....................83
Section 9.14. Representations and Warranties of the Master Servicer.........84
Section 9.15. Closing Certificate and Opinion...............................86
Section 9.16. Standard Hazard and Flood Insurance Policies..................86
Section 9.17. Presentment of Claims and Collection of Proceeds..............87
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies........87
Section 9.19. Trustee To Retain Possession of
Certain Insurance Policies and Documents..................87
Section 9.20. Realization Upon Defaulted Mortgage Loans.....................88
Section 9.21. Compensation to the Master Servicer...........................88
Section 9.22. REO Property..................................................88
Section 9.23. [Omitted].....................................................89
Section 9.24. Reports to the Trustee........................................89
Section 9.25. Annual Officer's Certificate as to Compliance.................89
Section 9.26. Annual Independent Accountants' Servicing Report..............90
Section 9.27. Merger or Consolidation.......................................91
Section 9.28. Resignation of Master Servicer................................91
Section 9.29. Assignment or Delegation of Duties by the Master Servicer.....91
Section 9.30. Limitation on Liability of the Master Servicer and Others.....91
Section 9.31. Indemnification; Third-Party Claims...........................92
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration..........................................92
Section 10.02. Prohibited Transactions and Activities........................94
Section 10.03. Indemnification with Respect to
Certain Taxes and Loss of REMIC Status....................94
Section 10.04. REO Property..................................................95
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment.......................96
Section 11.02. Entire Agreement..............................................96
Section 11.03. Amendment.....................................................96
Section 11.04. Voting Rights.................................................97
Section 11.05. Provision of Information......................................97
Section 11.06. Governing Law.................................................98
Section 11.07. Notices.......................................................98
Section 11.08. Severability of Provisions....................................98
Section 11.09. Indulgences; No Waivers.......................................98
Section 11.10. Headings Not To Affect Interpretation.........................98
Section 11.11. Benefits of Agreement.........................................98
Section 11.12. Special Notices to the Rating Agencies........................99
Section 11.13. Counterparts.................................................100
Section 11.14. Transfer of Servicing........................................100
<PAGE>
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Servicing Agreement
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
Exhibit K Custodial Agreement
Schedule A Mortgage Loan Schedule
Schedule B Principal Amount Schedules
<PAGE>
This TRUST AGREEMENT, dated as of February 1, 1999 (the "Agreement"), is by
and among STRUCTURED ASSET SECURITIES CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), AURORA LOAN SERVICES INC., as master servicer (the
"Master Servicer"), and THE CHASE MANHATTAN BANK, a New York banking corporation
with its main office in New York, New York, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from Lehman Capital, A
Division of Lehman Brothers Holdings Inc. (the "Seller"), and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed by
it to the Trustee for inclusion in the Trust Fund. On the Closing Date, the
Depositor will acquire the Certificates from the Trust Fund, as consideration
for its transfer to the Trust Fund of the Mortgage Loans and the other property
constituting the Trust Fund. The Depositor has duly authorized the execution and
delivery of this Agreement to provide for the conveyance to the Trustee of the
Mortgage Loans and the other property constituting the Trust Fund. All covenants
and agreements made by the Depositor, the Master Servicer and the Trustee herein
with respect to the Mortgage Loans and the other property constituting the Trust
Fund are for the benefit of the Holders from time to time of the Certificates.
The Depositor and the Master Servicer are entering into this Agreement, and the
Trustee is accepting the Trust Fund created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund be treated
for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, the Lower Tier
REMIC and the Upper Tier REMIC, respectively). Each Certificate, other than the
Class R Certificate, represents ownership of a regular interest in the Upper
Tier REMIC for purposes of the REMIC Provisions. The Class R Certificate
represents ownership of the sole class of residual interest in each of the Lower
Tier REMIC and the Upper Tier REMIC for purposes of the REMIC Provisions. The
Upper Tier REMIC shall hold as assets the several classes of uncertificated
Lower Tier Interests set out below.
<PAGE>
<TABLE>
<CAPTION>
Lower Tier Class Initial Class Principal Corresponding Class
Designation Interest Rate Amount of Certificate(s)
---------------- ------------- ----------------------- -------------------
<S> <C> <C> <C>
Class LT1-A 6.90% $152,951,000.00 Class 1-A
Class LT1-AP 0.00 933,405.00 Class 1-AP
Class LT 2-A 6.75 76,965,100.00 Class 2-A
(1) Class 2-AX
(2) Class R
Class LT2-AP 0.00 784,915.00 Class 2-AP
Class LT3-A 6.55 33,914,000.00 Class 3-A
(3) Class 3-AX
Class LT3-AP 0.00 844,678.00 Class 3-AP
Class LTB-1 6.90 8,662,000.00 Class B-1
Class LTB-2 6.90 6,351,000.00 Class B-2
Class LTB-3 6.90 2,741,000.00 Class B-3
Class LTB-4 6.90 1,443,000.00 Class B-4
Class LTB-5 6.90 865,000.00 Class B-5
Class LTB-6 6.90 2,318,513.06 Class B-6
Class LTR (4) (4) (4)
</TABLE>
______________
(1) The Class 2-AX Certificates will be entitled to receive on each
Distribution Date to a specified portion of the interest payable on
the Class LT2-A Interest.
(2) The Class R Certificate will be entitled to receive $100 of principal
plus interest at the rate of 6.90% from amounts payable with respect
to the Class LT2-A Interest.
(3) The Class 3-AX Certificates will be entitled to receive on each
Distribution Date a specified portion of the interest payable on the
Class LT3-A Interest.
(4) The Class LTR does not have a stated principal amount or a stated
interest rate. Ownership of the Class LTR Interest will be evidenced
by the Class R Certificate.
The Lower Tier REMIC shall hold as assets all assets included in the Trust
Fund other than the uncertificated Lower Tier Interests.
Distributions of principal payments on each class of Lower Tier Interest
for any Distribution Date shall correspond to the principal distributions
required to be made on the Corresponding Class of Certificates on such
Distribution Date. Realized Losses and Net Prepayment Interest Shortfalls as of
any Distribution Date shall be allocated among the classes of Lower Tier
Interests in the same manner that such items are allocated among the
Corresponding Classes of Certificates.
The following table sets forth the Class designation, 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 Class Principal
Class Designation Interest Rate Amount Minimum Denominations
----------------- ------------- ----------------------- ---------------------
<S> <C> <C> <C>
Class 1-A 6.90% $152,951,000.00 $100,000
Class 1-AP 0.00 933,405.00 100,000
Class 2-A 6.75 76,965,000.00 100,000
Class 2-AP 0.00 784,915.00 100,000
Class 2-AX 0.15 (1) 30,000,000(3)
Class 3-A 6.55 33,914,000.00 100,000
Class 3-AP 0.00 844,678.00 100,000
Class 3-AX 0.35 (2) 20,000,000(3)
Class B1 6.90 8,662,000.00 100,000
Class B2 6.90 6,351,000.00 100,000
Class B3 6.90 2,741,000.00 100,000
Class B4 6.90 1,443,000.00 250,000
Class B5 6.90 865,000.00 250,000
Class B6 6.90 2,318,513.06 250,000
Class R 6.90 100.00 100
</TABLE>
______________
(1) The Class 2-AX Certificates will accrue interest on a Class Notional
Amount equal, as to any Distribution Date, to the Class Principal
Amount of the Class 2-A Certificates immediately prior to such date.
(2) The Class 3-AX Certificates will accrue interest on a Class Notional
Amount equal, as to any Distribution Date, to the Class Principal
Amount of the Class 3-A Certificates immediately prior to such date.
(3) In Notional Amount.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $288,773,612.87.
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
-----------
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, as
------------------------------
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that service or master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
or the Master Servicer or (y) as provided in the applicable Servicing Agreement,
to the extent applicable to the Servicer.
Accountant: A person engaged in the practice of accounting who (except when
----------
this Agreement provides that an Accountant must be Independent) may be employed
by or affiliated with the Depositor or an Affiliate of the Depositor.
Accretion Directed Certificate: None.
------------------------------
Accretion Termination Date: The first Distribution Date following the
----------------------------
Credit Support Depletion Date.
Accrual Amount: As to any Class of Accrual Certificates and each
---------------
Distribution Date through the Credit Support Depletion Date, the sum of (x) any
amount of Accrued Certificate Interest allocable to such Class pursuant to
Section 5.02(a)(ii) on such Distribution Date and (y) any Interest Shortfall
allocable to such Class pursuant to Section 5.02(a)(iii) on such Distribution
Date. As to any Class of Accrual Certificates and each Distribution Date after
the Credit Support Depletion Date, zero.
Accrual Certificate: None.
-------------------
Accrual Component: None.
-----------------
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
-----------------------------
any Principal Only Certificates) and any Distribution Date, the product of the
Interest Rate for such Class of Certificates and the Class Principal Amount (or
Class Notional Amount) of such Class of Certificates immediately preceding such
Distribution Date, as reduced by such Class's share of the interest portion of
(i) any Excess Losses for such Distribution Date and (ii) any Relief Act
Reduction, in each case allocable among the Class A Certificates of the related
Certificate Group pro rata based on the Accrued Certificate Interest otherwise
distributable thereto, and allocable to the Subordinate Certificates pro rata
based on interest accrued on their respective Apportioned Principal Balances.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
Additional Collateral: None.
---------------------
Adjustable Rate Mortgage Loan: None.
-----------------------------
Advance: An advance of the aggregate of payments of principal and interest
-------
(net of the Master Servicing Fee and the Servicing Fee) on one or more Mortgage
Loans that were due on the Due Date in the related Due Period and not received
as of the close of business on the related Determination Date, required to be
made by or on behalf of the Master Servicer and any Servicer (or by the Trustee)
pursuant to Section 5.04.
Affiliate: With respect to any specified Person, any other Person
---------
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Master Servicing Compensation: As to any Distribution Date, the
----------------------------------------
sum of (x) the aggregate of the Master Servicing Fees payable to the Master
Servicer in respect of such Distribution Date and (y) all income and gain
realized from the investment of funds in the Collection Account during the
period from and including the Deposit Date in the calendar month immediately
preceding the month in which such Distribution Date occurs, to but excluding the
Deposit Date relating to such Distribution Date.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
-----------------------------
Balances for all Mortgage Loans at any date of determination.
Aggregate Subordinate Percentage: The sum of the Class Principal Amounts of
--------------------------------
the Subordinate Certificates divided by the sum of the Non-AP Pool Balances for
all Mortgage Pools.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
----------------------------
the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements hereto.
---------
AP Percentage: As to any Discount Mortgage Loan in any Mortgage Pool, the
-------------
percentage equivalent of a fraction, the numerator of which is 6.90% minus the
Net Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
6.90%. As to any Non-Discount Mortgage Loan in any Mortgage Pool, 0.000%.
AP Principal Distribution Amount: For any Distribution Date and for each
----------------------------------
Certificate Group, the sum of the following amounts:
(i) the applicable AP Percentage of the principal portion of each
Scheduled Payment (without giving effect to any Debt Service Reduction
occurring prior to the Bankruptcy Coverage Termination Date) on each
Mortgage Loan in the related Mortgage Pool due during the related Due
Period;
(ii) the applicable AP Percentage of each of the following amounts:
(1) each Principal Prepayment collected on a Mortgage Loan in the related
Mortgage Pool during the applicable Prepayment Period, (2) each other
unscheduled collection, including Insurance Proceeds and Net Liquidation
Proceeds (other than with respect to any Mortgage Loan in the related
Mortgage Pool that was finally liquidated during the applicable Prepayment
Period) representing or allocable to recoveries of principal of such
Mortgage Loan in the related Mortgage Pool received during the applicable
Prepayment Period and (3) the principal portion of all proceeds of the
purchase of any Mortgage Loan in the related Mortgage Pool (or, in the case
of a permitted substitution, amounts representing a principal adjustment)
actually received by the Trustee with respect to the applicable Prepayment
Period;
(iii) with respect to unscheduled recoveries allocable to principal of
any Mortgage Loan in the related Mortgage Pool that was finally liquidated
during the related Prepayment Period, the applicable AP Percentage of the
related net Liquidation Proceeds allocable to principal; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Apportioned Principal Balance: As to any Class of Subordinate Certificates
-----------------------------
and any Distribution Date, the Class Principal Amount of such Class multiplied
by a fraction, the numerator of which is the applicable Group Subordinate Amount
and the denominator of which is the sum of the Group Subordinate Amounts.
Appraised Value: With respect to any Mortgage Loan, the amount set forth in
---------------
an appraisal made in connection with the origination of such Mortgage Loan as
the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
----------------------
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
---------------------
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate on
------------------
behalf of the Depositor.
Available Distribution Amount: As to each Mortgage Pool and on any
-------------------------------
Distribution Date, the sum of the following amounts:
(1) the total amount of all cash received by the Master Servicer
through the Remittance Date and deposited by the Master Servicer by the
Deposit Date for such Distribution Date on the Mortgage Loans of such
Mortgage Pool (including proceeds of any Insurance Policy and any other
credit support relating to such Mortgage Loans), plus all Advances made by
the Master Servicer or any Servicer (or the Trustee) for such Distribution
Date, any Compensating Interest Payment for such date and Mortgage Pool and
any amounts paid by any Servicer in respect of Prepayment Interest
Shortfalls in respect of the related Mortgage Loans for such date, but not
including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest collected
but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received or identified by the
applicable Servicer after the applicable Prepayment Period (together
with any interest payments received with such prepayments to the
extent that they represent the payment of interest accrued on the
related Mortgage Loans for the period subsequent to the applicable
Prepayment Period);
(d) any other unscheduled collection, including Net Liquidation
Proceeds and Insurance Proceeds, received by the Master Servicer after
the applicable Prepayment Period; and
(e) all fees and amounts due or reimbursable to the Master
Servicer or any Servicer pursuant to the terms of this Agreement or
the applicable Servicing Agreement;
(f) any Prepayment Penalty Amounts;
(g) any Prepayment Interest Excess; and
(h) such portion of each payment in respect of interest
representing Retained Interest.
(2) any other payment made by any Servicer, the Seller, the Depositor,
or any other Person with respect to such Distribution Date (including the
Purchase Price with respect to any Mortgage Loan repurchased by the Seller,
the Depositor or any other Person).
Balloon Mortgage Loan: Any Mortgage Loan having an original term to
-----------------------
maturity that is shorter than its amortization schedule, and a final Scheduled
Payment that is disproportionately large in comparison to other Scheduled
Payments.
Balloon Payment: The final Scheduled Payment in respect of a Balloon
----------------
Mortgage Loan.
Bankruptcy: As to any Person, the making of an assignment for the benefit
----------
of creditors, the filing of a voluntary petition in bankruptcy, adjudication as
a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the United States Bankruptcy Code of 1986, as amended, or
any other similar state laws.
Bankruptcy Coverage Termination Date: As to each Mortgage Pool, the
---------------------------------------
Distribution Date on which the related Bankruptcy Loss Limit has been reduced to
zero (or less than zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $100,000, which amount shall
---------------------
be reduced from time to time by the amount of Bankruptcy Losses allocated to the
Certificates.
Bankruptcy Losses: Any Realized Losses (as reported by the applicable
------------------
Servicer to the Master Servicer) arising from a proceeding under the United
States Bankruptcy Code or any other similar state law or other proceeding with
respect to the Mortgagor of or Mortgaged Property under a Mortgage Loan,
including, without limitation, any such loss arising from (a) the difference
between (i) the principal amount that would have been due under the original
scheduled payments of principal and interest due on the related Mortgage Loan
and (ii) the value established in the relevant court with respect to such
Mortgaged Property, including without limitation a Deficient Valuation, or (b) a
Debt Service Reduction.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee to
--------------------
the effect that any proposed transfer will not (i) cause the assets of the Trust
Fund to be regarded as plan assets for purposes of the Plan Asset Regulations or
(ii) give rise to any fiduciary duty on the part of the Depositor or the
Trustee.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
-----------------
Property.
Book-Entry Certificates: Beneficial interests in Certificates designated as
-----------------------
"Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to Certificate Owners, such Book-Entry
Certificates shall no longer be "Book-Entry Certificates." As of the Closing
Date, the following Classes of Certificates constitute Book-Entry Certificates:
the Class 1-A, Class 1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class
3-AP, Class 3-AX, Class B1, Class B2 and Class B3.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day on
------------
which banking institutions in New York, New York or, if other than New York, the
city in which the Corporate Trust Office of the Trustee is located, or the State
of Colorado, or (iii) with respect to any Remittance Date or any Servicer
reporting date, the States specified in the definition of "Business Day" in the
applicable Servicing Agreement, are authorized or obligated by law or executive
order to be closed.
Certificate: Any one of the certificates signed and countersigned by the
-----------
Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in accordance
--------------------
with the provisions of Section 4.04.
Certificate Group: The Group 1 Certificates, Group 2 Certificates or the
------------------
Group 3 Certificates, as applicable.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who
-----------------
is the owner of such Book-Entry Certificate, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other than a
-----------------------------
Notional Certificate, at the time of determination, the maximum specified dollar
amount of principal to which the Holder thereof is then entitled hereunder, such
amount being equal to the initial principal amount set forth on the face of such
Certificate (plus, in the case of any Negative Amortization Certificate, any
Deferred Interest allocated thereto on previous Distribution Dates, and plus, in
the case of any Accrual Certificate, its Percentage Interest of any related
Accrual Amount for each previous Distribution Date), less the amount of all
principal distributions previously made with respect to such Certificate, all
Realized Losses allocated to such Certificate, and, in the case of a Subordinate
Certificate, any Subordinate Certificate Writedown Amount allocated to such
Certificate. For purposes of Article V hereof, unless specifically provided to
the contrary, Certificate Principal Amounts shall be determined as of the close
of business of the immediately preceding Distribution Date, after giving effect
to all distributions made on such date. Notional Certificates are issued without
Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained and
-------------------- ---------------------
the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
-----------------
Class: All Certificates bearing the same class designation.
-----
Class A Certificate: Any Class 1-A, Class 1-AP, Class 2-A, Class 2-AP,
--------------------
Class 2-AX, Class 3-A, Class 3-AP or Class 3-AX Certificate.
Class AP Deferred Amount: As to any Distribution Date on or prior to the
------------------------
Credit Support Depletion Date and each of the Class 1-AP, Class 2-AP and Class
3-AP Certificates, the aggregate of the applicable AP Percentage of the
principal portion of each Realized Loss on a Discount Mortgage Loan in the
related Mortgage Pool, other than, in each case, an Excess Loss, to be allocated
to such Class of Certificates on such Distribution Date or previously allocated
to such Class of Certificates and not yet paid to the Holders of such Class of
Certificates pursuant to Section 5.02(a)(v).
Class AP Certificate: Any Class 1-AP, Class 2-AP or Class 3-AP Certificate.
--------------------
Class B Certificate: Any Class B1, Class B2, Class B3, Class B4, Class B5
--------------------
or Class B6 Certificate.
Class LTR Interest: The sole residual interest in the Lower Tier REMIC.
------------------
Class Notional Amount: With respect to each Class of Notional Certificates,
---------------------
the applicable class notional amount described in the Preliminary Statement
hereto.
Class Principal Amount: With respect to each Class of Certificates other
-----------------------
than any Class of Notional Certificates, the aggregate of the Certificate
Principal Amounts of all Certificates of such Class at the date of
determination. With respect to each Class of Notional Certificates, zero.
Class Percentage: With respect to each Class of Subordinate Certificates,
----------------
for each Distribution Date, the percentage obtained by dividing the Class
Principal Amount of such Class immediately prior to such Distribution Date by
the aggregate Certificate Principal Amount of all Certificates immediately prior
to such date.
Clearing Agency: An organization registered as a "clearing agency" pursuant
---------------
to Section 17A of the Securities Exchange Act of 1934, as amended. As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
-----------------------------
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: February 26, 1999.
------------
Code: The Internal Revenue Code of 1986, as amended, and as it may be
----
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: A separate account established and maintained by the
-------------------
Master Servicer pursuant to Section 4.01.
Compensating Interest Payment: With respect to each Mortgage Pool and any
------------------------------
Distribution Date, an amount equal to the excess of (x) the aggregate of any
Prepayment Interest Shortfalls with respect to such Mortgage Pool and such
Distribution Date over (y) the aggregate of any amounts required to be paid by
any Servicer in respect of such shortfalls but not paid; provided, that such
amount, to the extent payable by the Master Servicer, shall not exceed the
Aggregate Master Servicing Compensation that would be payable to the Master
Servicer in respect of such Mortgage Pool and such Distribution Date without
giving effect to any Compensating Interest Payment.
Component: 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 Corporation: The entity that holds title (fee or an acceptable
-----------------------
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
-----------------
Proprietary Lease.
Cooperative Loan Documents: As to any Cooperative Loan, (i) the Cooperative
--------------------------
Shares, together with a stock power in blank; (ii) the original executed
Security Agreement and the assignment of the Security Agreement endorsed in
blank; (iii) the original executed Proprietary Lease and the assignment of the
Proprietary Lease endorsed in blank; (iv) the original executed Recognition
Agreement and the assignment of the Recognition Agreement (or a blanket
assignment of all Recognition Agreements) endorsed in blank; (v) the executed
UCC-1 financing statement with evidence of recording thereon, which has been
filed in all places required to perfect the security interest in the Cooperative
Shares and the Proprietary Lease; and (vi) executed UCC-3 financing statements
(or copies thereof) or other appropriate UCC financing statements required by
state law, evidencing a complete and unbroken line from the mortgagee to the
Trustee with evidence of recording thereon (or in a form suitable for
recordation).
Cooperative Property: The real property and improvements owned by the
---------------------
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
------------------
Cooperative Unit: A single family dwelling located in a Cooperative
-----------------
Property.
Corporate Trust Office: The principal corporate trust office of the Trustee
----------------------
at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at 450 West 33rd
Street, New York, New York 10001, Attention: Capital Markets Fiduciary Services.
Corresponding Class: With respect to any class of Lower Tier Interests, the
-------------------
Class of Certificates or Component so designated in the Preliminary Statement
hereto. With respect to any Class of Certificates or Component, the class or
classes of Lower Tier Interests so designated in the Preliminary Statement
hereto.
Corresponding Component: None.
-----------------------
Credit Score: With respect to any Mortgage Loan, a numerical assessment of
------------
default risk with respect to the Mortgagor under such Mortgage Loan, determined
based on a methodology developed by Fair, Isaac & Co., Inc.
Credit Support Depletion Date: The Distribution Date on which, giving
-------------------------------
effect to all distributions on such date, the aggregate Certificate Principal
Amount of the Subordinate Certificates is reduced to zero.
Credit Support Percentage: As to any Class of Subordinate Certificates and
-------------------------
any Distribution Date, the sum of the Class Percentages of all Classes of
Certificates that rank lower in priority than such Class.
Custodial Agreement: Each custodial agreement attached as Exhibit K hereto,
-------------------
and any custodial agreement subsequently executed by the Trustee substantially
in the form thereof.
Custodian: Each custodian appointed by the Trustee pursuant to a Custodial
---------
Agreement, and any successor thereto.
Cut-off Date: February 1, 1999.
------------
Cut-off Date Aggregate Principal Balance: With respect to the Mortgage
--------------------------------------------
Loans in the Trust Fund on the Closing Date, the Aggregate Principal Balance for
all such Mortgage Loans as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
---
Debt Service Reduction: With respect to any Mortgage Loan, a reduction of
-----------------------
the Scheduled Payment that the related Mortgagor is obligated to pay on any Due
Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.
Deferred Interest: With respect to any Class of Negative Amortization
------------------
Certificates and any Distribution Date, the lesser of (x) the applicable
Interest Distribution Amount for such date (without giving effect to any
Deferred Interest) and (y) the aggregate Mortgage Loan Negative Amortization, if
any, for the related Due Period.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
--------------------
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under such Mortgage Loan, which valuation
results from a proceeding under Bankruptcy law or any similar proceeding.
Definitive Certificate: A Certificate of any Class issued in definitive,
-----------------------
fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
----------------------
Fund pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Deposit Date: With respect to each Distribution Date, the Business Day
-------------
immediately preceding such Distribution Date.
Depositor: Structured Asset Securities Corporation, a Delaware corporation
---------
having its principal place of business in New York, or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 18th day of
------------------
the month in which such Distribution Date occurs, or, if such 18th day is not a
Business Day, the next succeeding Business Day.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate less
------------------------
than 6.90% per annum.
Disqualified Organization: Either (i) the United States, (ii) any state or
-------------------------
political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative described
in section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by section 511
of the Code, (vii) any organization described in section 1381(a)(2)(C) of the
Code, (viii) any "electing large partnership" described in section 775 of the
Code, or (ix) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. In addition, a corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to tax
and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
Distribution Date: The 25th day of each month, or, if such 25th day is not
------------------
a Business Day, the next succeeding Business Day commencing in March 1999.
Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
--------
Payment is due under the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period commencing on
----------
the second day of the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: Either (i) an account or accounts maintained with a
-----------------
federal or state chartered depository institution or trust company acceptable to
the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company or
depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a "special deposit account") maintained with
the Trustee or any other federal or state chartered depository institution or
trust company, acting in its fiduciary capacity, in a manner acceptable to the
Trustee and the Rating Agencies. Eligible Accounts may bear interest.
Eligible Investments: Any one or more of the following obligations or
---------------------
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America
or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution
or trust company (including U.S. subsidiaries of foreign depositories and
the Trustee or any agent of the Trustee, acting in its respective
commercial capacity) incorporated or organized under the laws of the United
States of America or any state thereof and subject to supervision and
examination by federal or state banking authorities, so long as at the time
of investment or the contractual commitment providing for such investment
the commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a depository
institution or trust company which is the principal subsidiary of a holding
company, the commercial paper or other short-term debt or deposit
obligations of such holding company or deposit institution, as the case may
be) have been rated by each Rating Agency in its highest short-term rating
category or one of its two highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, FNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by each Rating Agency in its highest short-term rating
category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at
the time of investment or the contractual commitment providing for such
investment, at least equal to one of the two highest short-term credit
ratings of each Rating Agency; provided, however, that securities issued by
any particular corporation will not be Eligible Investments to the extent
that investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust Fund to
exceed 20% of the sum of the Aggregate Principal Balance and the aggregate
principal amount of all Eligible Investments in the Certificate Account;
provided, further, that such securities will not be Eligible Investments if
they are published as being under review with negative implications from
either Rating Agency;
(v) commercial paper (including both 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 ratings;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership interests
in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations
are backed by the full faith and credit of the United States of America)
held by a custodian in safekeeping on behalf of the holders of such
receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment,
(A) rated in the highest rating category by each Rating Agency or (B) that
would not adversely affect the then current rating by either Rating Agency
of any of the Certificates. Such investments in this subsection (viii) may
include money market mutual funds, including, without limitation, the VISTA
U.S. Government Money Market Fund or any other fund for which The Chase
Manhattan Bank (the "Bank"), the Trustee or an affiliate thereof serves as
an investment advisor, administrator, shareholder servicing agent, and/or
custodian or subcustodian, notwithstanding that (i) the Bank or an
affiliate thereof charges and collects fees and expenses from such funds
for services rendered, (ii) the Bank or an affiliate thereof charges and
collects fees and expenses for services rendered pursuant to this
Agreement, and (iii) services performed for such funds and pursuant to this
Agreement may converge at any time. The Trustee specifically authorizes the
Bank or an affiliate thereof to charge and collect from the Trustee such
fees as are collected from all investors in such funds for services
rendered to such funds (but not to exceed investment earnings thereon);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
----------------------------
Escrow Account: Any account established and maintained by the applicable
---------------
Servicer pursuant to the applicable Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated in
----------------
Section 6.14(a).
Excess Loss: Any Bankruptcy Loss, or portion thereof, in excess of the
-----------
then-applicable Bankruptcy Loss Limit, any Fraud Loss, or portion thereof, in
excess of the then-applicable Fraud Loss Limit, and any Special Hazard Loss, or
portion thereof, in excess of the then-applicable Special Hazard Loss Limit.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
----
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
-----
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Scheduled Distribution Date: May 25, 2029.
---------------------------------
Financial Intermediary: A broker, dealer, bank or other financial
------------------------
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
Fitch: Fitch IBCA, Inc., or any successor in interest.
-----
FNMA: The Federal National Mortgage Association, a federally chartered and
----
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
Fraud Loss: Any Realized Loss on a Mortgage Loan sustained by reason of a
----------
default arising from fraud, dishonesty or misrepresentation in connection with
the related Mortgage Loan, as reported by the applicable Servicer to the Master
Servicer.
Fraud Loss Limit: As of any Distribution Date after the Cut-off Date (x)
----------------
prior to the first anniversary of the Cut-off Date, $5,775,472, less the
aggregate of the Fraud Losses since the Cut-off Date, and (y) from the first to
the fourth anniversary of the Cut-off Date, an amount equal to (1) the lesser of
(a) the Fraud Loss Limit as of the most recent anniversary of the Cut-off Date
and (b) 2% (from the first to but excluding the second anniversary of the
Cut-off Date) or 1% (from and including the second, third and fourth anniversary
of the Cut-off Date) of the aggregate principal balance of all the Mortgage
Loans as of the most recent anniversary of the Cut-off Date less (2) the
aggregate of Fraud Losses since the most recent anniversary of the Cut-off Date.
On or after the fifth anniversary of the Cut-off Date, the Fraud Loss Limit
shall be zero.
GNMA: The Government National Mortgage Association, a wholly owned
----
corporate instrumentality of the United States within HUD.
Group 1: All of the Group 1 Certificates.
-------
Group 1 Certificate: Any Class 1-A or Class 1-AP Certificate.
-------------------
Group 2: All of the Group 2 Certificates.
-------
Group 2 Certificate: Any Class 2-A, Class 2-AP, Class 2-AX or Class R
--------------------
Certificate.
Group 3: All of the Group 3 Certificates.
-------
Group 3 Certificate: Any Class 3-A, Class 3-AP or Class 3-AX Certificate.
-------------------
Group Subordinate Amount: As to any Mortgage Pool and any Distribution
--------------------------
Date, the excess of the Non-AP Pool Balance of such Mortgage Pool over the sum
of the aggregate of the Certificate Principal Amounts of the Non-AP Senior
Certificates of the related Certificate Group.
Holder or Certificateholder: The registered owner of any Certificate as
------ -----------------
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee, the Master
Servicer, any Servicer or any Affiliate thereof shall be deemed not to be
outstanding in determining whether the requisite percentage necessary to effect
any such consent has been obtained, except that, in determining whether the
Trustee shall be protected in relying upon any such consent, only Certificates
which a Responsible Officer of the Trustee knows to be so owned shall be
disregarded. The Trustee may request and conclusively rely on certifications by
the Depositor, the Master Servicer and any Servicer in determining whether any
Certificates are registered to an Affiliate of the Depositor, the Master
Servicer or such Servicer.
HUD: The United States Department of Housing and Urban Development, or any
---
successor thereto.
Independent: When used with respect to any Accountants, a Person who is
-----------
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
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 Maturity Date: May 25, 2031.
-----------------------------
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
---------------
Inc., or any successor in interest.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
--------------------------
Master Servicer or the applicable Servicer has determined that all amounts that
it expects to recover on behalf of the Trust Fund from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Master Servicer or
--------------------
a Servicer in connection with the liquidation of any defaulted Mortgage Loan and
are not recoverable under the applicable Primary Mortgage Insurance Policy,
including, without limitation, foreclosure and rehabilitation expenses, legal
expenses and unreimbursed amounts expended pursuant to Sections 9.06, 9.16 or
9.22.
Liquidation Proceeds: Cash received in connection with the liquidation of a
--------------------
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan, including any amounts remaining in the related Escrow Account.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the ratio of the
--------------------
principal balance of such Mortgage Loan at origination, or such other date as is
specified, to the Original Value thereof.
Lower Tier Interest: Any one of the classes of lower tier interests
---------------------
described in the Preliminary Statement hereto.
Lower Tier Interest Rate: As to each Lower Tier Interest, the applicable
-------------------------
interest rate, if any, as described in the Preliminary Statement hereto.
Lower Tier REMIC: One of the two separate REMICs as described in the
------------------
Preliminary Statement hereto.
Maintenance: With respect to any Cooperative Unit, the rent or fee paid by
-----------
the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Master Servicer: Aurora Loan Services Inc., or any successor in interest,
----------------
or if any successor master servicer shall be appointed as herein provided, then
such successor master servicer.
Master Servicing Fee: As to any Distribution Date and each Mortgage Loan,
--------------------
an amount equal to the product of the Master Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the
related Due Period. The Master Servicing Fee for any Mortgage Loan shall be
payable in respect of any Distribution Date solely from the interest portion of
the Scheduled Payment or other payment or recovery with respect to such Mortgage
Loan.
Master Servicing Fee Rate: 0.02% per annum.
-------------------------
Material Defect: As defined in Section 2.02(c) hereof.
---------------
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
----
Corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage, or
------------------
an Assignment of Mortgage, has been or will be recorded in the name of MERS, as
agent for the holder from time to time of the Mortgage Note.
Moody's: Moody's Investors Service, Inc., or any successor in interest.
-------
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
--------
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage File: The mortgage documents listed in Section 2.01(b) pertaining
-------------
to a particular Mortgage Loan required to be delivered to the Trustee or a
Custodian pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
--------------
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 or Section 2.05,
including without limitation, each Mortgage Loan listed on the Mortgage Loan
Schedule, as amended from time to time.
Mortgage Loan Sale Agreement: The agreement, dated as of February 1, 1999,
----------------------------
for the sale of the Mortgage Loans by Lehman Capital to the Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
----------------------
shall identify each Mortgage Loan, as such schedule may be amended from time to
time pursuant to Section 2.02.
Mortgage Note: The note or other evidence of the indebtedness of a
--------------
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Any of Pool 1, Pool 2 or Pool 3.
-------------
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
--------------
interest accrues on such Mortgage Loan.
Mortgaged Property: Either of (x) the fee simple interest in real property,
------------------
together with improvements thereto including any exterior improvements to be
completed within 120 days of disbursement of the related Mortgage Loan proceeds,
or (y) in the case of a Cooperative Loan, the related Cooperative Shares and
Proprietary Lease, securing the indebtedness of the Mortgagor under the related
Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
---------
Negative Amortization Certificate: None.
---------------------------------
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan, the
------------------------
related Liquidation Proceeds net of unreimbursed expenses incurred in connection
with liquidation or foreclosure and unreimbursed Advances, Servicing Advances,
Servicing Fees and Retained Interest, if any, received and retained in
connection with the liquidation of such Mortgage Loan.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage Rate
------------------
thereof reduced by the sum of the applicable Servicing Fee Rate, the Master
Servicing Fee Rate, the Trustee Fee Rate and the Retained Interest Rate.
Net Prepayment Interest Shortfall: With respect to each Mortgage Pool and
----------------------------------
any Distribution Date, the excess, if any, of any Prepayment Interest Shortfalls
with respect to the Mortgage Loans in such Mortgage Pool for such date over the
sum of any amounts paid by the Servicers with respect to such shortfalls and any
amount that is required to be paid by the Master Servicer in respect of such
shortfalls pursuant to this Agreement.
Non-AP Senior Certificate: Any Class 1-A, Class 2-A, Class 2-AX, Class 3-A,
-------------------------
Class 3-AX or Class R Certificate.
Non-AP Percentage: As to any Discount Mortgage Loan in any Mortgage Pool,
------------------
the percentage equivalent of the fraction, the numerator of which is the Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
6.90%. As to any Premium Mortgage Loan in any Mortgage Pool, 100%.
Non-AP Pool Balance: As to each Mortgage Pool and any Distribution Date,
-------------------
the sum of the applicable Non-AP Percentage of the Scheduled Principal Balance
of each Mortgage Loan included in such Mortgage Pool.
Non-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 6.90% per annum.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage Loan.
----------------------
Non-permitted Foreign Holder: As defined in Section 3.03(f).
----------------------------
Non-U.S. Person: Any 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 Class Notional
Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: Any Class 2-AX or Class 3-AX Certificate.
--------------------
Notional Component: None.
------------------
Notional Component Amount: None.
-------------------------
Offering Document: Either of the Prospectus or the private placement
------------------
memorandum dated February 24, 1999 relating to the Class B4, Class B5 and Class
B6 Certificates.
Officer's Certificate: A certificate signed by the Chairman of the Board,
----------------------
any Vice Chairman, the President, any Vice President or any Assistant Vice
President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable in
------------------
form and substance to the Trustee, and who may be in-house or outside counsel to
the Depositor, the Master Servicer or a Servicer but which must be Independent
outside counsel with respect to any such opinion of counsel concerning the
transfer of any Residual Certificate or concerning certain matters with respect
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the taxation, or the federal income tax status, of each REMIC.
Original Credit Support Percentage: With respect to each Class of
-------------------------------------
Subordinate Certificates, the Credit Support Percentage for such Class of
Certificates on the Closing Date.
Original Group Subordinate Amount: As to any Mortgage Pool, the Group
------------------------------------
Subordinate Amount for such Mortgage Pool on the Closing Date.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
---------------
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor at
the time the related Mortgage Loan was originated.
Paying Agent: Any paying agent appointed pursuant to Section 3.08.
------------
Percentage Interest: With respect to any Certificate, 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 Notional Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
thereof divided by the initial Class Principal Amount of all Certificates of the
same Class. With respect to any Notional Certificate, the Percentage Interest
evidenced thereby shall be as specified on the face thereof.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Placement Agent: Lehman Brothers Inc.
---------------
Plan Asset Regulations: The Department of Labor regulations set forth in 29
----------------------
C.F.R. 2510.3-101.
Pool 1: The aggregate of the Mortgage Loans identified on the Mortgage Loan
------
Schedule as being included in Pool 1.
Pool 2: The aggregate of the Mortgage Loans identified on the Mortgage Loan
------
Schedule as being included in Pool 2.
Pool 3: The aggregate of the Mortgage Loans identified on the Mortgage Loan
------
Schedule as being included in Pool 3.
Premium Mortgage Loan. Any Mortgage Loan with a Net Mortgage Rate greater
-----------------------
than 6.90% per annum.
Prepayment Interest Excess: With respect to any Principal Prepayment in
----------------------------
full received from the first day through the sixteenth day of any month, all
amounts paid in respect of interest at the applicable Net Mortgage Rate on such
Principal Prepayment.
Prepayment Interest Shortfall: With respect to any Distribution Date and
-------------------------------
(x) any Principal Prepayment in part (other than any such prepayment received on
the first of the month) and (y) any Principal Prepayment in full received on or
after the seventeenth day of the month immediately preceding the month of such
Distribution Date, but on or before the last day of the month immediately
preceding the month of such Distribution Date, the difference between (i) one
full month's interest at the applicable Mortgage Rate (giving effect to any
applicable Relief Act Reduction), as reduced by the Master Servicing Fee Rate,
the applicable Servicing Fee Rate and the Retained Interest Rate, on the
outstanding principal balance of such Mortgage Loan immediately prior to such
prepayment and (ii) the amount of interest actually received with respect to
such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Penalty Amounts: With respect to any Distribution Date, all
----------------------------
premiums or charges paid by the obligors under the Mortgage Notes due to
Principal Prepayments collected by the Servicers during the immediately
preceding Prepayment Period.
Prepayment Period: With respect to any Distribution Date and any partial
------------------
Principal Prepayment, the period from the second day of the month immediately
preceding the month of such Distribution Date to the first day of the month of
such Distribution Date. With respect to any Distribution Date and a full
Principal Prepayment, the period from the seventeenth day of the month
immediately preceding the month of such Distribution Date to the sixteenth day
of the month of such Distribution Date.
Primary Mortgage Insurance Policy: Mortgage guaranty insurance, if any, on
---------------------------------
an individual Mortgage Loan, as evidenced by a policy or certificate.
Principal Amount Schedules: Not applicable.
--------------------------
Principal Only Certificate: Any Class 1-AP, Class 2-AP or Class 3-AP
----------------------------
Certificate.
Principal Prepayment: Any Mortgagor payment of principal (other than a
---------------------
Balloon Payment) or other recovery of principal on a Mortgage Loan that is
recognized as having been received or recovered in advance of its scheduled Due
Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note or the applicable Servicing
Agreement.
Proceeding: Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
------------------
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated February 24, 1999, together
----------
with the accompanying prospectus dated January 15, 1999, relating to the Class
1-A, Class 1-AP, Class 2-A, Class 2-AP, Class 2-AX, Class 3-A, Class 3-AP, Class
3-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
Master Servicer or the applicable Servicer (or the Trustee, if applicable) shall
be reimbursed from the Purchase Price for any Mortgage Loan or related REO
Property for any Advances made with respect to such Mortgage Loan that are
reimbursable to the Master Servicer or such Servicer under this Agreement or the
related Servicing Agreement, as well as any unreimbursed Servicing Advances and
accrued and unpaid Master Servicing Fees or Servicing Fees, as applicable.
Qualified GIC: A guaranteed investment contract or surety bond providing
--------------
for the investment of funds in the Collection Account or the Certificate Account
and insuring a minimum, fixed or floating rate of return on investments of such
funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two
highest rating categories or, if such insurance company has no long-term
debt, whose claims paying ability is rated by each Rating Agency in one of
its two highest rating categories, and whose short-term debt is rated by
each Rating Agency in its highest rating category;
(b) provide that the Trustee may exercise all of the rights under such
contract or surety bond without the necessity of taking any action by any
other Person;
(c) provide that if at any time the then current credit standing of
the obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds would result in a
downgrading of any rating of the Certificates, the Trustee shall terminate
such contract without penalty and be entitled to the return of all funds
previously invested thereunder, together with accrued interest thereon at
the interest rate provided under such contract to the date of delivery of
such funds to the Trustee;
(d) provide that the Trustee's interest therein shall be transferable
to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued interest
thereon be returnable to the Collection Account or the Certificate Account,
as the case may be, not later than the Business Day prior to any
Distribution Date.
Qualified Insurer: An insurance company duly qualified as such under the
------------------
laws of the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability is
rated by each Rating Agency in its highest rating category or whose selection as
an insurer will not adversely affect the rating of the Certificates.
Qualifying Substitute Mortgage Loan: In the case of a Mortgage Loan
--------------------------------------
substituted for a Deleted Mortgage Loan, a Mortgage Loan that, on the date of
substitution, (i) has a Scheduled Principal Balance (together with that of any
other mortgage loan substituted for the same Deleted Mortgage Loan) as of the
Due Date in the month in which such substitution occurs not in excess of the
Scheduled Principal Balance of the related Deleted Mortgage Loan, provided,
however, that, to the extent that the Scheduled Principal Balance of such
Mortgage Loan is less than the Scheduled Principal Balance of the related
Deleted Mortgage Loan, then such differential in principal amount, together with
interest thereon at the applicable Mortgage Rate net of the Master Servicing Fee
and the applicable Servicing Fee from the date as to which interest was last
paid through the end of the Due Period in which such substitution occurs, shall
be paid by the party effecting such substitution to the Trustee for deposit into
the Certificate Account, and shall be treated as a Principal Prepayment
hereunder; (ii) has a Net Mortgage Rate not lower than the Net Mortgage Rate of
the related Deleted Mortgage Loan; (iii) has a remaining stated term to maturity
not longer than, and not more than one year shorter than, the remaining term to
stated maturity of the related Deleted Mortgage Loan; (iv) (A) has a
Loan-to-Value Ratio as of the date of such substitution of not greater than 80%,
provided, however, that if the related Deleted Mortgage Loan has a Loan-to-Value
Ratio of greater than 80%, then the Loan-to-Value Ratio of such substitute
Mortgage Loan may be greater than 80% but shall not be greater than the
Loan-to-Value Ratio of the related Deleted Mortgage Loan and (B) the addition of
such substitute Mortgage Loan does not increase the weighted average
Loan-to-Value Ratio of the related Mortgage Pool by more than 5%; (v) will
comply with all of the representations and warranties relating to Mortgage Loans
set forth herein, as of the date as of which such substitution occurs; (vi) is
not a Cooperative Loan unless the related Deleted Mortgage Loan was a
Cooperative Loan; (vii) if applicable, has the same index as and a margin not
less than that of the related Deleted Mortgage Loan; (viii) has not been
delinquent for a period of more than 30 days more than once in the twelve months
immediately preceding such date of substitution; (ix) is covered by a Primary
Mortgage Insurance Policy if the related Deleted Mortgage Loan is so covered,
and the Loan-to-Value Ratio of such Mortgage Loan is greater than 80%; and (x)
has a Credit Score not greater than 20 points lower than the Credit Score of the
related Deleted Mortgage Loan, provided, however, that if the Deleted Mortgage
Loan does not have a Credit Score, then such substitute Mortgage Loan shall have
a Credit Score equal to or greater than 700. In the event that either one
mortgage loan is substituted for more than one Deleted Mortgage Loan or more
than one mortgage loan is substituted for one or more Deleted Mortgage Loans,
then (a) the Scheduled Principal Balance referred to in clause (i) above shall
be determined such that the aggregate Scheduled Principal Balance of all such
substitute Mortgage Loans shall not exceed the aggregate Scheduled Principal
Balance of all Deleted Mortgage Loans and (b) each of (1) the rate referred to
in clause (ii) above, (2) the remaining term to stated maturity referred to in
clause (iii) above, (3) the Loan-to-Value Ratio referred to in clause (iv) above
and (4) the Credit Score referred to in clause (x) above shall be determined on
a weighted average basis, provided that the final scheduled maturity date of any
Qualifying Substitute Mortgage Loan shall not exceed the Final Scheduled
Distribution Date of any Class of Certificates. Whenever a Qualifying Substitute
Mortgage Loan is substituted for a Deleted Mortgage Loan pursuant to this
Agreement, the party effecting such substitution shall certify such
qualification in writing to the Trustee.
Rating Agency: Each of DCR, Fitch and S&P.
-------------
Realized Loss: (a) with respect to each Liquidated Mortgage Loan, an amount
-------------
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of liquidation, plus (ii) interest at the applicable Net Mortgage Rate from the
date as to which interest was last paid up to the last day of the month of such
liquidation, minus (iii) Liquidation Proceeds received, net of amounts that are
reimbursable to the Master Servicer or any 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.
---------------
Reimbursement Amount: As defined in Section 5.02.
--------------------
Relief Act Reduction: With respect to any Mortgage Loan as to which there
---------------------
has been a reduction in the amount of interest collectible thereon as a result
of application of the Solders' and Sailors' Civil Relief Act of 1940, as
amended, any amount by which interest collectible on such Mortgage Loan for the
Due Date in the related Due Period is less than interest accrued thereon for the
applicable one-month period at the Mortgage Rate without giving effect to such
reduction.
REMIC: Each of the Lower Tier REMIC and the Upper Tier REMIC, as described
-----
in the Preliminary Statement hereto.
REMIC Provisions: The provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at sections 860A through
86OG of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The day in each month on which each Servicer is required
----------------
to remit payments to the account maintained by the Master Servicer, as specified
in the related Servicing Agreement, which in the case of each Servicer is the
18th day of each month (or if such 18th day is not a Business Day, the
immediately preceding Business Day).
REO Property: A Mortgaged Property acquired by the Trust Fund through
-------------
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Reserve Interest Rate: 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.
----------------------
Retained Interest: Interest in respect of each Mortgage Loan retained by
------------------
the Retained Interest Holder at the Retained Interest Rate.
Retained Interest Holder: The Depositor or any successor in interest by
--------------------------
assignment or otherwise.
Retained Interest Rate: With respect to each Mortgage Loan, the excess of
-----------------------
the Mortgage Rate of such Mortgage Loan over the Trust Rate.
Rounding Account: Not applicable.
----------------
S&P: Standard & Poor's Rating Services, a division of the McGraw-Hill
---
Companies, Inc., or any successor in interest.
Scheduled Amount: Not applicable.
----------------
Scheduled Certificate: None.
---------------------
Scheduled Component: None.
-------------------
Scheduled Payment: Each scheduled payment of principal and interest (or of
-----------------
interest only, if applicable) to be paid by the Mortgagor on a Mortgage Loan, as
reduced (except where otherwise specified herein) by the amount of any related
Debt Service Reduction (excluding all amounts of principal and interest that
were due on or before the Cut-off Date whenever received) and, in the case of an
REO Property, an amount equivalent to the Scheduled Payment that would have been
due on the related Mortgage Loan if such Mortgage Loan had remained in
existence. In the case of any bi-weekly payment Mortgage Loan, all payments due
on such Mortgage Loan during any Due Period shall be deemed collectively to
constitute the Scheduled Payment due on such Mortgage Loan in such Due Period.
Scheduled Principal Amount: As to any Distribution Date, an amount equal to
--------------------------
the amount described in clause (i)(b) of the definition of Senior Principal
Distribution Amount.
Scheduled Principal Balance: With respect to (i) any Mortgage Loan as of
-----------------------------
any Distribution Date, the principal balance of such Mortgage Loan at the close
of business on the Cut-off Date, after giving effect to principal payments due
on or before the Cut-off Date, whether or not received, less an amount equal to
principal payments due after the Cut-off Date and on or before the Due Date in
the related Due Period, whether or not received from the Mortgagor or advanced
by any Servicer or the Master Servicer, and all amounts allocable to unscheduled
principal payments (including Principal Prepayments, Net Liquidation Proceeds,
Insurance Proceeds and condemnation proceeds, in each case to the extent
identified and applied prior to or during the applicable Prepayment Period) and
(ii) any REO Property as of any Distribution Date, the Scheduled Principal
Balance of the related Mortgage Loan on the Due Date immediately preceding the
date of acquisition of such REO Property by 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 1-A, Class 1-AP, Class 2-A, Class 2-AP, Class
------------------
2-AX, Class 3-A, Class 3-AP, Class 3-AX or Class R Certificate.
Senior Percentage: With respect to each Mortgage Pool and any Distribution
-----------------
Date, the percentage equivalent of the fraction, the numerator of which is the
aggregate of the Certificate Principal Amounts of the Class 1-A Certificates, in
the case of Pool 1, the Class 2-A and Class R Certificates, in the case of Pool
2, and the Class 3-A Certificates, in the case of Pool 3, immediately prior to
such date and the denominator of which is the related Non-AP Pool Balance for
such date.
Senior Prepayment Percentage: With respect to each Mortgage Pool and any
------------------------------
Distribution Date occurring during the five years beginning on the first
Distribution Date, 100%. With respect to each Mortgage Pool and for any
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, the related Senior Percentage plus the following percentage
of the related Subordinate Percentage for such Distribution Date: for any
Distribution Date in the first year thereafter, 70%; for any Distribution Date
in the second year thereafter, 60%; for any Distribution Date in the third year
thereafter, 40%; for any Distribution Date in the fourth year thereafter, 20%;
and for any subsequent Distribution Date, 0%; provided, however, that if on any
of the foregoing Distribution Dates the Senior Percentage for any Mortgage Pool
exceeds the initial Senior Percentage for such Mortgage Pool, the Senior
Prepayment Percentage for each Mortgage Pool on such Distribution Date will once
again equal 100% for such Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage for any Mortgage Pool below the level in effect for the most recent
prior period set forth in the paragraph above shall be effective on any
Distribution Date if, as of the first Distribution Date as to which any such
decrease applies, (i) the average outstanding principal balance on such
Distribution Date and for the preceding five Distribution Dates of all Mortgage
Loans that were delinquent 60 days or more (including for this purpose any
Mortgage Loans in foreclosure and the Scheduled Payments that would have been
due on Mortgage Loans with respect to which the related Mortgaged Property has
been acquired by the Trust Fund if the related Mortgage Loan had remained in
existence) is greater than or equal to 50% of the applicable Group Subordinate
Amount immediately prior to such Distribution Date or (ii) cumulative Realized
Losses with respect to the Mortgage Loans in any Mortgage Pool exceed (a) with
respect to the Distribution Date on the fifth anniversary of the first
Distribution Date, 30% of the related Original Group Subordinate Amount, (b)
with respect to the Distribution Date on the sixth anniversary of the first
Distribution Date, 35% of the related Original Group Subordinate Amount, (c)
with respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the related Original Group Subordinate Amount, (d)
with respect to the Distribution Date on the eighth anniversary of the first
Distribution Date, 45% of the related Original Group Subordinate Amount, and (e)
with respect to the Distribution Date on the ninth anniversary of the first
Distribution Date or thereafter, 50% of the related Original Group Subordinate
Amount.
Senior Principal Distribution Amount: For each Certificate Group and any
--------------------------------------
Distribution Date, the sum of the following amounts:
(i) the product of (a) the related Senior Percentage for such date and
(b) the principal portion (multiplied by the applicable Non-AP Percentage)
of each Scheduled Payment (without giving effect to any Debt Service
Reduction occurring prior to the Bankruptcy Coverage Termination Date), on
each Mortgage Loan in the related Mortgage Pool due during the related Due
Period;
(ii) the product of (a) the related Senior Prepayment Percentage for
such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the related
Prepayment Period, (2) each other unscheduled collection, including
Insurance Proceeds and Net Liquidation Proceeds (other than with respect to
any Mortgage Loan in the related Mortgage Pool that was finally liquidated
during the related Prepayment Period) representing or allocable to
recoveries of principal received during the related Prepayment Period, and
(3) the principal portion of all proceeds of the purchase of any Mortgage
Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal of
any Mortgage Loan in the related Mortgage Pool that was finally liquidated
during the related Prepayment Period, the lesser of (a) the related net
Liquidation Proceeds allocable to principal (multiplied by the applicable
Non-AP Percentage) and (b) the product of the related Senior Prepayment
Percentage for such date and the Scheduled Principal Balance (multiplied by
the applicable Non-AP Percentage) of such related Mortgage Loan at the time
of liquidation; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Servicer: Aurora Loan Services Inc. or any successor in interest.
--------
Servicing Advances: Expenditures incurred by the Servicer in connection
-------------------
with the liquidation or foreclosure of a Mortgage Loan which are eligible for
reimbursement under the Servicing Agreement.
Servicing Agreement: The Servicing Agreement between the Servicer and the
--------------------
Seller, dated as of February 1, 1999, attached hereto as Exhibit E and any other
servicing agreement entered into between a successor servicer and the Seller
pursuant to the terms hereof, attached hereto as an exhibit.
Servicing Fee: The Servicing Fee specified in the applicable Servicing
--------------
Agreement (which shall include any Prepayment Interest Excess).
Servicing Fee Rate: With respect to any Servicer, as specified in the
-------------------
applicable Servicing Agreement.
Servicing Officer: Any officer of the Master Servicer involved in or
------------------
responsible for the administration and servicing or master servicing of the
Mortgage Loans whose name appears on a list of servicing officers furnished by
the Master Servicer to the Trustee, as such list may from time to time be
amended.
Special Hazard Loss: With respect to the Mortgage Loans, (x) any Realized
-------------------
Loss arising out of any direct physical loss or damage to a Mortgaged Property
which is caused by or results from any cause, exclusive of any loss covered by a
hazard policy or a flood insurance policy required to be maintained in respect
of such Mortgaged Property and any loss caused by or resulting from (i) normal
wear and tear, (ii) conversion or other dishonest act on the part of the
Trustee, the Master Servicer, any Servicer or any of their agents or employees,
or (iii) errors in design, faulty workmanship or faulty materials, unless the
collapse of the property or a part thereof ensues, or (y) any Realized Loss
arising from or related to the presence or suspected presence of hazardous
wastes, or hazardous substances on a Mortgaged Property unless such loss is
covered by a hazard policy or flood insurance policy required to be maintained
in respect of such Mortgaged Property, in any case, as reported by the
applicable Servicer to the Master Servicer.
Special Hazard Loss Limit: As of the Cut-off Date, $5,720,000, 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 Scheduled
Principal Balances of the Mortgage Loans; (ii) twice the Scheduled Principal
Balance of the Mortgage Loan having the highest Scheduled Principal Balance, and
(iii) the aggregate Scheduled Principal Balances of the Mortgage Loans secured
by Mortgaged Properties located in the single California postal zip code area
having the highest aggregate Scheduled Principal Balance of Mortgage Loans of
any such postal zip code area and (b) the Special Hazard Loss Limit as of the
Closing Date less the amount, if any, of Special Hazard Losses incurred with
respect to Mortgage Loans since the Closing Date.
Startup Day: The day designated as such pursuant to Section 10.01(b)
------------
hereof.
Subordinate Certificate: Any Class B Certificate.
-----------------------
Subordinate Certificate Writedown Amount: As to any Distribution Date, the
-----------------------------------------
amount by which (i) the sum of the Class 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 each Mortgage Pool and any
-----------------------
Distribution Date, the difference between 100% and the related Senior Percentage
for such Distribution Date.
Subordinate Prepayment Percentage: With respect to each Mortgage Pool and
----------------------------------
any Distribution Date, the difference between 100% and the related Senior
Prepayment Percentage for such Distribution Date.
Subordinate Principal Distribution Amount: For each Certificate Group and
-------------------------------------------
any Distribution Date, the sum of the following:
(i) the product of (a) the related Subordinate Percentage for such
date and (b) the principal portion (multiplied by the applicable Non-AP
Percentage) of each Scheduled Payment (without giving effect to any Debt
Service Reduction occurring prior to the applicable Bankruptcy Coverage
Termination Date) on each Mortgage Loan in the related Mortgage Pool due
during the related Due Period;
(ii) the product of (a) the related Subordinate Prepayment Percentage
for such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans in the related Mortgage Pool collected during the related
Prepayment Period, (2) each other unscheduled collection, including
Insurance Proceeds and Net Liquidation Proceeds (other than with respect to
any Mortgage Loan in the related Mortgage Pool that was finally liquidated
during the related Prepayment Period) representing or allocable to
recoveries of principal received during the related Prepayment Period, and
(3) the principal portion of all proceeds of the purchase of any Mortgage
Loan in the related Mortgage Pool (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal of
any Mortgage Loan in the related Mortgage Pool that was finally liquidated
during the related Prepayment Period, the related net Liquidation Proceeds
allocable to principal (multiplied by the applicable Non-AP Percentage)
less any related amount paid pursuant to subsection (iii) of the definition
of Senior Principal Distribution Amount for the related Certificate Group;
and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
TAC Amount: Not applicable.
----------
TAC Certificate: None.
---------------
TAC Component: None.
-------------
Tax Matters Person: The "tax matters person" as specified in the REMIC
-------------------
Provisions.
Termination Price: As defined in Section 7.01 hereof.
-----------------
Title Insurance Policy: A title insurance policy maintained with respect to
----------------------
a Mortgage Loan.
Transfer Agreement: As defined in the Mortgage Loan Sale Agreement.
------------------
Transferor: Each seller of Mortgage Loans to Lehman Capital pursuant to a
----------
Transfer Agreement.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
----------
consisting of the Mortgage Loans (other than any Retained Interest), the
assignment of the Depositor's rights under the Mortgage Loan Sale Agreement
(other than any Retained Interest), such amounts as shall from time to time be
held in the Collection Account, the Certificate Account, any Escrow Account, the
Insurance Policies, any REO Property and the other items referred to in, and
conveyed to the Trustee under, Section 2.01(a).
Trustee: The Chase Manhattan Bank, not in its individual capacity but
-------
solely as Trustee, or any successor in interest, or if any successor trustee or
any co-trustee shall be appointed as herein provided, then such successor
trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the product of
-----------
the Trustee Fee Rate and the aggregate Scheduled Principal Balance of the
related Mortgage Loans as of the first day of the related Due Period. The
Trustee Fee shall be calculated separately, by Mortgage Pool.
Trustee Fee Rate: 0.008% per annum.
----------------
Trust Rate: With respect to each Mortgage Loan, the sum of (i) 6.90%, (ii)
----------
the Servicing Fee Rate, (iii) the Master Servicing Fee Rate and (iv) the Trustee
Fee Rate.
Undercollateralization Distribution: As defined in Section 5.02(e)(ii).
-----------------------------------
Undercollateralized Group: With respect to any Distribution Date, the
--------------------------
Non-AP Senior Certificates of any Certificate Group as to which the aggregate
Certificate Principal Amount thereof after giving effect to distributions
pursuant to Sections 5.02(a) and (b) on such date is greater than the Non-AP
Pool Balance of the related Mortgage Pool for such Distribution Date.
Unscheduled Principal Amount: As to any Distribution Date, the sum of the
-----------------------------
amounts described in clauses (ii)(b) and (iii) (without regard to the reference
in clause (iii) to the "Senior Prepayment Percentage") of the definition of
Senior Principal Distribution Amount.
Upper Tier REMIC: One of the two separate REMICs as described in the
------------------
Preliminary Statement hereto.
Voting Interests: The portion of the voting rights of all the Certificates
----------------
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 98% of all
Voting Interests shall be allocated to the Certificates other than the Notional
Certificates and 2% of all Voting Interests shall be allocated to the Notional
Certificates. Voting Interests allocated to the Notional Certificates shall be
allocated between the Classes of such Certificates (and among the Certificates
of each such Class) in proportion to their Class Notional Amounts (or Notional
Amounts). Voting Interests shall be allocated among the other Classes of
Certificates (and among the Certificates of each such Class) in proportion to
their Class Principal Amounts (or Certificate Principal Amounts).
Section 1.02. Calculations Respecting Mortgage Loans. Calculations required
--------------------------------------
to be made pursuant to this Agreement with respect to any Mortgage Loan in the
Trust Fund shall be made based upon current information as to the terms of the
Mortgage Loans and reports of payments received from the Mortgagor on such
Mortgage Loans and payments to be made to the Trustee as supplied to the Trustee
by the Master Servicer. The Trustee shall not be required to recompute, verify
or recalculate the information supplied to it by the Master Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
-----------------------------------------------------------
Mortgage Loans. (a) Concurrently with the execution and delivery of this
- ---------------
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Trustee, without recourse, subject to Sections 2.02,
2.04, 2.05 and 2.06, in trust, all the right, title and interest of the
Depositor in and to the Mortgage Loans. 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
(i) any amounts representing Retained Interest and (ii) payments of
principal and interest due on or before such date, and all such payments due
after such date but received prior to such date and intended by the related
Mortgagors to be applied after such date, together with all of the Depositor's
right, title and interest in and to the Collection Account and all amounts from
time to time credited to and the proceeds of the Collection Account, the
Certificate Account and all amounts from time to time credited to and the
proceeds of the Certificate Account, any Escrow Account established pursuant to
Section 9.06 hereof and all amounts from time to time credited to and the
proceeds of any such Escrow Account, any REO Property and the proceeds thereof,
the Depositor's rights under any Insurance Policies related to the Mortgage
Loans, and the Depositor's security interest in any collateral pledged to secure
the Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral, and any proceeds of the foregoing, to have and to hold, in trust;
and the Trustee declares that, subject to the review provided for in Section
2.02, it has received and shall hold the Trust Fund, as trustee, in trust, for
the benefit and use of the Holders of the Certificates and for the purposes and
subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, has caused to be executed, authenticated and
delivered to or upon the order of the Depositor, in exchange for the Trust Fund,
Certificates in the authorized denominations evidencing the entire ownership of
the Trust Fund.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Sale Agreement (other than any right to receive Retained
Interest), including all rights of the Seller under the Servicing Agreement to
the extent assigned under the Mortgage Loan Sale Agreement, and delegates its
obligations thereunder. The Trustee hereby accepts such assignment and
delegation, and shall be entitled to exercise all rights of the Depositor under
the Mortgage Loan Sale Agreement as if, for such purpose, it were the Depositor.
The foregoing sale, transfer, assignment, set-over, deposit and conveyance does
not and is not intended to result in creation or assumption by the Trustee of
any obligation of the Depositor, the Seller, or any other Person in connection
with the Mortgage Loans or any other agreement or instrument relating thereto
except as specifically set forth herein.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Trustee, and/or any custodian acting on the Trustee's behalf, if
applicable, the following documents or instruments with respect to each Mortgage
Loan (each a "Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage Note
endorsed without recourse in proper form to the order of the Trustee, or in
blank (in each case, with all necessary intervening endorsements as
applicable);
(ii) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Trustee;
(iii) with respect to each Mortgage Loan other than a Cooperative
Loan, the original recorded Mortgage with evidence of recording indicated
thereon. If, in connection with any Mortgage Loan, the Depositor cannot
deliver the Mortgage with evidence of recording thereon on or prior to the
Closing Date because of a delay caused by the public recording office where
such Mortgage has been delivered for recordation or because such Mortgage
has been lost, the Depositor shall deliver or cause to be delivered to the
Trustee (or its custodian), in the case of a delay due to recording, a true
copy of such Mortgage, pending delivery of the original thereof, together
with an Officer's Certificate of the Depositor certifying that the copy of
such Mortgage delivered to the Trustee (or its custodian) is a true copy
and that the original of such Mortgage has been forwarded to the public
recording office, or, in the case of a Mortgage that has been lost, a copy
thereof (certified as provided for under the laws of the appropriate
jurisdiction) and a written Opinion of Counsel acceptable to the Trustee
and the Depositor that an original recorded Mortgage is not required to
enforce the Trustee's interest in the Mortgage Loan;
(iv) The original of each assumption, modification or substitution
agreement, if any, relating to the Mortgage Loans, or, as to any
assumption, modification or substitution agreement which cannot be
delivered on or prior to the Closing Date because of a delay caused by the
public recording office where such assumption, modification or substitution
agreement has been delivered for recordation, a photocopy of such
assumption, modification or substitution agreement, pending delivery of the
original thereof, together with an Officer's Certificate of the Depositor
certifying that the copy of such assumption, modification or substitution
agreement delivered to the Trustee (or its custodian) is a true copy and
that the original of such agreement has been forwarded to the public
recording office;
(v) with respect to each Non-MERS Mortgage Loan other than a
Cooperative Loan, the original Assignment of Mortgage for each Mortgage
Loan;
(vi) If applicable, such original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument (each, an
"Intervening Assignment"), as may be necessary to show a complete chain of
assignment from the originator, or, in the case of an Intervening
Assignment that has been lost, a written Opinion of Counsel acceptable to
the Trustee that such original Intervening Assignment is not required to
enforce the Trustee's interest in the Mortgage Loans;
(vii) the original Primary Mortgage Insurance Policy or certificate,
if private mortgage guaranty insurance is required;
(viii) with respect to each Mortgage Loan other than a Cooperative
Loan, the original mortgagee title insurance policy or attorney's opinion
of title and abstract of title;
(ix) the original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage or as to any security
agreement, chattel mortgage or their equivalent that cannot be delivered on
or prior to the Closing Date because of a delay caused by the public
recording office where such document has been delivered for recordation, a
photocopy of such document, pending delivery of the original thereof,
together with an Officer's Certificate of the Depositor certifying that the
copy of such security agreement, chattel mortgage or their equivalent
delivered to the Trustee (or its custodian) is a true copy and that the
original of such document has been forwarded to the public recording
office;
(x) with respect to any Cooperative Loan, the Cooperative Loan
Documents; and
(xi) in connection with any pledge of Additional Collateral, the
original additional collateral pledge and security agreement executed in
connection therewith, assigned to the Trustee.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-4 is intended to effect the transfer to the
Trustee, for the benefit of the Certificateholders, of the Mortgage Notes and
the Mortgages.
(c) (i) Assignments of Mortgage with respect to each Non-MERS Mortgage Loan
other than a Cooperative Loan shall be recorded; provided, however, that such
Assignments need not be recorded if, in the Opinion of Counsel (which must be
Independent counsel) acceptable to the Trustee and the Rating Agencies,
recording in such states is not required to protect the Trustee's interest in
the related Non-MERS Mortgage Loans. Subject to the preceding sentence, as soon
as practicable after the Closing Date (but in no event more than 3 months
thereafter except to the extent delays are caused by the applicable recording
office), the Trustee, at the expense of the Depositor and with the cooperation
of the Servicer, shall cause to be properly recorded by the Servicer in each
public recording office where the related Mortgages are recorded each Assignment
of Mortgage referred to in subsection (b)(v) above with respect to a Non-MERS
Mortgage Loan. With respect to each Cooperative Loan, the Trustee, at the
expense of the Depositor and with the cooperation of the Servicer, shall cause
to be taken such actions as are necessary under applicable law in order to
perfect the interest of the Trustee in the related Mortgaged Property.
(ii) With respect to each MERS Mortgage Loan, the Trustee, at the
expense of the Depositor and with the cooperation of the Servicer, shall
cause to be taken such actions as are necessary to cause the Trustee to be
clearly identified as the owner of each such Mortgage Loan on the records
of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS.
(d) In instances where a Title Insurance Policy is required to be delivered
to the Trustee, or to the applicable Custodian on behalf of the Trustee, under
clause (b)(viii) above and is not so delivered, the Depositor will provide a
copy of such Title Insurance Policy to the Trustee, or to the applicable
Custodian on behalf of the Trustee, as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.
(e) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above documents, herewith delivers to the Trustee, or to the applicable
Custodian on behalf of the Trustee, an Officer's Certificate which shall include
a statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the applicable Collection
Account pursuant to Section 4.01 have been so deposited. All original documents
that are not delivered to the Trustee shall be held by the Master Servicer or
the applicable Servicer in trust for the benefit of the Trustee and the
Certificateholders.
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation
-----------------------------------
for Trust Fund. (a) The Trustee, by execution and delivery hereof, acknowledges
receipt of the Mortgage Files pertaining to the Mortgage Loans listed on the
Mortgage Loan Schedule, subject to review thereof by the Trustee, or by the
applicable Custodian on behalf of the Trustee, under this Section 2.02. The
Trustee, or the applicable Custodian on behalf of the Trustee, will execute and
deliver to the Depositor and the Master Servicer on the Closing Date an Initial
Certification in the form annexed hereto as Exhibit B-1 (or in the form annexed
to the applicable Custodial Agreement as Exhibit B-1, as applicable).
(b) Within 45 days after the Closing Date, the applicable Custodian will,
on behalf of the Trustee and for the benefit of Holders of the Certificates,
review each Mortgage File to ascertain that all required documents set forth in
Section 2.01 have been received and appear on their face to contain the
requisite signatures by or on behalf of the respective parties thereto, and
shall deliver to the Depositor and the Master Servicer an Interim Certification
in the form annexed hereto as Exhibit B-2 (or in the form annexed to the
applicable Custodial Agreement as Exhibit B-2, as applicable) to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan prepaid in full or any Mortgage Loan specifically identified
in such certification as not covered by such certification), (i) all of the
applicable documents specified in Section 2.01(b) are in its possession and (ii)
such documents have been reviewed by it and appear to relate to such Mortgage
Loan. The Trustee, or the applicable Custodian on behalf of the Trustee, shall
make sure that the documents are executed and endorsed, but shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that the same are valid,
binding, legally effective, properly endorsed, genuine, enforceable or
appropriate for the represented purpose or that they have actually been recorded
or are in recordable form or that they are other than what they purport to be on
their face. Neither the Trustee nor any Custodian shall have any responsibility
for verifying the genuineness or the legal effectiveness of or authority for any
signatures of or on behalf of any party or endorser.
(c) If in the course of the review described in paragraph (b) above the
Trustee or the applicable Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear regular
on its face (i.e., is mutilated, damaged, defaced, torn or otherwise physically
altered) or appears to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule (each, a "Material Defect"), the Trustee, or the
applicable Custodian on behalf of the Trustee, shall promptly identify the
Mortgage Loan to which such Material Defect relates in the Interim Certificate
delivered to the Depositor or the Master Servicer (and to the Trustee). Within
90 days of its receipt of such notice, the Depositor shall be required to cure
such Material Defect (and, in such event, the Depositor shall provide the
Trustee with an Officer's Certificate confirming that such cure has been
effected). If the Depositor does not so cure such Material Defect, it shall, if
a loss has been incurred with respect to such Mortgage Loan that would, if such
Mortgage Loan were not purchased from the Trust Fund, constitute a Realized
Loss, and such loss is attributable to the failure of the Depositor to cure such
Material Defect, repurchase the related Mortgage Loan from the Trust Fund at the
Purchase Price. A loss shall be deemed to be attributable to the failure of the
Depositor to cure a Material Defect if, as determined by the Depositor, upon
mutual agreement acting in good faith, absent such Material Defect, such loss
would not have been incurred. Within the two year period following the Closing
Date, the Depositor may, in lieu of repurchasing a Mortgage Loan pursuant to
this Section 2.02, substitute for such Mortgage Loan a Qualifying Substitute
Mortgage Loan subject to the provisions of Section 2.05. The failure of the
Trustee or the applicable Custodian to give the notice contemplated herein
within 45 days after the Closing Date shall not affect or relieve the Depositor
of its obligation to repurchase any Mortgage Loan pursuant to this Section 2.02
or any other Section of this Agreement requiring the repurchase of Mortgage
Loans from the Trust Fund.
(d) Within 180 days following the Closing Date, the Trustee, or the
applicable Custodian, shall deliver to the Depositor and the Master Servicer a
Final Certification substantially in the form annexed hereto as Exhibit B-3 (or
in the form annexed to the applicable Custodial Agreement as Exhibit B-3, as
applicable) evidencing the completeness of the Mortgage Files in its possession
or control, with any exceptions noted thereto.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
(f) Each of the parties hereto acknowledges that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications thereof as provided in this Section 2.02.
Section 2.03. Representations and Warranties of the Depositor. (a) The
--------------------------------------------------
Depositor hereby represents and warrants to the Trustee, for the benefit of
Certificateholders, and to the Master Servicer, as of the Closing Date or such
other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry on
its business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Depositor or its
properties or the certificate of incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor of this
Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
state, federal or other governmental authority or agency, except such as
has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee and the Master Servicer, constitutes a valid and binding obligation
of the Depositor enforceable against it in accordance with its terms except
as such enforceability may be subject to (A) applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the
rights of creditors generally and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against or
affecting the Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter
which in the judgment of the Depositor will be determined adversely to the
Depositor and will if determined adversely to the Depositor materially and
adversely affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect its ability to perform its
obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the Mortgage
Loans to the Trustee, the Depositor was the sole owner of record and holder
of each Mortgage Loan, and the Depositor had good and marketable title
thereto, and had full right to transfer and sell each Mortgage Loan to the
Trustee free and clear, subject only to (1) liens of current real property
taxes and assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges permitted by
statute, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of
such Mortgage acceptable to mortgage lending institutions in the area in
which the related Mortgaged Property is located and specifically referred
to in the lender's Title Insurance Policy or attorney's opinion of title
and abstract of title delivered to the originator of such Mortgage Loan,
and (3) such other matters to which like properties are commonly subject
which do not, individually or in the aggregate, materially interfere with
the benefits of the security intended to be provided by the Mortgage, of
any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to sell
and assign each Mortgage Loan pursuant to this Agreement.
(b) The representations and warranties of each Transferor with respect to
the related Mortgage Loans in the applicable Transfer Agreement, which have been
assigned to the Trustee hereunder, were made as of the date specified in the
applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty of
Lehman Capital under the Mortgage Loan Sale Agreement, the only right or remedy
of the Trustee or of any Certificateholder shall be the Trustee's right to
enforce the obligations of the applicable Transferor under any applicable
representation or warranty made by it. The Trustee acknowledges that the
representations and warranties of Lehman Capital in Section 1.04(b) of the
Mortgage Loan Sale Agreement are applicable only to facts or conditions that
arise or events that occur subsequent to the date as of which the
representations and warranties with respect to the related Mortgage Loans in the
Transfer Agreements were made, and which do not constitute a breach of any
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement. The Trustee acknowledges that Lehman Capital shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition or
event constituting such breach also constitutes a breach of a representation or
warranty made by the applicable Transferor in the applicable Transfer Agreement,
without regard to whether such Transferor fulfills its contractual obligations
in respect of such representation or warranty. The Trustee further acknowledges
that the Depositor shall have no obligation or liability with respect to any
breach of any representation or warranty with respect to the Mortgage Loans
(except as set forth in Section 2.03(a)(vi)) under any circumstances.
Section 2.04. Discovery of Breach. It is understood and agreed that the
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representations and warranties (i) set forth in Section 2.03, (ii) of Lehman
Capital set forth in the Mortgage Loan Sale Agreement and assigned to the
Trustee by the Depositor hereunder and (iii) of each Transferor, assigned by
Lehman Capital to the Depositor pursuant to the Mortgage Loan Sale Agreement and
assigned to the Trustee by the Depositor hereunder shall each survive delivery
of the Mortgage Files and the Assignment of Mortgage of each Mortgage Loan to
the Trustee and shall continue throughout the term of this Agreement. Upon
discovery by either the Depositor, the Master Servicer or the Trustee of a
breach of any of such representations and warranties that adversely and
materially affects the value of the related Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties. Within 90
days of the discovery of a breach of any representation or warranty given to the
Trustee by the Depositor or given by Lehman Capital and assigned to the Trustee,
the Depositor or Lehman Capital, as applicable, shall either (a) cure such
breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Qualifying Substitute Mortgage Loan for the affected Mortgage Loan. In the event
of discovery of a breach of any representation and warranty of any Transferor
assigned to the Trustee, the Trustee may enforce its rights under the applicable
Transfer Agreement for the benefit of Certificateholders.
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans. (a)
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With respect to any Mortgage Loan repurchased by the Depositor pursuant to this
Agreement, by Lehman Capital pursuant to the Mortgage Loan Sale Agreement or by
any Transferor pursuant to the applicable Transfer Agreement, the principal
portion of the funds received by the Trustee in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
in the Collection Account. The Trustee, upon receipt of the full amount of the
Purchase Price for a Deleted Mortgage Loan, or upon receipt of the Mortgage File
for a Qualifying Substitute Mortgage Loan substituted for a Deleted Mortgage
Loan (and any applicable Substitution Amount), shall release or cause to be
released and reassign to the Depositor, Lehman Capital or the applicable
Transferor, as applicable, the related Mortgage File for the Deleted Mortgage
Loan and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, representation or warranty, as shall be necessary
to vest in such party or its designee or assignee title to any Deleted Mortgage
Loan released pursuant hereto, free and clear of all security interests, liens
and other encumbrances created by this Agreement, which instruments shall be
prepared by the Trustee (or its custodian), and the Trustee shall have no
further responsibility with respect to the Mortgage File relating to such
Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Trustee (or its custodian) pursuant to the terms of this
Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor, the
applicable Transferor or Lehman Capital, as applicable, must deliver to the
Trustee (or its custodian) the Mortgage File for the Qualifying Substitute
Mortgage Loan containing the documents set forth in Section 2.01(b) along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01(a); and (ii) the
Depositor will be deemed to have made, with respect to such Qualified Substitute
Mortgage Loan, each of the representations and warranties made by it with
respect to the related Deleted Mortgage Loan. As soon as practicable after the
delivery of any Qualifying Substitute Mortgage Loan hereunder, the Trustee, at
the expense of the Depositor and with the cooperation of the Servicer, shall (i)
with respect to a Qualifying Substitute Mortgage Loan that is a Non-MERS
Mortgage Loan, cause the Assignment of Mortgage to be recorded by the Servicer
if required pursuant to Section 2.01(c)(i), or (ii) with respect to a Qualifying
Substitute Mortgage Loan that is a MERS Mortgage Loan, cause to be taken such
actions as are necessary to cause the Trustee to be clearly identified as the
owner of each such Mortgage Loan on the records of MERS if required pursuant to
Section 2.01(c)(ii).
(c) Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Qualifying Substitute Mortgage
Loan for a Deleted Mortgage Loan shall be made unless the Trustee has received
an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.
Section 2.06. Grant Clause. It is intended that the conveyance of the
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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
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registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Principal
Amount, as applicable, or in the Percentage Interests, specified herein. Each
Class of Book-Entry Certificates shall be issued in the minimum denominations in
Certificate Principal Amount (or Notional Amount) 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 shall be
issued in definitive, fully registered form in the minimum denominations in
Certificate Principal Amount (or Notional Amount) specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. The Residual
Certificate shall be issued as a single Certificate and maintained in
definitive, fully registered form in a minimum denomination equal to 100% of the
Percentage Interest of such Class. The Certificates may be issued in the form of
typewritten certificates. One Certificate of each Class of Certificates other
than any Class of Residual Certificates may be issued in any denomination in
excess of the minimum denomination.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the Depositor
upon receipt by the Trustee of the Mortgage Files described in Section 2.01. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein, executed by an
authorized officer of the Trustee or the Authenticating Agent, if any, by manual
signature, and such certification upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Depositor to the Trustee or the Authenticating Agent for authentication
and the Trustee or the Authenticating Agent shall authenticate and deliver such
Certificates as in this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
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accepts its appointment as, Certificate Registrar in respect of the Certificates
and shall maintain books for the registration and for the transfer of
Certificates (the "Certificate Register"). The Trustee may appoint a bank or
trust company to act as Certificate Registrar. A registration book shall be
maintained for the Certificates collectively. The Certificate Registrar may
resign or be discharged or removed and a new successor may be appointed in
accordance with the procedures and requirements set forth in Sections 6.06 and
6.07 hereof with respect to the resignation, discharge or removal of the Trustee
and the appointment of a successor Trustee. The Certificate Registrar may
appoint, by a written instrument delivered to the Holders and the Master
Servicer, any bank or trust company to act as co-registrar under such conditions
as the Certificate Registrar may prescribe; provided, however, that the
Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
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(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
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mutilated and is surrendered to the Trustee or any Authenticating Agent or (ii)
the Trustee or any Authenticating Agent receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and there is delivered to the
Trustee or the Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor and any Authenticating Agent that such destroyed, lost or
stolen Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee and Authenticating Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
or the Authenticating Agent) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of Section
---------------------
3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the books
of the Certificate Registrar as the owner of such Certificate for the purpose of
receiving distributions pursuant to Sections 5.01 and 5.02 and for all other
purposes whatsoever, and neither the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
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definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in exchange
therefor a like aggregate Certificate Principal Amount of definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates of the same Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a Paying
---------------------------
Agent (which may be the Trustee) for the purpose of making distributions to
Certificateholders hereunder. The Trustee shall cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
------------------------
Certificates, upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Depositor, the Master Servicer, the Paying Agent, the
Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate Owners
and the Clearing Agency shall be responsible for crediting the amount of
such distributions to the accounts of such Persons entitled thereto, in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09 conflict
with any other provisions of this Agreement, the provisions of this Section
3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
3.09(c), the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal of and interest on the Book-Entry Certificates to such Clearing
Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Principal Amount of a Class
of Book-Entry Certificates identified as such to the Trustee by an Officer's
Certificate from the Clearing Agency advise the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Trustee
shall notify or cause the Certificate Registrar to notify the Clearing Agency to
effect notification to all Certificate Owners, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Book-Entry Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Trustee
shall issue the Definitive Certificates. Neither the Transferor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent
applicable, with respect to such Definitive Certificates and the Trustee shall
recognize the holders of the Definitive Certificates as Certificateholders
hereunder.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Collection Account. (a) On the Closing Date, the Master
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Servicer shall open and shall thereafter maintain an account held in trust (the
"Collection Account"), entitled "Aurora Loan Services Inc., as Master Servicer,
in trust for the benefit of the Holders of Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 1999-ALS1." The
Collection Account shall relate solely to the Certificates issued by the Trust
Fund hereunder, and funds in such Collection Account shall not be commingled
with any other monies.
(b) The Collection Account shall be an Eligible Account. If an existing
Collection Account ceases to be an Eligible Account, the Master Servicer shall
establish a new Collection Account that is an Eligible Account within 30 days
and transfer all funds on deposit in such existing Collection Account into such
new Collection Account.
(c) The Master Servicer shall give to the Trustee prior written notice of
the name and address of the depository institution at which the Collection
Account is maintained and the account number of such Collection Account. On each
Deposit Date, the entire amount on deposit in the Collection Account (subject to
permitted withdrawals set forth in Section 4.02), excluding such amounts not
included in the Available Distribution Amount for such Distribution Date
pursuant to clauses (a) through (g) of paragraph (1) of the definition thereof,
shall be remitted to the Trustee for deposit into the Certificate Account by
wire transfer in immediately available funds. The Master Servicer, at its
option, may choose to make daily remittances from the Collection Account to the
Trustee for deposit into the Certificate Account.
(d) The Master Servicer shall deposit or cause to be deposited into the
Collection Account, no later than the Business Day following the Closing Date,
any amounts representing Scheduled Payments on the Mortgage Loans due after the
Cut-off Date and received by the Master Servicer on or before the Closing Date.
Thereafter, the Master Servicer shall deposit or cause to be deposited in the
Collection Account on the applicable Remittance Date the following amounts
received or payments made by it (other than in respect of principal of and
interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) all payments on account of principal, including Principal
Prepayments and late collections, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans (other
than payments due prior to the Cut-off Date), net of the Servicing Fee and
Master Servicing Fee with respect to each such Mortgage Loan, but only to
the extent of the amount permitted to be withdrawn or withheld from the
Collection Account in accordance with Sections 5.04 and 9.21;
(iii) any unscheduled payment or other recovery with respect to a
Mortgage Loan not otherwise specified in this paragraph (d), including all
Net Liquidation Proceeds with respect to the Mortgage Loans and REO
Property, and all amounts received in connection with the operation of any
REO Property, net of any unpaid Servicing Fees and Master Servicing Fees
with respect to such Mortgage Loans (but only to the extent of the amount
permitted to be withdrawn or withheld from the Collection Account in
accordance with Sections 5.04 and 9.21);
(iv) all Insurance Proceeds;
(v) all Advances made by the Master Servicer or any Servicer pursuant
to Section 5.04 or the applicable Servicing Agreement; and
(vi) all proceeds of any Mortgage Loan purchased by any Person.
(e) Funds in the Collection Account may be invested in Eligible Investments
(selected by and at the written direction of the Master Servicer) which shall
mature not later than the earlier of (a) the Deposit Date (except that if such
Eligible Investment is an obligation of the Trustee or the Paying Agent, if
other than the Trustee, and such Collection Account is maintained with the
Trustee or the Paying Agent, if other than the Trustee, then such Eligible
Investment shall mature not later than such applicable Distribution Date) or (b)
the day on which the funds in such Collection Account are required to be
remitted to the Trustee for deposit into the Certificate Account, and any such
Eligible Investment shall not be sold or disposed of prior to its maturity. All
such Eligible Investments shall be made in the name of the Trustee (in its
capacity as such) or its nominee. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time, subject to Section 5.05, and shall
not be part of the Trust Fund. The amount of any losses incurred in respect of
any such investments shall be deposited in such Collection Account by the Master
Servicer out of its own funds, without any right of reimbursement therefor,
immediately as realized. The foregoing requirements for deposit in the
Collection Account are exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments of interest on funds in the
Collection Account and payments in the nature of late payment charges or
assumption fees need not be deposited by the Master Servicer in the Collection
Account and may be retained by the Master Servicer or the applicable Servicer as
additional servicing compensation. If the Master Servicer deposits in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Collection Account. In the event the
Master Servicer does not provide written direction to the Trustee pursuant to
this Section, all funds on deposit in the Collection Account shall remain
uninvested.
Section 4.02. Application of Funds in the Collection Account. The Master
-----------------------------------------------
Servicer may, from time to time, make, or cause to be made, withdrawals from the
Collection Account for the following purposes:
(i) to reimburse itself or any Servicer for Advances made by it or by
such Servicer pursuant to Section 5.04 or the applicable Servicing
Agreement; the Master Servicer's right to reimburse itself pursuant to this
subclause (i) is limited to amounts received on or in respect of particular
Mortgage Loans (including, for this purpose, Liquidation Proceeds and
amounts representing Insurance Proceeds with respect to the property
subject to the related Mortgage) which represent late recoveries (net of
the applicable Servicing Fee and the Master Servicing Fee) of payments of
principal or interest respecting which any such Advance was made, it being
understood, in the case of any such reimbursement, that the Master
Servicer's or Servicer's right thereto shall be prior to the rights of the
Certificateholders;
(ii) to reimburse itself or any Servicer for any Servicing Advances
made by it or by such Servicer that it determines in good faith will not be
recoverable from amounts representing late recoveries of payments of
principal or interest respecting the particular Mortgage Loan as to which
such Servicing Advance was made or from Liquidation Proceeds or Insurance
Proceeds with respect to such Mortgage Loan, it being understood, in the
case of any such reimbursement, that such Master Servicer's or Servicer's
right thereto shall be prior to the rights of the Certificateholders;
(iii) to reimburse itself or any Servicer from Liquidation Proceeds
for Liquidation Expenses and for amounts expended by it pursuant to
Sections 9.20 and 9.22(a) or the applicable Servicing Agreement in good
faith in connection with the restoration of damaged property and, to the
extent that Liquidation Proceeds after such reimbursement exceed the unpaid
principal balance of the related Mortgage Loan, together with accrued and
unpaid interest thereon at the applicable Mortgage Rate less the applicable
Servicing Fee and the Master Servicing Fee for such Mortgage Loan to the
Due Date next succeeding the date of its receipt of such Liquidation
Proceeds, to pay to itself out of such excess the amount of any unpaid
assumption fees, late payment charges or other Mortgagor charges on the
related Mortgage Loan and to retain any excess remaining thereafter as
additional servicing compensation, it being understood, in the case of any
such reimbursement or payment, that such Master Servicer's or Servicer's
right thereto shall be prior to the rights of the Certificateholders;
(iv) in the event it has elected not to pay itself the Master
Servicing Fee out of any Mortgagor payment on account of interest or other
recovery with respect to a particular Mortgage Loan prior to the deposit of
such Mortgagor payment or recovery in the Collection Account, to pay to
itself the Master Servicing Fee for each Distribution Date and any unpaid
Master Servicing Fees for prior Distribution Dates, as reduced pursuant to
Section 5.05, from any Mortgagor payment as to interest or such other
recovery with respect to that Mortgage Loan, as is permitted by this
Agreement;
(v) to reimburse itself or any Servicer for expenses incurred by and
recoverable by or reimbursable to it or such Servicer pursuant to Section
9.04, 9.06, 9.16 or 9.22(a) or pursuant to the applicable Servicing
Agreement, and to reimburse itself for any expenses reimbursable to it
pursuant to Section 10.01(c);
(vi) to pay to the applicable Person, with respect to each Mortgage
Loan or REO Property acquired in respect thereof that has been repurchased
by such Person pursuant to this Agreement, all amounts received thereon and
not distributed on the date on which the related repurchase was effected;
(vii) subject to Section 5.04, to pay to itself income earned on the
investment of funds deposited in the Collection Account;
(viii) to make payments to the Trustee for deposit into the
Certificate Account in the amounts and in the manner provided for in
Section 4.04;
(ix) to make distributions of the Retained Interest to the Retained
Interest Holder on each Distribution Date;
(x) to make payment to itself and others pursuant to any provision of
this Agreement;
(xi) to withdraw funds deposited in error in the Collection Account;
(xii) to clear and terminate any Collection Account pursuant to
Section 7.02;
(xiii) to reimburse a successor Master Servicer (solely in its
capacity as successor Master Servicer), for any fee or advance occasioned
by a termination of the Master Servicer, and the assumption of such duties
by the Trustee or a successor Master Servicer appointed by the Trustee
pursuant to Section 6.14, in each case to the extent not reimbursed by the
terminated Master Servicer, it being understood, in the case of any such
reimbursement or payment, that the right of the Master Servicer or the
Trustee thereto shall be prior to the rights of the Certificateholders; and
(xiv) to reimburse any Servicer for such amounts as are due thereto
under the applicable Servicing Agreement and have not been retained by or
paid to such Servicer to the extent provided in such Servicing Agreement.
Each Servicer shall be entitled to retain as additional servicing
compensation any Prepayment Penalty Amounts or Prepayment Interest Excess.
In connection with withdrawals pursuant to subclauses (i), (iii), (iv) and
(vi) above, the Master Servicer's or Servicer's entitlement thereto is limited
to collections or other recoveries on the related Mortgage Loan. The Master
Servicer shall therefore keep and maintain a separate accounting for each
Mortgage Loan it master services for the purpose of justifying any withdrawal
from the Collection Account it maintains pursuant to such subclause (i), (iii),
(iv) and (vi).
Section 4.03. Reports to Certificateholders. (a) On each Distribution Date,
-----------------------------
the Trustee shall deliver or cause to be delivered by first class mail to each
Certificateholder a written report setting forth the following information, by
Mortgage Pool and Certificate Group (on the basis of Mortgage Loan level
information obtained from the Servicers):
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates, other than
any Class of Notional Certificates, allocable to principal on the Mortgage
Loans, including Liquidation Proceeds and Insurance Proceeds, stating
separately the amount attributable to scheduled principal payments and
unscheduled payments in the nature of principal in each Mortgage Pool;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (other than
any Class of Principal Only Certificates) allocable to interest, including
any Accrual Amount added to the Class Principal Amount of any Class of
Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holders of a
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Master Servicer or any Servicer (or the Trustee) with
respect to such Distribution Date, (B) the aggregate amount of such
Advances actually made, and (C) the amount, if any, by which (A) above
exceeds (B) above;
(v) the Aggregate Principal Balance of the Mortgage Loans and the
Non-AP Pool Balance of each Mortgage Pool 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 Class Notional Amount) of each
Class of Certificates, to the extent applicable, as of such Distribution
Date after giving effect to payments allocated to principal reported under
clause (i) above (and to the addition of any Accrual Amount in the case of
any Class of Accrual Certificates), separately identifying any reduction of
any of the foregoing Certificate Principal Amounts due to Realized Losses:
(vii) any Realized Losses realized with respect to the Mortgage Loans
(x) in the applicable Prepayment Period and (y) in the aggregate since the
Cut-off Date, stating separately the amount of Special Hazard Losses, Fraud
Losses and Bankruptcy Losses and the aggregate amount of such Realized
Losses, and the remaining Special Hazard Loss Amount, Fraud Loss Amount and
Bankruptcy Loss Amount;
(viii) the amount of the Master Servicing Fees, Servicing Fees and
Trustee Fee paid during the Due Period to which such distribution relates;
(ix) the number and aggregate Scheduled Principal Balance of Mortgage
Loans, as reported to the Trustee by the Master Servicer, (a) remaining
outstanding (b) delinquent one month, (c) delinquent two months, (d)
delinquent three or more months, and (e) as to which foreclosure
proceedings have been commenced as of the close of business on the last
Business Day of the calendar month immediately preceding the month in which
such Distribution Date occurs;
(x) the deemed principal balance of each REO Property as of the close
of business on the last Business Day of the calendar month immediately
preceding the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the principal balance of such Mortgage
Loan and the number of such Mortgage Loans as of the close of business on
the Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the preceding
calendar month, the Scheduled Principal Balance of each Deleted Mortgage
Loan, and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Interest Shortfalls and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which
Certificateholders would have received if there were sufficient available
amounts in the Certificate Account and the amounts actually distributed);
and
(xv) any other "loan-level" information for any Mortgage Loans that
are delinquent three or more months and any REO Property held by the Trust
that is reported by the Master Servicer to the Trustee.
In the case of information furnished pursuant to subclauses (i), (ii) and
(viii) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.
The foregoing information and reports shall be prepared and determined by
the Trustee based solely on Mortgage Loan data provided to the Trustee by the
Master Servicer no later than four Business Days prior to the Distribution Date.
In preparing or furnishing the Mortgage Loan data to the Trustee, the Master
Servicer shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Property
that has been provided to the Master Servicer by each Servicer, and the Master
Servicer shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to be
delivered by first class mail to the Depositor a copy of the above-described
written report, to the following address: Mortgage Finance Group, Lehman
Brothers Inc., Three World Financial Center, 200 Vesey Street, New York, New
York, 10285, Attention: Joseph J. Kelly, or to such other address as the
Depositor may designate.
(b) Upon the reasonable advance written request of any Certificateholder
that is a savings and loan, bank or insurance company, which request, if
received by the Trustee, will be promptly forwarded to the Master Servicer, the
Master Servicer shall provide, or cause to be provided, (or, to the extent that
such information or documentation is not required to be provided by a Servicer
under the applicable Servicing Agreement, shall use reasonable efforts to obtain
such information and documentation from such Servicer, and provide) to such
Certificateholder such reports and access to information and documentation
regarding the Mortgage Loans as such Certificateholder may reasonably deem
necessary to comply with applicable regulations of the Office of Thrift
Supervision or its successor or other regulatory authorities with respect to
investment in the Certificates; provided, however, that the Master Servicer
shall be entitled to be reimbursed by such Certificateholder for such Master
Servicer's actual expenses incurred in providing such reports and access.
(c) Within 90 days, or such shorter period as may be required by statute or
regulation, after the end of each calendar year, the Trustee shall send to each
Person who at any time during the calendar year was a Certificateholder of
record, and make available to Certificate Owners (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report summarizing
the items provided to Certificateholders pursuant to Section 4.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns. Such information shall include the amount of original issue
discount accrued on each Class of Certificates and information regarding the
expenses of the Trust Fund. The Master Servicer shall provide the Trustee with
such information as is necessary for the Trustee to prepare such reports.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
--------------------
maintain in its name, as trustee, a special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders until disbursed pursuant to the terms of this Agreement. The
Certificate Account shall be an Eligible Account. If the existing Certificate
Account ceases to be an Eligible Account, the Trustee shall establish a new
Certificate Account that is an Eligible Account within 20 Business Days and
transfer all funds on deposit in such existing Certificate Account into such new
Certificate Account. The Certificate Account shall relate solely to the
Certificates issued hereunder and funds in the Certificate Account shall be held
separate and apart from and shall not be commingled with any other monies
including, without limitation, other monies of the Trustee held under this
Agreement.
(b) The Trustee shall cause to be deposited into the Certificate Account on
the day on which, or, if such day is not a Business Day, the Business Day
immediately following the day on which, any monies are remitted by the Master
Servicer to the Trustee, all such amounts. The Trustee shall make withdrawals
from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate Account in error;
(ii) to pay itself any investment income earned with respect to funds
in the Certificate Account invested in Eligible Investments as set forth in
subsection (c) below, and to make payments to itself and others pursuant to
any provision of this Agreement;
(iii) to make payments of the Master Servicing Fee (to the extent not
already withheld or withdrawn from the Collection Account by the Master
Servicer) to the Master Servicer;
(iv) to make distributions to the Certificateholders pursuant to
Article V; and
(v) to clear and terminate the Certificate Account pursuant to Section
7.02.
(c) The Trustee may invest, or cause to be invested, funds held in the
Certificate Account, which funds, if invested, shall be invested in Eligible
Investments (which may be obligations of the Trustee). All such investments must
mature no later than the next Distribution Date, and shall not be sold or
disposed of prior to their maturity. All such Eligible Investments will be made
in the name of the Trustee (in its capacity as such) or its nominee. All income
and gain realized from any such investment shall be compensation for the Trustee
and shall be subject to its withdrawal on order from time to time. The amount of
any losses incurred in respect of any such investments shall be paid by the
Trustee for deposit in the Certificate Account out of its own funds, without any
right of reimbursement therefor, immediately as realized. Funds held in the
Certificate Account that are not invested shall be held in cash.
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
------------------------
respecting the final distribution on the Certificates, on each Distribution Date
the Trustee or the Paying Agent shall make distributions in accordance with this
Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date to any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of the
Class 2-AX or Class 3-AX Certificates, a Percentage Interest of 100%, by wire
transfer in immediately available funds to an account specified in the request
and at the expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon presentation
and surrender of such Certificate at the Corporate Trust Office. Wire transfers
will be made at the expense of the Holder requesting such wire transfer by
deducting a wire transfer fee from the related distribution. Notwithstanding
such final payment of principal of any of the Certificates, each Residual
Certificate will remain outstanding until the termination of each REMIC and the
payment in full of all other amounts due with respect to the Residual
Certificate and at such time such final payment in retirement of any Residual
Certificate will be made only upon presentation and surrender of such
Certificate at the Corporate Trust Office of the Trustee or at the office of the
New York Presenting Agent. If any payment required to be made on the
Certificates is to be made on a day that is not a Business Day, then such
payment will be made on the next succeeding Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Certificate Principal Amounts (or initial Notional
Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
---------------------------------------------
Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Available Distribution Amount
with respect to each Mortgage Pool, and shall distribute such amount to itself
(in the case of clause (i)) and to the Holders of record of each Class of
Certificates in the following order of priority:
(i) from the Available Distribution Amount for each Mortgage Pool, to
the Trustee, the Trustee Fee allocable to such Mortgage Pool for such
Distribution Date;
(ii) from the Available Distribution Amount for each Mortgage Pool, to
each Class of Senior Certificates in the related Certificate Group (other
than any Class of Principal Only Certificates), the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such Class's
allocable share of any Net Prepayment Interest Shortfalls for the related
Mortgage Pool for such Distribution Date; provided, however, that any
shortfall in available amounts for each Mortgage Pool shall be allocated
between the Classes of the related Certificate Group in proportion to the
amount of Accrued Certificate Interest (as so reduced) that would otherwise
be distributable thereon;
(iii) from the Available Distribution Amount for each Mortgage Pool,
to each Class of Senior Certificates in the related Certificate Group
(other than any Class of Principal Only Certificates), any related Interest
Shortfall for such Distribution Date; provided, however, that any shortfall
in available amounts for each Mortgage Pool shall be allocated between the
Classes of the related Certificate Group in proportion to the Interest
Shortfall for each such Class on such Distribution Date;
(iv) from the remaining Available Distribution Amount for each
Mortgage Pool, to the Senior Certificates of the related Certificate Group
(other than any Class of Notional Certificates), as follows:
(A) to the Class 1-A and Class 1-AP Certificates, from the
Available Distribution Amount for Pool 1 for such Distribution Date,
in reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) to the Class 1-A Certificates, the Senior Principal
Distribution Amount for Pool 1 for such Distribution Date, until
the Class Principal Amount thereof has been reduced to zero; and
(2) to the Class 1-AP Certificates, the AP Distribution
Amount for Pool 1 for such Distribution Date, until the Class
Principal Amount thereof has been reduced to zero;
(B) to the Class 2-A, Class 2-AP and Class R Certificates, from
the Available Distribution Amount for Pool 2 for such Distribution
Date, in reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) sequentially, to the Class 2-Aand Class R Certificates,
in that order, the Senior Principal Distribution Amount for Pool
2 for such Distribution Date, until the Class Principal Amount of
each such Class has been reduced to zero; and
(2) to the Class 2-AP Certificates, the AP Principal
Distribution Amount for Pool 2 for such Distribution Date, until
the Class Principal Amount thereof has been reduced to zero;
(C) to the Class 3-A and Class 3-AP Certificates, from the
Available Distribution Amount for Pool 3 for such Distribution Date,
in reduction of their respective Class Principal Amounts,
concurrently, as follows:
(1) to the Class 3-A Certificates, the Senior Principal
Distribution Amount for Pool 3 for such Distribution Date, until
the Class Principal Amount thereof has been reduced to zero; and
(2) to the Class 3-AP Certificates, the AP Distribution
Amount for Pool 3 for such Distribution Date, until the Class
Principal Amount thereof has been reduced to zero;
(v) to the Class 1-AP, Class 2-AP and Class 3-AP Certificates, to the
extent of the remaining Available Distribution Amount for each Mortgage
Pool, the Class AP Deferred Amount for such Class and Distribution Date,
until the Class Principal Amount thereof has been reduced to zero;
provided, however, that (A) distributions pursuant to this priority shall
not exceed the aggregate Subordinate Principal Distribution Amount for all
Mortgage Pools for such date; (B) such amounts will not reduce the Class
Principal Amounts of such Classes; and (C) in the event the aggregate
Subordinate Principal Distribution Amount for all Mortgage Pools is
insufficient to fully pay the Class AP Deferred Amount for the Class 1-AP,
Class 2-AP and Class 3-AP Certificates, such amount shall be distributed
pro rata to such Classes on the basis of their respective Class AP Deferred
Amounts; and
(vi) from the remaining Available Distribution Amount for all Mortgage
Pools, subject to the prior distribution of amounts pursuant to Section
5.02(e) in the case of clauses (C), (F), (I), (L), (O) and (R) below, to
the Subordinated Certificates, as follows:
(A) to the Class B1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(B) to the Class B1 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(C) to the Class B1 Certificates, in reduction of the Class
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Certificate
Principal Balance thereof has been reduced to zero;
(D) to the Class B2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(E) to the Class B2 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(F) to the Class B2 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Class Principal
Amount thereof has been reduced to zero;
(G) to the Class B3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(H) to the Class B3 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(I) to the Class B3 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Class Principal
Amount thereof has been reduced to zero;
(J) to the Class B4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(K) to the Class B4 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(L) to the Class B4 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Certificate
Principal Balance thereof has been reduced to zero;
(M) to the Class B5 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(N) to the Class B5 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(O) to the Class B5 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Class Principal
Balance thereof has been reduced to zero;
(P) to the Class B6 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date, as reduced by such
Class's allocable share of any Net Prepayment Interest Shortfalls for
such Distribution Date;
(Q) to the Class B6 Certificates, any Interest Shortfall for such
Class on such Distribution Date; and
(R) to the Class B6 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
each Subordinate Principal Distribution Amount for such Distribution
Date, except as provided in Section 5.02(c), until the Certificate
Principal Balance thereof has been reduced to zero.
(b) Net Prepayment Interest Shortfalls for each Mortgage Pool shall be
allocated among the Certificates of the related Certificate Group (other than
any related Principal Only Certificates) pro rata based on (i) in the case of
the Non-AP Senior Certificates, the Accrued Certificate Interest otherwise
distributable thereon, and (ii) in the case of the Subordinate Certificates,
interest accrued on the related Apportioned Principal Balances.
(c) (i) If on any Distribution Date the Credit Support Percentage for the
Class B1 Certificates is less than the Original Credit Support Percentage for
such Class, then, notwithstanding anything to the contrary in Section 5.02(a),
no distribution of amounts described in clauses (ii) and (iii) of the definition
of Subordinate Principal Distribution Amount will be made in respect of the
Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates on such
Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date the
Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on such
Distribution Date.
Any amount not distributed in respect of any Class on any Distribution Date
pursuant to the immediately preceding paragraph will be allocated among the
remaining Subordinate Classes in proportion to their respective Certificate
Principal Amounts.
(d) On each Distribution Date, the Trustee shall distribute to the Holder
of the Class R Certificate any amounts remaining in the Upper Tier REMIC for
such Distribution Date after application of all amounts described in paragraph
(a) of this Section 5.02. Any distributions pursuant to this paragraph (d) shall
not reduce the Class Principal Amount of the Class R Certificate.
(e) (i) On each Distribution Date prior to the Credit Support Depletion
Date but on or after the date on which the aggregate Certificate Principal
Amount of the Non-AP Senior Certificates of any Certificate Group has been
reduced to zero, amounts otherwise distributable as principal on each Class of
Subordinate Certificates pursuant to Section 5.02(a)(vi), in reverse order of
priority, in respect of such Class's Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for the Mortgage Pool relating to such
retired Certificates, shall be distributed as principal to the Non-AP Senior
Certificates (other than any Notional Certificates) remaining outstanding, until
the Class Principal Amounts thereof have been reduced to zero, provided that on
such Distribution Date (a) the Aggregate Subordinate Percentage for such
Distribution Date is less than 200% of the Aggregate Subordinate Percentage as
of the Cut-off Date or (b) the average outstanding principal balance of the
Mortgage Loans in any Mortgage Pool that are delinquent 60 days or more over the
last six months as a percentage of the related Group Subordinate Amount is
greater than or equal to 50%.
(A) On each Distribution Date on which the aggregate Certificate
Principal Amount of the Non-AP Senior Certificates of any two
Certificate Groups has been reduced to zero, any amounts distributable
pursuant to this Section 5.02(e)(i) will be distributed, as to each
applicable Class of Subordinate Certificates, in proportion to such
Class's Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for the Mortgage Pool relating to each such
retired Certificate Group.
(B) On each Distribution Date on which any of the Non-AP Senior
Certificates of each of two Certificate Groups remain outstanding, any
amounts distributable pursuant to this Section 5.02(e)(i) will be
distributed in proportion to the aggregate Certificate Principal
Amounts of such Certificates of each such Certificate Group.
(ii) (A) On any Distribution Date on which any Certificate Group
constitutes an Undercollateralized Group, all amounts otherwise
distributable as principal on the Subordinate Certificates, in reverse
order of priority (other than amounts necessary to pay Class AP Deferred
Amounts or unpaid Interest Shortfalls) (or, following the Credit Support
Depletion Date, such other amounts described in the immediately following
sentence), will be distributed as principal to the Non-AP Senior
Certificates (other than any Notional Certificates) of such
Undercollateralized Group, until the aggregate Certificate Principal Amount
of such Non-AP Senior Certificates equals the Non-AP Pool Balance of the
related Mortgage Pool (such distribution, an "Undercollateralization
Distribution"). In the event that any Certificate Group constitutes an
Undercollateralized Group on any Distribution Date following the Credit
Support Depletion Date, Undercollateralization Distributions will be made
from any Available Distribution Amount for each Mortgage Pool not related
to an Undercollateralized Group remaining after all required amounts have
been distributed to the Non-AP Senior Certificates of each such other
Certificate Group. In addition, the amount of any unpaid Interest
Shortfalls with respect to an Undercollateralized Group on any Distribution
Date (including any Interest Shortfalls for such Distribution Date) will be
distributed to the Non-AP Senior Certificates of such Undercollateralized
Group prior to the payment of any Undercollateralization Distributions from
amounts otherwise distributable as principal on the Subordinate
Certificates, in reverse order of priority (or, following the Credit
Support Depletion Date, as provided in the preceding sentence).
(B) If on any Distribution Date two Certificate Groups are
Undercollateralized Groups and one Certificate Group is not an
Undercollateralized Group, the distributions described in paragraph
(ii)(A) above will be made in proportion to the amount by which the
aggregate Certificate Principal Amount of the Non-AP Senior
Certificates, after giving effect to distributions pursuant to
Sections 5.02(a) and (b) on such Distribution Date, of each
Undercollateralized Group exceeds the Non-AP Pool Balance of the
related Mortgage Pool for such Distribution Date.
Section 5.03. Allocation of Realized Losses. (a) On any Distribution Date,
-----------------------------
(x) the applicable AP Percentage of the principal portion of each Realized Loss
(other than any Excess Loss) in respect of a Mortgage Loan in each Mortgage Pool
will be allocated to the related Class of Principal Only Certificates until the
Class Principal Amount thereof has been reduced to zero; and (y) the applicable
Non-AP Percentage of the principal portion of each Realized Loss (other than any
Excess Loss) in respect of a Mortgage Loan shall be allocated in the following
order of priority:
first, to the Class B6 Certificates, until the Class 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 Component 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 of the related
Certificate Group, pro rata, in accordance with their Class Principal
Amounts; provided, that any such loss allocated to any Class of Accrual
Certificates shall be allocated (subject to Section 5.03(c)) on the basis
of the lesser of (x) the Class Principal Amount thereof immediately prior
to the applicable Distribution Date and (y) the Class Certificate Principal
thereof on the Closing Date (as reduced by any Realized Losses previously
allocated thereto).
(b) With respect to any Distribution Date, the applicable Non-AP Percentage
of the principal portion of any Excess Loss in respect of a Mortgage Loan shall
be allocated, pro rata, to the Subordinate Certificates (regardless which
Mortgage Pool experienced the loss) and Group 1 Certificates (in the case of a
Realized Loss in Pool 1), Group 2 Certificates (in the case of a Realized Loss
in Pool 2) or Group 3 Certificates (in the case of a Realized Loss in Pool 3)
and on the basis of the Apportioned Principal Balances of the Classes of
Subordinate Certificates and Class Principal Amounts of the Senior Certificates;
provided, that any such loss allocated to any Class of Accrual Certificates (and
any Accrual Component) shall be allocated (subject to Section 5.03(c)) on the
basis of the lesser of (x) the Class 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). The applicable AP Percentage of the principal portion of an Excess
Loss in a Mortgage Pool will be applied to the related Class of Principal Only
Certificates until the Class Principal Amount thereof has been reduced to zero.
(c) Any Realized Losses allocated to a Class of Certificates pursuant to
Section 5.03(a) or (b) shall be allocated among the Certificates of such Class
in proportion to their respective Certificate Principal Amounts. Any allocation
of Realized Losses pursuant to this paragraph (c) shall be accomplished by
reducing the Certificate Principal Amount of the related Certificates on the
related Distribution Date in accordance with Section 5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03 shall be
allocated on the Distribution Date in the month following the month in which
such loss was incurred and, in the case of the principal portion thereof, after
giving effect to distributions made on such Distribution Date, except that the
aggregate amount of Realized Losses to be allocated to the Principal Only
Certificates on such Distribution Date will be taken into account in determining
distributions in respect of any related Class AP Deferred Amount for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown Amount
for such date shall effect a corresponding reduction in the Certificate
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class to
which any portion of such Realized Loss had previously been allocated shall be
entitled to receive, on the Distribution Date in the month following the month
in which such recovery is received, its pro rata share (based on the Class
Principal Amount thereof) of such recovery, up to the amount of the portion of
such Realized Loss previously allocated to such Class. In the event that the
total amount of such recovery exceeds the amount of Realized Loss allocated to
the outstanding Classes in accordance with the preceding provisions, each
outstanding Class of Certificates shall be entitled to receive its pro rata
share of the amount of such excess, up to the amount of any unrecovered Realized
Loss previously allocated to such Class. Any such recovery allocated to a Class
of Certificates shall not further reduce the Certificate Principal Amount of
such Certificate. Any such amounts not otherwise allocated to any Class of
Certificates, pursuant to this subsection shall be treated as Principal
Prepayments for purposes of this Agreement.
Section 5.04. Advances by Master Servicer and Trustee. (a) Advances shall
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be made in respect of each Deposit Date as provided herein. If, on any
Determination Date, the Master Servicer determines that any Scheduled Payments
due during the related Due Period (other than Balloon Payments) have not been
received, the Master Servicer shall, or cause the applicable Servicer to,
advance such amount, less an amount, if any, to be set forth in an Officer's
Certificate to be delivered to the Trustee on such Determination Date, which if
advanced the Master Servicer or the applicable Servicer has determined would not
be recoverable from amounts received with respect to such Mortgage Loan,
including late payments, Liquidation Proceeds, Insurance Proceeds or otherwise.
If the Master Servicer determines that an Advance is required, it shall on the
Deposit Date immediately following such Determination Date either (i) remit to
the Trustee from its own funds (or funds advanced by the applicable Servicer)
for deposit in the Certificate Account immediately available funds in an amount
equal to such Advance, (ii) cause to be made an appropriate entry in the records
of the Collection Account that funds in such account being held for future
distribution or withdrawal have been, as permitted by this Section 5.04, used by
the Master Servicer to make such Advance, and remit such immediately available
funds to the Trustee for deposit in the Certificate Account or (iii) make
Advances in the form of any combination of clauses (i) and (ii) aggregating the
amount of such Advance. Any funds being held in the Collection Account for
future distribution to Certificateholders and so used shall be replaced by the
Master Servicer from its own funds by remittance to the Trustee for deposit in
the Certificate Account on or before any future Deposit Date to the extent that
funds in the Certificate Account on such Deposit Date shall be less than
payments to Certificateholders required to be made on the related Distribution
Date. The Master Servicer and each Servicer shall be entitled to be reimbursed
from the Collection Account for all Advances made by it as provided in Section
4.02.
(b) In the event that the Master Servicer fails for any reason to make an
Advance required to be made pursuant to Section 5.04 on or before the Deposit
Date, the Trustee, as successor Master Servicer pursuant to Section 6.14, shall,
on or before the related Distribution Date, deposit in the Certificate Account
an amount equal to the excess of (a) Advances required to be made by the Master
Servicer or any Servicer that would have been deposited in such Certificate
Account over (b) the amount of any Advance made by the Master Servicer or any
Servicer with respect to such Distribution Date; provided, however, that the
Trustee shall be required to make such Advance only if it is not prohibited by
law from doing so and it has determined that such Advance would be recoverable
from amounts to be received with respect to such Mortgage Loan, including late
payments, Liquidation Proceeds, Insurance Proceeds, or otherwise. The Trustee
shall be entitled to be reimbursed from the Certificate Account for Advances
made by it pursuant to this Section 5.04 as if it were the Master Servicer.
Section 5.05. Compensating Interest Payments. The amount of the Aggregate
------------------------------
Master Servicing Compensation payable to the Master Servicer in respect of any
Distribution Date shall be reduced by the amount of any Compensating Interest
Payment for such Distribution Date, but only to the extent such Compensating
Interest Payment is not actually made by a Servicer on the applicable Remittance
Date. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer.
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee. (a) The Trustee, except during the
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continuance of an Event of Default (of which a Responsible Officer of the
Trustee shall have actual knowledge), undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Any permissive
right of the Trustee provided for in this Agreement shall not be construed as a
duty of the Trustee. If an Event of Default (of which a Responsible Officer of
the Trustee shall have actual knowledge) has occurred and has not otherwise been
cured or waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement and use the same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs unless the Trustee is acting as Master
Servicer, in which case it shall use the same degree of care and skill as the
Master Servicer hereunder.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Master Servicer, to the Trustee pursuant to this Agreement, and
shall not be required to recalculate or verify any numerical information
furnished to the Trustee pursuant to this Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of Holders of Certificates as
provided in Section 6.19 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from a
failure by the Master Servicer (i) to remit funds (or to make Advances) or
(ii) to furnish information to the Trustee when required to do so) unless a
Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by
the Trustee at the Corporate Trust Office, and such notice references the
Holders of the Certificates and this Agreement;
(iii) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under this Agreement except during such
time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in
accordance with the terms of this Agreement; and
(iv) The Trustee shall not be responsible for any act or omission of
the Master Servicer.
(d) The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall use its best efforts to remit to the Master Servicer upon receipt
any such complaint, claim, demand, notice or other document (i) which is
delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
(e) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
(f) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer or any Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer in
accordance with the terms of this Agreement.
(g) Subject to Section 4.04, the Trustee shall not be held liable by reason
of any insufficiency in any account (including without limitation the Collection
Amount) held by or on behalf of the Trustee resulting from any investment loss
on any Eligible Investment included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).
(h) Except as otherwise provided herein, the Trustee shall have no duty (A)
to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any re-recording, re-filing or
re-depositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund other than from funds available in the
Collection Account or the Certificate Account, or (D) to confirm or verify the
contents of any reports or certificates of the Master Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties.
(i) The Trustee shall pay, out of its own funds, but not to exceed in the
aggregate $3,000 per calendar year, one-half of any fees assessed by the Rating
Agencies after the Closing Date in connection with maintaining the ratings of
the Certificates. Any additional fees in excess of such amounts shall be paid by
the Depositor.
(j) The Trustee shall not be liable in its individual capacity for an error
of judgment made in good faith by a Responsible Officer or other officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(k) Notwithstanding anything in this Agreement to the contrary, the Trustee
shall not be liable for special, indirect or consequential losses or damages of
any kind whatsoever (including, but not limited to, lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.
Section 6.02. Certain Matters Affecting the Trustee. Except as otherwise
--------------------------------------
provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors, opinion of counsel or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any advice of its
counsel or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(iii) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(iv) Unless an Event of Default shall have occurred and be continuing,
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document (provided the same appears regular on its face), unless
requested in writing to do so by Holders of at least a majority in Class
Principal Amount (or Class Notional Amount) of each Class of Certificates;
provided, however, that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability or payment of such estimated expenses as
a condition to proceeding. The reasonable expense thereof shall be paid by
the Holders requesting such investigation;
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, or attorneys, which agents, custodians or attorneys shall have
any and all of the rights, powers, duties and obligations of the Trustee
conferred on them by such appointment provided that the Trustee shall
continue to be responsible for its duties and obligations hereunder to the
extent provided herein, and provided further that the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by the Trustee;
(vi) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto, in each case at the
request, order or direction of any of the Certificateholders pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(vii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act; and
(viii) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Fund created hereby or the powers
granted hereunder.
Section 6.03. Trustee Not Liable for Certificates. The Trustee makes no
------------------------------------
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Mortgage Loan, or related document save that the Trustee represents
that, assuming due execution and delivery by the other parties hereto, this
Agreement has been duly authorized, executed and delivered by it and constitutes
its valid and binding obligation, enforceable against it in accordance with its
terms except that such enforceability may be subject to (A) applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally, and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in equity
or at law. The Trustee shall not be accountable for the use or application by
the Depositor of funds paid to the Depositor in consideration of the assignment
of the Mortgage Loans to the Trust Fund by the Depositor or for the use or
application of any funds deposited into the Collection Account, the Certificate
Account, any Escrow Account or any other fund or account maintained with respect
to the Certificates. The Trustee shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued hereunder.
Except as otherwise provided herein, the Trustee shall have no responsibility
for filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security interest
or lien granted to it hereunder or to record this Agreement.
Section 6.04. Trustee May Own Certificates. The Trustee and any Affiliate
----------------------------
or agent of the Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may transact banking and trust with the
other parties hereto with the same rights it would have if it were not Trustee
or such agent.
Section 6.05. Eligibility Requirements for Trustee. The Trustee hereunder
-------------------------------------
shall at all times be (i) an institution insured by the FDIC and (ii) a
corporation or national banking association, organized and doing business under
the laws of any State or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of not less than $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for the
purposes of this Section, the combined capital and surplus of such corporation
or national banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.06.
Section 6.06. Resignation and Removal of Trustee. (a) The Trustee may at
-----------------------------------
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor and the Master Servicer. Upon receiving
such notice of resignation, the Depositor will promptly appoint a successor
trustee by written instrument, one copy of which instrument shall be delivered
to the resigning Trustee, one copy to the successor trustee and one copy to the
Master Servicer. If no successor trustee shall have been so appointed and shall
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.05 and shall fail to resign after written
request therefor by the Depositor, (ii) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, (iii) a tax is imposed or
threatened with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund held by the Trustee is located, or (iv) the continued use of the
Trustee would result in a downgrading of the rating by the Rating Agencies of
any Class of Certificates with a rating, then the Depositor shall remove the
Trustee and appoint a successor trustee by written instrument, one copy of which
instrument shall be delivered to the Trustee so removed, one copy to the
successor trustee and one copy to the Master Servicer.
(c) The Holders of more than 50% of the Class Principal Amount (or Class
Notional Amount) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee and to the Depositor remove the Trustee by such
written instrument, signed by such Holders or their attorney-in-fact duly
authorized, one copy of which instrument shall be delivered to the Depositor,
one copy to the Trustee so removed and one copy to the Master Servicer; the
Depositor shall thereupon use its best efforts to appoint a mutually acceptable
successor trustee in accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.07.
Section 6.07. Successor Trustee. (a) Any successor trustee appointed as
------------------
provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and documents and
statements related to each Mortgage Files held by it hereunder, and shall duly
assign, transfer, deliver and pay over to the successor trustee the entire Trust
Fund, together with all necessary instruments of transfer and assignment or
other documents properly executed necessary to effect such transfer and such of
the record or copies thereof maintained by the predecessor trustee in the
administration hereof as may be requested by the successor trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement. In addition, the Master Servicer and the predecessor trustee shall
execute and deliver such other instruments and do such other things as may
reasonably be required to more fully and certainly vest and confirm in the
successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to the Rating Agencies. The expenses of such
mailing shall be borne by the Master Servicer.
Section 6.08. Merger or Consolidation of Trustee. Any Person into which the
----------------------------------
Trustee may be merged or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, provided that such Person shall
be eligible under the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian. (a)
--------------------------------------------------------
Notwithstanding any other provisions hereof, at any time, the Trustee, the
Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Class Notional Amount) of each Class of Certificates shall
each have the power from time to time to appoint one or more Persons to act
either as co-trustees jointly with the Trustee, or as separate trustees, or as
custodians, for the purpose of holding title to, foreclosing or otherwise taking
action with respect to any Mortgage Loan outside the state where the Trustee has
its principal place of business where such separate trustee or co-trustee is
necessary or advisable (or the Trustee has been advised by the Master Servicer
that such separate trustee or co-trustee is necessary or advisable) under the
laws of any state in which a property securing a Mortgage Loan is located or for
the purpose of otherwise conforming to any legal requirement, restriction or
condition in any state in which a property securing a Mortgage Loan is located
or in any state in which any portion of the Trust Fund is located. The separate
Trustees, co-trustees, or custodians so appointed shall be trustees or
custodians for the benefit of all the Certificateholders and shall have such
powers, rights and remedies as shall be specified in the instrument of
appointment; provided, however, that no such appointment shall, or shall be
deemed to, constitute the appointee an agent of the Trustee. The obligation of
the Trustee to make Advances pursuant to Section 5.04 and 6.14 hereof shall not
be affected or assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations, including the
holding of title to the Trust Fund or any portion thereof in any such
jurisdiction, shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder;
and
(iv) the Trustee or the Certificateholders evidencing more than 50% of
the Aggregate Voting Interests of the Certificates may at any time accept
the resignation of or remove any separate trustee, co-trustee or custodian,
so appointed by it or them, if such resignation or removal does not violate
the other terms of this Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any separate trustee, co-trustee or
custodian. If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Trustee shall pay the reasonable compensation of the co-trustees to
the extent, and in accordance with the standards, specified in Section 6.12
hereof (which compensation shall not reduce any compensation payable to the
Trustee under such Section).
Section 6.10. Authenticating Agents. (a) The Trustee may appoint one or
----------------------
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid by the
Trustee, it shall be a reimbursable expense pursuant to Section 6.12.
Section 6.11. Indemnification of Trustee. The Trustee and its directors,
---------------------------
officers, employees and agents shall be entitled to indemnification from the
Trust Fund for any loss, liability or expense incurred in connection with any
legal proceeding and incurred without negligence or willful misconduct on their
part, arising out of, or in connection with, the acceptance or administration of
the trusts created hereunder, including the costs and expenses of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor, the Master Servicer and the Holders written notice thereof
promptly after the Trustee shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense;
and
(iii) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
Section 6.12. Fees and Expenses of Trustee. The Trustee shall be entitled
----------------------------
to the Trustee Fee (which shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust), to the extent provided
herein, and in addition, the Trustee shall be entitled to receive, and is
authorized to pay to itself the amount of income or gain earned from the
investment of funds in the Certificate Account.
Section 6.13. Collection of Monies. Except as otherwise expressly provided
--------------------
in this Agreement, the Trustee may demand payment or delivery of, and shall
receive and collect, all money and other property payable to or receivable by
the Trustee pursuant to this Agreement. The Trustee shall hold all such money
and property received by it as part of the Trust Fund and shall distribute it as
provided in this Agreement. If the Trustee shall not have timely received
amounts to be remitted with respect to the Mortgage Loans from the Master
Servicer, the Trustee shall request the Master Servicer to make such
distribution as promptly as practicable or legally permitted. If the Trustee
shall subsequently receive any such amount, it may withdraw such request.
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor.
------------------------------------------------------------
(a) The occurrence of any one or more of the following events shall constitute
an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Trustee the
Mortgage Loan data sufficient to prepare the reports described in Section
4.03(a) which continues unremedied for a period of one Business Day after
the date upon which written notice of such failure shall have been given to
such Master Servicer by the Trustee or to such Master Servicer and the
Trustee by the Holders of not less than 25% of the Class Principal Amount
(or Class Notional Amount) of each Class of Certificates affected thereby;
or
(ii) Any failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of such Master Servicer contained in this Agreement which
continues unremedied for a period of 30 days (or 15 days, in the case of a
failure to maintain any Insurance Policy required to be maintained pursuant
to this Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to such Master
Servicer by the Trustee, or to such Master Servicer and the Trustee by the
Holders of not less than 25% of the Class Principal Amount (or Class
Notional Amount) of each Class of Certificates affected thereby; or
(iii) A decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer, and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or any Rating Agency
reduces or withdraws or threatens to reduce or withdraw the rating of the
Certificates because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to such Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all
or substantially all of its assets, or consolidate with or merge into
another entity or shall permit another entity to consolidate or merge into
it, such that the resulting entity does not meet the criteria for a
successor servicer as specified in Section 9.27 hereof; or
(vii) If a representation or warranty set forth in Section 9.14 hereof
shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Certificateholders,
and the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or cured within 60
days after the date on which written notice of such incorrect
representation or warranty shall have been given to the Master Servicer by
the Trustee, or to the Master Servicer and the Trustee by the Holders of
not less than 25% of the Aggregate Certificate Principal Amount of each
Class of Certificates; or
(viii) A sale or pledge of the any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Class Principal Amount (or
Class Notional Amount) of each Class of Certificates;
(ix) Any Servicer at any time is not either an FNMA- or FHLMC-
approved Seller/Servicer, and the Master Servicer has not terminated the
rights and obligations of such Servicer under the applicable Servicing
Agreement and replaced such Servicer with an FNMA- or FHLMC-approved
servicer within 30 days of the absence of such approval; or
(x) Any failure of the Master Servicer to remit to the Trustee any
payment required to be made to the Trustee for the benefit of
Certificateholders under the terms of this Agreement, including any
Advance, on any Deposit Date.
If an Event of Default described in clauses (i) through (ix) of this
Section 6.14 shall occur, then, in each and every case, subject to applicable
law, so long as any such Event of Default shall not have been remedied within
any period of time prescribed by this Section 6.14, the Trustee, by notice in
writing to the Master Servicer may, and shall, if so directed by
Certificateholders evidencing more than 50% of the Class Principal Amount (or
Class Notional Amount) of each Class of Certificates, terminate all of the
rights and obligations of the Master Servicer hereunder and in and to the
Mortgage Loans and the proceeds thereof. If an Event of Default described in
clause (x) of this Section 6.14 shall occur, then, in each and every case,
subject to applicable law, the Trustee, by notice in writing to the Master
Servicer, shall promptly terminate all of the rights and obligations of the
Master Servicer hereunder and in and to the Mortgage Loans and the proceeds
thereof. On or after the receipt by the Master Servicer of such written notice,
all authority and power of the Master Servicer, and only in its capacity as
Master Servicer under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
the terms of this Agreement; and the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the defaulting Master Servicer as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents or
otherwise. The defaulting Master Servicer agrees to cooperate with the Trustee
in effecting the termination of the defaulting Master Servicer's
responsibilities and rights hereunder as Master Servicer including, without
limitation, notifying Mortgagors of the assignment of the master servicing
function and providing the Trustee or its designee all documents and records in
electronic or other form reasonably requested by it to enable the Trustee or its
designee to assume the defaulting Master Servicer's functions hereunder and the
transfer to the Trustee for administration by it of all amounts which shall at
the time be or should have been deposited by the defaulting Master Servicer in
the Collection Account maintained by such defaulting Master Servicer and any
other account or fund maintained with respect to the Certificates or thereafter
received with respect to the Mortgage Loans. The Master Servicer being
terminated shall bear all costs of a master servicing transfer, including but
not limited to those of the Trustee reasonably allocable to specific employees
and overhead, legal fees and expenses, accounting and financial consulting fees
and expenses, and costs of amending the Agreement, if necessary.
Notwithstanding the termination of its activities as Master Servicer, each
terminated Master Servicer shall continue to be entitled to reimbursement to the
extent provided in Section 4.02(i), (ii), (iii), (iv), (v), (vi), (vii), (ix)
and (xi) to the extent such reimbursement relates to the period prior to such
Master Servicer's termination.
If any Event of Default shall occur, the Trustee shall promptly notify the
Rating Agencies of the nature and extent of such Event of Default. The Trustee
shall immediately give written notice to the Master Servicer upon such Master
Servicer's failure to remit funds on the Deposit Date.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 9.29, the Trustee, unless another master servicer shall have
been appointed, shall be the successor in all respects to the Master Servicer in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination and shall have no liability relating to the representations and
warranties of the Master Servicer set forth in Section 9.14. In the Trustee's
capacity as such successor, the Trustee shall have the same limitations on
liability herein granted to the Master Servicer. As compensation therefor, the
Trustee shall be entitled to receive all compensation payable to the Master
Servicer under this Agreement, including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, appoint, or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution servicer, master servicer, servicing or mortgage servicing
institution having a net worth of not less than $15,000,000 and meeting such
other standards for a successor master servicer as are set forth in this
Agreement, as the successor to such Master Servicer in the assumption of all of
the responsibilities, duties or liabilities of a master servicer, like the
Master Servicer. Any entity designated by the Trustee as a successor master
servicer may be an Affiliate of the Trustee; provided, however, that, unless
such Affiliate meets the net worth requirements and other standards set forth
herein for a successor master servicer, the Trustee, in its individual capacity
shall agree, at the time of such designation, to be and remain liable to the
Trust Fund for such Affiliate's actions and omissions in performing its duties
hereunder. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted to the Master Servicer
hereunder. The Trustee and such successor shall take such actions, consistent
with this Agreement, as shall be necessary to effectuate any such succession and
may make other arrangements with respect to the servicing to be conducted
hereunder which are not inconsistent herewith. The Master Servicer shall
cooperate with the Trustee and any successor master servicer in effecting the
termination of the Master Servicer's responsibilities and rights hereunder
including, without limitation, notifying Mortgagors of the assignment of the
master servicing functions and providing the Trustee and successor master
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Master Servicer's
functions hereunder and the transfer to the Trustee or such successor master
servicer, as applicable, all amounts which shall at the time be or should have
been deposited by the Master Servicer in the Collection Account and any other
account or fund maintained with respect to the Certificates or thereafter be
received with respect to the Mortgage Loans. Neither the Trustee nor any other
successor master servicer shall be deemed to be in default hereunder by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Master Servicer to deliver,
or any delay in delivering, cash, documents or records to it, (ii) the failure
of the Master Servicer to cooperate as required by this Agreement, (iii) the
failure of the Master Servicer to deliver the Mortgage Loan data to the Trustee
as required by this Agreement or (iv) restrictions imposed by any regulatory
authority having jurisdiction over the Master Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default. During
----------------------------------------------------
the continuance of any Event of Default, so long as such Event of Default shall
not have been remedied, the Trustee, in addition to the rights specified in
Section 6.14, shall have the right, in its own name and as trustee of an express
trust, to take all actions now or hereafter existing at law, in equity or by
statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies, of the Certificateholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16. Waiver of Defaults. 35% or more of the Aggregate Voting
-------------------
Interests of Certificateholders may waive any default or Event of Default by the
Master Servicer in the performance of its obligations hereunder, except that a
default in the making of any required deposit to the Certificate Account that
would result in a failure of the Trustee to make any required payment of
principal of or interest on the Certificates may only be waived with the consent
of 100% of the affected Certificateholders. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
Section 6.17. Notification to Holders. Upon termination of the Master
------------------------
Servicer or appointment of a successor to the Master Servicer, in each case as
provided herein, the Trustee shall promptly mail notice thereof by first class
mail to the Certificateholders at their respective addresses appearing on the
Certificate Register. The Trustee shall also, within 45 days after the
occurrence of any Event of Default known to the Trustee, give written notice
thereof to Certificateholders, unless such Event of Default shall have been
cured or waived prior to the issuance of such notice and within such 45-day
period.
Section 6.18. Directions by Certificateholders and Duties of Trustee During
-------------------------------------------------------------
Event of Default. Subject to the provisions of Section 8.01 hereof, during the
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continuance of any Event of Default, Holders of Certificates evidencing not less
than 25% of the Class Principal Amount (or Class Notional Amount) of each Class
of Certificates may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement; provided, however, that
the Trustee shall be under no obligation to pursue any such remedy, or to
exercise any of the trusts or powers vested in it by this Agreement (including,
without limitation, (i) the conducting or defending of any administrative action
or litigation hereunder or in relation hereto and (ii) the terminating of the
Master Servicer or any successor master servicer from its rights and duties as
master servicer hereunder) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon
------------------------------------------------------------
Event of Default. In the event that the Trustee shall have actual knowledge of
- ----------------
any action or inaction of the Master Servicer that would become an Event of
Default upon the Master Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Master Servicer.
Section 6.20. Preparation of Tax Returns and Other Reports. (a) The Trustee
--------------------------------------------
shall prepare or cause to be prepared on behalf of the Trust Fund, based upon
information calculated in accordance with this Agreement pursuant to
instructions given by the Depositor, and the Trustee shall file, federal tax
returns and appropriate state income tax returns and such other returns as may
be required by applicable law relating to the Trust Fund, and the Trustee shall
forward copies to the Depositor of all such returns and Form 1099 information
and such other information within the control of the Trustee as the Depositor
may reasonably request in writing, and shall forward to each Certificateholder
such forms and furnish such information within the control of the Trustee as are
required by the Code and the REMIC Provisions to be furnished to them, and will
prepare and file annual reports required by applicable state authorities, will
file copies of this Agreement with the appropriate state authorities as may be
required by applicable law, and will prepare and disseminate to
Certificateholders Form 1099 (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law. The Master
Servicer will indemnify the Trustee for any liability of or assessment against
the Trustee resulting from any error in any of such tax or information returns
directly resulting from errors in the information provided by such Master
Servicer (other than information that is derived solely from information
provided by a Servicer).
(b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall promptly forward a copy of such notice to the Master
Servicer and the Depositor.
(c) The Depositor shall prepare or cause to be prepared the initial current
report on Form 8-K and thereafter the Trustee will prepare or cause to be
prepared Form 10-Ks and Form 10-Qs (if necessary), or monthly current reports on
Form 8-K, on behalf of the Trust Fund, as may be required by applicable law, for
filing with the Securities and Exchange Commission (the "SEC"), and the Trustee
will sign each such report on behalf of the Trust. The Trustee will forward a
copy of each such report to the Depositor promptly after such report has been
filed with the SEC. The Trustee agrees to use its best efforts to seek to
terminate such filing obligation after the period during which such filings are
required under the Securities Exchange Act of 1934. Promptly after filing a Form
15 or other applicable form with the SEC in connection with such termination,
the Trustee shall deliver to the Depositor a copy of such form together with
copies of confirmations of receipt by the SEC of each report filed therewith on
behalf of the Trust Fund.
ARTICLE VII
PURCHASE AND TERMINATION
OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of
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All Mortgage Loans. (a) The respective obligations and responsibilities of the
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Trustee and the Master Servicer created hereby (other than the obligation of the
Trustee to make payments to Certificateholders as set forth in Section 7.02, the
obligation of the Master Servicer to make a final remittance to the Trustee for
deposit into the Certificate Account pursuant to Section 4.01 and the
obligations of the Master Servicer to the Trustee pursuant to Sections 9.10 and
9.14), shall terminate on the earlier of (i) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the sale of the property held by the
Trust Fund in accordance with Section 7.01(b); provided, however, that in no
event shall the Trust Fund created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof, and (ii) the Latest Possible Maturity Date.
Any termination of the Trust Fund shall be carried out in such a manner so that
the termination of each REMIC included therein shall qualify as a "qualified
liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring after the date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than 10% of
the Cut-off Date Aggregate Principal Balance, the Depositor may, upon written
direction to the Trustee, cause (i) the Trustee to sell (or arrange for the sale
of) the assets of the Trust Fund and (ii) the Trust Fund to adopt a plan of
complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all of its
property. The property of the Trust Fund shall be sold at a price (the
"Termination Price") equal to: (i) 100% of the unpaid principal balance of each
Mortgage Loan on the day of such purchase plus interest accrued thereon at the
applicable Mortgage Rate with respect to any Mortgage Loan to the Due Date in
the Due Period immediately preceding the related Distribution Date to the date
of such repurchase and (ii) the fair market value of any REO Property and any
other property held by any REMIC, such fair market value to be determined by an
appraiser or appraisers appointed by the Master Servicer with the consent of the
Trustee.
Section 7.02. Procedure Upon Termination of Trust Fund. (a) Notice of any
-----------------------------------------
termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
(x) no later than five Business Days after the Trustee has received notice from
the Depositor of its intent to exercise its right to cause the termination of
the Trust Fund pursuant to Section 7.01(b) or (y) upon the final payment or
other liquidation of the last Mortgage Loan or REO Property in the Trust Fund.
Such notice shall specify (A) the Distribution Date upon which final
distribution on the Certificates of all amounts required to be distributed to
Certificateholders pursuant to Section 5.02 will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distribution being made only upon presentation and surrender of the Certificates
at the office or agency of the Trustee therein specified. The Trustee shall give
such notice to the Master Servicer and the Certificate Registrar at the time
such notice is given to Holders of the Certificates. Upon any such termination,
the duties of the Certificate Registrar with respect to the Certificates shall
terminate and the Trustee shall terminate, or request the Master Servicer to
terminate, the Collection Account it maintains, the Certificate Account and any
other account or fund maintained with respect to the Certificates, subject to
the Trustee's obligation hereunder to hold all amounts payable to
Certificateholders in trust without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
(c) Any reasonable expenses incurred by the Trustee in connection with any
termination or liquidation of the Trust Fund shall be paid from proceeds
received from the liquidation of the Trust Fund.
Section 7.03. Additional Trust Fund Termination Requirements. (a) The Trust
----------------------------------------------
Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee seeks (at the request of the Master Servicer),
and subsequently receives, an Opinion of Counsel (at the expense of the Master
Servicer), addressed to the Trustee to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 7.03 will not (i) result in
the imposition of taxes on any REMIC under the REMIC Provisions or (ii) cause
any REMIC established hereunder to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, the Trustee (upon (x) the sale of the property
of the Trust Fund by the Trustee pursuant to Section 7.01(b) or (y)
notification by the Depositor that it intends to exercise its option to
cause the termination of the Trust Fund) shall adopt a plan of complete
liquidation of the Trust Fund on behalf of each REMIC, meeting the
requirements of a qualified liquidation under the REMIC Provisions;
(ii) The sale of the assets of the Trust Fund pursuant to Section 7.02
shall be a sale for cash and shall occur at or after the time of adoption
of such a plan of complete liquidation and prior to the time of making of
the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates, the
Trustee shall make final distributions of principal and interest on the
Certificates in accordance with Section 5.02 and distribute or credit, or
cause to be distributed or credited, to the Holder of the Residual
Certificate all cash on hand after such final payment (other than cash
retained to meet claims), and the Trust Fund (and each REMIC) shall
terminate at that time; and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holder of the Residual Certificate be
made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof hereby
(i) authorizes the Trustee to take such action as may be necessary to adopt a
plan of complete liquidation of the related REMIC and (ii) agrees to take such
other action as may be necessary to adopt a plan of complete liquidation of the
related REMIC, which authorization shall be binding upon all successor Residual
Certificateholders.
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or incapacity
-------------------------------
of any Certificateholder shall not operate to terminate this Agreement or this
Trust Fund, nor entitle such Certificateholder's legal representatives or heirs
to claim an accounting or take any action or proceeding in any court for a
partition or winding up of this Trust Fund, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Except as
otherwise expressly provided herein, no Certificateholder, solely by virtue of
its status as a Certificateholder, shall have any right to vote or in any manner
otherwise control the Master Servicer or the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association, nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount (or Class Notional Amount) of Certificates of each Class shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the cost, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for sixty
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request has been given such Trustee
during such sixty-day period by such Certificateholders; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not acting
-------------------------
as Certificate Registrar, the Certificate Registrar will furnish or cause to be
furnished to the Trustee, within fifteen days after receipt by the Certificate
Registrar of a request by the Trustee in writing, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the Master
Servicer, the Certificate Registrar and the Trustee that neither the Depositor,
the Master Servicer, the Certificate Registrar nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request, demand,
--------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders or Certificate Owner, if the
Holder is a Clearing Agency, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where expressly required herein, to the Master
Servicer. Such instrument or instruments (as the action embodies therein and
evidenced thereby) are herein sometimes referred to as an "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agents shall be sufficient for
any purpose of this Agreement and conclusive in favor of the Trustee and Master
Servicer, if made in the manner provided in this Section. Each of the Trustee
and Master Servicer shall promptly notify the other of receipt of any such
instrument by it, and shall promptly forward a copy of such instrument to the
other.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments or deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the individual executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Master Servicer, nor the
Depositor shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Certificate shall bind every future Holder
of the same Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Master Servicer in reliance thereon, whether or not notation of such action is
made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01. Duties of the Master Servicer. The Certificateholders, by
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their purchase and acceptance of the Certificates, appoint Aurora Loan Services
Inc., as Master Servicer. For and on behalf of the Depositor, the Trustee and
the Certificateholders, the Master Servicer shall master service the Mortgage
Loans in accordance with the provisions of this Agreement and the provisions of
the applicable Servicing Agreement.
Section 9.02. Master Servicer Fidelity Bond and Master Servicer Errors and
------------------------------------------------------------
Omissions Insurance Policy. (a) The Master Servicer, at its expense, shall
- ----------------------------
maintain in effect a Fidelity Bond and an Errors and Omissions Insurance Policy,
affording coverage with respect to all directors, officers, employees and other
Persons acting on such Master Servicer's behalf, and covering errors and
omissions in the performance of the Master Servicer's obligations hereunder. The
Errors and Omissions Insurance Policy and the Fidelity Bond shall be in such
form and amount that would meet the requirements of FNMA or FHLMC if it were the
purchaser of the Mortgage Loans. The Master Servicer shall (i) require each
Servicer to maintain an Errors and Omissions Insurance Policy and a Fidelity
Bond in accordance with the provisions of the applicable Servicing Agreement,
(ii) cause each Servicer to provide to the Master Servicer certificates
evidencing that such policy and bond is in effect and to furnish to the Master
Servicer any notice of cancellation, non-renewal or modification of the policy
or bond received by it, as and to the extent provided in the applicable
Servicing Agreement, and (iii) furnish copies of the certificates and notices
referred to in clause (ii) to the Trustee upon its request. The Fidelity Bond
and Errors and Omissions Insurance Policy may be obtained and maintained in
blanket form.
(b) The Master Servicer shall promptly report to the Trustee any material
changes that may occur in the Master Servicer Fidelity Bond or the Master
Servicer Errors and Omissions Insurance Policy and shall furnish to the Trustee,
on request, certificates evidencing that such bond and insurance policy are in
full force and effect. The Master Servicer shall promptly report to the Trustee
all cases of embezzlement or fraud, if such events involve funds relating to the
Mortgage Loans. The total losses, regardless of whether claims are filed with
the applicable insurer or surety, shall be disclosed in such reports together
with the amount of such losses covered by insurance. If a bond or insurance
claim report is filed with any of such bonding companies or insurers, the Master
Servicer shall promptly furnish a copy of such report to the Trustee. Any
amounts relating to the Mortgage Loans collected by the Master Servicer under
any such bond or policy shall be promptly remitted by the Master Servicer to the
Trustee for deposit into the Certificate Account. Any amounts relating to the
Mortgage Loans collected by any Servicer under any such bond or policy shall be
remitted to the Master Servicer to the extent provided in the applicable
Servicing Agreement.
Section 9.03. Master Servicer's Financial Statements and Related
----------------------------------------------------------
Information. For each year this Agreement is in effect, the Master Servicer
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shall submit to the Trustee, each Rating Agency and the Depositor a copy of its
annual unaudited financial statements on or prior to May 31 of each year. Such
financial statements shall include a balance sheet, income statement, statement
of retained earnings, statement of additional paid-in capital, statement of
changes in financial position and all related notes and schedules and shall be
in comparative form, certified by a nationally recognized firm of Independent
Accountants to the effect that such statements were examined and prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding year.
Section 9.04. Power to Act; Procedures. (a) The Master Servicer shall
-------------------------
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, and each
Servicer shall have full power and authority (to the extent provided in the
applicable Servicing Agreement) to do any and all things that it may deem
necessary or desirable in connection with the servicing and administration of
the Mortgage Loans, including but not limited to the power and authority (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable; provided that the Master Servicer shall not
take, or knowingly permit any Servicer to take, any action that is inconsistent
with or prejudices the interests of the Trust Fund or the Certificateholders in
any Mortgage Loan or the rights and interests of the Depositor, the Trustee and
the Certificateholders under this Agreement. The Master Servicer shall represent
and protect the interests of the Trust Fund in the same manner as it protects
its own interests in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Mortgage Loan and shall not make or permit
any Servicer to make any modification, waiver or amendment of any term of any
Mortgage Loan that would cause the Trust Fund to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860F(a) or Section 860G(d) of
the Code. Without limiting the generality of the foregoing, the Master Servicer
in its own name or in the name of a Servicer, and each Servicer, to the extent
such authority is delegated to such Servicer by the Master Servicer under the
applicable Servicing Agreement, is hereby authorized and empowered by the
Trustee when the Master Servicer or a Servicer, as the case may be, believes it
appropriate in its best judgment and in accordance with Accepted Servicing
Practices and the applicable Servicing Agreement, to execute and deliver, on
behalf of itself and the Certificateholders, the Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. The Trustee shall furnish
the Master Servicer, upon request, with any powers of attorney empowering the
Master Servicer or any Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the applicable Servicing Agreement and
this Agreement, and the Trustee shall execute and deliver such other documents,
as the Master Servicer may request, necessary or appropriate to enable the
Master Servicer to master service and administer the Mortgage Loans and carry
out its duties hereunder, in each case in accordance with Accepted Servicing
Practices (and the Trustee shall have no liability for misuse of any such powers
of attorney by the Master Servicer or any Servicer). If the Master Servicer or
the Trustee has been advised that it is likely that the laws of the state in
which action is to be taken prohibit such action if taken in the name of the
Trustee or that the Trustee would be adversely affected under the "doing
business" or tax laws of such state if such action is taken in its name, then
upon request of the Trustee, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 6.09 hereof. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.
(b) In master servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures, and shall cause each Servicer to employ
procedures (including, but not limited to, collection procedures), consistent
with the applicable Servicing Agreement. Consistent with the foregoing, the
Master Servicer may, and may permit any Servicer to, in its discretion (i) waive
any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the due dates
for payments due on a Mortgage Note for a period not greater than 120 days;
provided, however, that the maturity of any Mortgage Loan shall not be extended
past the date on which the final payment is due on the latest maturing Mortgage
Loan as of the Cut-off Date. In the event of any extension described in clause
(ii) above, the Master Servicer shall make or cause to be made Advances on the
related Mortgage Loan in accordance with the provisions of Section 5.04 on the
basis of the amortization schedule of such Mortgage Loan without modification
thereof by reason of such extension. Notwithstanding anything to the contrary in
this Agreement, the Master Servicer shall not, unless default by the related
Mortgagor is, in the reasonable judgment of the Master Servicer, imminent,
permit any modification, waiver or amendment of any material term of any
Mortgage Loan (including but not limited to the interest rate, the principal
balance, the amortization schedule, or any other term affecting the amount or
timing of payments on the Mortgage Loan or the collateral therefor) unless the
Master Servicer shall have provided or caused to be provided to the Trustee an
Opinion of Counsel in writing to the effect that such modification, waiver or
amendment would not be treated as giving rise to a new debt instrument for
federal income tax purposes and would not adversely affect the status of the
REMIC.
Section 9.05. Servicing Agreements Between the Master Servicer and
----------------------------------------------------------
Servicers; Enforcement of Servicers' Obligations. (a) Each Servicing Agreement
- -------------------------------------------------
requires the applicable Servicer to service the Mortgage Loans in accordance
with the provisions thereof. References in this Agreement to actions taken or to
be taken by the Master Servicer include actions taken or to be taken by a
Servicer on behalf of the Master Servicer. Any fees and other amounts payable to
such Servicers shall be deducted from amounts remitted to the Master Servicer by
the applicable Servicer and shall not be an obligation of the Trust.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
terminate the rights and obligations of such Servicer thereunder and either act
as servicer of the related Mortgage Loans or enter into a Servicing Agreement
with a successor Servicer. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, and
shall be reimbursed therefor initially only (i) from a general recovery
resulting from such enforcement only to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans or (ii) from a
specific recovery of costs, expenses or attorneys' fees against the party
against whom such enforcement is directed, and then, to the extent that such
amounts are insufficient to reimburse the Master Servicer for the costs of such
enforcement, (iii) from the Collection Account.
Section 9.06. Collection of Taxes, Assessments and Similar Items. (a) To
---------------------------------------------------
the extent provided in the applicable Servicing Agreement, the Master Servicer
shall cause each Servicer to establish and maintain one or more custodial
accounts at a depository institution (which may be a depository institution with
which the Master Servicer or any Servicer establishes accounts in the ordinary
course of its servicing activities), the accounts of which are insured to the
maximum extent permitted by the FDIC (each, an "Escrow Account") and shall
deposit therein any collections of amounts received with respect to amounts due
for taxes, assessments, water rates, Standard Hazard Insurance Policy premiums
or any comparable items for the account of the Mortgagors. Withdrawals from any
Escrow Account may be made (to the extent amounts have been escrowed for such
purpose) only in accordance with the applicable Servicing Agreement. Each
Servicer shall be entitled to all investment income not required to be paid to
Mortgagors on any Escrow Account maintained by such Servicer. The Master
Servicer shall make (or cause to be made) to the extent provided in the
applicable Servicing Agreement advances to the extent necessary in order to
effect timely payment of taxes, water rates, assessments, Standard Hazard
Insurance Policy premiums or comparable items in connection with the related
Mortgage Loan (to the extent that the Mortgagor is required, but fails, to pay
such items), provided that it has determined that the funds so advanced are
recoverable from escrow payments, reimbursement pursuant to Section 4.02(v) or
otherwise.
(b) Costs incurred by the Master Servicer or by Servicers in effecting the
timely payment of taxes and assessments on the properties subject to the
Mortgage Loans may be added to the amount owing under the related Mortgage Note
where the terms of the Mortgage Note so permit; provided, however, that the
addition of any such cost shall not be taken into account for purposes of
calculating the distributions to be made to Certificateholders. Such costs, to
the extent that they are unanticipated, extraordinary costs, and not ordinary or
routine costs shall be recoverable by the Master Servicer pursuant to Section
4.02(v).
Section 9.07. Termination of Servicing Agreements; Successor Servicers. (a)
--------------------------------------------------------
The Master Servicer shall be entitled to terminate the rights and obligations of
any Servicer under the applicable Servicing Agreement in accordance with the
terms and conditions of such Servicing Agreement and without any limitation by
virtue of this Agreement; provided, however, that in the event of termination of
any Servicing Agreement by the Master Servicer or the related Servicer, the
Master Servicer shall either act as Servicer of the related Mortgage Loans, or
enter into a Servicing Agreement with a successor Servicer.
(b) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces. The Master Servicer shall use reasonable efforts to have the successor
Servicer assume liability for the representations and warranties made by the
terminated Servicer in respect of the related Mortgage Loans, and in the event
of any such assumption by the successor Servicer, the Trustee or the Master
Servicer, as applicable, may, in the exercise of its business judgment, release
the terminated Servicer from liability for such representations and warranties.
Section 9.08. Master Servicer Liable for Enforcement. Notwithstanding any
--------------------------------------
Servicing Agreement, the Master Servicer shall remain obligated and liable to
the Trustee and the Certificateholders in accordance with the provisions of this
Agreement, to the extent of its obligations hereunder, without diminution of
such obligation or liability by virtue of such Servicing Agreements or
arrangements. The Master Servicer shall use commercially reasonable efforts to
ensure that the Mortgage Loans are serviced in accordance with the provisions of
this Agreement and shall use commercially reasonable efforts to enforce the
provisions of each Servicing Agreement for the benefit of the
Certificateholders. The Master Servicer shall be entitled to enter into any
agreement with the Servicers for indemnification of the Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification. Except as expressly set forth herein, the Master Servicer shall
have no liability for the acts or omissions of any Servicer in the performance
by such Servicer of its obligations under the related Servicing Agreement.
Section 9.09. No Contractual Relationship Between Servicers and Trustee or
-------------------------------------------------------------
Depositor. Any Servicing Agreement that may be entered into and any other
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transactions or services relating to the Mortgage Loans involving a Servicer in
its capacity as such and not as an originator shall be deemed to be between such
Servicer, the Seller and the Master Servicer, and the Trustee and the Depositor
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to such Servicer except as set
forth in Section 9.10 hereof.
Section 9.10. Assumption of Servicing Agreement by Trustee. (a) In the
----------------------------------------------
event the Master Servicer shall for any reason no longer be the Master Servicer
(including by reason of any Event of Default under this Agreement), the Trustee
shall thereupon assume all of the rights and obligations of such Master Servicer
hereunder and under each Servicing Agreement entered into with respect to the
Mortgage Loans. The Trustee, its designee or any successor master servicer
appointed by the Trustee shall be deemed to have assumed all of the Master
Servicer's interest herein and therein to the same extent as if such Servicing
Agreement had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations of the
Master Servicer under such Servicing Agreement accruing prior to its replacement
as Master Servicer, and shall be liable to the Trustee, and hereby agrees to
indemnify and hold harmless the Trustee from and against all costs, damages,
expenses and liabilities (including reasonable attorneys' fees) incurred by the
Trustee as a result of such liability or obligations of the Master Servicer and
in connection with the Trustee's assumption (but not its performance, except to
the extent that costs or liability of the Trustee are created or increased as a
result of negligent or wrongful acts or omissions of the Master Servicer prior
to its replacement as Master Servicer) of the Master Servicer's obligations,
duties or responsibilities thereunder; provided that the Master Servicer shall
not indemnify or hold harmless the Trustee against negligent or wrongful acts or
omissions of the Trustee.
(b) The Master Servicer that has been terminated shall, upon request of the
Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Servicing Agreement and the
related Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Servicing Agreement to the assuming party.
Section 9.11. "Due-on-Sale" Clauses; Assumption Agreements. To the extent
---------------------------------------------
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.
Section 9.12. Release of Mortgage Files. (a) Upon becoming aware of the
--------------------------
payment in full of any Mortgage Loan, or the receipt by the Master Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Master Servicer will, or will cause the applicable Servicer to, promptly
notify the Trustee (or the applicable Custodian) by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account maintained by the Master Servicer pursuant to Section 4.01
have been or will be so deposited) of a Servicing Officer and shall request the
Trustee or the applicable Custodian, to deliver to the applicable Servicer the
related Mortgage File. Upon receipt of such certification and request, the
Trustee or the applicable Custodian (with the consent, and at the direction of
the Trustee), shall promptly release the related Mortgage File to the applicable
Servicer and the Trustee shall have no further responsibility with regard to
such Mortgage File. Upon any such payment in full, the Master Servicer is
authorized, and each Servicer, to the extent such authority is delegated to such
Servicer by the Master Servicer under the applicable Servicing Agreement, is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Collection Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with Accepted Servicing Practices and the
applicable Servicing Agreement, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Master Servicer, or by a
Servicer (in form reasonably acceptable to the Trustee) and as are necessary to
the prosecution of any such proceedings. The Trustee or the Custodian, shall,
upon request of the Master Servicer, or of a Servicer, and delivery to the
Trustee or the applicable Custodian, of a trust receipt signed by a Servicing
Officer substantially in the form of Exhibit C, release the related Mortgage
File held in its possession or control to the Master Servicer (or the applicable
Servicer). Such trust receipt shall obligate the Master Servicer or applicable
Servicer to return the Mortgage File to the Trustee or Custodian, as applicable,
when the need therefor by the Master Servicer or applicable Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a certificate of a Servicing Officer similar to that herein above specified,
the trust receipt shall be released by the Trustee or the Custodian, as
applicable, to the Master Servicer (or the applicable Servicer).
Section 9.13. Documents, Records and Funds in Possession of Master Servicer
-------------------------------------------------------------
To Be Held for Trustee. (a) The Master Servicer shall transmit, or cause the
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applicable Servicer to transmit, to the Trustee such documents and instruments
coming into the possession of the Master Servicer or such Servicer from time to
time as are required by the terms hereof to be delivered to the Trustee. Any
funds received by the Master Servicer or by a Servicer in respect of any
Mortgage Loan or which otherwise are collected by the Master Servicer or by a
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be held for the benefit of the Trustee and the
Certificateholders subject to the Master Servicer's right to retain or withdraw
from the Collection Account the Master Servicing Fee and other amounts provided
in this Agreement, and to the right of each Servicer to retain its Servicing Fee
as provided in the applicable Servicing Agreement. The Master Servicer shall,
and shall (to the extent provided in the applicable Servicing Agreement) cause
each Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Trustee, its agents and accountants at any time upon
reasonable request and during normal business hours, and to Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under the control
of, the Master Servicer, or any Servicer, in respect of any Mortgage Loans,
whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master
Servicer, or by any Servicer, for and on behalf of the Trustee and the
Certificateholders and shall be and remain the sole and exclusive property of
the Trustee; provided, however, that the Master Servicer and each Servicer shall
be entitled to setoff against, and deduct from, any such funds any amounts that
are properly due and payable to the Master Servicer or such Servicer under this
Agreement or the applicable Servicing Agreement.
(c) The Master Servicer hereby acknowledges that concurrently with the
execution of this Agreement, the Trustee shall own or, to the extent that a
court of competent jurisdiction shall deem the conveyance of the Mortgage Loans
from the Seller to the Depositor not to constitute a sale, the Trustee shall
have a security interest in the Mortgage Loans and in all Mortgage Files
representing such Mortgage Loans and in all funds now or hereafter held by, or
under the control of, a Servicer or the Master Servicer that are collected by
any Servicer or the Master Servicer in connection with the Mortgage Loans,
whether as scheduled installments of principal and interest or as full or
partial prepayments of principal or interest or as Liquidation Proceeds or
Insurance Proceeds or otherwise, and in all proceeds of the foregoing and
proceeds of proceeds (but excluding any fee or other amounts to which a Servicer
is entitled under its Servicing Agreement, or the Master Servicer or the
Depositor is entitled to hereunder); and the Master Servicer agrees that so long
as the Mortgage Loans are assigned to and held by the Trustee, all documents or
instruments constituting part of the Mortgage Files, and such funds relating to
the Mortgage Loans which come into the possession or custody of, or which are
subject to the control of, the Master Servicer or any Servicer shall be held by
the Master Servicer or such Servicer for and on behalf of the Trustee as the
Trustee's agent and bailee for purposes of perfecting the Trustee's security
interest therein as provided by the applicable Uniform Commercial Code or other
laws.
(d) The Master Servicer agrees that it shall not, and shall not authorize
any Servicer to, create, incur or subject any Mortgage Loans, or any funds that
are deposited in any custodial account, Escrow Account or the Collection
Account, or any funds that otherwise are or may become due or payable to the
Trustee, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, nor assert by legal action or otherwise any
claim or right of setoff against any Mortgage Loan or any funds collected on, or
in connection with, a Mortgage Loan.
Section 9.14. Representations and Warranties of the Master Servicer. (a)
------------------------------------------------------
The Master Servicer hereby represents and warrants to the Depositor and the
Trustee, for the benefit of the Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under the jurisdiction
of its formation, and as Master Servicer has full power and authority to
transact any and all business contemplated by this Agreement and to
execute, deliver and comply with its obligations under the terms of this
Agreement, the execution, delivery and performance of which have been duly
authorized by all necessary corporate action on the part of the Master
Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws, (B)
violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Master Servicer is a party or by which it is bound
or to which any of its assets are subject, which violation, default or
breach would materially and adversely affect the Master Servicer's ability
to perform its obligations under this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights in general, and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency to the extent that any such default would
materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any agreement or
instrument or subject to any charter provision, bylaw or any other
corporate restriction or any judgment, order, writ, injunction, decree, law
or regulation that may materially and adversely affect its ability as
Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this Agreement
or the performance by the Master Servicer of its obligations under this
Agreement;
(vi) no litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which would prohibit its
entering into this Agreement or performing its obligations under this
Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is an FNMA-and FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master Servicer
with this Agreement or the consummation of the transactions contemplated by
this Agreement, except for such consents, approvals, authorizations and
orders (if any) as have been obtained;
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
and
(x) the Master Servicer has obtained an Errors and Omissions Insurance
Policy and a Fidelity Bond in accordance with Section 9.02, each of which
is in full force and effect, and each of which provides at least such
coverage as is required hereunder.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 9.14 shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Depositor and the Trustee and
hold them harmless against any loss, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Master Servicer's representations and warranties
contained in Section 9.14(a). Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including, but not
limited to, lost profits). It is understood and agreed that the enforcement of
the obligation of the Master Servicer set forth in this Section to indemnify the
Depositor and the Trustee as provided in this Section constitutes the sole
remedy (other than as set forth in Section 6.14) of the Depositor and the
Trustee, respecting a breach of the foregoing representations and warranties.
Such indemnification shall survive any termination of the Master Servicer as
Master Servicer hereunder, and any termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising out
of the breach of any representations and warranties made in this Section shall
accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
(c) It is understood and agreed that the representations and warranties of
the Depositor set forth in Sections 2.03(a) through (f) shall survive the
execution and delivery of this Agreement. The Depositor shall indemnify the
Master Servicer and hold it harmless against any loss, damages, penalties,
fines, forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Depositor's representations
and warranties contained in Sections 2.03(a) through (f) hereof. It is
understood and agreed that the enforcement of the obligation of the Depositor
set forth in this Section to indemnify the Master Servicer as provided in this
Section constitutes the sole remedy of the Master Servicer respecting a breach
by the Depositor of the representations and warranties in Sections 2.03(a)
through (f) hereof.
Any cause of action against the Depositor relating to or arising out of the
breach of the representations and warranties made in Sections 2.03(a) through
(f) hereof shall accrue upon discovery of such breach by either the Depositor or
the Master Servicer or notice thereof by any one of such parties to the other
parties.
Section 9.15. Closing Certificate and Opinion. On or before the Closing
---------------------------------
Date, the Master Servicer shall cause to be delivered to the Depositor and
Lehman Brothers Inc. an Opinion of Counsel, dated the Closing Date, in form and
substance reasonably satisfactory to the Depositor and Lehman Brothers Inc., as
to the due authorization, execution and delivery of this Agreement by the Master
Servicer and the enforceability thereof.
Section 9.16. Standard Hazard and Flood Insurance Policies. For each
------------------------------------------------
Mortgage Loan, the Master Servicer shall maintain, or cause to be maintained by
each Servicer, standard fire and casualty insurance and, where applicable, flood
insurance, all in accordance with the provisions of this Agreement and the
related Servicing Agreement, as applicable. It is understood and agreed that
such insurance shall be with insurers meeting the eligibility requirements set
forth in the applicable Servicing Agreement and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Pursuant to Section 4.01, any amounts collected by the Master Servicer, or
by any Servicer, under any insurance policies maintained pursuant to this
Section 9.16 (other than amounts to be applied to the restoration or repair of
the property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into the
Collection Account, subject to withdrawal pursuant to Section 4.02. Any cost
incurred by the Master Servicer or any Servicer in maintaining any such
insurance if the Mortgagor defaults in its obligation to do so shall be added to
the amount owing under the Mortgage Loan where the terms of the Mortgage Loan so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or such
Servicer pursuant to Section 4.02(v).
Section 9.17. Presentment of Claims and Collection of Proceeds. The Master
------------------------------------------------
Servicer shall, or shall cause each Servicer (to the extent provided in the
applicable Servicing Agreement) to, prepare and present on behalf of the Trustee
and the Certificateholders all claims under the Insurance Policies with respect
to the Mortgage Loans, and take such actions (including the negotiation,
settlement, compromise or enforcement of the insured's claim) as shall be
necessary to realize recovery under such policies. Any proceeds disbursed to the
Master Servicer (or disbursed to a Servicer and remitted to the Master Servicer)
in respect of such policies or bonds shall be promptly deposited in the
Collection Account upon receipt, except that any amounts realized that are to be
applied to the repair or restoration of the related Mortgaged Property as a
condition requisite to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable Insurance Policy need not be so deposited
(or remitted).
Section 9.18. Maintenance of the Primary Mortgage Insurance Policies. (a)
------------------------------------------------------
The Master Servicer shall not take, or permit any Servicer (consistent with the
applicable Servicing Agreement) to take, any action that would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of such Master Servicer or Servicer, would have been
covered thereunder. The Master Servicer shall use its best reasonable efforts to
keep in force and effect, or to cause each Servicer to keep in force and effect
(to the extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. The Master Servicer shall not, and shall not permit
any Servicer to, cancel or refuse to renew any such Primary Mortgage Insurance
Policy that is in effect at the date of the initial issuance of the Certificates
and is required to be kept in force hereunder except in accordance with the
provisions of this Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any Primary Mortgage Insurance Policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted Mortgage Loans.
Pursuant to Section 4.01, any amounts collected by the Master Servicer or any
Servicer under any Primary Mortgage Insurance Policies shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 4.02.
Section 9.19. Trustee To Retain Possession of Certain Insurance Policies
------------------------------------------------------------
and Documents. The Trustee (or its custodian, if any, as directed by the
- --------------
Trustee), shall retain possession and custody of the originals of the Primary
Mortgage Insurance Policies or certificate of insurance if applicable and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or its custodian, if any, as directed by
the Trustee), upon the execution or receipt thereof the originals of the Primary
Mortgage Insurance Policies and any certificates of renewal thereof, and such
other documents or instruments that constitute portions of the Mortgage File
that come into the possession of the Master Servicer from time to time.
Section 9.20. Realization Upon Defaulted Mortgage Loans. The Master
---------------------------------------------
Servicer shall use its reasonable best efforts to, or to cause each Servicer to,
foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, all in accordance with the applicable
Servicing Agreement.
Section 9.21. Compensation to the Master Servicer. The Master Servicer
-------------------------------------
shall (i) be entitled, at its election, either (a) to pay itself the Master
Servicing Fee, as reduced pursuant to Section 5.05, in respect of the Mortgage
Loans out of any Mortgagor payment on account of interest prior to the deposit
of such payment in the Collection Account it maintains or (b) to withdraw from
the Collection Account, subject to Section 5.05, the Master Servicing Fee to the
extent permitted by Section 4.02(iv). The Master Servicer shall also be
entitled, at its election, either (a) to pay itself the Master Servicing Fee in
respect of each delinquent Mortgage Loan master serviced by it out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 4.02 or (b) to withdraw from
the Collection Account it maintains the Master Servicing Fee in respect of each
Liquidated Mortgage Loan to the extent of such Liquidation Proceeds or other
recoveries, to the extent permitted by Section 4.02. Servicing compensation in
the form of assumption fees, if any, late payment charges, as collected, if any,
or otherwise (including any Prepayment Penalty Amount) shall be retained by the
Master Servicer (or the applicable Servicer) and shall not be deposited in the
Collection Account. If the Master Servicer does not retain or withdraw the
Master Servicing Fee from the Collection Account as provided herein, the Master
Servicer shall be entitled to direct the Trustee to pay the Master Servicing Fee
to such Master Servicer by withdrawal from the Certificate Account to the extent
that payments have been received with respect to the applicable Mortgage Loan.
The Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement. Pursuant to Section
4.01(e), all income and gain realized from any investment of funds in the
Collection Account shall be for the benefit of the Master Servicer as additional
compensation. The provisions of this Section 9.21 are subject to the provisions
of Section 6.14(b).
Section 9.22. REO Property. (a) In the event the Trust Fund acquires
-------------
ownership of any REO Property in respect of any Mortgage Loan, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee, on behalf
of the Certificateholders. The Master Servicer shall use its reasonable best
efforts to sell, or, to the extent provided in the applicable Servicing
Agreement, cause the applicable Servicer to sell, any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable, but in all events
within the time period, and subject to the conditions set forth in Article X
hereof. Pursuant to its efforts to sell such REO Property, the Master Servicer
shall protect and conserve, or cause the applicable Servicer to protect and
conserve, such REO Property in the manner and to such extent required by the
applicable Servicing Agreement, subject to Article X hereof.
(b) The Master Servicer shall deposit or cause to be deposited all funds
collected and received by it, or recovered from any Servicer, in connection with
the operation of any REO Property in the Collection Account.
(c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Advances as well as any unpaid Master Servicing Fees or
Servicing Fees from Liquidation Proceeds received in connection with the final
disposition of such REO Property; provided, that any such unreimbursed Advances
as well as any unpaid Master Servicing Fees or Servicing Fees may be reimbursed
or paid, as the case may be, prior to final disposition, out of any net rental
income or other net amounts derived from such REO Property.
(d) The Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the applicable Servicer
as provided above, shall be deposited in the Collection Account on or prior to
the Determination Date in the month following receipt thereof (and the Master
Servicer shall provide prompt written notice to the Trustee upon such deposit)
and be remitted by wire transfer in immediately available funds to the Trustee
for deposit into the Certificate Account on the next succeeding Deposit Date.
Section 9.23. [Omitted]
---------
Section 9.24. Reports to the Trustee. (a) Not later than 30 days after each
----------------------
Distribution Date, the Master Servicer shall forward to the Trustee a statement,
deemed to have been certified by a Servicing Officer, setting forth the status
of the Collection Account maintained by the Master Servicer as of the close of
business on the related Distribution Date, indicating that all distributions
required by this Agreement to be made by the Master Servicer have been made (or
if any required distribution has not been made by the Master Servicer,
specifying the nature and status thereof) and showing, for the period covered by
such statement, the aggregate of deposits into and withdrawals from the
Collection Account maintained by the Master Servicer. Copies of such statement
shall be provided by the Master Servicer to the Depositor, Attention: Contract
Finance, and, upon request, any Certificateholders (or by the Trustee at the
Master Servicer's expense if the Master Servicer shall fail to provide such
copies (unless (i) the Master Servicer shall have failed to provide the Trustee
with such statement or (ii) the Trustee shall be unaware of the Master
Servicer's failure to provide such statement)).
(b) Not later than two Business Days following each Distribution Date, the
Master Servicer shall deliver to the Person designated by the Depositor, in a
format consistent with other electronic loan level reporting supplied by the
Master Servicer in connection with similar transactions, "loan level"
information with respect to the Mortgage Loans as of the related Determination
Date, to the extent that such information has been provided to the Master
Servicer by the Servicers or by the Depositor.
Section 9.25. Annual Officer's Certificate as to Compliance. (a) The Master
---------------------------------------------
Servicer shall deliver to the Trustee and the Rating Agencies on or before May
31 of each year, commencing on May 31, 2000, an Officer's Certificate,
certifying that with respect to the period ending on the immediately preceding
December 31; (i) such Servicing Officer has reviewed the activities of such
Master Servicer during the preceding calendar year or portion thereof and its
performance under this Agreement; (ii) to the best of such Servicing Officer's
knowledge, based on such review, such Master Servicer has performed and
fulfilled its duties, responsibilities and obligations under this Agreement in
all material respects throughout such year, or, if there has been a default in
the fulfillment of any such duties, responsibilities or obligations, specifying
each such default known to such Servicing Officer and the nature and status
thereof, (iii) nothing has come to the attention of such Servicing Officer to
lead such Servicing Officer to believe that any Servicer has failed to perform
any of its duties, responsibilities and obligations under its Servicing
Agreement in all material respects throughout such year, or, if there has been a
material default in the performance or fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, and (iv) the Master
Servicer has received from each Servicer such Servicer's annual certificate of
compliance and a copy of such Servicer's annual audit report, in each case to
the extent required under the applicable Servicing Agreement, or, if any such
certificate or report has not been received by the Master Servicer, the Master
Servicer is using its best reasonable efforts to obtain such certificate or
report.
(b) Copies of such statements shall be provided to any Certificateholder
upon request, by the Master Servicer or by the Trustee at the Master Servicer's
expense if the Master Servicer failed to provide such copies (unless (i) the
Master Servicer shall have failed to provide the Trustee with such statement or
(ii) the Trustee shall be unaware of the Master Servicer's failure to provide
such statement).
Section 9.26. Annual Independent Accountants' Servicing Report. If the
----------------------------------------------------
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Depositor on or
before May 31 of each year, commencing on May 31, 2000, to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for FHLMC or the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
Master Servicer's activities have been conducted in compliance with this
Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by FHLMC requires it to
report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.
Section 9.27. Merger or Consolidation. Any Person into which the Master
------------------------
Servicer may be merged or consolidated, or any Person resulting from any merger,
conversion, other change in form or consolidation to which the Master Servicer
shall be a party, or any Person succeeding to the business of the Master
Servicer, shall be the successor to the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or resulting Person to the Master Servicer shall be
a Person that shall be qualified and approved to service mortgage loans for FNMA
or FHLMC and shall have a net worth of not less than $15,000,000.
Section 9.28. Resignation of Master Servicer. Except as otherwise provided
------------------------------
in Sections 9.27 and 9.29 hereof, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it unless it or the Trustee determines
that the Master Servicer's duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it and cannot be cured. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel that shall be Independent to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee shall have
assumed, or a successor master servicer shall have been appointed by the Trustee
and until such successor shall have assumed, the Master Servicer's
responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer to the Depositor.
Section 9.29. Assignment or Delegation of Duties by the Master Servicer.
-----------------------------------------------------------
Except as expressly provided herein, the Master Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Master Servicer hereunder; provided, however, that the Master Servicer shall
have the right without the prior written consent of the Trustee, the Depositor
or the Rating Agencies to delegate or assign to or subcontract with or authorize
or appoint an Affiliate of the Master Servicer to perform and carry out any
duties, covenants or obligations to be performed and carried out by the Master
Servicer hereunder. In no case, however, shall any such delegation,
subcontracting or assignment to an Affiliate of the Master Servicer relieve the
Master Servicer of any liability hereunder. Notice of such permitted assignment
shall be given promptly by the Master Servicer to the Depositor and the Trustee.
If, pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor master servicer, the entire amount of the Master
Servicing Fees and other compensation payable to the Master Servicer pursuant
hereto, including amounts payable to or permitted to be retained or withdrawn by
the Master Servicer pursuant to Section 9.21 hereof, shall thereafter be payable
to such successor master servicer.
Section 9.30. Limitation on Liability of the Master Servicer and Others.
-----------------------------------------------------------
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Master Servicer or
any such person against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in its performance of its duties
or by reason of reckless disregard for its obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties to
master service the Mortgage Loans in accordance with this Agreement and that in
its opinion may involve it in any expenses or liability; provided, however, that
the Master Servicer may in its sole discretion undertake any such action that it
may deem necessary or desirable in respect to this Agreement and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund and the Master Servicer shall be entitled to be reimbursed therefor
out of the Collection Account it maintains as provided by Section 4.02.
The Master Servicer shall not be liable for any acts or omissions of any
Servicer. In particular, the Master Servicer shall not be liable for any
servicing errors or interruptions resulting from any failure of any Servicer to
maintain computer and other information systems that are year-2000 compliant.
Section 9.31. Indemnification; Third-Party Claims. The Master Servicer
-------------------------------------
agrees to indemnify the Depositor and the Trustee, and hold them harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liability, fees and expenses
that the Depositor and the Trustee may sustain as a result of the failure of the
Master Servicer to perform its duties and master service the Mortgage Loans in
compliance with the terms of this Agreement. The Depositor and the Trustee shall
immediately notify the Master Servicer if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans entitling the Depositor or the
Trustee to indemnification hereunder, whereupon the Master Servicer shall assume
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or them in respect of such claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) As set forth in the Preliminary
---------------------
Statement hereto, the Trustee shall elect REMIC status in accordance with the
REMIC Provisions with respect to each of the Lower Tier REMIC and the Upper Tier
REMIC. The Trustee shall make such elections on Forms 1066 or other appropriate
federal tax or information return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. For the purposes of such
elections, each Lower Tier Interests, other than the Class LTR Interest, is
hereby designated as a regular interest in the Lower Tier REMIC, and each
Certificate, other than the Class R Certificate, is hereby designated as a
regular interest in the Upper Tier REMIC. The Class LTR Interest is hereby
designated as the sole residual interest in the Lower Tier REMIC. The Class R
Certificate evidences ownership of the Class LTR Interest and is also hereby
designated as the sole residual interest in the Upper Tier REMIC.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not including
taxes) of each REMIC, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.
(d) The Trustee shall prepare, sign and file, all of each REMIC's federal
and state tax and information returns as such REMIC's direct representative. The
expenses of preparing and filing such returns shall be borne by the Trustee.
(e) The Trustee or its designee shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates shall
take any action or cause the REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Master Servicer nor the Holder of any Residual Certificate
shall take any action, cause the REMIC to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of such REMIC as
a REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to the REMIC or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Master Servicer, or their
respective designees, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to such REMIC, and no such
Person shall take any such action or cause such REMIC to take any such action as
to which the Trustee or the Master Servicer has advised it in writing that an
Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Holder of the Residual
Certificate in such REMIC or, if no such amounts are available, out of other
amounts held in the Collection Account, and shall reduce amounts otherwise
payable to holders of regular interests in such REMIC, as the case may be.
(h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) Upon the request of any Rating Agency, the Trustee shall deliver to
such Rating Agency an Officer's Certificate stating the Trustee's compliance
with the provisions of this Section 10.01.
Section 10.02. Prohibited Transactions and Activities. Neither the
------------------------------------------
Depositor, the Master Servicer nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of each REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a repurchase
of Mortgage Loans pursuant to Article II of this Agreement, nor acquire any
assets for any REMIC, nor sell or dispose of any investments in the Certificate
Account for gain, nor accept any contributions to the REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of such REMIC as a REMIC or of the Certificates other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of the
assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause such REMIC to be subject to a tax on
prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of
----------------------------------------------------------
REMIC Status. (a) In the event that a REMIC fails to qualify as a REMIC, loses
- ------------
its status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Trustee of its duties and obligations set
forth herein, the Trustee shall indemnify the Holder of the Residual Certificate
against any and all losses, claims, damages, liabilities or expenses ("Losses")
resulting from such negligence; provided, however, that the Trustee shall not be
liable for any such Losses attributable to the action or inaction of the Master
Servicer, the Depositor, or the Holder of such Residual Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Residual Certificate on which the Trustee has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Trustee
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Trustee of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 10.04. REO Property. (a) Notwithstanding any other provision of
------------
this Agreement, the Master Servicer, acting on behalf of the Trustee hereunder,
shall not, and shall, to the extent provided in the applicable Servicing
Agreement, not permit any Servicer to, rent, lease, or otherwise earn income on
behalf of any REMIC with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure" property within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Master Servicer has advised, or has caused
the applicable Servicer to advise, the Trustee in writing to the effect that,
under the REMIC Provisions, such action would not adversely affect the status of
the REMIC as a REMIC and any income generated for such REMIC by the REO Property
would not result in the imposition of a tax upon such REMIC.
(b) The Master Servicer shall make, or shall cause the applicable Servicer
to make, reasonable efforts to sell any REO Property for its fair market value.
In any event, however, the Master Servicer shall, or shall cause the applicable
Servicer to, dispose of any REO Property within three years from the end of the
calendar year of its acquisition by the Trust Fund unless the Trustee has
received a grant of extension from the Internal Revenue Service to the effect
that, under the REMIC Provisions and any relevant proposed legislation and under
applicable state law, the REMIC may hold REO Property for a longer period
without adversely affecting the REMIC status of such REMIC or causing the
imposition of a Federal or state tax upon such REMIC. If the Trustee has
received such an extension, then the Trustee, or the Master Servicer, acting on
its behalf hereunder, shall, or shall cause the applicable Servicer to, continue
to attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the "Extended Period"). If
the Trustee has not received such an extension and the Trustee, or the Master
Servicer acting on behalf of the Trustee hereunder, or the applicable Servicer
is unable to sell the REO Property within 33 months after its acquisition by the
Trust Fund or if the Trustee has received such an extension, and the Trustee, or
the Master Servicer acting on behalf of the Trustee hereunder, is unable to sell
the REO Property within the period ending three months before the close of the
Extended Period, the Master Servicer shall, or shall cause the applicable
Servicer to, before the end of the three year period or the Extended Period, as
applicable, (i) purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Master Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
-----------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
-----------------
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time to
---------
time by the Depositor, the Master Servicer and the Trustee, without notice to or
the consent of any of the Holders, (i) to cure any ambiguity, (ii) to cause the
provisions herein to conform to or be consistent with or in furtherance of the
statements made with respect to the Certificates, the Trust Fund or this
Agreement in any Offering Document; or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein, (iii) to make
any other provisions with respect to matters or questions arising under this
Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, nor shall such amendment
effected pursuant to clause (iii) of such sentence adversely affect in any
material respect the interests of any Holder. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the Trustee
may require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this paragraph.
Any such amendment shall be deemed not to adversely affect in any material
respect any Holder, if the Trustee receives written confirmation from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
the then current rating assigned to the Certificates (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of not less
than 66-2/3% of the Class Principal Amount (or Percentage Interest) of each
Class of Certificates affected thereby for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders; provided,
however, that no such amendment shall be made unless the Trustee receives an
Opinion of Counsel, at the expense of the party requesting the change, that such
change will not adversely affect the status of the REMIC as a REMIC or cause a
tax to be imposed on such REMIC; and provided further, that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate, without the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentages of Class Principal Amount (or Percentage
Interest) of Certificates of each Class, the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of the
Class Principal Amount (or Class Notional Amount) of each Class of Certificates
affected thereby. For purposes of this paragraph, references to "Holder" or
"Holders" shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this Section
11.03 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing Agreement,
the Trustee shall not consent to any amendment of any Servicing Agreement except
pursuant to the standards provided in this Section with respect to amendment of
this Agreement.
Section 11.04. Voting Rights. Except to the extent that the consent of all
-------------
affected Certificateholders is required pursuant to this Agreement, with respect
to any provision of this Agreement requiring the consent of Certificateholders
representing specified percentages of aggregate outstanding Certificate
Principal Amount (or Notional Amount), Certificates owned by the Depositor, the
Master Servicer, the Trustee or any Servicer or Affiliates thereof are not to be
counted so long as such Certificates are owned by the Depositor, the Master
Servicer, the Trustee or any Servicer or Affiliates thereof.
Section 11.05. Provision of Information. (a) For so long as any of the
--------------------------
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such Certificateholder,
upon the request of such Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act. Any
reasonable, out-of-pocket expenses incurred by the Trustee in providing such
information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Securities and Exchange Commission pursuant to Section
6.20(c) and (ii) a copy of any other document incorporated by reference in the
Prospectus. Any reasonable out-of-pocket expenses incurred by the Trustee in
providing copies of such documents shall be reimbursed by the Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail to the Depositor, Attention: Contract Finance, a
copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given when received by
(a) in the case of the Depositor, Structured Asset Securities Corporation, 200
Vesey Street, 12th Floor, New York, New York 10285, Attention: Mark Zusy, (b) in
the case of the Trustee, The Chase Manhattan Bank, 450 West 33rd Street, New
York, New York 10001-2697, Attention: Structured Finance Services, and (c) in
the case of the Master Servicer, Aurora Loan Services Inc., 2530 South Parker
Road, Suite 601, Aurora, Colorado 80014; Attention: Master Servicing, or as to
each party such other address as may hereafter be furnished by such party to the
other parties in writing. Any notice required or permitted to be mailed to a
Holder shall be given by first class mail, postage prepaid, at the address of
such Holder as shown in the Certificate Register. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Holder receives such notice.
Section 11.08. Severability of Provisions. If any one or more of the
----------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any delay
------------------------
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
-----------------------------------------
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in the
---------------------
Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of the
Certificates, any benefit or any legal or equitable right, power, remedy or
claim under this Agreement, except to the extent specified in Section 11.14.
Section 11.12. Special Notices to the Rating Agencies. (a) The Depositor
---------------------------------------
shall give prompt notice to the Rating Agencies of the occurrence of any of the
following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) any Assignment by the Master Servicer of its rights hereunder or
delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer pursuant
to Section 6.14 and any resignation of the Master Servicer hereunder;
(v) the appointment of any successor to any Master Servicer pursuant
to Section 6.14; and
(vi) the making of a final payment pursuant to Section 7.02.
(b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to DCR, to:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
38th Floor
Chicago, Illinois 60603
Attention: Residential
MBS/SASCO 1999-ALS1
If to Fitch, to:
Fitch IBCA, Inc.
1201 East 7th Street
Powell, Wyoming 82435
Attention: Residential Mortgage Surveillance
If to S&P, to:
Standard & Poor's Rating Services
25 Broadway, 12th Floor
New York, New York 10004
Attention: Residential Mortgages
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
Section 11.14. Transfer of Servicing. The Seller agrees that it shall
-----------------------
provide written notice to the Trustee and the Master Servicer thirty days prior
to any transfer or assignment by the Seller of its rights under any Servicing
Agreement or of the servicing thereunder or delegation of its rights or duties
thereunder or any portion thereof to any Person other than the initial Servicer
under such Servicing Agreement. In addition, the ability of the Seller to
transfer or assign its rights and delegate its duties under any Servicing
Agreement or to transfer the servicing thereunder to a successor servicer shall
be subject to the following conditions:
(i) Such successor servicer must be qualified to service loans for
FNMA or FHLMC;
(ii) Such successor servicer must satisfy the seller/servicer
eligibility standards in the applicable Servicing Agreement, exclusive of
any experience in mortgage loan origination, and must be reasonably
acceptable to the Master Servicer, whose approval shall not be unreasonably
withheld;
(iii) Such successor servicer must execute and deliver to the Trustee
and the Master Servicer an agreement, in form and substance reasonably
satisfactory to the Trustee and the Master Servicer, that contains an
assumption by such successor servicer of the due and punctual performance
and observance of each covenant and condition to be performed and observed
by the Servicer under the applicable Servicing Agreement;
(iv) There must be delivered to the Trustee a letter from each Rating
Agency to the effect that such transfer of servicing will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of
the Certificates;
(v) The Seller shall, at its cost and expense, take such steps, or
cause the terminated Servicer to take such steps, as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of the
Mortgage Loans to such successor servicer, including, but not limited to,
the following: (A) to the extent required by the terms of the Mortgage
Loans and by applicable federal and state laws and regulations, the Seller
shall cause the prior Servicer to timely mail to each obligor under a
Mortgage Loan any required notices or disclosures describing the transfer
of servicing of the Mortgage Loans to the successor servicer; (B) prior to
the effective date of such transfer of servicing, the Seller shall cause
the prior Servicer to transmit to any related insurer notification of such
transfer of servicing; (C) on or prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to deliver
to the successor servicer all Mortgage Loan Documents and any related
records or materials; (D) on or prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to
transfer to the successor servicer, or, if such transfer occurs after a
Remittance Date but before the next succeeding Deposit Date, to the Master
Servicer, all funds held by the Servicer in respect of the Mortgage Loans;
(E) on or prior to the effective date of such transfer of servicing, the
Seller shall cause the prior Servicer to, after the effective date of the
transfer of servicing to the successor servicer, continue to forward to
such successor servicer, within one Business Day of receipt, the amount of
any payments or other recoveries received by the prior Servicer, and to
notify the successor servicer of the source and proper application of each
such payment or recovery; and (F) the Seller shall cause the prior Servicer
to, after the effective date of transfer of servicing to the successor
servicer, continue to cooperate with the successor servicer to facilitate
such transfer in such manner and to such extent as the successor servicer
may reasonably request.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee and the Master Servicer
have caused their names to be signed hereto by their respective officers
hereunto duly authorized as of the day and year first above written.
STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor
By: /s/ Stanley P. Labanowski
------------------------------------------
Name: Stanley P. Labanowski
Title: Authorized Signatory
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Kimberly Costa
------------------------------------------
Name: Kimberly Costa
Title: Vice President
AURORA LOAN SERVICES INC., as Master Servicer
By: /s/ Ralph Lenzi
------------------------------------------
Name: Ralph Lenzi
Title: CEO
Solely for purposes of Section 11.14,
accepted and agreed to by:
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Joseph J. Kelly
----------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
<PAGE>
EXHIBIT A
---------
FORMS OF CERTIFICATES
<PAGE>
EXHIBIT B-1
-----------
FORM OF INITIAL CERTIFICATION
______________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of February 1, 1999
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1999-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as Custodian on behalf of the
Trustee, hereby certifies that it (or its custodian) has received the documents
listed in Section 2.01(b) of the Trust Agreement for each Mortgage File
pertaining to each Mortgage Loan listed on Schedule A, to the Trust Agreement,
subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Trust Agreement. This
Certificate is subject in all respects to the terms of Section 2.02 of the Trust
Agreement and the Trust Agreement sections cross-referenced therein.
[Custodian], on behalf of
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT B-2
-----------
FORM OF INTERIM CERTIFICATION
______________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of February 1, 1999
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1999-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the undersigned,
as Custodian on behalf of the Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on Schedule I hereto) it (or its custodian) has received the
applicable documents listed in Section 2.01(b) of the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents identified above and has determined that
each such document appears regular on its face and appears to relate to the
Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is qualified
in all respects by the terms of said Trust Agreement including, but not limited
to, Section 2.02(b).
[Custodian], on behalf of
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT B-3
-----------
FORM OF FINAL CERTIFICATION
______________
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of February 1, 1999
among Structured Asset Securities Corporation, as Depositor, The Chase
Manhattan Bank, as Trustee, and Aurora Loan Services Inc., as Master
Servicer, with respect to Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1999-ALS1
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the undersigned,
as Custodian on behalf of the Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on Schedule I hereto) it (or its custodian) has received the
applicable documents listed in Section 2.01(b) of the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Trust Agreement. This Certificate is qualified
in all respects by the terms of said Trust Agreement.
[Custodian], on behalf of
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT B-4
-----------
FORM OF ENDORSEMENT
Pay to the order of The Chase Manhattan Bank, as trustee (the "Trustee")
under the Trust Agreement dated as of February 1, 1999, among Structured Asset
Securities Corporation, as Depositor, the Trustee and the Master Servicer
relating to Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1999-ALS1, without recourse.
______________________________________
[current signatory on note]
By:___________________________________
Name:
Title:
<PAGE>
EXHIBIT C
---------
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
_______________
Date
[Addressed to Trustee
or, if applicable, custodian]
In connection with the administration of the mortgages held by you as
Trustee under a certain Trust Agreement dated as of February 1, 1999 among
Structured Asset Securities Corporation, as Depositor, Aurora Loan Services
Inc., as Master Servicer, and you, as Trustee (the "Trust Agreement"), the
undersigned Master Servicer hereby requests a release of the Mortgage File held
by you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
Reason for requesting file:
1. Mortgage Loan paid in full. (The Master Servicer hereby certifies that
all amounts received in connection with the loan have been or will be credited
to the Collection Account or the Certificate Account (whichever is applicable)
pursuant to the Trust Agreement.)
2. The Mortgage Loan is being foreclosed.
3. Mortgage Loan substituted. (The Master Servicer hereby certifies that a
Qualifying Substitute Mortgage Loan has been assigned and delivered to you along
with the related Mortgage File pursuant to the Trust Agreement.)
4. Mortgage Loan repurchased. (The Master Servicer hereby certifies that
the Purchase Price has been credited to the Collection Account or the
Certificate Account (whichever is applicable) pursuant to the Trust Agreement.)
5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Trust Agreement and
will be returned to you within ten (10) days of our receipt of the Mortgage
File, except if the Mortgage Loan has been paid in full, or repurchased or
substituted for a Qualifying Substitute Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned when
no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Trust Agreement.
_____________________________________
[Name of Master Servicer]
By:__________________________________
Name:
Title: Servicing Officer
<PAGE>
EXHIBIT D-1
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes and
says:
1. That he [she] is [title of officer] ________________________ of [name of
Purchaser] _________________________________________ (the "Purchaser"), a
_______________________ [description of type of entity] duly organized and
existing under the laws of the [State of __________] [United States], on behalf
of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is ______________.
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
__________________ [date of transfer], and that the Purchaser is not acquiring a
Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form of
this affidavit. For these purposes, a "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (other than an instrumentality if all of its activities are
subject to tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(C), any "electing large partnership" within the meaning of
Section 775 of the Code, or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.
4. That the Purchaser is not, and on __________________ [date of transfer]
will not be, and is not and on such date will not be investing the assets of, an
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or a plan subject to Code Section 4975 or a person
or entity that is using the assets of any employee benefit plan or other plan to
acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among Structured Asset Securities Corporation, The
Chase Manhattan Bank, as Trustee and Aurora Loan Services Inc., as Master
Servicer, dated as of February 1, 1999, no transfer of a Residual Certificate
shall be permitted to be made to any person unless the Trustee has received a
certificate from such transferee to the effect that such transferee is not an
employee benefit plan subject to ERISA or a plan subject to Section 4975 of the
Code and is not using the assets of any employee benefit plan or other plan to
acquire a Residual Certificate.
6. That the Purchaser does not hold REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
"Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the assessment
or collection of any federal, state or local taxes legally required to be paid
with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are
not satisfied or that the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form and providing
to the Trustee a written statement substantially in the form of Exhibit G to the
Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.
10. That the Purchaser (i) is a U.S. Person or (ii) is a Non-U.S. Person
that holds a Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or successor form
at the time and in the manner required by the Code. "Non-U.S. Person" means an
individual, corporation, partnership or other person other than a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any state
thereof, including for this purpose, the District of Columbia, or an estate that
is subject to U.S. federal income tax regardless of the source of its income, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
trustees have authority to control all substantial decisions of the trust.
11. That the Purchaser agrees to such amendments of the Trust Agreement as
may be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent thereof, a
Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the Trust
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [title of
officer] this _____ day of __________, 19__.
______________________________________
[name of Purchaser]
By:___________________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________, 19__.
NOTARY PUBLIC
______________________________
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
<PAGE>
EXHIBIT D-2
-----------
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
______________
Date
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
_______________________________
Name:
Title:
<PAGE>
EXHIBIT E
---------
SERVICING AGREEMENT
<PAGE>
EXHIBIT F
---------
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1999-ALS1
----------------------------------------
Reference is hereby made to the Trust Agreement dated as of February 1,
1999 (the "Trust Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer and The Chase Manhattan
Bank, as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Trust Agreement.
This letter relates to $_________ initial Certificate Balance of Class
Certificates which are held in the form of Definitive Certificates registered in
the name of (the "Transferor"). The Transferor has requested a transfer of such
Definitive Certificates for Definitive Certificates of such Class registered in
the name of [insert name of transferee].
In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Trust Agreement
and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser
that the Transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A purchasing for its own account or for the
account of a "qualified institutional buyer", which purchaser is aware that the
sale to it is being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Placement Agent and the Depositor.
________________________________________
[Name of Transferor]
By:_____________________________________
Name:
Title:
Dated: __________________, ________
<PAGE>
EXHIBIT G
---------
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
______________
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Mortgage Pass-Through Certificates, Series 1999-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 February 1,
1999 among the Depositor, Aurora Loan Services Inc., as Master Servicer and
The Chase Manhattan Bank, as Trustee (the "Trustee"), a signed letter in
the form of this letter; and we further agree, in the capacities stated
above, to provide to any person purchasing any of the Privately Offered
Certificates from us a notice advising such purchaser that resales of the
Privately Offered Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any Privately
Offered Certificates to an Institutional Accredited Investor, we will be
required to furnish to the Trustee and the Depositor a certification from
such transferee in the form hereof to confirm that the proposed sale is
being made pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act. We further
understand that the Privately Offered Certificates purchased by us will
bear a legend to the foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Privately Offered
Certificates, and we and any account for which we are acting are each able
to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or for
one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make our
investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that in
accordance with ERISA, the Code and the Exemption, no Plan as to which the
Purchaser, the Depositor, any Servicer or Master Servicer or the Trustee is
a party in interest or disqualified person, and no person acting on behalf
of such a Plan may acquire such Certificate unless the acquisition would
constitute an exempt transaction under a statutory exemption or any of the
administrative exemptions issued by the U.S. Department of Labor.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Trust Agreement.
<PAGE>
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
__________________________________
[Purchaser]
By________________________________
Name:
Title:
<PAGE>
EXHIBIT H
---------
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"), a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (2)
if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory
to the Trustee and the Depositor, and upon which the Trustee and the Depositor
shall be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee or the
Depositor to any obligation in addition to those undertaken by such entities in
the Trust Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among Structured Asset Securities Corporation, as
Depositor, Aurora Loan Services Inc., as Master Servicer, and The Chase
Manhattan Bank, as Trustee, dated as of February 1, 1999, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person unless
the Depositor and Trustee have received a certificate from such transferee in
the form hereof.
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _______________, 199 .
________________________________________
[Investor]
By:_____________________________________
Name:
Title:
ATTEST:
_____________________________
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named
_________________, known or proved to me to be the same person who executed
the foregoing instrument and to be the _________________ of the Investor, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Investor.
Subscribed and sworn before me this _____ day of ___________ 199__.
_______________________________
NOTARY PUBLIC
My commission expires the
____ day of __________, 19__.
<PAGE>
EXHIBIT I
---------
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT J
---------
MONTHLY ELECTRONIC DATA TRANSMISSION
<PAGE>
EXHIBIT K
---------
CUSTODIAL AGREEMENT
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
<PAGE>
SCHEDULE B
----------
PRINCIPAL AMOUNT SCHEDULES
[Not Applicable]
================================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
SELLER
and
STRUCTURED ASSET SECURITIES CORPORATION,
PURCHASER
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
Dated as of February 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
CONVEYANCE OF MORTGAGE LOANS
1.01. Sale of Mortgage Loans..............................................2
1.02. Delivery of Documents...............................................2
1.03. Review of Documentation.............................................2
1.04. Representations and Warranties of Lehman Capital....................3
1.05. Grant Clause........................................................7
1.06 Assignment by Depositor..............................................7
ARTICLE II
MISCELLANEOUS PROVISIONS
2.01. Binding Nature of Agreement; Assignment.............................7
2.02. Entire Agreement....................................................7
2.03. Amendment...........................................................7
2.04. Governing Law.......................................................8
2.05. Severability of Provisions..........................................8
2.06. Indulgences; No Waivers.............................................8
2.07. Headings Not to Affect Interpretation...............................9
2.08. Benefits of Agreement...............................................9
2.09. Counterparts........................................................9
SCHEDULES
SCHEDULE A Mortgage Loan Schedule
<PAGE>
This MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT is executed by and between
Lehman Capital, A Division of Lehman Brothers Holdings Inc. ("Lehman Capital"),
and Structured Asset Securities Corporation (the "Depositor"), dated as of the
1st day of February, 1999.
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 February 1, 1999, among the Depositor, Aurora Loan Services Inc., as
Master Servicer, and The Chase Manhattan Bank, as Trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the following specified mortgage loan transfer
agreements (each a "Transfer Agreement", and together the "Transfer
Agreements"), Lehman Capital has purchased from certain transferors (each a
"Transferor", and together the "Transferors"), certain mortgage loans identified
on the Mortgage Loan Schedule attached hereto as Exhibit A:
1. Mortgage Loan Purchase and Warranties Agreement, dated as of November
30, 1999, between Lehman Capital and Headlands Mortgage Company; and
2. Loan Purchase Agreement (Servicing Released), dated March 23, 1999,
between Lehman Capital and Aurora Loan Services Inc.
WHEREAS, each Transfer Agreement permits the purchaser to assign its rights
and interests in such agreement and to delegate its obligations thereunder;
WHEREAS, Lehman Capital desires to sell, without recourse, all of its
right, title and interest in the Mortgage Loans to the Depositor, to assign all
of its rights and interest under each Transfer Agreement, and to delegate all of
its obligations thereunder, to the Depositor; and
WHEREAS, Lehman Capital and the Depositor acknowledge and agree that the
Depositor will assign all of its rights and delegate all of its obligations
hereunder to the Trustee, and that each reference herein to the Depositor is
intended, unless otherwise specified, to mean the Depositor or the Trustee, as
assignee, whichever is the owner of the Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Lehman Capital and the Depositor agree as follows:
ARTICLE I.
CONVEYANCE OF MORTGAGE LOANS
Section 1.01. Sale of Mortgage Loans. Concurrently with the execution and
----------------------
delivery of this Agreement, Lehman Capital does hereby transfer, assign, set
over, deposit with and otherwise convey to the Depositor, without recourse,
subject to Sections 1.03 and 1.04, all the right, title and interest of Lehman
Capital in and to the Mortgage Loans identified on Schedule A hereto, having an
aggregate principal balance as of the Cut-off Date of $288,773,612.87. Such
conveyance includes, without limitation, the right to all distributions of
principal and interest received on or with respect to the Mortgage Loans on or
after February 1, 1999 (other than payments of principal and interest due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date, together with all of Lehman Capital's right, title and interest in and to
each related account and all amounts from time to time credited to and the
proceeds of such account, any REO Property and the proceeds thereof, Lehman
Capital's rights under any Insurance Policies related to the Mortgage Loans, and
Lehman Capital's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral.
Concurrently with the execution and delivery of this Agreement, Lehman
Capital hereby assigns to the Depositor all of its rights and interest under
each Transfer Agreement, and delegates to the Depositor all of its obligations
thereunder. Concurrently with the execution hereof, the Depositor tenders the
purchase price of $288,773,612.87. The Depositor hereby accepts such assignment
and delegation, and shall be entitled to exercise all such rights of Lehman
Capital under each Transfer Agreement, as if the Depositor had been a party to
each Transfer Agreement.
Section 1.02. Delivery of Documents. (a) In connection with such transfer
---------------------
and assignment of the Mortgage Loans hereunder, Lehman Capital does hereby
deliver, or cause to be delivered, to the Depositor (or its designee) the
documents or instruments with respect to each Mortgage Loan (each a "Mortgage
File") so transferred and assigned, as specified in the applicable Transfer
Agreement.
(b) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, Lehman Capital, in lieu of
delivering the related Mortgage Files, herewith delivers to the Depositor an
Officer's Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are required to be
deposited in the account maintained by the Servicer for such purpose have been
so deposited.
Section 1.03. Review of Documentation. The Depositor, by execution and
------------------------
delivery hereof, acknowledges receipt of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by LaSalle National Bank, as custodian or U.S. Bank Trust National Association,
as custodian (each, a "Custodian"), as applicable, for the Depositor. The
applicable Custodian is required to review, within 45 days following the Closing
Date, each applicable Mortgage File. If in the course of such review the
applicable Custodian identifies any Material Defect, Lehman Capital shall be
obligated to cure such defect or to repurchase the related Mortgage Loan from
the Depositor (or, at the direction of and on behalf of the Depositor, from the
Trust Fund), or to substitute a Qualifying Substitute Mortgage Loan therefor, in
each case to the same extent and in the same manner as the Depositor is
obligated to the Trustee and the Trust Fund under Section 2.02(c) of the Trust
Agreement.
Section 1.04. Representations and Warranties of Lehman Capital. (a) Lehman
------------------------------------------------
Capital hereby represents and warrants to the Depositor that as of the date
hereof that:
(i) Lehman Capital is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry on
its business as presently conducted, and to enter into and perform its
obligations under this Agreement;
(ii) the execution and delivery by Lehman Capital of this Agreement
have been duly authorized by all necessary corporate action on the part of
Lehman Capital; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on Lehman Capital or
its properties or the certificate of incorporation or bylaws of Lehman
Capital;
(iii) the execution, delivery and performance by Lehman Capital of
this Agreement and the consummation of the transactions contemplated hereby
do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
state, federal or other governmental authority or agency, except such as
has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by Lehman
Capital and, assuming due authorization, execution and delivery by the
Depositor, constitutes a valid and binding obligation of Lehman Capital
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency
laws and other similar laws affecting the enforcement of the rights of
creditors generally and (B) general principles of equity regardless of
whether such enforcement is considered in a proceeding in equity or at law;
and
(v) there are no actions, suits or proceedings pending or, to the
knowledge of Lehman Capital, threatened or likely to be asserted against or
affecting Lehman Capital, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter
which in the judgment of Lehman Capital will be determined adversely to
Lehman Capital and will if determined adversely to Lehman Capital
materially and adversely affect it or its business, assets, operations or
condition, financial or otherwise, or adversely affect its ability to
perform its obligations under this Agreement.
(b) The representations and warranties of each Transferor with respect
to the Mortgage Loans in the applicable Transfer Agreement were made as of the
date of such Transfer Agreement. To the extent that any fact, condition or event
with respect to a Mortgage Loan constitutes a breach of both (i) a
representation or warranty of a Transferor under the applicable Transfer
Agreement and (ii) a representation or warranty of Lehman Capital under this
Agreement, the only right or remedy of the Depositor shall be the right to
enforce the obligations of such Transferor under any applicable representation
or warranty made by it. The Depositor acknowledges and agrees that the
representations and warranties of Lehman Capital in this Section 1.04(b) are
applicable only to facts, conditions or events that do not constitute a breach
of any representation or warranty made by the related Transferor in the
applicable Transfer Agreement. Lehman Capital shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to the Mortgage Loans if the fact, condition or event constituting
such breach also constitutes a breach of a representation or warranty made by
the related Transferor in such Transfer Agreement, without regard to whether the
related Transferor fulfills its contractual obligations in respect of such
representation or warranty. Subject to the foregoing, Lehman Capital represents
and warrants upon delivery of the Mortgage Loans to the Depositor hereunder, as
to each, that:
(i) The information set forth with respect to the Mortgage Loans
on the Mortgage Loan Schedule provides an accurate listing of the Mortgage
Loans, and the information with respect to each Mortgage Loan on the
Mortgage Loan Schedule is true and correct in all material respects at the
date or dates respecting which such information is given;
(ii) There are no defaults in complying with the terms of any
Mortgage, and Lehman Capital has no notice as to any taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents which previously became due and owing
but which have not been paid;
(iii) Except in the case of Cooperative Loans, each Mortgage
requires all buildings or other improvements on the related Mortgaged
Property to be insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are customary
in the area where the related Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of the guidelines of FNMA
or FHLMC. If upon origination of the Mortgage Loan, the Mortgaged Property
was in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance
has been made available) a flood insurance policy meeting the requirements
of the current guidelines of the Federal Flood Insurance Administration is
in effect which policy conforms to the requirements of the current
guidelines of the Federal Flood Insurance Administration. Each Mortgage
obligates the related Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or regulation,
each Mortgagor has been given an opportunity to choose the carrier of the
required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering the common facilities of a
planned unit development. The hazard insurance policy is the valid and
binding obligation of the insurer, is in full force and effect, and will be
in full force and effect and inure to the benefit of the Depositor upon the
consummation of the transactions contemplated by this Agreement.
(iv) Each Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property
has not been released from the lien of the Mortgage, in whole or in part,
nor has any instrument been executed that would effect any such release,
cancellation, subordination or recision;
(v) Each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property (including all
improvements on the Mortgaged Property). The lien of the Mortgage is
subject only to: (1) liens of current real property taxes and assessments
not yet due and payable and, if the related Mortgaged Property is a
condominium unit, any lien for common charges permitted by statute, (2)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage
acceptable to mortgage lending institutions in the area in which the
related Mortgaged Property is located and specifically referred to in the
lender's Title Insurance Policy or attorney's opinion of title and abstract
of title delivered to the originator of such Mortgage Loan, and (3) such
other matters to which like properties are commonly subject which do not,
individually or in the aggregate, materially interfere with the benefits of
the security intended to be provided by the Mortgage. Any security
agreement, chattel mortgage or equivalent document related to, and
delivered to the Trustee in connection with, a Mortgage Loan establishes a
valid, subsisting and enforceable first lien on the property described
therein and the Depositor has full right to sell and assign the same to the
Trustee;
(vi) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Depositor, Lehman Capital was the sole owner of
record and holder of each Mortgage Loan, and Lehman Capital had good and
marketable title thereto, and has full right to transfer and sell each
Mortgage Loan to the Depositor free and clear, except as described in
paragraph (v) above, of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has full right and
authority, subject to no interest or participation of, or agreement with,
any other party, to sell and assign each Mortgage Loan pursuant to this
Agreement;
(vii) Each Mortgage Loan other than any Cooperative Loan is
covered by either (i) an attorney's opinion of title and abstract of title
the form and substance of which is generally acceptable to mortgage lending
institutions originating mortgage loans in the locality where the related
Mortgaged Property is located or (ii) an ALTA mortgagee Title Insurance
Policy or other generally acceptable form of policy of insurance, issued by
a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the originator of the Mortgage
Loan, and its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan (subject
only to the exceptions described in paragraph (v) above). If the Mortgaged
Property is a condominium unit located in a state in which a title insurer
will generally issue an endorsement, then the related Title Insurance
Policy contains an endorsement insuring the validity of the creation of the
condominium form of ownership with respect to the project in which such
unit is located. With respect to any Title Insurance Policy, the originator
is the sole insured of such mortgagee Title Insurance Policy, such
mortgagee Title Insurance Policy is in full force and effect and will inure
to the benefit of the Depositor upon the consummation of the transactions
contemplated by this Agreement, no claims have been made under such
mortgagee Title Insurance Policy and no prior holder of the related
Mortgage, including Lehman Capital, has done, by act or omission, anything
that would impair the coverage of such mortgagee Title Insurance Policy;
(viii) To the best of Lehman Capital's knowledge, no foreclosure
action is being threatened or commenced with respect to any Mortgage Loan.
There is no proceeding pending for the total or partial condemnation of any
Mortgaged Property (or, in the case of a Cooperative Loan, the related
cooperative unit) and each such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty,
so as to have a material adverse effect on the value of the related
Mortgaged Property as security for the related Mortgage Loan or the use for
which the premises were intended;
(ix) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding
that under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(x) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a
Federal or State authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act; and
(xi) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G of the Code and Treas. Reg. ss.1.860G-2.
It is understood and agreed that the representations and warranties set
forth herein survive delivery of the Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Depositor. Upon discovery by either Lehman
Capital or the Depositor of a breach of any of the foregoing representations and
warranties that adversely and materially affects the value of the related
Mortgage Loan, and that does not also constitute a breach of a representation or
warranty of the related Transferor in the applicable Transfer Agreement, the
party discovering such breach shall give prompt written notice to the other
party. Within 60 days of the discovery of any such breach, Lehman Capital shall
either (a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan or any property acquired in respect thereof from the Depositor at
the applicable Purchase Price or (c) within the two year period following the
Closing Date, substitute a Qualifying Substitute Mortgage Loan for the affected
Mortgage Loan.
Section 1.05. Grant Clause. It is intended that the conveyance of Lehman
------------
Capital's right, title and interest in and to Mortgage Loans and other property
conveyed pursuant to this Agreement shall constitute, and shall be construed as,
a sale of such property and not a grant of a security interest to secure a loan.
However, if such conveyance is deemed to be in respect of a loan, it is intended
that: (1) the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement; (2) Lehman Capital hereby grants to the
Depositor a first priority security interest in all of Lehman Capital's right,
title and interest in, to and under, whether now owned or hereafter acquired,
such Mortgage Loans and other property; and (3) this Agreement shall constitute
a security agreement under applicable law.
Section 1.06. Assignment by Depositor. The Depositor shall have the right,
-----------------------
upon notice to but without the consent of Lehman Capital, to assign, in whole or
in part, its interest under this Agreement with respect to the Mortgage Loans to
the Trustee, and the Trustee then shall succeed to all rights of the Depositor
under this Agreement. All references to the Depositor in this Agreement shall be
deemed to include its assignee or designee, specifically including the Trustee.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.01. Binding Nature of Agreement; Assignment. This Agreement shall
---------------------------------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 2.02. Entire Agreement. This Agreement contains the entire
-----------------
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 2.03. Amendment. (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 P. Labanowski
------------------------------
Name: Stanley P. Labanowski
Title: Authorized Signatory
<PAGE>
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st day
of February, 1999, by and between LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS
HOLDINGS INC., a Delaware corporation ("Lehman Capital"), and AURORA LOAN
SERVICES INC., a Delaware corporation ("the Servicer"), recites and provides as
follows:
RECITALS
WHEREAS, Lehman Capital has conveyed certain Mortgage Loans identified on
Schedule I hereto (the "Serviced Mortgage Loans") on a servicing-retained basis
to Structured Asset Securities Corporation ("SASCO"), which in turn has conveyed
the Serviced Mortgage Loans to The Chase Manhattan Bank, as trustee (the
"Trustee") under a trust agreement dated as of February 1, 1999 (the "Trust
Agreement"), among the Trustee, Aurora Loan Services Inc., as master servicer
("Aurora," and together with any successor Master Servicer appointed pursuant to
the provisions of the Trust Agreement, the "Master Servicer") and SASCO.
WHEREAS, Lehman Capital continues to own the servicing rights to the
Serviced Mortgage Loans, and may freely transfer such rights, subject to the
terms hereof.
WHEREAS, Lehman Capital desires that the Servicer service the Serviced
Mortgage Loans, and the Servicer has agreed to do so, subject to the right of
Lehman Capital to terminate the rights and obligations of the Servicer hereunder
at any time and to the other conditions set forth herein.
WHEREAS, Aurora, acting as Master Servicer, and any successor Master
Servicer shall be obligated, among other things, to supervise the servicing of
the Serviced Mortgage Loans on behalf of the Trustee, and shall have the right,
under certain circumstances, to terminate the rights and obligations of the
Servicer under this Servicing Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Lehman Capital and the Servicer hereby agree as
follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this Agreement,
-----------
including Exhibit A hereto and any provisions of the Flow Servicing Agreement
dated as of September 1, 1997, between Lehman Capital and the Servicer (the
"Flow Servicing Agreement") incorporated by reference herein, shall have the
meanings ascribed to such terms in the Trust Agreement.
2. Servicing. The Servicer agrees, with respect to the Serviced Mortgage
---------
Loans, to perform and observe the duties, responsibilities and obligations that
are to be performed and observed under the provisions of the Flow Servicing
Agreement, except as otherwise provided herein and on Exhibit A hereto, and that
the provisions of the Flow Servicing Agreement, as so modified, are and shall be
a part of this Agreement to the same extent as if set forth herein in full.
3. Master Servicing; Termination of Servicer. The Servicer, including any
------------------------------------------
successor servicer hereunder, shall be subject to the supervision of the Master
Servicer, which Master Servicer shall be obligated to ensure that the Servicer
services the Serviced Mortgage Loans in accordance with the provisions of this
Agreement. The Master Servicer, acting on behalf of the Trustee pursuant to the
Trust Agreement, shall have the same rights as the "Owner" (as defined in the
Flow Servicing Agreement) to enforce the obligations of the Servicer under the
Flow Servicing Agreement. In addition, all of the representations, warranties,
covenants, agreements and indemnities made by the Servicer (or by any successor
servicer) to the "Owner" under the Flow Servicing Agreement are hereby deemed
made to the Master Servicer as if the Master Servicer were the "Owner" and all
such representations, warranties, covenants, agreements and indemnities shall
inure to the benefit of the Master Servicer; provided, however, that
notwithstanding the foregoing, the Master Servicer shall have (i) no right or
interest in the "Reconstituted Termination Fee" referred to in Section 7.06 of
the Flow Servicing or the "Additional Remittance" referred to in Section 7.07 of
the Flow Servicing Agreement and (ii) no right to terminate the Servicer, except
as expressly set forth herein. Nothing contained herein is intended to result in
the creation or assumption by the Master Servicer of any obligation of the
"Owner" or any Person under the Flow Servicing Agreement or any other agreement
or instrument relating thereto except as specifically set forth herein. The
Master Servicer shall be entitled to terminate the rights and obligations of the
Servicer under this Agreement upon the failure of the Servicer to perform any of
its obligations under this Agreement, as provided in Article IX of the Flow
Servicing Agreement.
In addition, in the event that Lehman Capital transfers the servicing
rights in respect of the Serviced Mortgage Loans to one or more successor
servicers, the rights and obligations of the Servicer under this Agreement shall
terminate, at the sole option of Lehman Capital, without cause, upon thirty days
written notice to the Servicer, and each successor servicer shall succeed to the
rights and obligations of the Servicer under this Agreement as of such date.
Upon such termination the terminated Servicer shall not be entitled to the
Reconstituted Servicing Fee or any portion thereof, or, except as provided in
the Flow Servicing Agreement, to any other amounts in respect of the Serviced
Mortgage Loans.
The Servicer agrees that, notwithstanding anything to the contrary in the
Flow Servicing Agreement, Lehman Capital is the sole owner of the servicing
rights relating to the Serviced Mortgaged Loans, and the Servicer shall have no
right to transfer the servicing thereof.
4. No Representations. Neither the Servicer nor the Master Servicer shall
-------------------
be obligated or required to make any representations and warranties regarding
the Serviced Mortgage Loans in connection with the transactions contemplated by
the Trust Agreement and issuance of the certificates issued pursuant thereto.
5. Notices. All notices and communications between or among the parties
-------
hereto shall be in writing and shall be deemed received or given when mailed
first-class mail, postage prepaid, addressed to each other party at its address
specified below. Each party may designate to the other parties in writing, from
time to time, other addresses to which notices and communications hereunder
shall be sent.
6. Governing Law. THIS SERVICING AGREEMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
8. Reconstitution. Lehman Capital and the Servicer agree that this
--------------
Agreement is a Reconstitution Agreement, and that the date hereof is the
Reconstitution Date, each as defined in the Flow Servicing Agreement.
9. Notices and Remittances to the Master Servicer. All notices required to
----------------------------------------------
be delivered to the Owner or the Master Servicer under this Agreement shall be
delivered to the Master Servicer at the following address:
Aurora Loan Services Inc.
2530 South Parker Road
Suite 601
Aurora, Colorado
Attn: Master Servicing Department, SASCO 1999-ALS1
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
The Chase Manhattan Bank
New York, New York
ABA#: 021-000-021
Account Name: Aurora Loan Services Inc. Master Servicing Payment
Clearing Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SASCO 1999-ALS1
10. Errors and Omissions Insurance. The Servicer shall keep in force during
------------------------------
the term of this Agreement a fidelity bond and a policy or policies of insurance
covering errors and omissions in the performance of the Servicer's obligations
under this Agreement. Such fidelity bond and policy or policies shall be
maintained with recognized insurers and shall be in such form and amount as
would permit the Servicer to be qualified as a FNMA or FHLMC seller-servicer.
The Servicer shall be deemed to have complied with this provision if an
affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. The Servicer shall furnish
to the Master Servicer a copy of each such bond and insurance policy if (i) the
Master Servicer so requests and (ii) the Servicer is not an affiliate of Lehman
Brothers Inc. at the time of such request.
11. Annual Audit Report. On or before April 30 of each year, beginning with
-------------------
April 30, 2000, Servicer shall cause a firm of independent public accountants
(who may also render other services to Servicer), which is a member of the
American Institute of Certified Public Accountants, to furnish a statement to
Owner and Master Servicer, to the effect that such firm has examined certain
documents and records for the preceding fiscal year (or during the period from
the date of commencement of such servicer's duties hereunder until the end of
such preceding fiscal year in the case of the first such certificate) and that,
on the basis of such examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that Servicer's overall servicing operations have been conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers
except for such exceptions that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers requires it to report, in which case
such exceptions shall be set forth in such statement.
12. Annual Officer's Certificate. On or before April 30 of each year,
------------------------------
beginning with April 30, 2000, the Servicer, at its own expense, will deliver to
the Owner and Master Servicer a Servicing Officer's certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding fiscal year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
<PAGE>
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By: /s/Joseph J. Kelly
------------------------------
Name: Joseph J. Kelly
Title: Authorized Signatory
AURORA LOAN SERVICES INC.
By: /s/Leo C. Trautman, Jr.
------------------------------
Name: Leo C. Trautman, Jr.
Title: Executive Vice President
<PAGE>
EXHIBIT A
Modifications to the Flow Servicing Agreement
1. The following is hereby added immediately following the words "incidental
fees and charges" in the definition of "Ancillary Income" in Article I: ",
but not including any premium or penalty associated with a prepayment of
principal of a Mortgage Loan."
2. The definition of "Custodial Agreement" in Article I is hereby deleted and
replaced with the following:
"The custodial agreements relating to custody of the Serviced Mortgage
Loans among: (i) LaSalle National Bank, as Custodian, The Chase Manhattan
Bank, as Trustee, and Structured Asset Securities Corporation and (ii) U.S.
Bank Trust National Association, as Custodian, The Chase Manhattan Bank, as
Trustee, and Structured Asset Securities Corporation, each dated as of
February 1, 1999."
3. The definition of "Custodian" in Article I is hereby deleted and replaced
with the following:
"Either of LaSalle National Bank, as Custodian pursuant to a Custodial
Agreement, and any successor thereto, or U.S. Bank Trust National
Association, as Custodian pursuant to a Custodial Agreement, and any
successor thereto, as applicable."
4. The following definition is hereby added:
"MERS Eligible Mortgage Loan: Any Mortgage Loan that has been
------------------------------
designated by the Servicer as recordable in the name of MERS."
5. The definition of "Monthly Advance" in Article I is hereby amended by
adding at the end of such definition the following: ", but only to the
extent that such amount is expected, in the reasonable judgment of the
Servicer, to be recoverable from collections or other recoveries in respect
of such Mortgage Loan."
6. The following definition is hereby added:
"Non-MERS Eligible Mortgage Loan: Any Mortgage Loan other than a MERS
--------------------------------
Eligible Mortgage Loan."
7. The following definition is hereby added:
"Prepayment Interest Excess Amount: With respect to any Principal
------------------------------------
Prepayment in full of a Mortgage Loan received from the first day through
the sixteenth day of any calendar month, all amounts paid in respect of
interest on such Principal Prepayment."
8. The definition of "Prepayment Interest Shortfall Amount" is hereby deleted
and replaced with the following:
"Prepayment Interest Shortfall Amount: With respect to (x) any
---------------------------------------
Principal Prepayment in part (other than any such prepayment received on
the first of the month) and (y) any Principal Prepayment in full received
on or after the seventeenth day of the month preceding the month of such
Distribution Date, but on or before the last day of the month preceding the
month of such Distribution Date, the difference between (i) one full
month's interest at the applicable Mortgage Rate (giving effect to any
applicable Relief Act Reduction), as reduced by the Reconstituted Servicing
Fee, on the outstanding principal balance of such Mortgage Loan immediately
prior to such prepayment and (ii) the amount of interest actually received
with respect to such Mortgage Loan in connection with such Principal
Prepayment."
9. The following definition is hereby added:
"Prepayment Period: With respect to any Distribution Date and a
------------------
partial Principal Prepayment, the period from the second day of the month
preceding the month of such Distribution Date to the first day of the month
of such Distribution Date. With respect to any Distribution Date and a full
Principal Prepayment, the period from the seventeenth day of the month
preceding the month of such Distribution Date to the sixteenth day of the
month of such Distribution Date."
10. The definition of "Qualified Depository" in Article I is hereby deleted and
replaced with the following:
"Any of (i) a depository the accounts of which are insured by the FDIC
and the debt obligations of which are rated AA or better by Fitch and S&P;
(ii) the corporate trust department of any bank the debt obligations of
which are rated at least A-1 or its equivalent by each of Fitch and S&P; or
(iii) the Servicer, unless the Master Servicer is notified by either Fitch
or S&P that the designation of the Servicer as a Qualified Depository will
result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates."
11. The following definition is hereby added:
"Reconstituted Servicing Fee: An amount equal to (1) one-twelfth the
----------------------------
product of (a) a rate per annum equal to 0.30% and (b) the outstanding
principal balance of such Mortgage Loan and (2) any Prepayment Interest
Excess Amounts. The obligation of the Master Servicer to pay the
Reconstituted Servicing Fee is limited to, and the Reconstituted Servicing
Fee is payable solely from, the interest portion (including recoveries with
respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of such Monthly Payment collected by the
Servicer, or as otherwise provided under this Agreement."
12. The definition of "Remittance Date" in Article I is hereby deleted and
replaced with the following:
"The 18th day (or if such 18th day is not a Business Day, the first
Business Day immediately preceding) of any month, following the First
Remittance Date."
13. The definition of "Servicing Fee" in Article I is hereby deleted.
14. Section 2.02 is hereby deleted and replaced with the following paragraphs:
"Section 2.02 Books and Records.
-----------------
(a) Subject to Section 3.01(a) hereof, as soon as practicable after
the Closing Date (but in no event more than 90 days thereafter except to
the extent delays are caused by the applicable recording office), the
Servicer, at the expense of the Depositor, shall cause the Mortgage, with
respect to each MERS Eligible Mortgage Loan, to be properly recorded in the
name of MERS in the public recording office in the applicable jurisdiction,
or shall ascertain that such have previously been so recorded.
(b) Record title to each Non-MERS Eligible Mortgage Loan and the
related Mortgage Note shall be in the name of the Trustee. Subject to
Section 3.01(a) hereof, Assignments of Mortgage shall be recorded as to
each Non-MERS Mortgage Loan unless instructions to the contrary are
delivered to the Servicer, in writing, by the Trustee. Subject to the
preceding sentence, as soon as practicable after the Closing Date (but in
no event more than 90 days thereafter except to the extent delays are
caused by the applicable recording office), the Servicer, at the expense of
the Depositor, shall cause to be properly recorded in each public recording
office where such Non-MERS Eligible Mortgage Loans are recorded each
Assignment of Mortgage. Additionally, the Servicer shall prepare and
execute, at the direction of the Trustee, any note endorsements.
(c) All rights arising out of the Mortgage Loans shall be vested in
the Trustee. All funds received on or in connection with a Mortgage Loan
shall be received and held by the Servicer in trust for the benefit of the
Trustee pursuant to the terms of this Agreement."
15. Section 3.01(a) is hereby deleted and replaced with the following
paragraph:
"(a) The Servicer shall (A) record or cause to be recorded the
Mortgage, with respect to all MERS Eligible Mortgage Loans, in the name of
MERS, or shall ascertain that such have previously been so recorded; (B)
prepare or cause to be prepared all Assignments of Mortgage with respect to
all Non-MERS Eligible Mortgage Loans; (C) record or cause to be recorded,
subject to Section 2.02(b) hereof, all Assignments of Mortgage with respect
to Non-MERS Mortgage Loans in the name of the Trustee; (D) pay the
recording costs pursuant to Section 2.02 hereof; and/or (E) track such
Assignments of Mortgage to ensure they have been recorded. After the
expenses of such recording costs pursuant to Section 2.02 hereof shall have
been paid by the Servicer, the Servicer shall submit to the Depositor a
reasonably detailed invoice for reimbursement of recording costs it
incurred hereunder."
16. The fourth and fifth paragraphs of Section 3.01 are hereby deleted and
replaced with the following paragraph:
"Consistent with the terms of this Agreement, the Servicer may waive
any late payment charge, assumption fee or other fee that may be collected
in the ordinary course of servicing the Mortgage Loans. The Servicer shall
not make any future advances to any obligor under any Mortgage Loan, and
(unless the Mortgagor is in default with respect to the Mortgage Loan or
such default is, in the judgment of the Servicer, reasonably foreseeable)
the Servicer shall not permit any modification of any material term of any
Mortgage Loan, including any modification that would change the Mortgage
Interest Rate, defer or forgive the payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual
payments of principal) or change the final maturity date on such Mortgage
Loan. In the event of any such modification which permits the deferral of
interest or principal payments on any Mortgage Loan, the Servicer shall, on
the Business Day immediately preceding the Remittance Date in any month in
which any such principal or interest payment has been deferred, make a
Monthly Advance in accordance with Section 4.03, in an amount equal to the
difference between (a) such month's principal and one month's interest at
the Remittance Rate on the unpaid principal balance of such Mortgage Loan
and (b) the amount paid by the Mortgagor. The Servicer shall be entitled to
reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. Without limiting the generality of
the foregoing, the Servicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Master
Servicer, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect
to the Mortgage Loans and with respect to the Mortgaged Properties. Upon
the request of the Servicer, the Master Servicer shall execute and deliver
to the Servicer any powers of attorney and other documents, furnished to it
by the Servicer and reasonably satisfactory to the Master Servicer,
necessary or appropriate to enable the Servicer to carry out its servicing
and administrative duties under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the
Servicer shall not waive any premium or penalty in connection with a
prepayment of principal of any Mortgage Loan, and shall not consent to the
modification of any Mortgage Note to the extent that such modification
relates to payment of a prepayment premium or penalty."
17. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.03 are hereby deleted and
replaced with the following: "Aurora Loan Services Inc., as master servicer
for SASCO 1999-ALS1."
18. Section 3.04 is amended by deleting the word "and" at the end of clause
(v), replacing the period at the end of clause (vi) with "; and", and
adding the following immediately following clauses (vii) and (viii):
"(vii) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 7.03, it being understood that, in the case
of any such reimbursement, the Servicer's right thereto shall be prior to
the rights of the Trust Fund;
(viii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Reconstituted Servicing Fees, the Servicer's right to
reimburse itself pursuant to this subclause (viii) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and other amounts
received in respect of the related REO Property, and such other amounts as
may be collected by the Servicer from the Mortgagor or otherwise relating
to the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights of
the Purchaser;"
19. The words "Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
owner of residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors" in the first paragraph of Section 3.05 are hereby deleted and
replaced with the following: "Aurora Loan Services Inc., as master servicer
for SASCO 1999-ALS1."
20. All references in Section 3.11 to the disposition of REO Properties within
a two year period are hereby deleted and replaced with a three year period.
21. The following Section 3.13 is hereby added:
"Section 3.13 MERS.
----
(a) The Servicer shall take such actions as are necessary to cause the
Trustee to be clearly identified as the owner of each MERS Mortgage Loan on
the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the
MERS Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial
ownership or release of any security interest in such Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to
Section 10.01 within 10 Business Days of such transfer of servicing. The
Servicer shall cooperate with the Trustee, the Master Servicer and any
successor servicer to the extent necessary to ensure that such transfer of
servicing is appropriately reflected on the MERS system."
22. The first paragraph of Section 4.01 is hereby deleted and replaced with the
following:
"On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Master Servicer (a) all amounts
deposited in the Custodial Account as of the close of business on the last
day of the related Due Period (net of charges against or withdrawals from
the Custodial Account pursuant to Section 3.04), plus (b) all amounts, if
any, which the Servicer is obligated to distribute pursuant to Section
7.03, minus (c) any amounts attributable to Principal Prepayments,
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds or REO
Disposition Proceeds received after the applicable Prepayment Period, which
amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account
in connection with such Principal Prepayment in accordance with Section
7.03, and minus (d) any amounts attributable to Monthly Payments collected
but due on a due date or dates subsequent to the first day of the month in
which such Remittance Date occurs, which amounts shall be remitted on the
Remittance Date next succeeding the Due Period for such amounts."
23. Section 4.02 is hereby amended by deleting the words "Remittance Date" in
the first line of such Section, and substituting the following: "eleventh
Business Day of each month"
24. The third paragraph of Section 5.01 is hereby deleted.
25. Section 5.02 is hereby deleted.
26. All references to the "Servicing Fee" (other than the definition of
"Servicing Fee" in Article I) shall be deemed to refer to the
"Reconstituted Servicing Fee" pursuant to Section 7.03.
27. The following paragraph is added at the end of Section 10.01:
"Neither the Master Servicer nor any successor servicer (including the
Owner and the Master Servicer) shall be liable for any acts or omissions of
the Servicer or any predecessor servicer. In particular, neither the Master
Servicer nor any successor servicer (including the Owner and the Master
Servicer) shall be liable for any servicing errors or interruptions
resulting from any failure of the Servicer to maintain computer and other
information systems that are year-2000 compliant."
28. The following words are hereby added after the words "Attention: Rick
Skogg" in Section 10.06(ii):
"with a copy to:
Aurora Loan Services Inc.
601 Fifth Avenue
P.O. Box 1706
Scottsbluff, Nebraska 69361
Telephone No.: (308) 635-3500
Telecopier No.: (308) 632-4287
Attention: Leo C. Trautman, Jr."
