SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): September 27, 1996
Merrill Lynch Mortgage Investors, Inc.
------------------------------------------------------------------
(Exact name of registrant as specified in its character)
Delaware
------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
333-07569 13-3416059
-----------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
World Financial Center, North Tower
New York, NY 10281
Attention: General Counsel
________________________________________________________________
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: 212-449-1000
Not applicable
_________________________________________________________________
(Former name or former address, if changed since last report)
Item 5. Other Events.
-------------
Filing of Pooling and Servicing Agreement
- -----------------------------------------
On September 27, 1996, Merrill Lynch Mortgage Investors, Inc. (the
"Depositor") entered into a Pooling and Servicing Agreement dated as of
September 1, 1996 (the "Pooling and Servicing Agreement"), by and among the
Depositor, Beneficial Mortgage Corporation as master servicer, The
Chase Manhattan Bank, as trustee, and Texas Commerce Bank National
Association, as co-trustee. The Pooling and Servicing Agreement is annexed
hereto as Exhibit 99.
Amendment to Certificate of Incorporation
- -----------------------------------------
On September 26, 1996, Merrill Lynch Mortgage Investors, Inc. (the
"Depositor") filed a "Certificate of Amendment of Certificate of
Incorporation" with the State of Delaware Office of the Secretary of State.
The amendment is annexed hereto as Exhibit 3.3.
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) Exhibits
The following is filed herewith. The exhibit number
corresponds with Item 601(b) of Regulation S-K (in the case of the
Certificate of Amendment, as numbered in Registration Statement file
no. 333-07569).
Exhibit No. Description
----------- -----------
99 Pooling and Servicing Agreement
among Merrill Lynch Mortgage Investors,
Inc., Beneficial Mortgage Corporation,
as Master Servicer, Texas Commerce Bank
National Association, as Co-Trustee and
the Chase Manhattan Bank, as Trustee,
dated as of September 1, 1996
3.3 Certificate of Amendment of Certificate
of Incorporation of Merrill Lynch Mortgage
Investors, Inc.
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.
MERRILL LYNCH MORTGAGE INVESTORS, INC.
By: /s/ Peter Cerwin
----------------------
Peter Cerwin
Its: Vice President
Dated: October 7, 1996
EXHIBIT INDEX
Exhibit No. Page
----------- ----
99 3
3.3 84
EXHIBIT 99
Execution Copy
==============================================================================
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
as Depositor,
BENEFICIAL MORTGAGE CORPORATION,
as Master Servicer,
THE CHASE MANHATTAN BANK,
as Trustee
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Co-Trustee
____________________________
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
--------------------------------------------
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 1996-2
==============================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . 19
Section 1.03. Usage of Terms . . . . . . . . . . . . . . . . . . . 19
ARTICLE II SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Sale of Home Equity Loans . . . . . . . . . . . . . . 20
Section 2.02. Acceptance by Trustee; Repurchase Obligations;
Substitution of Eligible Substitute Home Equity
Loans . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Representations and Warranties Regarding the Master
Servicer . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.04. Representations and Warranties Regarding the Home
Equity Loans; Repurchase of Defective Home Equity
Loans . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.05. Execution and Authentication of Certificates;
Designation of "Regular Interests" and "Residual
Interests" under REMIC . . . . . . . . . . . . . . . 29
Section 2.06. Designation of Start-up Day and Final Maturity
Date . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.07. Certain Activities . . . . . . . . . . . . . . . . . 29
Section 2.08. Representation and Warranty of the Depositor . . . . 29
ARTICLE III ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01. The Master Servicer . . . . . . . . . . . . . . . . . 30
Section 3.02. Collection of Certain Home Equity Loan Payments;
Home Equity Loan Payment Record . . . . . . . . . . . 32
Section 3.03. Permitted Debits to the Home Equity Loan Payment
Record . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.05. Assumption and Modification Agreements . . . . . . . 34
Section 3.06. Realization upon Defaulted Home Equity Loans . . . . 35
Section 3.07. Trustee to Cooperate . . . . . . . . . . . . . . . . 35
Section 3.08. Servicing Compensation; Payment of Certain Expenses
by Master Servicer . . . . . . . . . . . . . . . . . 36
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . 36
Section 3.10. Annual Independent Public Accountants' Servicing
Report . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.11. Access to Certain Documentation and Information
Regarding the Home Equity Loans . . . . . . . . . . . 36
Section 3.12. Maintenance of Certain Servicing Policies . . . . . . 37
ARTICLE IV SERVICING CERTIFICATE; CERTIFICATE ACCOUNT DEPOSIT
Section 4.01. Servicing Certificate . . . . . . . . . . . . . . . . 38
Section 4.02. Certificate Account . . . . . . . . . . . . . . . . . 39
Section 4.03. Servicer LOC . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . 41
Section 5.02. Statements to Certificateholders . . . . . . . . . . 41
ARTICLE VI THE CERTIFICATES
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . 44
Section 6.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . 44
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates . . 46
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . 46
Section 6.05. Appointment of Paying Agent . . . . . . . . . . . . . 46
Section 6.06. Restrictions on Transfer of Class M and Class B
Certificates . . . . . . . . . . . . . . . . . . . . 47
Section 6.07. Restrictions on Transfer of Class R Certificates . . 47
Section 6.08. Actions of Certificateholders . . . . . . . . . . . . 49
ARTICLE VII THE MASTER SERVICER AND THE DEPOSITOR
Section 7.01. Liability of the Master Servicer . . . . . . . . . . 51
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer and the
Depositor . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.03. Limitation on Liability of the Master Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.04. Master Servicer Not to Resign . . . . . . . . . . . . 52
Section 7.05. Delegation of Duties . . . . . . . . . . . . . . . . 52
ARTICLE VIII DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . 53
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . 54
Section 8.03. Notification to Certificateholders . . . . . . . . . 55
Section 8.04. Waiver of Past Events of Default . . . . . . . . . . 55
ARTICLE IX THE TRUSTEE
Section 9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . 56
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . 57
Section 9.03. Trustee Not Liable for Certificates or Home Equity
Loans . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . 59
Section 9.05. Master Servicer to Pay Trustee's Fees and
Expenses . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.06. Eligibility Requirements for Trustee . . . . . . . . 59
Section 9.07. Resignation or Removal of Trustee . . . . . . . . . . 59
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . 60
Section 9.09. Merger or Consolidation of Trustee . . . . . . . . . 60
Section 9.10. Appointment of Co-Trustee or Separate Trustee . . . . 61
Section 9.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . 62
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . 62
Section 9.13. Suits for Enforcement . . . . . . . . . . . . . . . . 62
ARTICLE X TERMINATION
Section 10.01. Termination Upon Purchase by the Master Servicer
or Liquidation of All Home Equity Loans . . . . . . 63
Section 10.02. Additional Termination Requirements . . . . . . . . 65
ARTICLE XI MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . 66
Section 11.02. Recordation of Agreement . . . . . . . . . . . . . . 67
Section 11.03. Limitation on Rights of Certificateholders . . . . . 67
Section 11.04. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 68
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . 68
Section 11.06. Severability of Provisions . . . . . . . . . . . . . 68
Section 11.07. Assignment . . . . . . . . . . . . . . . . . . . . . 68
Section 11.08. Certificates Nonassessable and Fully Paid . . . . . 68
Section 11.09. Counterparts . . . . . . . . . . . . . . . . . . . . 68
EXHIBIT A - Form of Class A Certificate . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Form of Class M Certificate . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - Form of Class B Certificate . . . . . . . . . . . . . . . . . C-1
EXHIBIT D - Form of Class R Certificate . . . . . . . . . . . . . . . . . D-1
EXHIBIT E - Form of Notice of Payment in Full . . . . . . . . . . . . . . E-1
EXHIBIT F - Form of File Request . . . . . . . . . . . . . . . . . . . . F-1
This Pooling and Servicing Agreement, dated as of September 1, 1996,
among Merrill Lynch Mortgage Investors, Inc., as depositor (together with its
permitted successors and assigns, the "Depositor"), Beneficial Mortgage
Corporation ("Beneficial"), as master servicer (the "Master Servicer"), The
Chase Manhattan Bank, as trustee (the "Trustee") and Texas Commerce Bank
National Association, as co-trustee (the "Co-Trustee"),
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the meanings specified in this Article.
Accrual Period: As to any Distribution Date (the "current Distribution
--------------
Date"), the period beginning on the preceding Distribution Date (or the
Closing Date, in the case of the first Distribution Date) and ending on the
day preceding the current Distribution Date.
Additional Balance: As to any Home Equity Loan and any day, the Loan
------------------
Balance less the Trust Balance.
Affiliate: With respect to any Person, any other Person controlling,
---------
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies
of a Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise, and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
---------
hereof and supplements hereto.
Amount Available for Class A Interest: As to any Distribution Date, the
-------------------------------------
lesser of (a) Available Funds and (b) the Class A Interest Requirement.
Amount Available for Class A Principal: As to any Distribution Date,
--------------------------------------
the sum of (a) the lesser of (i) the excess, if any, of (A) Available Funds
over (B) the sum of the Amount Available for Class A Interest, the Amount
Available for Class M Interest and the Amount Available for Class B Interest
and (ii) the Class A Formula Amount and (b) as to the Class M Termination
Date and each Distribution Date thereafter, any Class B Remaining Available
Funds (on the Class M Termination Date, exclusive of the portion, if any, of
the Class B Remaining Available Funds distributed as principal of the Class
M Certificates); provided that the Amount Available for Class A Principal
shall not exceed the Class A Certificate Balance.
Amount Available for Class B Interest: As to any Distribution Date, the
-------------------------------------
lesser of (a) the excess, if any, of Available Funds over the sum of (i) the
Amount Available for Class A Interest and (ii) the Amount Available for Class
M Interest and (b) the Class B Interest Requirement.
Amount Available for Class B Principal: As to any Distribution Date
--------------------------------------
prior to the Class M Termination Date, the lesser of (a) the Class B
Remaining Available Funds for such date and (b) the Class B Certificate
Balance, and as to the Class M Termination Date and each Distribution Date
thereafter, the lesser of (a) Available Funds less the sum of (i) the Class
B Interest Requirement and (ii) as to the Class M Termination Date, any
amounts distributed in respect of the Class M Certificates on such date and
(b) the Class B Formula Amount.
Amount Available for Class M Interest: As to any Distribution Date, the
-------------------------------------
lesser of (a) the excess, if any, of Available Funds over the Amount
Available for Class A Interest and (b) the Class M Interest Requirement.
Amount Available for Class M Principal: As to the Class B Termination
--------------------------------------
Date and each Distribution Date thereafter, the lesser of (a) Class B
Remaining Available Funds for such date (in the case of the Class B
Termination Date, net of any such amounts distributed in respect of the Class
B Certificates on such date), plus, on the Class A Termination Date and on
each Distribution Date thereafter, the lesser of (i) Remaining Available
Funds for such date and (ii) the Class M Formula Amount and (b) the Class M
Certificate Balance.
Appraised Value: As to any Mortgaged Property and any time referred to
---------------
herein, the appraised value of such Mortgaged Property based upon the
appraisal made by or on behalf of the related Originator in connection with
the origination of the related Home Equity Loan.
Available Funds: As to any Distribution Date, the sum of (a) the
---------------
aggregate of all Trust Interest received during the related Collection Period
net of the Monthly Servicing Fee, (b) the aggregate of all Trust Principal
Payments received during the related Collection Period, (c) the aggregate of
all Trust Insurance Proceeds received during the related Collection Period,
(d) the aggregate of Trust Liquidation Proceeds received as of the end of the
calendar month preceding the month of such Distribution Date; (e) the
aggregate Purchase Price of any Defective Home Equity Loans repurchased by
the Depositor or the Master Servicer since the preceding Distribution Date
and (f) the Substitution Adjustment Amount deposited in the Collection
Account during the preceding Collection Period.
Available Servicer LOC Amount: As of any Distribution Date upon which
-----------------------------
a Servicer LOC is maintained pursuant to Section 3.02(c), the maximum amount
of coverage available thereunder in accordance with the terms thereof.
Beneficial: Beneficial Mortgage Corporation, a Delaware corporation,
----------
and its successors in interest.
BIF: The Bank Insurance Fund, as from time to time constituted or
---
created under the Financial Institution, Reform, Recovery and Enhancement Act
of 1989, or if at any time after the execution of this instrument the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Book-Entry Certificate: Any Class A, Class M or Class B Certificate
----------------------
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with such Depository (directly or as an indirect
participant in accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
------------
day on which banking institutions in the State of New York or the State of
New Jersey are required or authorized by law to be closed.
Certificate: Any Class A, Class M, Class B or Class R Certificate.
-----------
Certificate Account: The custodial account or accounts created and
-------------------
maintained with the Trustee pursuant to Section 4.02.
Certificate Owner: With respect to any Book-Entry Certificate, the
-----------------
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register and Certificate Registrar: The register maintained
----------------------------------------------
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
---------------------------
registered in the Certificate Register, except that, solely for the purpose
of giving any consent pursuant to this Agreement, any Certificate registered
in the name of Beneficial or the Master Servicer or any Person actually known
to a Responsible Officer of the Trustee to be an affiliate of Beneficial or
the Master Servicer shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent has been obtained.
Class: All Certificates whose form is identical except for variations
-----
in Percentage Interest.
Class A Certificate: Any of the Certificates signed by the Trustee and
-------------------
countersigned by the Trustee or the Certificate Registrar, substantially in
the form set forth in Exhibit A hereto.
Class A Certificate Balance: As of any Distribution Date, the Original
---------------------------
Class A Certificate Balance less all amounts previously distributed to
Holders of the Class A Certificates on all previous Distribution Dates as
part of the Amount Available for Class A Principal, but in no event less than
zero. For purposes of determining whether Amounts Available for Class A
Principal were actually distributed on any particular Distribution Date, the
distribution on any such Distribution Date to Holders of the Class A
Certificates shall be allocated first to the Amount Available for Class A
Interest and then to the Amount Available Class A Principal.
Class A Distribution Amount: As to any Distribution Date, the sum of
---------------------------
(a) the Amount Available for Class A Interest and (b) Amount Available for
Class A Principal.
Class A Formula Amount: As to any Distribution Date, the sum of (a) the
----------------------
Formula Principal Amount and (b) the Class A Unpaid Principal Shortfall.
Class A Interest Requirement: As to any Distribution Date, the sum of
----------------------------
(a) interest accrued during the related Accrual Period at the Class A
Pass-Through Rate on the Class A Certificate Balance, (b) interest accrued
during the related Accrual Period at the Class A Pass-Through Rate on any
Class A Unpaid Interest Shortfall and (c) any Class A Unpaid Interest
Shortfall.
Class A Interest Shortfall: As to any Distribution Date, the amount,
--------------------------
if any, by which distributions in respect of interest to Holders of the Class
A Certificates on such Distribution Date are less than the sum of (a)
interest accrued during the related Accrual Period at the Class A
Pass-Through Rate on the Class A Certificate Balance and (b) any interest due
on such Distribution Date on any Class A Unpaid Interest Shortfall (to the
extent legally permitted).
Class A Pass-Through Rate: As to the initial Accrual Period, 5.58531%
-------------------------
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR
plus 0.14% and (b) the Weighted Average Net Loan Rate.
Class A Principal Factor: As to any Distribution Date, the percentage,
------------------------
carried to seven places (rounded down), obtained by dividing the Class A
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class
A Certificate Balance.
Class A Principal Shortfall: As to any Distribution Date, the amount,
---------------------------
if any, by which distributions in respect of principal to Holders of the
Class A Certificates on such Distribution Date are less than the amount
specified in clause (a) of the definition of Class A Formula Amount.
Class A Termination Date: The Distribution Date on which the Class A
------------------------
Certificate Balance has been reduced to zero.
Class A Unpaid Interest Shortfall: As to any Distribution Date, the
---------------------------------
amount, if any, by which the aggregate of Class A Interest Shortfalls for
prior Distribution Dates exceeds the aggregate of amounts distributed in
respect of Class A Interest Shortfalls on prior Distribution Dates to Holders
of the Class A Certificates. For purposes of determining whether amounts
distributable in respect of Class A Unpaid Interest Shortfalls were actually
distributed on any particular Distribution Date, distributions on such
Distribution Date shall be allocated, first, to the amount specified in
clause (a) of the definition "Class A Interest Requirement," second, to any
interest due on any Class A Unpaid Interest Shortfall, and, third, to any
Class A Unpaid Interest Shortfall.
Class A Unpaid Principal Shortfall: As to any Distribution Date, the
----------------------------------
amount, if any, by which the aggregate of Class A Principal Shortfalls for
prior Distribution Dates exceeds the aggregate of the amounts distributed on
prior Distribution Dates in respect of Class A Principal Shortfalls to
Holders of the Class A Certificates. For purposes of determining whether
amounts distributable in respect of Class A Unpaid Principal Shortfalls were
actually distributed on any particular Distribution Date, the distribution
on such Distribution Date shall be allocated, first, to the Class A Interest
Requirement, second to the amounts described in clause (a) of the definition
of "Class A Formula Amount," and, third, to any Class A Unpaid Principal
Shortfall.
Class B Certificate: Any of the Certificates signed by the Trustee and
-------------------
countersigned by the Trustee or the Certificate Registrar, substantially in
the form set forth in Exhibit C hereto.
Class B Certificate Balance: As to any Distribution Date, the Original
---------------------------
Class B Certificate Balance less the sum of all amounts previously
distributed to Class B Certificateholders on all previous Distribution Dates
in excess of the Class B Interest Requirement for each such Distribution
Date, but in no event less than zero.
Class B Distribution Amount: As to any Distribution Date to and
---------------------------
including the Class B Termination Date, the sum of (a) the Amount Available
for Class B Interest and (b) the Amount Available for Class B Principal.
Class B Formula Amount: As to any Distribution Date on or after the
----------------------
Class M Termination Date, the lesser of (a) the sum of (i) the Formula
Principal Amount and (ii) any Class B Unpaid Principal Shortfall less (iii)
as to the Class M Termination Date, the aggregate amount distributed as
principal in respect of the Class M Certificates on such date and (b) the
Class B Certificate Balance.
Class B Interest Requirement: As to any Distribution Date, the sum of
----------------------------
(a) interest accrued during the related Accrual Period at the Class B
Pass-Through Rate on the Class B Certificate Balance, (b) interest accrued
during the related Accrual Period at the Class B Pass-Through Rate on any
Class B Unpaid Interest Shortfall (to the extent legally permitted) and (c)
any Class B Unpaid Interest Shortfall.
Class B Interest Shortfall: As to any Distribution Date, any amount by
--------------------------
which the amount of interest distributed to Class B Certificateholders on
such Distribution Date is less than the sum of (a) interest accrued during
the related Accrual Period at the Class B Pass-Through Rate on the Class B
Certificate Balance and (b) any interest due on such Distribution Date on any
Class B Unpaid Interest Shortfall (to the extent legally permitted).
Class B Pass-Through Rate: As to the initial Accrual Period, 5.69531%
-------------------------
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR
plus 0.25% and (b) the Weighted Average Net Loan Rate.
Class B Principal Factor: As to any Distribution Date, the percentage
------------------------
(carried to seven places, rounded down) obtained by dividing the Class B
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class
B Certificate Balance.
Class B Principal Shortfall: As to any Distribution Date on or after
---------------------------
the Class M Termination Date, the amount, if any, by which (a) distributions
in respect of principal to Holders of the Class B Certificates on such
Distribution Date are less than (b)(i) the Formula Principal Amount less (ii)
as to the Class M Termination Date, the amount specified in clause (a)(iii)
of the definition of Class B Formula Amount.
Class B Remaining Available Funds: As to any Distribution Date, the
---------------------------------
lesser of (a) Remaining Available Funds and (b) an amount equal to the
product of 1/12 of 400 basis points and the Pool Balance for such
Distribution Date.
Class B Termination Date: The Distribution Date upon which the Class
------------------------
B Certificate Balance is reduced to zero.
Class B Unpaid Interest Shortfall: As to any Distribution Date, the
---------------------------------
amount, if any, by which the aggregate of Class B Interest Shortfalls for
prior Distribution Dates exceeds the aggregate of the amounts distributed on
prior Distribution Dates to Holders of the Class B Certificates in respect
of Class B Interest Shortfalls. For purposes of determining whether amounts
distributable in respect of Class B Unpaid Interest Shortfalls were actually
distributed on any particular Distribution Date, the distribution on such
Distribution Date shall be allocated, first, to the amount specified in
clause (a) of the definition of "Class B Interest Requirement", second, to
any interest due on any Class B Unpaid Interest Shortfall, and, third, to any
Class B Unpaid Interest Shortfall.
Class B Unpaid Principal Shortfall: As to any Distribution Date on or
----------------------------------
after the Class M Termination Date, the amount, if any, by which the
aggregate of Class B Principal Shortfalls for prior Distribution Dates
exceeds the aggregate of amounts distributed on prior Distribution Dates in
respect of Class B Principal Shortfalls to Holders of the Class B
Certificates. For purposes of determining whether amounts distributable in
respect of Class B Unpaid Principal Shortfalls were actually distributed on
any particular Distribution Date, the distribution on such Distribution Date
shall be allocated, first, to the Class B Interest Requirement, second, to
the amounts described in clause (a)(i) of the definition of "Class B Formula
Amount" (on the Class M Termination Date, less the amount in clause (a)(iii)
of such definition), and, third, to any Class B Unpaid Principal Shortfall.
Class M Certificate: Any of the Certificates signed by the Trustee and
-------------------
countersigned by the Trustee or the Certificate Registrar, substantially in
the form set forth in Exhibit B hereto.
Class M Certificate Balance: As to any Distribution Date, the Original
---------------------------
Class M Certificate Balance less the sum of all amounts previously
distributed to Class M Certificateholders on all previous Distribution Dates
in excess of the Class M Interest Requirement for each such Distribution
Date, but in no event less than zero.
Class M Distribution Amount: As to any Distribution Date, the sum of
---------------------------
(a) the Amount Available for Class M Interest and (b) the Amount Available
for Class M Principal.
Class M Formula Amount: As to any Distribution Date on or after the
----------------------
Class A Termination Date, the lesser of (a) the sum of (i) the Formula
Principal Amount and (ii) any Class M Unpaid Principal Shortfall, less (iii)
as to the Class A Termination Date, the aggregate amount distributed as
principal in respect of the Class A Certificates on such date and (b) the
Class M Certificate Balance.
Class M Interest Requirement: As to any Distribution Date, the sum of
----------------------------
(a) interest accrued during the related Accrual Period at the Class M
Pass-Through Rate on the Class M Certificate Balance, (b) interest accrued
during the related Accrual Period at the Class M Pass-Through Rate on any
Class M Unpaid Interest Shortfall (to the extent legally permitted) and (c)
any Class M Unpaid Interest Shortfall.
Class M Interest Shortfall: As to any Distribution Date, any amount by
--------------------------
which the amount of interest distributed to Class M Certificateholders on
such Distribution Date is less than the sum of (a) interest accrued during
the related Accrual Period at the Class M Pass-Through Rate on the Class M
Certificate Balance and (b) any interest due on such Distribution Date on any
Class M Unpaid Interest Shortfall.
Class M Pass-Through Rate: As to the initial Accrual Period, 5.72531%
-------------------------
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR
plus 0.28% and (b) the Weighted Average Net Loan Rate.
Class M Principal Factor: As to any Distribution Date, the percentage
------------------------
(carried to seven places, rounded down) obtained by dividing the Class M
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class
M Certificate Balance.
Class M Principal Shortfall: As to any Distribution Date, the amount,
---------------------------
if any, by which (a) distributions in respect of principal to Holders of the
Class M Certificates on such Distribution Date are less than (b)(i) the
Formula Principal Amount less (ii) on the Class A Termination Date, the
amount specified in clause (a)(iii) of the definition of Class M Formula
Amount.
Class M Termination Date: The Distribution Date on which the Class M
------------------------
Certificate Balance is reduced to zero.
Class M Unpaid Interest Shortfall: As to any Distribution Date, the
---------------------------------
amount if any, by which the aggregate of Class M Interest Shortfalls for
prior Distribution Dates exceeds the aggregate of the amounts distributed on
prior Distribution Dates to Holders of the Class M Certificates in respect
of Class M Interest Shortfalls. For purposes of determining whether amounts
distributable in respect of Class M Unpaid Interest Shortfalls were actually
distributed on any particular Distribution Date, the distribution on such
Distribution Date shall be allocated, first, to the amount specified in
clause (a) of the definition of "Class M Interest Requirement", second, to
any interest due on any Class M Unpaid Interest Shortfall and, third, to any
Class M Unpaid Interest Shortfall.
Class M Unpaid Principal Shortfall: As to any Distribution Date on or
----------------------------------
after the Class A Termination Date, the amount, if any, by which the
aggregate of Class M Principal Shortfalls for prior Distribution Dates
exceeds the aggregate of amounts distributed on prior Distribution Dates in
respect of Class M Principal Shortfalls to Holders of the Class M
Certificates. For purposes of determining whether amounts distributable in
respect of Class M Unpaid Principal Shortfalls were actually distributed on
any particular Distribution Date, the distribution on such Distribution Date
shall be allocated, first, to the Class M Interest Requirement, second, to
the amounts described in clause (a)(i) of the definition of "Class M Formula
Amount" (on the Class A Termination Date, less the amount specified in clause
(a)(iii) of such definition) and, third, to any Class M Unpaid Principal
Shortfall.
Class R Certificate: Any of the Certificates signed by the Trustee and
-------------------
countersigned by the Trustee or the Certificate Registrar, substantially in
the form set forth in Exhibit D hereto.
Class R Certificate Balance: As of any Distribution Date, the Original
---------------------------
Class R Certificate Balance less all distribution, on all previous
Distribution Dates in respect of the Class R Distribution Amount, but in no
event less than zero.
Class R Distribution Amount: As to any Distribution Date, the excess,
---------------------------
if any, of the Available Funds for such date over the sum of the Class A
Distribution Amount, the Class M Distribution Amount and the Class B
Distribution Amount for such date.
Closing Date: September 27, 1996.
------------
Code: The Internal Revenue Code of 1986, as amended from time to time.
----
Collection Period: As to any Home Equity Loan and any Distribution
-----------------
Date, the one-month period ending on the related Cycle Date in the month
preceding the month of such Distribution Date; provided, however, that the
first such period for each Home Equity Loan shall commence on the Cut-off
Date and end on the Cycle Date for such Home Equity Loan occurring in
September 1996. When used with respect to all the Home Equity Loans and a
Distribution Date, the term "Collection Period" shall mean, collectively, the
respective Collection Periods applicable to each of the Home Equity Loans
that commenced in the second preceding calendar month (or, in the case of the
first Collection Period, the Cut-off Date) and ended in the calendar month
immediately preceding the month of such Distribution Date, and shall be
referred to herein as a "preceding Collection Period" or "related Collection
Period" with reference to a Distribution Date.
Combined Loan-to-Value Ratio: As to any Home Equity Loan as of any
----------------------------
date, the fraction, expressed as a percentage, the numerator of which is the
sum of (i) the Credit Limit and (ii) the greater of (x) the aggregate unpaid
principal balance of all loans secured by all senior or pari passu related
deeds of trust or mortgages, if any, as of such date and (y) the aggregate
maximum credit limit of such loans, and the denominator of which is the
Appraised Value of the related Mortgaged Property as of the date of execution
of the related Loan Agreement.
Corporate Trust Office: The principal office of the Trustee in New
----------------------
York, New York, at which at any particular time its corporate business shall
be administered, which office at the date of the execution of this instrument
is located at 450 West 33rd Street, 10th Floor, New York, New York 10001,
Attention: Global Trust Services.
Co-Trustee: Texas Commerce Bank, or any successor co-trustee appointed
----------
to succeed Texas Commerce Bank in accordance with this Agreement that has
accepted such appointment in accordance herewith.
Credit Limit: As to any Home Equity Loan, the maximum Loan Balance
------------
permitted under the terms of the related Loan Agreement.
Cut-off Date: The close of business on August 31, 1996.
------------
Cut-off Date Pool Balance: The aggregate of the Cut-off Date Trust
-------------------------
Balances of the Home Equity Loans.
Cut-off Date Trust Balance: As to any Home Equity Loan, the unpaid
--------------------------
principal balance thereof as of the close of business on the Cut-off Date.
Cycle Date: As to any Home Equity Loan, the day of the month on which
----------
the related billing cycle for such Home Equity Loan ends.
Defective Home Equity Loan: Any Home Equity Loan with respect to which
--------------------------
the Master Servicer is required to repurchase the Trust Balance or substitute
for such Trust Balance one or more Eligible Substitute Home Equity Loans
pursuant to Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(c).
-----------------------
Delinquency Amount: As of any date of determination, the sum of:
------------------
(a) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Foreclosure, Foreclosed or Liquidated Home Equity Loans)
which are between 30 and 59 days delinquent (on a contractual basis) and (ii)
11.00%;
(b) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Foreclosure, Foreclosed or Liquidated Home Equity Loans)
which are delinquent between 60 and 89 days (on a contractual basis) and (ii)
22.00%; and
(c) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Liquidated Home Equity Loans) delinquent 90 days or more,
and (ii) 44.00%.
Depositor: Merrill Lynch Mortgage Investors, Inc., and its successors
---------
in interest, in its capacity as depositor hereunder.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is Cede & Co., as the registered Holder of
Book-Entry Certificates evidencing $639,102,000 in initial aggregate
principal amount of the Class A Certificates, $41,291,000 initial aggregate
principal amount of the Class M Certificates and $37,700,000 initial
aggregate principal amount of the Class B Certificates. The Depository shall
at all times be a "clearing corporation" as defined in Section 8-102(3) of
the Uniform Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth Business Day
------------------
preceding such Distribution Date.
Disqualified Organization: A disqualified organization as defined in
-------------------------
section 860E(e)(5) of the Code (or any successor statute thereto).
Distribution Date: The 28th day of each calendar month or, if such day
-----------------
is not a Business Day, the next succeeding Business Day, beginning in October
1996.
Electronic Ledger: As to each Originator, the electronic master record
-----------------
of home equity credit line accounts maintained by it.
Eligible Account: An account that is (a) maintained with a depository
----------------
institution the long-term deposits or the long-term unsecured debt
obligations of which have been rated by each Rating Agency in its highest
rating category, or (b) an account or accounts the deposits in which are
fully insured by either the BIF or the SAIF, or (c) a segregated trust
account maintained with the Trustee in its fiduciary capacity in its
corporate trust department, or (d) otherwise acceptable to each Rating
Agency, as evidenced by a letter from such Rating Agency to the Trustee.
Eligible Substitute Home Equity Loan: A Home Equity Loan or Loans
------------------------------------
substituted by the Depositor or the Master Servicer for a Defective Home
Equity Loan, which must on the date of such substitution (a) have an
outstanding Trust Balance (or in the case of a substitution of more than one
Home Equity Loan for a Defective Home Equity Loan, an aggregate Trust
Balance) not in excess of, and not substantially less than, the Trust Balance
of such Defective Home Equity Loan; (b) have a Loan Rate of not less than the
Loan Rate of the Defective Home Equity Loan and not more than 1% in excess
of the Loan Rate of such Defective Home Equity Loan; (c) have a remaining
term to maturity not more than six months earlier or later than the remaining
term of the Defective Home Equity Loan; (d) comply with each representation,
warranty and obligation set forth in Section 2.04 (except that each such
representation and warranty shall be deemed to be made as of the date of
substitution); (e) have an original Combined Loan-to-Value Ratio not greater
than that of the Defective Home Equity Loan; and (f) have a Mortgage of the
same or higher level of priority as the Mortgage relating to the Defective
Home Equity Loan.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
-----
Event of Default: As defined in Section 8.01.
----------------
Final Auction: As defined in Section 10.01(b).
-------------
Fitch: Fitch Investors Service, L.P. or its successor in interest.
-----
Foreclosed Home Equity Loan: Any Home Equity Loan that is not a
---------------------------
Liquidated Home Equity Loan and as to which the related Mortgaged Property
is held by the Trust Fund upon the foreclosure or comparable conversion
thereof.
Foreclosure Home Equity Loan: A Home Equity Loan with respect to which
----------------------------
the Master Servicer or a Subservicer has commenced foreclosure proceedings.
Formula Principal Amount: As to any Distribution Date, the sum of (a)
------------------------
each Trust Principal Payment received during the preceding Collection Period,
(b) any Trust Insurance Proceeds received during the preceding Collection
Period, (c) the Trust Balance on the last day of the related Collection
Period of each Defective Home Equity Loan to be purchased by the Depositor
or the Master Servicer on the Business Day prior to such Distribution Date,
(d) all Substitution Adjustment Amounts received during the preceding
Collection Period and (e) the Trust Balance on the last day of the related
Collection Period of each Home Equity Loan that became a Liquidated Home
Equity Loan as of the end of the calendar month preceding the month of such
Distribution Date.
Home Equity Loan Losses: For any Distribution Date, the sum of the
-----------------------
aggregate of Liquidated Home Equity Loan Losses for all Home Equity Loans
that became Liquidated Home Equity Loans as of such Distribution Date.
Home Equity Loan Payment Record: With respect to the Trust Fund, the
-------------------------------
record maintained by the Master Servicer pursuant to Section 3.02(b).
Home Equity Loan Schedule: As of any date, the schedule of Home Equity
-------------------------
Loans included in the Trust Fund on such date. The initial schedule of Home
Equity Loans as of the Cut-off Date is the magnetic tape delivered to the
Trustee by the Depositor on the Closing Date setting forth as to each Home
Equity Loan (a) the Cut-off Date Trust Balance, (b) the Credit Limit, (c) the
dates upon which any outstanding Loan Balance is due and payable pursuant to
the amortization schedule in effect at the Closing Date, (d) the margin over
the related index that is applicable to the setting of the Loan Rate, (e) the
applicable maximum Loan Rate and minimum Loan Rate, if any, (vi) the monthly
billing cycle for such Home Equity Loan and (f) the billing name and address
of the Mortgagor.
Home Equity Loans: Such of the home equity loans the Trust Balances of
-----------------
which have been sold and assigned to the Trustee pursuant to Section 2.01 as
from time to time are held as a part of the Trust Fund, the Home Equity Loans
originally so held being identified in the Home Equity Loan Schedule. When
used in respect of any Distribution Date, the term Home Equity Loans shall
mean all Home Equity Loans (including those in respect of which the Trust
Fund has acquired the related Mortgaged Property) that (a) have not been
prepaid in full prior to the related Collection Period, (b) did not become
Liquidated Home Equity Loans prior to such related Collection Period and
(c) were not repurchased by the Master Servicer prior to such related
Collection Period.
Insurance Proceeds: As to any Home Equity Loan and Collection Period,
------------------
proceeds paid by any insurer pursuant to any insurance policy covering such
Home Equity Loan (net of any component thereof covering any expenses incurred
by or on behalf of the Master Servicer) or by the Master Servicer pursuant
to Section 3.04 during such Collection Period, that (a) are not Liquidation
Proceeds, (b) are not applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance with
the normal servicing procedures of the Master Servicer and (c) will be
applied by the Master Servicer in reduction of the Loan Balance of such Home
Equity Loan.
LIBOR: As to any Accrual Period, the per annum rate established by the
-----
Trustee with respect to such Accrual Period (a) based on the arithmetic mean
(rounded upwards, if necessary, to the nearest one-sixteenth of one percent)
of the offered rates for one-month United States dollar deposits that appear
on the Telerate Page 3750 as of 11:00 a.m., London time, on the related LIBOR
Determination Date, or (b) if on such date no such rate appears on the
Telerate Page 3750, based on the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one percent) of the rates at which
one-month U.S. dollar deposits are offered at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date by four Reference Banks to
prime banks in the London interbank market commencing on the second LIBOR
Business Day immediately following such LIBOR Determination Date or (c) if
fewer than two Reference Banks provide such offered quotations, the greater
of (i) LIBOR as determined on the preceding LIBOR Determination Date and (ii)
the Reserve Interest Rate.
LIBOR Business Day: A day on which banking institutions in The City of
------------------
New York and the City of London, England are open for dealing in foreign
currency and exchange.
LIBOR Determination Date: With respect to any Accrual Period, the
------------------------
second LIBOR Business Day prior to the beginning of such Accrual Period.
Liquidated Home Equity Loan: As to any Distribution Date, any Home
---------------------------
Equity Loan (other than a Defective Home Equity Loan that is purchased or
substituted pursuant to Section 2.02 or 2.04) in respect of which the Master
Servicer has determined as of the end of the calendar month preceding the
month of such Distribution Date that all Liquidation Proceeds that it expects
to recover have been recovered.
Liquidated Home Equity Loan Loss: As to any Liquidated Home Equity
--------------------------------
Loan, the amount, if any, by which (a) the sum of (i) the Trust Balance of
such Liquidated Home Equity Loan and (ii) accrued and unpaid interest thereon
at the applicable Net Loan Rate from time to time applicable through the end
of the Collection Period ending in the month preceding the month of the
Distribution Date upon which such Home Equity Loan became a Liquidated Home
Equity Loan, exceeds (b) the Trust Liquidation Proceeds received in
connection with the liquidation thereof. For purposes hereof, a Foreclosed
Home Equity Loan shall be deemed to have continued to accrue interest at the
Net Loan Rate that would have been applicable from time to time to the
accrual of interest on the related Home Equity Loan.
Liquidation Expenses: As to any Home Equity Loan, unreimbursed expenses
--------------------
that are incurred by the Master Servicer in connection with the liquidation
of such Home Equity Loan and not recovered under any insurance policy, such
expenses to include, without limitation, legal fees and expenses, any
unreimbursed amount expended by the Master Servicer pursuant to Section 3.06
(including, without limitation, amounts advanced to correct defaults under
any deed of trust or mortgage that is prior to such Home Equity Loan) in
respect of such Home Equity Loan and any related and unreimbursed
expenditures for real estate property taxes or for property restoration or
preservation.
Liquidation Period: The period beginning on the date of adoption by
------------------
holders of the Class R Certificates of a plan of complete liquidation of the
Trust Fund and ending on the day that is 90 days after the date such plan is
adopted.
Liquidation Proceeds: As to any Home Equity Loan, cash (other than
--------------------
Insurance Proceeds and if such Home Equity Loan is a Defective Home Equity
Loan, the Purchase Price of such Home Equity Loan) received in connection
with the liquidation of such Home Equity Loan, whether through trustee's
sale, foreclosure sale or otherwise, including without limitation rentals on
acquired Mortgaged Properties; provided, however, that in no event shall
Liquidation Proceeds with respect to any Home Equity Loan exceed (x) the sum
described in clause (a) of the definition of "Liquidated Home Equity Loan
Loss" and (y) any related Liquidation Expenses.
Loan Agreement: As to any Home Equity Loan, the related credit line
--------------
agreement executed by the Mortgagor and the related Originator and any
amendments or modifications thereto.
Loan Balance: As to any Home Equity Loan and any day, the principal
------------
balance of such Home Equity Loan at the close of business on such day.
Loan Rate: As to any Home Equity Loan and any day, the per annum rate
---------
of interest applicable to the calculation of interest on the related Loan
Balance for such day as set forth in the related Loan Agreement.
Master Servicer: Beneficial, in its capacity as master servicer
---------------
hereunder or its successor in interest or any successor servicer appointed
as provided herein.
Monthly Servicing Fee: As to any Home Equity Loan and any date, an
---------------------
amount equal to one-twelfth of the product of (a) the Servicing Fee Rate and
(b) the Trust Balance of such Home Equity Loan.
Moody's: Moody's Investors Service, Inc. or its successor in interest.
-------
Mortgage: As to any Home Equity Loan, the deed of trust or other
--------
instrument creating a first or second lien on an estate in fee simple
interest in real property securing such Home Equity Loan.
Mortgage File: As to any Home Equity Loan, the mortgage documents
-------------
listed in Section 2.01 pertaining to such Home Equity Loan and any additional
documents required to be added to the Mortgage File pursuant to this
Agreement, which documents may be physical documents or, pursuant to the
terms of Section 2.01, optical images or other representations thereof.
Mortgaged Property: As to any Home Equity Loan, the underlying
------------------
property, including real property and any improvements thereon, securing such
Home Equity Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
---------
Net Liquidation Proceeds: As to any Liquidated Home Equity Loan,
------------------------
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: As to any Home Equity Loan and any day, the Loan Rate
-------------
less the Servicing Fee Rate.
Officer's Certificate: A certificate signed by the President, a Senior
---------------------
Vice President or a Vice President of Beneficial or the Master Servicer, as
the case may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel delivered to the
------------------
Trustee, who may be counsel employed by the Master Servicer or the Depositor,
except that any opinion of counsel relating to the qualification of the Trust
Fund as a REMIC or compliance with or taxation pursuant to the REMIC
Provisions must be an opinion of independent counsel experienced in matters
relating to the subject of such opinion.
Original Class A Certificate Balance: $639,102,000.
------------------------------------
Original Class B Certificate Balance: $41,291,000.
------------------------------------
Original Class M Certificate Balance: $37,700,000.
------------------------------------
Original Class R Certificate Balance: $936.59.
------------------------------------
Originator: Each of Beneficial, Beneficial Arizona Inc., Beneficial
----------
California Inc., Beneficial Consumer Discount Company, Beneficial Delaware
Inc., Beneficial Discount Co. of Virginia, Beneficial Florida Inc.,
Beneficial Home Mortgage Loan Corp., Beneficial Homeowner Service
Corporation, Beneficial Indiana Inc., Beneficial Kentucky Inc., Beneficial
Michigan Inc., Beneficial Mississippi Inc., Beneficial Montana Inc.,
Beneficial Mortgage Co. of Arizona, Beneficial Mortgage Co. of Georgia,
Beneficial Mortgage Co. of Idaho, Beneficial Mortgage Co. of Maryland,
Beneficial Mortgage Co. of Massachusetts, Beneficial Mortgage Co. of
Mississippi, Beneficial Mortgage Co. of Nevada, Beneficial Mortgage Co. of
New Hampshire, Beneficial Mortgage Co. of North Carolina, Beneficial Mortgage
Co. of Ohio, Beneficial Mortgage Co. of Rhode Island, Beneficial Mortgage Co.
of South Carolina, Beneficial Mortgage Co. of Utah, Beneficial New Jersey
Inc., Beneficial Oregon Inc., Beneficial Tennessee Inc., Beneficial
Washington Inc. and Beneficial West Virginia Inc., or their respective
predecessors, as applicable.
Overdue Trust Percentage: As to any Collection Period and any payment
------------------------
received in respect of a Home Equity Loan that was due in a previous
Collection Period, the percentage (carried to four places) obtained by
dividing the average daily Trust Balance for all consecutive prior Collection
Periods from and including the Collection Period in which such payment was
due to and including the Collection Period in which such payment was received
in full by the average daily Loan Balance for such consecutive prior
Collection Periods. The Overdue Trust Percentage shall only be applied to
payments received in a Collection Period that were due in a previous
Collection Period or Periods.
Ownership Interest: With respect to any Class M, Class B or Class R
------------------
Certificate, any ownership or security interest therein, including any
interest therein as the Holder thereof and any other interest therein,
whether direct or indirect, legal or beneficial, as owner or as pledgee.
Paying Agent: Any Person appointed by the Trustee as permitted by
------------
Section 6.05.
Percentage Interest: As to any Certificate, the percentage interest
-------------------
evidenced thereby in distributions required to be made thereon, such
percentage interest being equal, in the case of a Certificate other than a
Class R Certificate, to the percentage obtained by dividing the original
principal denomination of such Certificate by the aggregate of the original
principal denominations of all Certificates of the same Class, and, in the
case of a Class R Certificate, to the percentage set forth on the face
thereof.
Permitted Investments: One or more of the following:
---------------------
(a) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States or any
agency or instrumentality thereof when such obligations are backed by the
full faith and credit of the United States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition thereof,
provided that the unsecured short-term debt obligations of the party agreeing
to repurchase such obligations are at the time rated by each Rating Agency
in its highest unsecured short-term rating category;
(c) certificates of deposit, time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days) of any U.S. depository institution or trust company incorporated under
the laws of the United States or any State provided that either (i) such
investments are fully insured by the Federal Deposit Insurance Corporation
or (ii) the debt obligations of such depository institution or trust company
(or if Standard & Poor's is a Rating Agency in the case of the principal
depository institution in a depository institution holding company, the
unsecured short-term debt obligations of the depository institution holding
company) at the date of acquisition thereof have been rated by each Rating
Agency in its highest unsecured short-term debt rating category;
(d) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been rated
by each Rating Agency in its highest short-term rating category;
(e) money market funds rated by each Rating Agency in its
highest category;
(f) money market mutual funds, including, without limitation,
the VISTA Money Market Funds or any other fund for which the Trustee or an
Affiliate of the Trustee serves as an investment advisor, administrator,
shareholder, servicing agent and/or custodian or subcustodian (provided that
any such fund is rated in the highest rating category by each of Standard &
Poor's and Moody's), notwithstanding that (i) the Trustee or an Affiliate of
the Trustee charges and collects fees and expenses from such funds for
services rendered, (ii) the Trustee 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; and
(g) other obligations or securities that are acceptable to
each Rating Agency as a Permitted Investment hereunder and will not result
in a reduction, withdrawal or suspension of the then-current rating of any
Class of Certificates, as evidenced by a letter to such effect from such
Rating Agency.
With respect to clause (f) above, the Depositor and the Master Servicer
specifically authorizes the Trustee or an Affiliate of the Trustee to charge
and collect all fees and expenses from such funds for services rendered to
such funds, in addition to any fees and expenses the Trustee may charge and
collect for services rendered pursuant to this Agreement.
In no event shall an instrument be a Permitted Investment if such
instrument evidences (x) a right to receive only interest payments with
respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument,
if the interest and principal payments with respect to such instrument
provide a yield to maturity at the date of investment of greater than 120%
of the yield to maturity at par of such underlying obligations.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: As to any Distribution Date, the aggregate of the Trust
------------
Balances of all Home Equity Loans as of the beginning of the related
Collection Period.
Pool Purchase Price: As defined in Section 10.01(b).
-------------------
Principal Payment: As to any Home Equity Loan and any Collection
-----------------
Period, all amounts (excluding Insurance Proceeds and Liquidation Proceeds)
received by the Master Servicer from or on behalf of the related Mortgagor
during such Collection Period that were applied in reduction of the Loan
Balance of such Home Equity Loan.
Purchase Price: With respect to any Defective Home Equity Loan required
--------------
to be repurchased on any date pursuant to Section 2.02 or 2.04, an amount
equal to the sum of (a) the Trust Balance thereof as of the end of the
Collection Period preceding the date of repurchase and (b) accrued and unpaid
interest thereon to the end of such Collection Period at the Net Loan Rate
from time to time applicable to such Trust Balance.
Rating Agency: Any statistical credit rating agency, or its successor,
-------------
that rated any Class of Certificates at the request of the Master Servicer
at the time of the initial issuance of the Certificates. If such agency or
a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by
the Master Servicer, notice of which designation shall be given to the
Trustee. References herein to the highest rating category of a Rating Agency
shall mean AAA, AAAm, AAAm-G or A-1+, in the case of Standard & Poor's, AAA,
or F-1+, in the case of Fitch, and Aaa or P-1 +, in the case of Moody's, and
in the case of any other Rating Agency shall mean an equivalent rating.
Record Date: As to any Book-Entry Certificate and any Distribution
-----------
Date, the day immediately preceding such Distribution Date or, if Definitive
Certificates are issued pursuant to Section 6.01, the last day of the
calendar month preceding the month in which such Distribution Date occurs.
As to any Class R Certificate and any Distribution Date, the fifth Business
Day preceding such Distribution Date.
Reference Banks: Banks designated by the Trustee (a) that are engaged
---------------
in transactions in Eurodollar deposits in the international Eurocurrency
market, (b) with an established place of business in London, and (c) that,
to the knowledge of the Trustee, do not control, are not controlled by, and
are not under common control with, Beneficial or the Depositor.
Remaining Available Funds: As to any Distribution Date, Available Funds
-------------------------
less the sum of (a) the Amount Available for Class A Interest, (b) the Amount
Available for Class M Interest, (c) the Amount Available for Class B
Interest, (d) if such Distribution Date is prior to the Class A Termination
Date, the Class A Formula Amount and (e) if such Distribution Date is on or
after the Class A Termination Date, the sum of the Class M Formula Amount
(plus, on the Class A Termination Date, the amount specified in clause
(a)(iii) of the definition of Class M Formula Amount) and the Class B Formula
Amount.
REMIC: As defined in Section 3.01.
-----
REMIC Change of Law: Any proposed, temporary or final statute,
-------------------
regulation, revenue ruling, revenue procedure or other official announcement
or interpretation relating to REMICs and the REMIC Provisions issued after
the Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
----------------
REMICs, which appear at sections 860A through 860G of Subchapter M of Chapter
1 of the Code, and related provisions and regulations promulgated thereunder,
as the foregoing may be in effect from time to time.
Reserve Interest Rate: With respect to any Accrual Period, the per
---------------------
annum rate that the Trustee determines to be either (a) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of one-sixteenth
percent) of the one-month U.S. dollar lending rates which at least two New
York City banks selected by the Trustee are quoting on the relevant LIBOR
Determination Date to the principal London offices of leading banks in the
London interbank market or (b) in the event that the Trustee can determine
no such arithmetic mean, the lowest one-month U.S. dollar lending rate which
at least two New York City banks selected by the Trustee are quoting on such
LIBOR Determination Date.
Responsible Officer: When used with respect to the Trustee, any officer
-------------------
within the Corporate Trust Office including any Vice President, Managing
Director, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge and familiarity with the
particular subject.
Sale Agreement: The Loan Sale Agreement dated as of September 1, 1996
--------------
between Beneficial, as seller, and Merrill Lynch Mortgage Investors, Inc.,
as purchaser, as amended, supplemented or otherwise modified from time to
time.
SAIF: The Savings Association Insurance Fund, as from time to time
----
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing or
performing duties now assigned to it, the body performing such duties on such
date.
Securities Act: The Securities Act of 1933, as amended.
--------------
Servicer LOC: Any letter of credit, surety or similar agreement
------------
obtained by the Master Servicer pursuant to Section 3.02(c).
Servicer LOC Issuer: At any time as to any Servicer LOC, the
-------------------
institution that is then obligated under such Servicer LOC.
Servicing Certificate: A certificate completed by and executed on
---------------------
behalf of the Master Servicer in accordance with Section 4.01.
Servicing Fee Rate: 1.0% per annum.
------------------
Servicing Officer: Any officer of the Master Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Home Equity Loans
whose name appears on a list of servicing officers furnished on the Closing
Date to the Trustee by the Master Servicer, as such list may be amended from
time to time.
Standard & Poor's: Standard & Poor's Debt Ratings Group or its
-----------------
successor in interest.
Subservicer: Each Originator, in its capacity as servicer of the Home
-----------
Equity Loans originated by it and sold by the Depositor to the Trustee
hereunder, and any other subservicer appointed as such by the Master
Servicer.
Substitution Adjustment Amount: As defined in the fourth sentence of
------------------------------
Section 2.02(b).
Tax Matters Person Residual Interest: A 0.000001% interest in the Class
------------------------------------
R Certificates, which shall be issued to and held by the Master Servicer
throughout the term hereof.
"Telerate Page 3750" means the display designated as page 3750 on the
------------------
Telerate Service (or such other page as may replace page 3750 on that service
or such other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits).
Termination Date: The Distribution Date upon which the final
----------------
distribution is made to Certificateholders.
Texas Commerce Bank: Texas Commerce Bank National Association, a
-------------------
national banking association, and its successors and assigns.
Total Expected Losses: As of any date of determination, the sum of (a)
---------------------
the aggregate amount of Liquidated Home Equity Loan Losses occurring on or
prior to such date and (b) the Delinquency Amount.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
--------
or other form of assignment of any Ownership Interest in a Class M, Class B
or Class R Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership
----------
Interest in a Class M, Class B or Class R Certificate.
Trust Balance: As to any Home Equity Loan and any day, the Cut-off Date
-------------
Trust Balance less (a) all Trust Principal Payments received and credited
against the Trust Balance since the Cut-off Date and (b) any Trust Insurance
Proceeds received since the Cut-off Date in respect of such Home Equity Loan.
For purposes hereof, a Foreclosed Home Equity Loan shall be deemed to have
a Trust Balance equal to the Trust Balance of the related Home Equity Loan
immediately prior to the foreclosure or comparable conversion, and a
Liquidated Home Equity Loan shall be deemed to have a Trust Balance equal to
the Trust Balance of the related Home Equity Loan immediately prior to the
final recovery of the related Liquidation Proceeds.
Trust Fund: The corpus of the trust created by this Agreement,
----------
consisting of, to the extent described herein, the Trust Balance of each Home
Equity Loan, such assets as shall from time to time be identified as credited
to the Home Equity Loan Payment Record or deposited in the Certificate
Account in accordance with this Agreement, any Insurance Proceeds, any
Servicer LOC, and any property that secured a Home Equity Loan and that has
been acquired by foreclosure or deed in lieu of foreclosure.
Trust Insurance Proceeds: As to any Home Equity Loan and any Collection
------------------------
Period, the product of (a) the Trust Percentage and (b) Insurance Proceeds
with respect to such Home Equity Loan received during such Collection Period.
Trust Interest: As to any payment on a Home Equity Loan made by or on
--------------
behalf of the related Mortgagor that is due (a) in the Collection Period in
which it is received, the product of (i) the portion of such payment
allocable to interest at the Net Loan Rate for the related Collection Period
and (ii) the Trust Percentage for the related Collection Period, or (b) in
a Collection Period prior to the Collection Period in which it was received,
the product of (i) the portion of such payment allocable to interest at the
Net Loan Rate at the beginning of the initial Collection Period in which such
payment was due and (ii) the Overdue Trust Percentage for the Collection
Period in which such payment is received.
Trust Liquidation Proceeds: As to any Liquidated Home Equity Loan, the
--------------------------
product of the Trust Percentage and Net Liquidation Proceeds.
Trust Percentage: As to any Home Equity Loan and any Collection Period,
----------------
the percentage (carried to four places) obtained by dividing the average
daily Trust Balance for the second preceding Collection Period by the average
daily Loan Balance for such second preceding Collection Period; provided,
that for any Foreclosed Home Equity Loan, the Trust Percentage shall be the
Trust Percentage in effect for the Collection Period in which such Home
Equity Loan became a Foreclosed Home Equity Loan. As of the Cut-off Date,
the Trust Percentage of each Home Equity Loan shall be 100%.
Trust Principal Payment: As to any payment made on a Home Equity Loan
-----------------------
by or on behalf of the related Mortgagor (other than Trust Insurance
Proceeds), (a) that is either a prepayment or was due in the Collection
Period in which it was received, the product of (i) the portion of such
payment applicable to the reduction of the Loan Balance of such Home Equity
Loan and (ii) the Trust Percentage for the related Collection Period, or (b)
that was due in a Collection Period prior to the Collection Period in which
it was received, the product of (x) the portion of such payment applicable
to the reduction of the Loan Balance of such Home Equity Loan and (y) the
Overdue Trust Percentage for the Collection Period in which such payment was
received; provided, however, that such amount shall not exceed the amount
necessary to reduce the related Trust Balance to zero.
Trustee: The Chase Manhattan Bank, or any successor trustee appointed
-------
in accordance with this Agreement that has accepted such appointment in
accordance herewith.
Weighted Average Net Loan Rate: As to any Distribution Date, the
------------------------------
average of the Net Loan Rates of all the Home Equity Loans in effect during
the applicable monthly billing cycles ending in the calendar month preceding
such Distribution Date (adjusted to an effective rate reflecting accrued
interest calculated on the basis of the actual number of days in the related
Accrual Period and a year assumed to consist of 360 days, and weighted by the
respective Trust Balances thereof).
Section 1.02. Interest Calculations. All calculations of interest
---------------------
hereunder shall be made on the basis of the actual number of days in the
Accrual Period and a year assumed to consist of 360 days. The establishment
of LIBOR on each LIBOR Determination Date by the Trustee and the Trustee's
calculation of the rate of interest applicable to the Certificates for the
related Accrual Period shall (in the absence of manifest error) be final and
binding.
Section 1.03. Usage of Terms. With respect to all terms in this
--------------
Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include typing, lithography, facsimile and other means of reproducing words
in a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
term "including" means "including without limitation".
ARTICLE II
SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Sale of Home Equity Loans. The Depositor, concurrently
-------------------------
with the execution and delivery of this Agreement, does hereby sell, assign,
set over and otherwise convey (a) to the Trustee, without recourse (except
as provided herein) all of its right, title and interest in and to the Trust
Balance of each Home Equity Loan secured by a lien on property located in
California and New Jersey, including the Trust Percentage or Overdue Trust
Percentage, as applicable, of all interest and principal received by the
Depositor or any Originator on or with respect to each such Home Equity Loan
after the Cut-off Date (other than any payment of principal and interest
allocable to any Additional Balance related thereto as herein provided, any
premium accompanying the prepayment of all or a portion of a related Loan
Balance, and any related fees, charges or amounts held for the account of
Mortgagors as described in Section 3.02(b)), together with all of its right,
title and interest in and to the proceeds of any related insurance policies
(to the extent of the related Trust Balances) and its rights with respect to
each such Home Equity Loan under the Sale Agreement and (b) to the Co-
Trustee, without recourse (except as provided herein) all of its right, title
and interest in and to the Trust Balance of each Home Equity Loan secured by
a lien on property located outside of California and New Jersey, including
the Trust Percentage or Overdue Trust Percentage, as applicable, of all
interest and principal received by the Depositor or any Originator on or with
respect to each such Home Equity Loan after the Cut-off Date (other than any
payment of principal and interest allocable to any Additional Balance related
thereto as herein provided, any premium accompanying the prepayment of all
or a portion of a related Loan Balance, and any related fees, charges or
amounts held for the account of Mortgagors as described in Section 3.02(b)),
together with all of its right, title and interest in and to the proceeds of
any related insurance policies (to the extent of the related Trust Balances)
and its rights with respect to each such Home Equity Loan under the Sale
Agreement. In connection with such conveyances, the Master Servicer does
hereby agree to enter into the Home Equity Loan Payment Record on the Closing
Date the initial deposit to the Certificate Account described in Section
4.02(a) and thereafter to effect the deposit to the Certificate Account
required pursuant to such Section.
In connection with such sale and assignment, the Depositor will as
promptly as practicable, but in no event later than 90 days following the
Closing Date, file in the appropriate office in the State in which its
principal place of business is located UCC-1 financing statements executed
by the Depositor as debtor, naming the Trustee or the Co-Trustee, as
applicable, as secured party and listing as collateral the respective Home
Equity Loans the Trust Balances of which are conveyed by the Depositor
hereunder. The characterization of the Depositor as debtor and the Trustee
or the Co-Trustee, as applicable, as secured party in any such financing
statement is solely for protective purposes and shall in no way be construed
as being contrary to the intent of the parties that this transaction be
treated as a sale to the Trustee or the Co-Trustee, as applicable, of the
Depositor's entire right, title and interest in the Trust Balances of the
Home Equity Loans. In connection with such filing, the Master Servicer
agrees that it shall cause to be filed all necessary continuation statements
and to take or cause to be taken such actions and to execute such documents
as are necessary to perfect and protect the Certificateholders' interests in
the Trust Balance of each such Home Equity Loan and the proceeds thereof
allocable thereto. In the event a Servicer LOC is obtained pursuant to
Section 3.02(c), the Master Servicer promptly shall deliver to the Trustee
such Servicer LOC.
In connection with such sale and assignment by the Depositor, the Master
Servicer acknowledges that it is holding (or that it will cause the related
Originators to hold on the Master Servicer's behalf) as custodian for the
Trustee and the Co-Trustee the following documents or instruments with
respect to each Home Equity Loan the Trust Balance of which is being so sold
and assigned:
(i) The related Loan Agreement (including any related
assumption, modification and substitution agreements), and any evidence of
indebtedness executed by the related Mortgagor in connection therewith;
(ii) any related amendments to the Loan Agreement or Mortgage,
any related modification or assumption agreement and any related previous
assignments of the Home Equity Loan;
(iii) the related Mortgage with evidence of recording indicated
thereon; and
(iv) with respect to each Home Equity Loan the original Credit
Limit of which was $10,000 or more, evidence of title insurance;
provided, however, that as to any Home Equity Loan in respect of which, as
evidenced by an Opinion of Counsel delivered to and in form and substance
satisfactory to the Trustee (x) an optical image or other representation of
the related documents specified in clauses (i) through (iii) above are
enforceable in the relevant jurisdiction to the same extent as the original
of such document and (y) such optical image or other representation does not
impair the ability of an owner of such Home Equity Loan to transfer its
interest in such Home Equity Loan, such optical image or other representation
may be held by the Master Servicer (or by the related Originator acting on
behalf of the Master Servicer) as custodian in lieu of the physical documents
specified above.
Except as hereinafter provided, the Master Servicer (or any Originator
acting on behalf of the Master Servicer) as custodian of the Mortgage Files,
shall be entitled to maintain possession of all of the foregoing documents
and instruments and shall not be required to deliver any of them to the
Trustee or the Co-Trustee.
The right of Beneficial, as Master Servicer, or any Originator acting
on behalf of the Master Servicer to maintain possession of the documents
enumerated above shall continue so long as (x) Beneficial (or such
Originator) remains an affiliate of Beneficial Corporation and the long-term
unsecured debt of Beneficial Corporation is assigned ratings of at least A-
by Standard & Poor's and Fitch and A3 by Moody's or (y) Beneficial has not
been removed as Master Servicer following the occurrence of an Event of
Default. The Master Servicer shall notify in writing each Originator and the
Trustee if the long-term unsecured debt of Beneficial Corporation does not
satisfy either of such ratings. At such time, as promptly as practicable but
in no event more than 90 days in the case of clause (i) below and 60 days in
the case of clause (ii) below following the occurrence of such event,
Beneficial, at its own expense shall (or shall cause the related Originator
to) (i) either (x) submit for recording an assignment of Mortgage in favor
of the Trustee or the Co-Trustee, as applicable (which may be a blanket
assignment, if permitted by law in the applicable jurisdiction as evidenced
by an Opinion of Counsel delivered to the Trustee) with respect to each of
the related Home Equity Loans in the appropriate real property or other
records or (y) deliver to the Trustee the fully executed and prepared
assignment of mortgage in favor of the Trustee in form for recordation,
together with an Opinion of Counsel to the effect that neither the recording
of an assignment nor the taking of any other action is required to protect
the Trustee's right, title and interest in and to the related Mortgage and
the related Home Equity Loan or, if a court were to recharacterize the sale
of the Home Equity Loans as a financing, to perfect a first priority security
interest in favor of the Trustee in such Mortgage and Home Equity Loan and
(ii) deliver the related Mortgage Files to the Trustee to be held by the
Trustee in trust, upon the terms herein set forth, for the use and benefit
of all present and future Certificateholders, and the Trustee shall retain
possession thereof except to the extent the Master Servicer or Subservicers
require any Mortgage Files for normal servicing as contemplated by Section
3.07.
The Trustee and the Co-Trustee shall have no duty or obligation to
review any Mortgage File until such Mortgage File is delivered to the Trustee
pursuant to clause (ii) of the immediately preceding paragraph. Within 60
days following the first delivery of the Mortgage Files to the Trustee
pursuant to clause (ii) of the immediately preceding paragraph, the Trustee
will review each Mortgage File delivered to it to ascertain that all required
documents set forth in this Section 2.01 have been executed and received, and
that such documents relate to the Home Equity Loans identified on the Home
Equity Loan Schedule. In so doing the Trustee may conclusively rely on the
purported due execution and genuineness of any signature thereon. If within
such 60-day period the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Home Equity Loans identified in such Home Equity Loan Schedule, the Trustee
shall promptly notify Beneficial, which shall have a period of 30 days after
receipt of such notice within which to correct or cure, or to cause the
related Originator to correct or cure, any such defect. Each original
recorded assignment of Mortgage shall be delivered to the Trustee within 10
Business Days following the date on which it is returned to Beneficial or the
related Originator by the office with which such assignment was filed for
recording and within 10 days following receipt by the Trustee of the recorded
assignment or the assignment in recordable form, as the case may be, the
Trustee shall review such assignment to confirm the information specified
above with respect to the documents constituting the Mortgage File. Upon
receipt by the Trustee of the recorded assignment or the assignment in
recordable form, as the case may be, such recorded assignment or assignment
in recordable form shall become part of the Mortgage File. The Trustee shall
notify Beneficial of any defect in such assignment based on such review.
Beneficial shall have a period of 30 days following receipt of such notice
to correct or cure, or to cause the related Originator to correct or cure,
such defect. In the event that Beneficial fails to record, or to cause the
related Originator to record, an assignment of a Home Equity Loan as herein
provided within such 30-day period, the Trustee shall, upon written
instructions from Beneficial, prepare and, if required hereunder, file such
assignment for recordation in the appropriate real property or other records
and Beneficial shall deliver within five Business Days of the Closing Date
a power of attorney of each Originator, which shall appoint the Trustee as
its attorney-in-fact with full power and authority to act in its stead for
the purpose of such preparation, execution and filing. Any expense incurred
by the Trustee not otherwise paid for by Beneficial or the related Originator
as required hereunder in connection with the preparation and filing of such
assignments shall be reimbursed to the Trustee from amounts that would
otherwise be distributable to holders of the Class R Certificates.
The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2.01. In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document appears to have been executed, that it appears to be what it
purports to be and, where applicable, that it purports to be recorded, but
shall not be required to determine whether any Person executing any document
was authorized to do so or whether any signature thereon is genuine.
Beneficial further confirms to the Trustee that each Originator have
caused the portions of their Electronic Ledgers relating to the Home Equity
Loans to be clearly and unambiguously marked to indicate that the Trust
Balance of each Home Equity Loan transferred and assigned by such Originator
to Beneficial, thereafter by Beneficial to the Depositor, and thereafter by
the Depositor to the Trustee and the Co-Trustee hereunder, has been sold to
the Trustee and the Co-Trustee and constitutes part of the Trust Fund in
accordance with the terms of the trust created hereunder.
The parties hereto agree that Texas Commerce Bank is appointed as the
initial Co-Trustee in accordance with Section 9.10 hereof, and Texas Commerce
Bank accepts such appointment. The sole purpose of Texas Commerce Bank as
a Co-Trustee is to hold title to the Trust Balances of Home Equity Loans
secured by liens on Mortgaged Properties that are not located in California
and New Jersey. With respect to such Trust Balances and Home Equity Loans,
any reference to the Trustee in respect thereof shall be deemed to include
the Co-Trustee only insofar as such reference relates to the holder of the
title thereto. The Co-Trustee has no obligations hereunder except to hold
such title and follow the instructions of the Trustee, in each case subject
to the limitations and protections set forth in Section 9.10.
Section 2.02. Acceptance by Trustee; Repurchase Obligations;
----------------------------------------------
Substitution of Eligible Substitute Home Equity Loans. (a) The Trustee
- -----------------------------------------------------
acknowledges the assignment and sale of the Trust Balance of each Home Equity
Loan to it, and declares that the Trustee holds and will hold the Trust Fund
in trust, upon the terms herein set forth, for the use and benefit of all
present and future Certificateholders. If the time to cure any defect of
which the Trustee has notified the Master Servicer following the Trustee's
review of the Mortgage Files pursuant to Section 2.01 has expired or if any
loss is suffered by the Trustee, on behalf of the Certificateholders, in
respect of any Home Equity Loan as a result of (i) a material defect in any
document constituting a part of a Mortgage File or (ii) the related
Originator's retention of such Mortgage File or an assignment of a Home
Equity Loan not having been recorded, the Master Servicer shall, on the
Business Day preceding the Distribution Date in the month following the
Collection Period in which the time to cure such defect expired or such loss
occurred, either (i) repurchase the Trust Balance of the related Home Equity
Loan (including any property acquired in respect thereof and any insurance
policy or insurance proceeds with respect thereto) from the Trust Fund at a
price equal to the Purchase Price, which shall be accomplished by deposit by
the Master Servicer in the Certificate Account pursuant to Section 4.02 on
such preceding Business Day, or (ii) so long as such Distribution Date occurs
within two years following the Closing Date, substitute for the Trust Balance
of such Home Equity Loan one or more Eligible Substitute Home Equity Loans
and remit any Substitution Adjustment Amount in respect thereof to the
Certificate Account pursuant to Section 4.02 on such preceding Business Day.
The Master Servicer may first request of the related Originator that it
effect the repurchase or substitution of any Eligible Substitute Home Equity
Loan described in the preceding sentence, but in the event any such
Originator shall not have effected such repurchase or substitution in the
time provided therefor, the Master Servicer shall be obligated to deposit the
related Purchase Price into the Certificate Account in immediately available
funds not later than such Distribution Date and thereby be deemed to have
purchased the Trust Balance of such Home Equity Loan in lieu of such
Originator. Such purchase by the Master Servicer shall not relieve the
related Originator of any liability to the Master Servicer with respect to
the Trust Balance of the Home Equity Loan so purchased, and the Master
Servicer shall be entitled to require the related Originator to pay to the
Master Servicer the related Purchase Price and thereby purchase the Trust
Balance of such Home Equity Loan from the Master Servicer. Upon receipt by
the Trustee of (i) in the case of a repurchase, written notification signed
by a Servicing Officer to the effect that the Purchase Price for any such
Defective Home Equity Loan has been so deposited in the Certificate Account
or (ii) in the case of a substitution, written notification signed by a
Servicing Officer to the effect that the Substitution Adjustment Amount, if
any, has been so deposited in the Certificate Account and, if required at
such time, that the related Mortgage File has been delivered to the Trustee
and the assignment referred to in Section 2.01 has been recorded, the Trustee
shall execute and deliver such instrument of transfer or assignment presented
to it by the Master Servicer, in each case without recourse, representation
or warranty, as shall be necessary to vest in the Master Servicer or the
related Originator, as the case may be, legal and beneficial ownership of
such purchased Defective Home Equity Loan (including any property acquired
in respect thereof and proceeds of any insurance policy with respect
thereto). It is understood and agreed that the obligation of the Master
Servicer to repurchase or substitute for any Home Equity Loan as to which a
material defect in a Mortgage File or any constituent document thereof
continues to exist following the cure period as described in the preceding
paragraph shall constitute the sole remedy respecting such defect available
to Certificateholders or the Trustee on behalf of Certificateholders against
the Master Servicer, and such obligation on the part of the Master Servicer
shall survive any resignation or termination of the Master Servicer
hereunder. It is further understood and agreed that any such repurchase
obligation shall be solely that of the original Master Servicer and shall
survive any resignation or termination of such Master Servicer hereunder, and
the Trustee shall in no event be obligated to repurchase any Home Equity Loan
hereunder.
Notwithstanding the foregoing, in the case of any repurchase or
substitution that would result in the realization of a gain by the Trust
Fund, the Master Servicer shall not be required to so repurchase or replace
any Home Equity Loan unless it is a Defective Home Equity Loan and the
Trustee shall have received (i) in the case of a repurchase, either an
Opinion of Counsel to the effect that such repurchase shall not be subject
to tax as a result of being deemed a "prohibited transaction" under section
860F(a)(2) of the Code or an Officer's Certificate to the effect that such
repurchase shall not give rise to net income taxable under section 860F(a)(1)
of the Code and (ii) in either case, an Opinion of Counsel that such
repurchase or substitution will not be deemed a contribution to the REMIC
after the "start-up day" that would give rise to the tax specified under
section 860G(d)(1) of the Code. Any such opinion or certificate shall be
provided solely at the expense of the Master Servicer. In the absence of
such opinion or certificate, the Master Servicer shall not be required to
repurchase or replace any Home Equity Loan unless it is a Defective Home
Equity Loan and there is an actual or imminent default with respect thereto
or unless such breach adversely affects the enforceability of such Home
Equity Loan.
(b) As to any Eligible Substitute Home Equity Loan, the Master Servicer
shall deliver, or cause the related Originator to deliver, to the Trustee an
acknowledgment that the Depositor (or the related Originator on behalf of the
Depositor) is holding as custodian for the Trustee such documents and
agreements, if any, as are permitted to be held by the Depositor (or the
related Originator) in accordance with Section 2.01. An assignment of
Mortgage in favor of the Trustee with respect to any such Eligible Substitute
Home Equity Loan shall be required to be recorded in the appropriate real
property or other records or delivered to the Trustee with the Opinion of
Counsel referred to in Section 2.01 under the same circumstances that all
other assignments of Mortgage are required to be recorded hereunder. For any
Collection Period during which the Master Servicer substitutes one or more
Eligible Substitute Home Equity Loans for one or more Defective Home Equity
Loans, the Master Servicer shall determine the amount, if any, by which the
sum of the aggregate Trust Balances of all such Eligible Substitute Home
Equity Loans at the end of such Collection Period is less than the aggregate
Trust Balances at the end of such Collection Period of the related Home
Equity Loans being removed from the Trust Fund. The amount of any such
shortfall for a Collection Period computed by the Master Servicer, together
with any accrued and unpaid interest on the Trust Balance of the Home Equity
Loan being replaced at the related Net Loan Rate (the "Substitution
------------
Adjustment Amount"), shall be deposited by the Master Servicer in the
- -----------------
Certificate Account on the Business Day next preceding the Distribution Date
in the month following the Collection Period in which the circumstances giving
rise to such substitution occur. All amounts received in respect of any
Eligible Substitute Home Equity Loans during the Collection Period in which
the circumstances giving rise to a substitution occur shall not be a part of
the Trust Fund and shall not be credited to the Home Equity Loan Payment Record
or deposited by the Master Servicer in the Certificate Account. All amounts
received by the Master Servicer during the Collection Period in which the
circumstances giving rise to such substitution occur in respect of the Trust
Balance of any Home Equity Loan so removed from the Trust Fund shall be
deposited by the Master Servicer in the Certificate Account. The Master
Servicer shall amend the Home Equity Loan Schedule to reflect the removal of
the Trust Balances of any Home Equity Loans from the Trust Fund and the
substitution of the Trust Balances of any Eligible Substitute Home Equity
Loans. Upon such substitution, the Trust Balance of any Eligible Substitute
Home Equity Loan shall constitute a portion of the Trust Fund and shall be
subject to the terms of this Agreement in all respects, and the Depositor
shall be deemed to have made with respect to any such Eligible Substitute
Home Equity Loan, as of the date of substitution, the covenants,
representations, warranties and obligations set forth in Section 2.04. The
Trustee shall upon satisfaction of the conditions set forth in Section
2.02(a) promptly effect the reconveyance of any Home Equity Loan so removed
from the Trust Fund to the Master Servicer (or, if so instructed by the
Master Servicer, to the related Originator), in the manner set forth in
Section 2.02(a). The procedures applied by the Master Servicer in selecting
each Eligible Substitute Home Equity Loan shall not be adverse to the
interests of the Trustee and the Certificateholders and shall be comparable
to the selection procedures applicable to the Home Equity Loans originally
conveyed hereunder.
(c) As of the Closing Date, the Trustee certifies that (i) it acquired
the Trust Balances of the Home Equity Loans in good faith, for value, and
without notice or knowledge or any adverse claim, lien, change, encumbrance
or security interest (including without limitation, federal tax liens or
liens arising under ERISA), (ii) except as permitted herein, it has not and
will not, in any capacity, assert any claim or interest in the Home Equity
Loans and (iii) it has not encumbered or transferred its right, title or
interest in the Home Equity Loans. The representation and warranty made in
clause (i) above is made by the Trustee without any independent investigation
and without recourse or warranty, except that the Trustee believes such
representation to be true.
Section 2.03. Representations and Warranties Regarding the Master
---------------------------------------------------
Servicer. The Master Servicer represents and warrants to the Trustee and the
- --------
Certificateholders as of the Closing Date that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to own its assets and to transact the business
in which it is currently engaged. The Master Servicer is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it or the performance of its obligations
hereunder requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer or the performance of
its obligations hereunder;
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform its obligations under this Agreement and all of
the transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution and delivery of this
Agreement and the performance by it of its obligations hereunder. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Master Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies;
(iii) The Master Servicer is not required to obtain the consent
of any other party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained or filed,
as the case may be, prior to the Closing Date; provided, however, that the
Master Servicer makes no representations or warranties with respect to any
requirements under the Blue Sky laws of any State;
(iv) The execution, delivery and performance of this Agreement
by the Master Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the Certificate of Incorporation or Bylaws of
the Master Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Master Servicer is a
party or by which the Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer or
any of its properties or with respect to this Agreement or the Certificates
which in the opinion of the Master Servicer has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by
this Agreement.
It is understood and agreed that the representations and warranties set forth
in this Section 2.03 shall survive the sale and assignment of the Trust
Balances of the Home Equity Loans to the Trustee. Upon discovery of a breach
of any of the foregoing representations and warranties which materially and
adversely affects the interests of the Certificateholders, the party
discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach,
the Master Servicer shall cure such breach in all material respects.
Section 2.04. Representations and Warranties Regarding the Home Equity
--------------------------------------------------------
Loans; Repurchase of Defective Home Equity Loans. Beneficial, in its
- ------------------------------------------------
capacity as Seller in the Sale Agreement, made the following representations
and warranties to the Depositor, and, pursuant to the Sale Agreement, hereby
represents and warrants to the Trustee and the Certificateholders as of the
Closing Date (except as otherwise expressly stated) that, as to each Home
Equity Loan the Trust Balance of which is conveyed to the Trust Fund:
(i) The information set forth on the Home Equity Loan
Schedule was true and correct in all material respects at the date or dates
respecting which such information is furnished;
(ii) As of the Closing Date, each Mortgage is a valid lien on
the related Mortgaged Property subject only to (a) the lien of the related
first deed of trust or mortgage, if any, (b) the lien of current real
property taxes and assessments, (c) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date
of recording of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally in the area wherein the
Mortgaged Property is located or specifically reflected in the appraisal
obtained in connection with the origination of the related Home Equity Loan
and (d) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by such Mortgage;
(iii) Immediately prior to the sale and assignment by
Beneficial to the Depositor, Beneficial had good title to each Home Equity
Loan the Trust Balance of which was sold and assigned by it, and Beneficial
has transferred all right, title and interest in the Trust Balance of each
Home Equity Loan to the Depositor;
(iv) As of the last Cycle Date immediately preceding the
Cut-off Date, no payment of principal or interest on or in respect of any
Home Equity Loan is more than 30 days past due;
(v) Beneficial and, if applicable, the related Originator
from whom Beneficial purchased each Home Equity Loan, was properly licensed
or otherwise authorized, to the extent required by applicable law, to
originate or purchase such Home Equity Loan; each Home Equity Loan at the
time it was made complied in all material respects with applicable state and
federal laws, including, without limitation, usury, equal credit opportunity
and disclosure laws, and the consummation of the transactions herein
contemplated, including, without limitation, the receipt of interest by
Certificateholders, and the ownership of the Trust Balances of the Home
Equity Loans by the Trustee as trustee of the Trust Fund, will not involve
the violation of such laws;
(vi) As to each Home Equity Loan having an original Credit
Limit of $10,000 or more, a lender's title insurance policy or binder,
foreclosure impairment insurance, or other assurance of title customary in
the relevant jurisdiction therefor, was issued on or as of the date of the
recording of the related Mortgage, and each such policy or binder is valid
and remains in full force and effect;
(vii) As of the Closing Date, neither Beneficial nor the
related Originator has received a written notice of default of any first lien
loan related to a Mortgaged Property that has not been cured by a party other
than Beneficial or the related Originator;
(viii) Each Loan Agreement is in substantially the form
previously provided to the Trustee by or on behalf of Beneficial;
(ix) At the date of the execution of any Loan Agreement, the
Combined Loan-to-Value Ratio for the related Home Equity Loan was not in
excess of 100%;
(x) No selection procedure reasonably believed by Beneficial
or the Originators to be adverse to the interests of the Certificateholders
was utilized in selecting the Home Equity Loans;
(xi) To the best of Beneficial's knowledge, an independent
interior and exterior appraisal in accordance with industry standards was
made in connection with the origination of each Home Equity Loan with a
Credit Limit in excess of $10,000;
(xii) The fair market value of the "interest in real property"
as defined in Treas. Reg. Section 1.860G-2(a)(4) and Treas. Reg. Section
1.856-3(c) securing each Home Equity Loan reduced by the amount of any lien
on the interest in real property that is senior to such Home Equity Loan, and
further reduced by a proportionate amount of any lien on the interest in real
property that is in parity with such Home Equity Loan, was at least equal to
80% of the adjusted issue price of the Home Equity Loan on the date of the
execution of the related Loan Agreement (provided the Home Equity Loan has
not been significantly modified as defined in the REMIC Provisions) or on the
Closing Date; and
(xiii) Each Home Equity Loan is a "qualified mortgage loan" in
accordance with the REMIC Provisions.
The representations and warranties set forth in this Section 2.04 shall
survive the sale and assignment of the respective Mortgage Files to the
Trustee. Upon discovery by the related Originator, the Master Servicer or
a Responsible Officer of the Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
in such representation or warranty regarding the knowledge of Beneficial as
to the facts stated therein, which materially and adversely affects the
interests of the Certificateholders in the related Home Equity Loan, the
party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach,
Beneficial shall use all reasonable efforts to cure such breach in all
material respects or shall, not later than the Business Day next preceding
the Distribution Date applicable to the Collection Period in which any such
cure period expired, either (i) repurchase the Trust Balance of such Home
Equity Loan (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trustee
at a price equal to the Purchase Price or (ii) remove such Home Equity Loan
from the Trust Fund and substitute in its place one or more Eligible
Substitute Home Equity Loans, in the same manner and subject to the same
conditions as set forth in Section 2.02. Any such repurchase or substitution
by Beneficial shall be accomplished in the manner set forth in Section 2.02
with respect to the repurchase or substitution of Home Equity Loans under
that Section. Upon making any such repurchase or substitution, Beneficial
shall be entitled to receive an instrument of assignment or transfer from the
Trustee to the same extent as set forth in Section 2.02 with respect to the
repurchase or substitution of Home Equity Loans under that Section. The
obligation of Beneficial to repurchase or replace any such Home Equity Loan
(or property acquired in respect thereof) shall constitute the sole remedy
respecting such breach available to Certificateholders or the Trustee on
behalf of Certificateholders, and such obligation on the part of Beneficial
shall survive any resignation or termination of Beneficial as Master Servicer
hereunder.
Beneficial shall be obligated either to repurchase or to replace with
one or more Eligible Substitute Home Equity Loans each Home Equity Loan as
to which any of the following conditions shall have existed as of the Closing
Date, which condition materially and adversely affects the interests of the
Certificateholders in the related Home Equity Loan:
(i) Any mechanics' lien or claim for work, labor or material
affecting the related Mortgaged Property that is or may be a lien prior to,
or equal or coordinate with, the lien of the related Mortgage;
(ii) Any delinquent tax or assessment lien against the related
Mortgaged Property;
(iii) Any valid offset, defense or counterclaim to any Loan
Agreement or Mortgage;
(iv) Any physical damage or lack of good repair with respect
to the related Mortgaged Property; or
(v) Any related first deed of trust or mortgage containing
a future advance provision.
Any such repurchase or substitution shall be effected prior to the
Distribution Date applicable to the Collection Period at the end of which any
such condition shall have been discovered and shall be accomplished in the
manner set forth in Section 2.02 with respect to the repurchase or
substitution of Home Equity Loans thereunder, and such repurchase or
substitution obligation shall constitute the sole remedy respecting any of
the foregoing conditions available to Certificateholders, or the Trustee on
behalf of Certificateholders, and shall survive any resignation or
termination of Beneficial as Master Servicer hereunder. It is understood and
agreed that any such repurchase or substitution obligation shall be solely
that of Beneficial, and neither the Depositor nor the Trustee shall be
obligated to repurchase or replace any Home Equity Loan hereunder.
Section 2.05. Execution and Authentication of Certificates; Designation
---------------------------------------------------------
of "Regular Interests" and "Residual Interests" under REMIC. (a) The
- -----------------------------------------------------------
Trustee has caused to be executed (not in its individual capacity, but solely
as Trustee), countersigned and delivered to or upon the written order of the
Depositor, in exchange for the Trust Balances of the Home Equity Loans,
concurrently with the sale and assignment to the Trustee of the Trust
Balances of the Home Equity Loans, Certificates in authorized denominations
evidencing the entire ownership of the Trust Fund.
(b) The Depositor hereby designates the Class A, Class M and Class B
Certificates as "regular interests", and the Class R Certificates as the
"residual interests", in the Trust Fund for purposes of the REMIC Provisions.
Section 2.06. Designation of Start-up Day and Final Maturity Date. The
---------------------------------------------------
Closing Date is hereby designated as the "start-up day" of the REMIC within
the meaning of section 860G(a)(9) of the Code. The "final maturity date" for
federal income tax purposes of all interests created hereby will be the
September 2026 Distribution Date.
Section 2.07. Certain Activities. The Trust will not: (i) issue
------------------
securities (except for the Certificates); (ii) borrow money, (iii) make
loans; (iv) invest in securities for the purpose of exercising control; (v)
underwrite securities; (vi) except as provided in this Agreement, engage in
the purchase and sale (or turnover) of investments; (vii) offer securities
in exchange for property (except Certificates for the Trust Balances of the
Home Equity Loans); or (viii) repurchase or otherwise reacquire its
securities.
Section 2.08. Representation and Warranty of the Depositor. The
--------------------------------------------
Depositor represents and warrants that it has transferred all of its right,
title and interest in the Trust Balance of each Home Equity Loan transferred
to it by Beneficial to the Trustee on the Closing Date free of any liens,
claims, charges or other encumbrances created by the Depositor and there has
been no other sale or assignment thereof by the Depositor.
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01. The Master Servicer. Beneficial is hereby appointed as
-------------------
Master Servicer hereunder. The parties intend that the Trust Fund formed
hereunder shall constitute, and that the affairs of the Trust Fund shall be
conducted and this Agreement shall be construed so as to qualify the Trust
Fund as, a "real estate mortgage investment conduit" (a "REMIC") as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Master Servicer covenants and agrees that it shall, to the
extent permitted by applicable law, act as agent (and the Master Servicer is
hereby appointed to act as agent) on behalf of the Trust Fund and in that
capacity it shall: (a) prepare, sign and file, or cause to be prepared,
signed and filed, all required federal tax returns for the REMIC using a
calendar year as the taxable year for the Trust Fund when and as required by
the REMIC Provisions and other applicable federal income tax laws; (b) cause
the Trust Fund to make an election to be treated as a REMIC on the federal
partnership information tax return of the Trust Fund for its first taxable
year in accordance with the REMIC Provisions; (c) prepare and forward, or
cause to be prepared and forwarded, to the Certificateholders all information
reports as and when required to be provided to them in accordance with the
REMIC Provisions; (d) conduct the affairs of the Trust Fund at all times that
any Certificates are outstanding so as to maintain the status of the Trust
Fund as a REMIC under the REMIC Provisions; (e) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the Trust Fund; (f) serve as tax matters
person pursuant to Treasury Regulations Section 1.860F-4(d) and Temporary
Treasury regulation Section 301.6231(a)(7)-1T for the Trust Fund; and (g) if
not otherwise paid from amounts available to be distributed to Holders of the
Class R Certificates, pay the amount of any federal income tax, including
prohibited transaction penalty taxes, imposed on the Trust Fund when and as
the same shall be due and payable (but such obligation shall not prevent the
Master Servicer or any other appropriate Person from contesting any such tax
in appropriate proceedings and shall not prevent the Master Servicer from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). If the Master Servicer is not permitted, by applicable
law, to fulfill any of its duties described in this Section 3.01 (as
evidenced by an Opinion of Counsel to such effect delivered to the Trustee),
the Trustee shall, at the expense of the Master Servicer, carry out such
duties pursuant to the written instructions of the Master Servicer, in which
event the Trustee shall have no liability to Certificateholders in connection
with the carrying out of such duties other than pursuant to the standard of
care set forth in Section 9.01 hereof with respect to acts or omissions of
the Trustee generally.
The Master Servicer shall, or shall cause the related Subservicer to,
service and administer the Home Equity Loans and shall have full power and
authority, acting alone or through such Subservicer, to do any and all things
in connection with such servicing and administration that it may deem
necessary or desirable. Any amounts received by any Subservicer in respect
of a Home Equity Loan shall be deemed to have been received by the Master
Servicer whether or not actually received by it. Without limiting the
generality of the foregoing, the Master Servicer shall continue, and is
hereby authorized and empowered by the Trustee, to execute and deliver on
behalf of itself, the Certificateholders and 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 Home Equity Loans and with respect to the Mortgaged Properties. The
Trustee shall, upon written request of a Servicing Officer, furnish the
Master Servicer with any powers of attorney and other documents as are
reasonably necessary or appropriate to enable the Master Servicer to carry
out its servicing and administrative duties hereunder.
In connection with the servicing and administration of the Home Equity
Loans, the Master Servicer shall not, and shall not permit any Subservicer
to, consent to an increase in the Credit Limit specified in any Loan
Agreement unless (i) the Master Servicer or such Subservicer and such
Mortgagor execute a new Loan Agreement providing for such increase and (ii)
the Master Servicer, not later than (x) the Business Day immediately
preceding the Distribution Date applicable to the Collection Period during
which a new Loan Agreement was executed or (y) in the event the Master
Servicer is not entitled to retain and commingle with its own funds amounts
referred to in Section 3.02(c), not later than the second Business Day
following the date on which such new Loan Agreement was executed, deposit in
the Certificate Account the amount necessary (including any accrued and
unpaid interest) to prepay in full on behalf of the Mortgagor the Trust
Balance of the related Home Equity Loan. Upon making any such deposit the
Master Servicer shall be entitled to receive an instrument of assignment or
transfer from the Trustee to the same extent as set forth in Section 2.02.
The Master Servicer and each Subservicer may consent to the placing of a lien
or liens junior to that of the Mortgage on the related Mortgaged Property so
long as the total of the principal amounts of any first lien loan, the Credit
Limit and the combined principal balances secured by any such junior lien
loan or loans does not exceed 75%, if such Mortgage is a second deed of trust
or mortgage, and 80%, if such Mortgage is a first deed of trust or mortgage,
of the Appraised Value of the Mortgaged Property as specified in an appraisal
made by or on behalf of the Master Servicer at the time of and in connection
with such consent. The Master Servicer and each Subservicer may also consent
to the placing of a lien or liens senior to that of the Mortgage on the
Mortgaged Property so long as the Combined Loan-to-Value Ratio of such Home
Equity following the placement of such lien or liens is equal to or less than
the Combined Loan-to-Value Ratio of such Home Equity Loan at origination.
The Master Servicer and each Subservicer may also consent to any
modification of the terms of any Loan Agreement or Mortgage not expressly
prohibited hereby if (i) the effect of any such modification will not be to
materially and adversely affect the security afforded by the Mortgaged
Property or decrease or slow (other than as permitted by clause (ii) of
Section 3.02(a)) the timing of receipt of any payments required thereunder,
(ii) such modification will not cause the Trust Fund to fail to qualify as
a REMIC under the REMIC Provisions, (iii) after such modification for the
Loan Agreement or Mortgage, the related Home Equity Loan is a "qualified
mortgage" as defined in the REMIC Provisions, and (iv) the modification does
not cause the Trust Fund to owe additional tax to any state or federal
governmental agency.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor
and not that of a joint venturer, partner or agent.
In the event that any tax is imposed on "prohibited transactions" (as
defined in section 860F(a)(2) of the Code) of the Trust Fund, such tax shall
be charged against amounts otherwise distributable to Holders of the Class
R Certificates to the extent hereinafter provided. In the event that any
such tax shall be due and owing at a time when amounts otherwise
distributable to Holders of the Class R Certificates are not available and
the negligence of the Master Servicer caused the imposition of such tax, the
Master Servicer shall pay such tax from its own funds. In such event, the
Master Servicer is hereby authorized to retain from amounts otherwise
distributable to Holders of the Class R Certificates on any subsequent
Distribution Date sufficient funds to reimburse the Master Servicer for the
payment of such tax (to the extent that the Master Servicer has not been
previously reimbursed or indemnified therefor). The obligation of the Master
Servicer to pay any such tax from its own funds in the event amounts
otherwise distributable to Holders of the Class R Certificates are not
sufficient shall be solely that of the Master Servicer and shall survive any
resignation or termination of the Master Servicer hereunder; provided,
however, that such obligation shall be solely that of the original Master
Servicer in the case of "prohibited transactions" caused by, or stemming from
any act or omission of, such original Master Servicer, including, but not
limited to, the repurchase of a Defective Home Equity Loan, and in such case
shall survive any such resignation or termination of the original Master
Servicer hereunder.
Section 3.02. Collection of Certain Home Equity Loan Payments; Home
-----------------------------------------------------
Equity Loan Payment Record. (a) The Master Servicer and each Subservicer
- --------------------------
shall follow such collection procedures as it follows from time to time with
respect to home equity loans in its servicing portfolio comparable to the
Home Equity Loans. Consistent with the foregoing, the Master Servicer and
any such Subservicer may in its discretion (i) waive any late payment charge
or any prepayment or other fees that may be collected in the ordinary course
of servicing such Home Equity Loans and (ii) if a Mortgagor is in default or
about to be in default under a Home Equity Loan, arrange with such Mortgagor
a schedule for the payment of interest due and unpaid; provided such
arrangement is consistent with the Master Servicer's or such Subservicer's
policies with respect to the home equity loans it owns or services.
(b) The Master Servicer shall establish and maintain for the Trust Fund
a Home Equity Loan Payment Record in which the following payments on and
collections in respect of each Home Equity Loan shall be credited within two
Business Days of receipt thereof by the Master Servicer for the account of
the Certificateholders:
(i) all Trust Interest;
(ii) Trust Principal Payments, including, without limitation,
Trust Principal Payments made by the Master Servicer on behalf of Mortgagors
in connection with the execution of a new Loan Agreement providing for an
increased Credit Limit;
(iii) the Purchase Price of any Trust Balance repurchased by
the Master Servicer or by an Originator pursuant to Sections 2.02 and 2.04;
(iv) the Substitution Adjustment Amount in respect of any Home
Equity Loan replaced by an Eligible Substitute Home Equity Loan pursuant to
Section 2.02 or 2.04;
(v) all Trust Liquidation Proceeds; and
(vi) all Trust Insurance Proceeds (including, for this
purpose, any amounts required to be credited by the Master Servicer pursuant
to the penultimate sentence of Section 3.04).
The foregoing requirements respecting credits to the Home Equity Loan Payment
Record are exclusive, it being understood that, without limiting the
generality of the foregoing, the Master Servicer need not enter in the Home
Equity Loan Payment Record amounts representing fees (including annual fees),
prepayment premiums or late charge penalties payable by Mortgagors, or
amounts received by the Master Servicer for the account of Mortgagors for
application towards the payment of taxes, insurance premiums, assessments and
similar items. All amounts credited by the Master Servicer to the Home
Equity Loan Payment Record shall be held by the Master Servicer in trust for
the Certificateholders until such amounts are disbursed in accordance with
Section 4.02 or debited in accordance with this Section 3.03.
(c) Until the Business Day prior to each Distribution Date on which
amounts are required to be deposited in the Certificate Account pursuant to
Section 4.02, the Master Servicer may retain and commingle such amounts
(including the Initial Reserve Amount) with its own funds so long as (i) no
Event of Default shall have occurred and be continuing and (ii) either (x)
the Master Servicer remains an affiliate of Beneficial Corporation and the
short-term debt obligations of Beneficial Corporation are rated at least A-1
by Standard & Poor's, F-1 by Fitch and P-1 by Moody's (or such lower rating
as each such organization may otherwise agree to in writing) or (y) the
Master Servicer arranges for and maintains a Servicer LOC acceptable in form
and substance to each Rating Agency (which acceptability shall be confirmed
in writing); provided, however, that amounts permitted to be retained and
commingled pursuant to this subclause (y) shall not exceed the Available
Servicer LOC Amount. In the event the Master Servicer is entitled to retain
and commingle the amounts referred to in the preceding sentence, it shall be
entitled to retain for its own account any investment income thereon, and any
such investment income shall not be subject to any claim of the Trustee or
Certificateholders. Any amounts retained and commingled by the Master
Servicer pursuant to this Section 3.02(c) shall be held by the Master
Servicer in constructive trust for the benefit of the Trust Fund. In the
event that the Master Servicer is not permitted to retain and commingle such
amounts with its own funds, it shall, any provisions herein to the contrary
notwithstanding, deposit such amounts not later than the second Business Day
following receipt in the Certificate Account created and maintained pursuant
to Section 4.02, subject to withdrawal to the same extent as debits to the
Home Equity Loan Payment Record are permitted pursuant to Section 3.03.
(d) The Home Equity Loan Payment Record shall be made available for
inspection during normal business hours of the Master Servicer upon request
of the Trustee, any Servicer LOC Issuer or the firm of independent
accountants acting pursuant to Section 3.10.
Section 3.03. Permitted Debits to the Home Equity Loan Payment Record.
-------------------------------------------------------
The Master Servicer may, from time to time, make debits to the Home Equity
Loan Payment Record to reflect (i) the making of deposits into the
Certificate Account pursuant to Section 4.02 and (ii) the payment to itself
of any portion of the Monthly Servicing Fee initially deposited by it in the
Certificate Account and not retained by it pursuant to the first sentence of
Section 3.08. In addition, if the Master Servicer deposits in the
Certificate Account or credits to the Home Equity Loan Payment Record any
amount not required to be deposited therein or credited thereto or any amount
in respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment it may at any time
withdraw such amount from the Certificate Account or debit such amount in the
Home Equity Loan Payment Record, any provision herein to the contrary
notwithstanding.
All funds deposited or credited by the Master Servicer in the
Certificate Account or the Home Equity Loan Payment Record, respectively,
shall be held by the Trustee or the Master Servicer, as the case may be, in
trust for the Certificateholders until disbursed in accordance with Section
5.01 or withdrawn or debited in accordance with this Section 3.03.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
----------------------------------------------------
Expenses. The Master Servicer shall cause to be maintained for each
- --------
Mortgaged Property hazard insurance with an appropriate endorsement in favor
of the Master Servicer or the related Subservicer and extended coverage in
an amount that is at least equal to the lesser of (i) the maximum insurable
value of the improvements securing the related Home Equity Loan from time to
time or (ii) the sum of the Loan Balance of such Home Equity Loan and the
outstanding principal balance of any mortgage loan senior to such Home Equity
Loan from time to time, but in no event shall such amount be less than is
necessary to prevent the Mortgagor from becoming a coinsurer thereunder. The
Master Servicer shall also maintain on property acquired upon foreclosure,
or by deed in lieu of foreclosure, hazard insurance with an appropriate
endorsement in favor of the Master Servicer or the related Subservicer with
extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value from time to time of the improvements that are
a part of such property or (ii) the sum of the Loan Balance of such Home
Equity Loan and the outstanding principal balance of any mortgage loan senior
to such Home Equity Loan at the time of such foreclosure or deed in lieu of
foreclosure plus accrued interest and the good-faith estimate of the Master
Servicer of related Liquidation Expenses to be incurred in connection
therewith. Amounts collected by the Master Servicer under any such policies
shall be credited to the Home Equity Loan Payment Record and deposited in the
Certificate Account in accordance with Section 3.02(b) to the extent that
they constitute Trust Liquidation Proceeds or Trust Insurance Proceeds.
In cases in which any Mortgaged Property is located in a federally
designated flood area, the hazard insurance to be maintained for such
Mortgaged Property shall include flood insurance (to the extent available).
All such flood insurance shall be in such amounts as are required under
applicable guidelines of the Federal National Mortgage Association. The
Master Servicer shall be under no obligation to require that any Mortgagor
maintain earthquake or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property
acquired in respect of a Home Equity 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. If the Master Servicer shall obtain and
maintain a blanket policy issued by an insurer acceptable to the Rating
Agencies insuring against hazard losses on all of the Home Equity Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth
in the first sentence of this Section 3.04, it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the first sentence of this
Section 3.04, and there shall have been a loss which would have been covered
by such policy, credit to the Home Equity Loan Payment Record and deposit in
the Certificate Account the applicable Trust Percentage of the amount not
otherwise payable under the blanket policy because of such deductible clause.
The Trust Percentage of any amounts paid under any such policy shall be
credited to the Home Equity Loan Payment Record and deposited in the
Certificate Account in accordance with Section 3.02(b).
Section 3.05. Assumption and Modification Agreements. In any case in
--------------------------------------
which a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Master Servicer and each Subservicer shall exercise its right
to accelerate the maturity of the related Home Equity Loan and require that
the Loan Balance thereof be paid in full on or prior to such conveyance by
the Mortgagor under any "due-on-sale" clause applicable thereto. If such
"due-on-sale" clause, by its terms, is not operable or the Master Servicer
is prevented, as provided in the following paragraph of this Section 3.05,
from enforcing any such clause, the Master Servicer is authorized to take or
enter into an assumption and modification agreement from or with the Person
to whom such property has been or is about to be conveyed, pursuant to which
such Person becomes liable under the Loan Agreement and the Mortgagor remains
liable thereon. In connection with any such agreement, the provisions for
the adjustment of the Loan Rate thereon shall not be modified to increase or
decrease the Loan Rate. Any such agreement shall, for all purposes, be
considered part of the related Mortgage File. Any fee collected by the
Master Servicer for entering into any such agreement will be retained by the
Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Master Servicer shall not be deemed
to be in default, breach or any other violation of its obligations hereunder
by reason of any assumption of a Home Equity Loan, or transfer of any
Mortgaged Property without the assumption thereof, by operation of law or any
assumption or transfer which the Master Servicer reasonably believes it may
be restricted by law from preventing, for any reason whatsoever.
Section 3.06. Realization upon Defaulted Home Equity Loans. The Master
--------------------------------------------
Servicer shall, or shall cause the applicable Subservicer to, foreclose upon
or otherwise comparably convert to ownership Mortgaged Properties securing
such of the Home Equity Loans as come into and continue in default when, in
the opinion of the Master Servicer, no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.02. In
connection with such foreclosure or other conversion, the Master Servicer or
such Subservicer shall follow such practices (including, in the case of any
default on a related prior deed of trust, the advancing of funds to correct
such default) and procedures as it shall deem necessary or advisable and as
shall be normal and usual from time to time in its general mortgage servicing
activities. In determining whether to foreclose upon or otherwise comparably
convert the ownership of a Mortgaged Property, the Master Servicer and each
Subservicer shall take into account (and shall not be required to foreclose
or otherwise convert the ownership of such Mortgaged Property in the case of)
the existence of any hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act
of 1976, or other federal, state or local environmental legislation, on such
Mortgaged Property. The foregoing is subject to the proviso that neither the
Master Servicer nor any Subservicer shall be required to expend its own funds
in connection with any foreclosure or other conversion or towards the
correction of any default on a related prior mortgage loan or restoration of
any property unless it shall determine that such foreclosure, correction or
restoration will increase Trust Liquidation Proceeds.
In the event that the Trust Fund acquires any Mortgaged Property by
foreclosure or by deed in lieu of foreclosure, such Mortgaged Property shall
be disposed of by or on behalf of the Trust Fund within two years after its
acquisition by the Trust Fund unless the Trustee shall have received an
Opinion of Counsel to the effect that the holding by the Trust Fund of such
Mortgaged Property subsequent to two years after its acquisition will not
result in the imposition of taxes on "prohibited transactions" (as defined
in section 860F of the Code) of the Trust Fund or cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
Section 3.07. Trustee to Cooperate. (a) Upon the payment in full of
--------------------
the Loan Balance of any Home Equity Loan, the Master Servicer will promptly
notify the Trustee by a certification substantially in the form of Exhibit
E hereto of a Servicing Officer. Such notification shall be made each month
at the time that the Master Servicer delivers the Servicing Certificate to
the Trustee pursuant to Section 4.01. Upon any such payment in full, the
Master Servicer is authorized to execute, pursuant to the authorization
contained in Section 3.01, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Master Servicer if required by applicable law and be delivered to the Person
entitled thereto, it being understood and agreed that no expenses incurred
in connection with such instrument of satisfaction shall be reimbursed from
amounts at the time credited to the Home Equity Loan Payment Record.
(b) If the Trustee is holding the Mortgage Files, from time to time and
as appropriate for the servicing or foreclosure of any Home Equity Loan, the
Trustee shall, within three Business Days of receipt by the Trustee of a
written request substantially in the form of Exhibit F hereto, accompanied
by an Officer's Certificate certifying as to the accuracy of the facts set
forth therein, transmitted by the Master Servicer to the Trustee or made in
writing signed by a Servicing Officer and delivered to the Trustee as
provided in Section 11.05, deliver the related Mortgage File to the Master
Servicer and shall execute such documents, in the forms provided by the
Master Servicer, as shall be certified by a Servicing Officer to be necessary
to the prosecution of any such proceedings. The Master Servicer shall return
the Mortgage File to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan shall be liquidated,
in which case the Master Servicer shall deliver a certificate of a Servicing
Officer similar to that hereinabove specified, and the Master Servicer shall
be entitled to retain the Mortgage File.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
------------------------------------------------------
Master Servicer. The Master Servicer shall be entitled to retain, out of
- ---------------
each payment that is allocable to interest on the Trust Balance of a Home
Equity Loan, as servicing compensation for the related Collection Period, the
Monthly Servicing Fee. Additional servicing compensation in the form of late
payment charges or other receipts not required to be credited to the Home
Equity Loan Payment Record (or in respect to which a debit may be made
pursuant to Section 3.03) shall be retained by the Master Servicer. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of Trustee fees,
and all other fees and expenses not expressly stated hereunder to be for the
account of the Certificateholders) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. The Master Servicer
---------------------------------
will deliver to the Trustee, on or before April 30 of each year, beginning
with April 30, 1997, an Officer's Certificate stating that (i) a review of
the activities of the Master Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its material obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
Section 3.10. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before April 30 of each year, beginning with April 30, 1997, the Master
Servicer at its expense shall cause a firm of independent public accountants
(who may also render other services to the Master Servicer) to furnish a
report to the Trustee to the effect that such firm has examined certain
documents and records relating to the servicing of home equity loans under
this Agreement and pooling and servicing agreements substantially similar to
this Agreement, and that such examination, which has been conducted
substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers (to the extent that the procedures in such audit guide are
applicable to the servicing obligations set forth in such agreements), has
disclosed no items of noncompliance with the provisions of this Agreement
which, in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
Section 3.11. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Home Equity Loans. (a) The Master Servicer or the Trustee, as
- ---------------------
applicable, shall provide to Certificateholders that are federally insured
savings associations, the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation and the supervisory agents and examiners of such office
and such corporation access to the documentation regarding the Home Equity
Loans required by applicable regulations of the Office of Thrift Supervision,
such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Master Servicer.
Nothing in this Section 3.11 shall derogate from the obligation of the Master
Servicer or the Trustee to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Master
Servicer or the Trustee to provide access as provided in this Section 3.11
as a result of such obligation shall not constitute a breach of this Section
3.11.
(b) The Master Servicer shall supply such supplemental information, in
such form as the Trustee shall reasonably request, to the Paying Agent and
the Trustee, on or before the start of the third Business Day preceding the
related Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Paying Agent or the Trustee, as the case may be, to
make required distributions and to furnish the required reports to
Certificateholders.
Section 3.12. Maintenance of Certain Servicing Policies. The Master
-----------------------------------------
Servicer shall during the term of its service as master servicer maintain in
force (i) a policy or policies of insurance covering errors and omissions in
the performance of its obligations as master servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and bond shall, together, comply with the requirements
from time to time of the Federal National Mortgage Association for Persons
performing servicing for mortgage loans purchased by such Association.
ARTICLE IV
SERVICING CERTIFICATE; CERTIFICATE ACCOUNT DEPOSIT
Section 4.01. Servicing Certificate. Not later than each Determination
---------------------
Date, the Master Servicer shall deliver to the Trustee, Moody's, Fitch and
Standard & Poor's a Servicing Certificate identifying the related Collection
Period, the Certificates, the date of this Agreement, and the following
information (in the case of information furnished pursuant to clauses (viii)
and (ix) below, the amounts will be expressed as a dollar amount per
Certificate with a $1,000 denomination) with respect to the following
Distribution Date:
(i) the aggregate of all Trust Interest received during the
related Collection Period;
(ii) the aggregate of all Trust Principal Payments received
during the related Collection Period;
(iii) the aggregate of all Trust Insurance Proceeds received
during the related Collection Period;
(iv) the aggregate of the Trust Liquidation Proceeds received
during the calendar month preceding the month of such Determination Date;
(v) the number and aggregate Trust Balance of any Home Equity
Loans that were identified as Defective Home Equity Loans pursuant to Section
2.02 or Section 2.04 during the related Collection Period and (A) the
aggregate Purchase Price of any such Defective Home Equity Loans that will
be repurchased by the related Originator or the Master Servicer prior to the
following Distribution Date and (B) the Substitution Adjustment Amount, if
any, to be deposited in the Collection Account prior to such Distribution
Date in respect of any such Defective Home Equity Loans for which the related
Originator or the Master Servicer substituted one or more Eligible Substitute
Home Equity Loans;
(vi) the Monthly Servicing Fee;
(vii) the sum of the amounts specified pursuant to clauses
(i)-(v), inclusive, above, net of the amount specified in clause (vi) above;
(viii) the Class A Distribution Amount (including the Class A
Formula Amount and the Class A Interest Requirement, stated separately) for
such Distribution Date, together with the Class A Pass-Through Rates
applicable to such Distribution Date;
(ix) the Class M and Class B Distribution Amounts (including
the Class M Interest Requirement and the Class B Interest Requirement and,
on and after the Class A Termination Date and the Class B Termination Date,
the Class B Formula Amount and the Class M Formula Amount, respectively,
stated separately) for such Distribution Date, together with the Class M and
Class B Pass-Through Rates applicable to such Distribution Date;
(x) the Amount Available for Class M Interest and the Amount
Available for Class B Interest;
(xi) the Remaining Available Funds, if any, for such
Distribution Date;
(xii) the Class B Remaining Available Funds, if any, for such
Distribution Date;
(xiii) the Class A Certificate Balance, Class M Certificate
Balance and Class B Certificate Balance as well as the Class A Principal
Factor, Class M Principal Factor and Class B Principal Factor, each after
giving effect to the distribution to be made on such Distribution Date;
(xiv) any Liquidated Home Equity Loan Losses for such
Distribution Date, including cumulative losses up to such date;
(xv) in the event the Servicer LOC is then in effect, the
Available Servicer LOC Amount after giving effect to all drawings made under
the Servicer LOC to and including the date of such statement;
(xvi) the book value (within the meaning of 12 C.F.R. Section
571.13 or comparable provision) of the Trust Percentage of any real estate
acquired through foreclosure or grant of a deed in lieu of foreclosure and
held by the Trust Fund as of the last day of the related Collection Period;
(xvii) the number and aggregate Trust Balances of Home Equity
Loans delinquent (a) 30 to 59 days and (b) 60 days or more, respectively, as
of the end of the related Collection Period; and
(xviii) the Pool Balance for the following Distribution Date.
Section 4.02. Certificate Account. (a) On or before the Closing Date,
-------------------
the Master Servicer shall establish, and thereafter maintain in the name of
the Trustee, an account (the "Certificate Account"), which shall be an
Eligible Account held by the Trustee in trust for the benefit of the
Certificateholders. The Master Servicer shall deposit to the Certificate
Account in same day funds all funds received by it constituting Available
Funds not later than 11:00 A.M. New York time on (i) the Business Day
preceding each Distribution Date, if the Master Servicer is entitled to
retain and commingle funds pursuant to Section 3.02 or (ii) the second
Business Day following receipt of such amounts in the event the Master
Servicer is not so entitled to retain and commingle funds. In addition, on
the Closing Date, the Master Servicer shall enter into the Home Equity Loan
Payment Record an initial deposit equal to $5,100,000, and shall deposit in
the Certificate Account (i) if the Master Servicer is entitled to retain and
commingle funds pursuant to Section 3.02(e), not later than the Business Day
prior to the initial Distribution Date or (ii) if the Master Servicer is not
so entitled, on the second Business Day following the Closing Date, the
lesser of (x) amount by which the sum of the Class A Interest Requirement,
the Class A Formula Amount, the Class M Interest Requirement and the Class
B Interest Requirement for the initial Distribution Date and an amount equal
to the product 1/12 of 400 basis points and the Pool Balance exceeds
Available Funds with respect to such Distribution Date and (y) $5,100,000.
If the amount described in clause (x) of the preceding sentence is deposited
into the Certificate Account, the Master Servicer shall make a corresponding
adjustment to the Home Equity Loan Payment Record. The amounts deposited in
the Certificate Account shall be net of the Monthly Servicing Fee and are
subject to withdrawal to the same extent that debits to the Home Equity Loan
Payment Record are permitted.
(b) The Master Servicer may cause the institution maintaining the
Certificate Account to invest in the name of the Trustee any funds in the
Certificate Account, which funds shall be invested in Permitted Investments
designated in writing by the Master Servicer in its discretion and which
shall mature not later than the Business Day preceding the Distribution Date
following the date of such investment (except that any investment in an
obligation of an institution with which the Certificate Account is
maintained, and which institution is rated A-1 + by Standard & Poor's and
Fitch and P-1 by Moody's, may mature not later than 11:00 A.M. New York time
on such Distribution Date) and shall not be sold or disposed of prior to
their maturity. 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. The amount of any losses incurred in
respect of any such investments shall be deposited in the Certificate Account
by the Master Servicer out of its own funds immediately as realized.
Section 4.03. Servicer LOC. If at any time the Master Servicer shall
------------
be commingling with its own funds proceeds of the Home Equity Loans pursuant
to Section 3.02(c) and shall fail to deposit in the Certificate Account on
or before 11:00 A.M. New York time on the Business Day prior to a
Distribution Date funds in the amount specified in clause (vii) of the
related Servicing Certificate, the Trustee shall, pursuant to the terms of
the Servicer LOC, make a proper demand under such Servicer LOC that the
Servicer LOC Issuer pay as promptly as practicable to the Trustee for deposit
in the Certificate Account an amount equal to the lesser of (i) the aggregate
of all Trust Interest, Trust Principal Payments, Trust Insurance Proceeds and
Trust Liquidation Proceeds received by the Master Servicer or any Subservicer
during the related Collection Period and (ii) any amount by which the
aggregate of such Trust Interest, Trust Principal Payments, Trust Insurance
Proceeds and Trust Liquidation Proceeds exceeds the total amount deposited
by the Master Servicer to the Certificate Account with respect to such
Distribution Date (but in no event shall such amount exceed the Available
Servicer LOC Amount).
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions. (a) On each Distribution Date, the
-------------
Trustee shall, based upon the information set forth in the Servicing
Certificate relating to such Distribution Date, distribute from the
Certificate Account and only from the Certificate Account to each Holder of
a Class A, Class M, Class B or Class R Certificate of record on the related
Record Date (other than as provided in Section 10.01 respecting the final
distribution in respect of the Certificates) by check or money order mailed
to such Certificateholder at the address appearing in the Certificate
Register, or, upon written request by a Certificateholder, by wire transfer
(in the event such Certificateholder owns of record one or more Class A,
Class M or Class B Certificates having principal denominations aggregating
at least $5,000,000, or owns a Class R Certificate and has given the Trustee,
at least 10 days prior to such distribution, written instruction for making
such wire transfer), or by such other means of payment as a Certificateholder
and the Trustee shall agree, such Certificateholder's Percentage Interest in
the Class A Distribution Amount, the Class M Distribution Amount, the Class
B Distribution Amount or the Class R Distribution Amount, in such order of
priority, as applicable.
(b) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, which shall credit the amount of such distribution
to the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall
be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by the Depository and the Depository Participants
in accordance with the provisions of the Certificates. None of the Trustee,
any Paying Agent, the Certificate Registrar, the Depositor, the Originators
or the Master Servicer shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 5.02. Statements to Certificateholders. On or prior to the
--------------------------------
Business Day preceding each Distribution Date, the Master Servicer shall
forward to the Trustee for mailing by regular mail to each Holder of a
Certificate, a statement setting forth:
(i) (a) the amount of such distribution allocable to
principal of the Class A Certificates, the Class M Certificates and the Class
B Certificates, (b) the amount of such distribution allocable to any Class
A Unpaid Principal Shortfall, Class M Unpaid Principal Shortfall and Class
B Unpaid Principal Shortfall and (c) any remaining Class A Unpaid Principal
Shortfall, Class M Unpaid Principal Shortfall and Class B Unpaid Principal
Shortfall after giving effect to such distribution (separately for each Class
of Certificates, where applicable) with respect to such Distribution Date;
(ii) (a) the amount of such distribution allocable to the
Class A Interest Requirement, Class M Interest Requirement and Class B
Interest Requirement, (b) the amount of such distribution allocable to Class
A Unpaid Interest Shortfall, Class M Unpaid Interest Shortfall and Class B
Unpaid Interest Shortfall and (c) any remaining Class A Unpaid Interest
Shortfall, Class M Unpaid Interest Shortfall and Class B Unpaid Interest
Shortfall after giving effect to such distribution;
(iii) the amount of any Class A Principal Shortfall, Class M
Principal Shortfall and Class B Principal Shortfall;
(iv) the amount of any Class A Interest Shortfall, Class M
Interest Shortfall and Class B Interest Shortfall for such Distribution Date;
(v) the Class A Certificate Balance, Class M Certificate
Balance and Class B Certificate Balance and the Class A Principal Factor,
Class M Principal Factor and Class B Principal Factor, each after giving
effect to the distribution of principal on such Distribution Date;
(vi) the Pool Balance for the following Distribution Date and
the number of outstanding Home Equity Loans;
(vii) the number and aggregate Trust Balances of Home Equity
Loans delinquent (a) 30 to 59 days and (b) 60 days or more, respectively, as
of the end of the related Collection Period;
(viii) any Liquidated Home Equity Loan Losses for such
Distribution Date, including cumulative losses up to such date;
(ix) the Trust Percentage of the book value (within the
meaning of 12 C.F.R. Section 571.13 or any comparable provision) of any real
estate, and the number of Mortgaged Properties, acquired through foreclosure
or grant of a deed in lieu of foreclosure as of the last day of the related
Collection Period; and
(x) the Class A Pass-Through Rate, Class M Pass-Through Rate
and Class B Pass-Through Rate applicable to the distribution on the following
Distribution Date.
In the case of information furnished pursuant to clauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Class A, Class
M and Class B Certificate, as applicable, with a $1,000 denomination. Any
such statement furnished to a Class A, Class M or Class B Certificateholder
may, if requested by the Master Servicer, omit information pertinent only to
Certificates of a Class not held by such Certificateholder.
On each Distribution Date, the Master Servicer shall forward to the
Trustee for mailing to each Holder of a Class R Certificate a copy of the
report or reports forwarded to the Holders of Certificates on such
Distribution Date. The Master Servicer shall also forward to the Trustee for
mailing to each such Holder, and each of the Rating Agencies a statement
setting forth the amount of the distribution to each such Holder, together
with such other information as the Master Servicer deems necessary or
appropriate.
Within 90 days after the end of each calendar year, the Master Servicer
shall forward to the Trustee for mailing by regular mail to each Person who
at any time during such calendar year was a Certificateholder a statement
containing the applicable distribution information provided pursuant to
clauses (i) and (ii) of this Section 5.02, aggregated for such calendar year
or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Master Servicer shall be deemed
to have been satisfied to the extent that substantially comparable
information shall be provided by the Master Servicer pursuant to any
requirements of the Code. The Trustee shall have no obligation to mail to
Certificateholders any statement required to be so mailed hereunder if the
Master Servicer has not provided such statement to the Trustee.
ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates. The Class A Certificates shall be
----------------
substantially in the form set forth in Exhibit A, the Class M Certificates
shall be substantially in the form set forth in Exhibit B, the Class B
Certificates shall be substantially in the form set forth in Exhibit C, and
the Class R Certificates shall be substantially in the form set forth in
Exhibit D. Such Certificates shall, on original issue, be executed and
delivered by the Trustee to or upon the written order of the Depositor
concurrently with the sale and assignment to the Trustee of the Trust Fund.
So long as the Class A, Class M and Class B Certificates are Book-Entry
Certificates, such Certificates shall be evidenced by (i) in the case of the
Class A Certificates, three Certificates each representing $200,000,000
principal amount and a single Certificate representing $39,102,000 principal
amount, (ii) in the case of the Class M Certificates, a single Certificate
representing $41,291,000 principal amount, and (iii) in the case of the Class
B Certificates, a single Certificate representing $37,700,000 principal
amount, the beneficial ownership of such Certificates to be held through
Book-Entry Certificates in minimum dollar denominations of $1,000 and
integral dollar multiples in excess thereof.
The Class R Certificates have not been and will not be registered under
the Securities Act or the securities laws of any state of the United States.
Neither the Depositor, the Master Servicer nor the Trustee is under any
obligation to register or qualify the Class R Certificates under the
Securities Act or any other securities laws or to take any action not
otherwise required under this Agreement to permit the transfer of any Class
R Certificate without registration or qualification.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trust Fund by a Responsible Officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures were affixed, authorized to sign on
behalf of the Trustee shall bind the Trust Fund, notwithstanding that such
individuals or any of them have ceased to be so authorized prior to the
countersigning and delivery of such Certificates or did not hold such offices
at the date of such Certificate. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless such
Certificate shall have been manually countersigned by the Trustee
substantially in the form provided for herein, and such countersignature 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 countersignature.
Section 6.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as herein provided. The
Trustee shall initially serve as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as
herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth below,
the Trustee shall execute, countersign and deliver, in the name of the
designated transferee or transferees, one or more new Certificates
representing the applicable aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of a like Class in authorized denominations (in the
case of the Class A, Class M and Class B Certificates) or aggregate
Percentage Interests (in the case of the Class R Certificates), upon
surrender of the Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, countersign and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall (if so required
by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer satisfactory to the Trustee
and the Certificate Registrar duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of the
Book-Entry Certificates may not be transferred by the Trustee except to
another Depository; (ii) the Depository shall maintain book-entry records
with respect to the Certificate Owners and with respect to ownership and
transfers of such Book-Entry Certificates; (iii) registration of ownership
and transfers of the Book-Entry Certificates on the books of the Depository
shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses
from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of Holders under this Agreement, and
requests and directions for and votes of such representatives shall not be
deemed to be inconsistent if they are made with respect to different
Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown
on the books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(c) If (i)(A) the Master Servicer advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Master Servicer is unable to
locate a qualified successor, (ii) the Master Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Default,
Certificate Owners representing Percentage Interests aggregating not less
than 51% of the aggregate Percentage Interests of each outstanding Class of
Book-Entry Certificates advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry
system through the Depository is no longer desired by the Certificate Owners,
the Trustee shall notify all Certificate Owners, through the Depository, of
the occurrence of any such event and of the availability of definitive, fully
registered Certificates (the "Definitive Certificates") to Certificate Owners
-----------------------
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer 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 the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum by the
Holders of such Certificates sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be destroyed by the Trustee.
(d) So long as Definitive Certificates have not been issued, the
Depositor, the Master Servicer and the Trustee shall not have any liability
for any aspect of the records relating to or payment on account of
Certificate Owners, for monitoring or restricting any transfer of beneficial
ownership in a Book-Entry Certificate or for maintaining, supervising or
reviewing any records relating to Certificate Owners.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(i) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of
any Certificate, and (ii) there is delivered to the Trustee, the Master
Servicer and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of
written notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section 6.03, the Trustee 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 and the Certificate Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 6.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Master Servicer, the Trustee,
the Certificate Registrar and any agent of the Master Servicer, the Trustee
or the Certificate Registrar may treat the Person in whose name any
Certificate is registered in the Certificate Register as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section
5.01 and for all other purposes whatsoever, and none of the Master Servicer,
the Trustee, the Certificate Registrar or any agent of any of them shall be
affected by notice to the contrary.
Section 6.05. Appointment of Paying Agent. The Trustee is empowered
---------------------------
to appoint a Paying Agent meeting the eligibility requirements set forth
under Section 9.06 for the purpose of making distributions to
Certificateholders pursuant to Section 5.01; provided that prior to any such
appointment (other than the appointment of the Trustee as Paying Agent) the
Trustee shall first have received a letter from each Rating Agency to the
effect that the appointment of such Paying Agent will not result in the
reduction, suspension or withdrawal of the rating given the Class A, Class
M or Class B Certificates by such Rating Agency. The Trustee hereby
initially appoints itself as Paying Agent. In the event of any appointment
by the Trustee of a Person other than itself as Paying Agent, on or prior to
the Business Day prior to the related Distribution Date, the Master Servicer,
as agent of the Trustee, shall, to the extent received by the Master
Servicer, deposit or cause to be deposited with such Paying Agent a sum
sufficient to make the payments to Certificateholders in the amounts and in
the manner provided for in Section 5.01, such sum to be held in trust for the
benefit of Certificateholders.
The Trustee shall cause any Paying Agent other than itself 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 trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders or withheld pursuant to the Code.
Section 6.06. Restrictions on Transfer of Class M and Class B
-----------------------------------------------
Certificates. (a) The Class M and Class B Certificates shall be assigned
- ------------
or transferred only in accordance with this Section 6.06. Each Person who
has or who acquires any Ownership Interest in a Class M or Class B
Certificate that is a Book-Entry Certificate shall be deemed by the
acceptance or acquisition of such Ownership Interest to have made the
representation set forth in clause (b) below and otherwise to have agreed to
be bound by the provisions of this Section 6.06. Any assignment and Transfer
shall be made directly to the Person that is the principal in the transaction
and not to a nominee or agent for such principal.
(b) Each of Class M and Class B Certificates that is a Definitive
Certificate shall state that the Transferee thereof is deemed by the
acceptance or acquisition of such Certificate to represent that such
Transferee is not an employee benefit plan or a collective investment fund
or insurance company account which is treated as holding "plan assets"
subject to ERISA, or section 4975 of the Code, or a trustee or any other
Person acting on behalf of any such plan.
(c) Any attempted or purported Transfer of any Ownership Interest in
a Class M or Class B Certificate in violation of the provisions of this
Section 6.06 shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported Transferee shall become a Holder
of a Class M or Class B Certificate in violation of the provisions of this
Section 6.06, then, upon discovery by or due notification of the Trustee that
the registration of Transfer of such Ownership Interest in a Class M or Class
B Certificate was not in fact permitted by this Section 6.06, the last
preceding Holder that is a permitted Holder shall be restored to all rights
as Holder thereof retroactive to the date of registration of Transfer of such
Ownership Interest in the related Class M or Class B Certificate. Absent
negligence or willful misconduct, the Trustee shall be under no liability to
any Person for any registration of Transfer of an Ownership Interest in a
Class M or Class B Certificate that is in fact not permitted by this Section
6.06 or for making any distributions in respect of such Class M or Class B
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement.
Section 6.07. Restrictions on Transfer of Class R Certificates. (a)
------------------------------------------------
The Class R Certificates shall be assigned or transferred only in accordance
with this Section 6.07. Such assignment and Transfer shall be made directly
to the Person that is the principal in the transaction and not to a nominee
or agent for such principal.
(b) No registration of Transfer of a Class R Certificate shall be made
unless such Transfer is exempt from the registration requirements of the
Securities Act and any applicable state securities laws or is made in
accordance with the Securities Act and such laws. In the event registration
of such a Transfer is to be made within three years from the date of the
initial issuance of Certificates pursuant hereto, (i) the Trustee or the
Master Servicer may require a written Opinion of Counsel acceptable to and
in form and substance satisfactory to the Master Servicer that such Transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the Securities Act and state securities laws or is
being made pursuant to the Securities Act and such laws, which Opinion of
Counsel shall not be an expense of the Trustee or the Master Servicer, and
(ii) the Trustee shall require the Transferee to execute an investment letter
acceptable to and in form and substance satisfactory to the Master Servicer
certifying to the Trustee and the Master Servicer the facts surrounding such
Transfer, which investment letter shall not be an expense of the Trustee or
the Master Servicer. The Holder of a Class R Certificate desiring to effect
such registration of Transfer shall, and does hereby agree to, indemnify the
Trustee and the Master Servicer against any liability that may result if the
Transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No registration of Transfer of a Class R Certificate shall be made
unless the Trustee shall have received either (i) a representation letter
from the Transferee of such Class R Certificate, acceptable to and in form
and substance satisfactory to the Master Servicer, to the effect that such
Transferee is not an employee benefit plan subject to ERISA or section 4975
of the Code, or a trustee or any other Person acting on behalf of any such
plan, which representation letter shall not be an expense of the Trustee or
the Master Servicer, or (ii) in the case of any such Class R Certificate
presented for registration in the name of an employee benefit plan subject
to ERISA or section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee or any other Person acting on behalf of
any such plan, an Opinion of Counsel satisfactory to the Master Servicer to
the effect that the purchase or holding of such Class R Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions as well as the fiduciary
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those undertaken in this
Agreement, which representation letter or Opinion of Counsel shall not be an
expense of the Trustee or the Master Servicer.
(d) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Master Servicer or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause
(vi) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale, and the rights of each
Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall not be a Disqualified Organization and shall
promptly notify the Master Servicer and the Trustee of any change or
impending change in its status.
(ii) No Ownership Interest in a Class R Certificate may be
transferred without the express written consent of the Trustee. In
connection with any proposed registration of Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall, as a condition to such
consent, require delivery to it, in form and substance satisfactory to it,
each of the following:
A. an affidavit from the proposed Transferee to the effect
that such Transferee is not a Disqualified Organization and that it is not
acquiring its Ownership Interest in a Class R Certificate that is the subject
of the proposed Transfer as a nominee, trustee or agent for any Person who
is a Disqualified Organization; and
B. a covenant of the proposed Transferee to the effect that
the proposed Transferee agrees to be bound and to abide by the Transfer
restrictions applicable to a Class R Certificate.
(iii) Notwithstanding the delivery of the items described in
clause (ii) above, if a Responsible Officer of the Trustee has actual
knowledge that the proposed Transferee is a Disqualified Organization, no
registration of Transfer of any Ownership Interest in a Class R Certificate
to such proposed Transferee shall be effected; provided that the Trustee
shall have no obligation to determine whether any proposed Transferee is a
Disqualified Organization.
(iv) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to require delivery of the items
described in clause (ii) above from any other Person to whom such Person
attempts to transfer any Ownership Interest in a Class R Certificate and (B)
not to transfer any Ownership Interest in a Class R Certificate or to cause
the Transfer of any Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is a Disqualified
Organization.
(v) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of this
Section 6.07 shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported Transferee shall become a Holder
of a Class R Certificate in violation of the provisions of this Section 6.07,
then, upon discovery by or due notification of the Trustee that the
registration of Transfer of such Ownership Interest in a Class R Certificate
was not in fact permitted by this Section 6.07, the last preceding Holder
that is not a Disqualified Organization shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer of such
Ownership Interest in the related Class R Certificate. The Trustee shall be
under no liability to any Person for any registration of Transfer of an
Ownership Interest in a Class R Certificate that is in fact not permitted by
this Section 6.07 or for making any distributions in respect of such Class
R Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement absent negligence or
willful misconduct. The Trustee shall be entitled to recover from any Holder
of a Class R Certificate that was in fact a Disqualified Organization at the
time it became Holder all distributions made in respect of such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the last preceding Holder of such
Class R Certificate that is not a Disqualified Organization.
(vi) If any Disqualified Organization acquires any Ownership
Interest in a Class R Certificate in violation of the restrictions in this
Section 6.07, then the Master Servicer shall have the right, without notice
to the Holder of such Class R Certificate or any other Person having an
Ownership Interest therein, to sell such Class R Certificate to a purchaser
selected by the Master Servicer on such terms as the Master Servicer may
choose. Such purchaser may be the Master Servicer itself or any affiliate
of the Master Servicer that is not a Disqualified Organization. The proceeds
of such sale, net of commissions (which may include commissions payable to
the Master Servicer or its affiliates), expenses and taxes due, if any, will
be remitted by the Trustee to the last preceding Holder of such Class R
Certificate that is not a Disqualified Organization, except that in the event
that the Trustee determines that the Holder of such Class R Certificate may
be liable for any amount due under this Section 6.07 or any other provisions
of this Agreement, the Master Servicer may withhold a corresponding amount
from such remittance as security for such claim. The terms and conditions
of any sale under this clause (vi) shall be determined in the sole discretion
of the Master Servicer, and it shall not be liable to any Person having an
Ownership Interest in such Class R Certificate as a result of its exercise
of such discretion.
Section 6.08. Actions of Certificateholders. (a) Any request, demand,
-----------------------------
authorization, direction, notice, consent, waiver or other action provided
by this Agreement to be given or taken by Certificateholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Certificateholders 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, when required, to the Depositor or the Master Servicer. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and conclusive in favor
of the Trustee, the Depositor and the Master Servicer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be
done, by the Trustee, the Depositor or the Master Servicer in reliance
thereon, whether or not notation of such action is made upon such
Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section 6.08 as it shall deem necessary.
ARTICLE VII
THE MASTER SERVICER AND THE DEPOSITOR
Section 7.01. Liability of the Master Servicer and the Depositor. The
--------------------------------------------------
Master Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Master
Servicer herein. The Depositor shall be liable hereunder only for its
representation and warranty in Section 2.08.
Section 7.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Master Servicer and the Depositor. Any corporation into
- -----------------------------------------------------
which the Master Servicer or the Depositor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Master Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of the Master Servicer or the
Depositor, shall be the successor of the Master Servicer or the Depositor,
as applicable 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.
Section 7.03. Limitation on Liability of the Master Servicer and
--------------------------------------------------
Others. Neither the Master Servicer, the Depositor nor any of the directors
- ------
or officers or employees or agents of the Master Servicer or the Depositor
shall be under any liability to the Trust Fund or the Certificateholders for
any action taken or for refraining from the taking of any action, the
Depositor 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 which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties of the Master Servicer or by reason of reckless
disregard of obligations and duties of the Master Servicer hereunder. The
Master Servicer, the Depositor and any director or officer or employee or
agent of the Master Servicer or the Depositor 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. Subject to the second
succeeding sentence, the Master Servicer, the Depositor and any director or
officer or employee or agent of the Master Servicer or the Depositor shall
be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any legal action relating
to this Agreement or the Certificates, other than any loss, liability or
expense related to any specific Home Equity Loan or Home Equity Loans (except
as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Master Servicer nor the
Depositor shall be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to duties to service the Home Equity
Loans in accordance with this Agreement, and which in its opinion may involve
it in any expense or liability; provided, however, that the Master Servicer
or the Depositor may in its sole discretion undertake any such action which
it may deem necessary or desirable in respect of this Agreement, and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, any loss, liability or expense
incurred in connection with any such action shall be losses, liabilities and
expenses of the Trust Fund and the Master Servicer or the Depositor, as
applicable, shall be entitled to be reimbursed therefor only from amounts
otherwise distributable to Holders of the Class R Certificates on any
subsequent Distribution Date (to the extent the Master Servicer has not
previously been reimbursed or indemnified therefor). The Master Servicer's
right to indemnity or reimbursement pursuant to this Section 7.03 shall
survive any resignation or termination of the Master Servicer with respect
to any losses, liabilities or expenses arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation
or termination).
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
-----------------------------
of Section 7.02, the Master Servicer shall not resign from the obligations
and duties hereby imposed on it except (i) upon determination that the
performance of its obligations or 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 or its subsidiaries or Affiliates,
the other activities of the Master Servicer so causing such a conflict being
of a type and nature carried on by the Master Servicer or its subsidiaries
or Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions; (a) the Master Servicer has proposed a successor
master servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; (b) each Rating Agency
shall have delivered a letter to the Trustee stating that the appointment of
such proposed successor master servicer as Master Servicer hereunder will not
result in the reduction or withdrawal of the then-current rating of any rated
Class of Certificates; and such proposed successor master servicer has agreed
in writing to assume the obligations of Master Servicer hereunder and the
Master Servicer has delivered to the Trustee an Opinion of Counsel to the
effect that all conditions precedent to the resignation of the Master
Servicer and the appointment of and acceptance by the proposed successor
master servicer have been satisfied; provided, however, that in the case of
clause (i) above no such resignation shall become effective until the Trustee
or a successor Master Servicer shall have assumed the Master Servicer's
responsibilities and obligations hereunder in accordance with Section 8.02.
Any such resignation shall not relieve the Master Servicer of responsibility
for any of the obligations specified in Sections 8.01 and 8.02 as obligations
that survive the resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
Section 7.05. Delegation of Duties. In the ordinary course of
--------------------
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to
conduct such duties in accordance with standards comparable to those with
which the Master Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Master Servicer of its liabilities and responsibilities
with respect to such duties and shall not constitute a resignation within the
meaning of Section 7.04. The Master Servicer shall provide each Rating
Agency and the Trustee with written notice prior to the delegation of any of
its duties to any Person other than any of the Master Servicer's Affiliates
or their respective successors and assigns.
ARTICLE VIII
DEFAULT
Section 8.01. Events of Default. If any one of the following events
-----------------
("Events of Default") shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the
Certificate Account any deposit or enter any amount to the Home Equity Loan
Payment Record required to be made under the terms of this Agreement which
continues unremedied for a period of five Business Days after the date upon
which written notice of such failure shall have been given to the Master
Servicer by the Trustee, or to the Master Servicer and the Trustee by Holders
of Certificates of any Class affected thereby, evidencing, as to such Class,
Percentage Interests aggregating not less than 51%; or
(ii) failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or agreements
of the Master Servicer set forth in the Certificates or in this Agreement,
which failure (x) materially and adversely affect the rights of
Certificateholders and (y) continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee, or to
the Master Servicer and the Trustee by the Holders of Certificates of any
Class affected thereby, evidencing, as to such Class, Percentage Interests
aggregating not less than 51%; or
(iii) the entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator, 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,
and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) the consent by the Master Servicer to the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to substantially all of its
property, or 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
(v) Total Expected Losses exceed 7.50% of the Cut-Off Date
Pool Balance on or prior to the fifth anniversary of the Cut-Off or 11.25%
of the Cut-Off Date Pool Balance on or prior to the tenth anniversary of the
Cut-Off Date;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied by the Master Servicer, either the Trustee or the
Holders of Certificates of any Class affected thereby, evidencing, as to such
Class, Percentage Interests aggregating not less than 51%, by notice then
given in writing to the Master Servicer (and to the Trustee if given by the
Holders of Certificates) may terminate all of the rights and obligations of
the Master Servicer as master servicer under this Agreement, on or after the
receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to
the Certificates or the Trust Percentage of the Home Equity Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section 8.01; and, without limitation, the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of the 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 of the Trust Balance of each Home Equity Loan and
related documents, or otherwise. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the responsibilities and
rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Trustee for the administration by it of all necessary
documentation and all cash amounts that shall at the time be held by the
Master Servicer and credited by it to the Home Equity Loan Payment Record,
or that have been deposited by the Master Servicer in the Certificate Account
or thereafter received by the Master Servicer with respect to the Home Equity
Loans. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Mortgage Files to the successor
Master Servicer and amending this Agreement to reflect such succession as
Master Servicer pursuant to this Section 8.01 shall be paid by the
predecessor Master Servicer upon presentation of reasonable documentation of
such costs and expenses.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and
----------------------------------------
after the time the Master Servicer receives a notice of termination pursuant
to Section 8.01 or gives notice of its resignation under clause (i) of
Section 7.04, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as master servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Master Servicer by the terms and provisions hereof; and provided, however,
that the responsibilities and duties of the Master Servicer pursuant to
Sections 2.02 and 2.04 shall not terminate; provided, further, that any
liability of the Trustee in its capacity as successor master servicer shall
be limited to the extent such liability results from an inability to fulfill
its responsibilities and duties as successor master servicer due to any
failure on the part of the original Master Servicer to deliver the
documentation and cash amounts referred to in Section 8.01 or otherwise
fulfill its obligations hereunder. As compensation therefor, the Trustee
shall be entitled to such compensation as the Master Servicer would have been
entitled to hereunder if no such notice of termination had been given,
including, without limitation, any investment earnings on any Permitted
Investments hereunder to which the Master Servicer would have been entitled.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to
act, or shall, if it is legally unable so to act, appoint, or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution that is then servicing a home equity loan portfolio and
having all licenses, permits and approvals required by applicable law, and
a net worth of not less than $10,000,000 as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, unless
the Trustee is prohibited by law from so acting, the Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment
and assumption, the successor shall be entitled to receive compensation out
of payments on Home Equity Loans in an amount equal to the compensation which
the Master Servicer would otherwise have received pursuant to Section 3.08
(or such lesser compensation as the Trustee and such successor shall agree).
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The
appointment of a successor Master Servicer, including the Trustee, shall not
affect any liability of a predecessor Master Servicer that may have arisen
under this Agreement prior to its termination as Master Servicer (including,
without limitation, any deductible under an insurance policy pursuant to
Section 3.04), nor shall any successor Master Servicer, including the
Trustee, be liable for any acts or omissions of any predecessor Master
Servicer or for any breach by such predecessor Master Servicer or the
Depositor of any of their representations or warranties contained herein or
in any related document or agreement.
(b) Any successor to the Master Servicer as master servicer, including
the Trustee, shall, during the term of its service as master servicer (i)
continue to service and administer the Home Equity Loans for the benefit of
Certificateholders, and, retain any amounts representing prepayment premiums,
fees or late charge penalties or for application towards taxes, insurance
premiums, assessments and similar items, and payments representing interest
in excess of interest at the Net Loan Rate, for the benefit of such successor
master servicer and (ii) maintain in force (x) a policy or policies of
insurance covering errors and omissions in the performance of its obligations
as master servicer hereunder and (y) a fidelity bond in respect of its
officers, employees and agents to the same extent as the Master Servicer is
so required pursuant to Section 3.12.
Section 8.03. Notification to Certificateholders. Upon any termination
----------------------------------
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof
to Certificateholders at their respective addresses appearing in the
Certificate Register and to each Rating Agency at the respective address
provided to the Trustee in writing.
Section 8.04. Waiver of Past Events of Default. The Holders of
--------------------------------
Certificates evidencing not less than 51% of the aggregate Percentage
Interests may, on behalf of all Holders of Certificates, waive any default
by the Master Servicer in the performance of its obligations hereunder and
its consequences, except a default in making any required deposits to or
payments from the Certificate Account in accordance with this Agreement.
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.
ARTICLE IX
THE TRUSTEE
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
-----------------
of an Event of Default and after the curing of all Events of Default which
may have occurred, undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured) and is actually known to a Responsible
Officer, 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 man would exercise or use under the circumstances in
the conduct of his own affairs.
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 to the Trustee
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement.
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) prior to the occurrence of an Event of Default of which
a Responsible Officer of the Trustee shall have actual knowledge, and after
the curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates of any Class
affected thereby, evidencing, as to such Class, Percentage Interests
aggregating not less than 51% relating 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; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the Master
Servicer referred to in clauses (i) and (ii) of Section 8.01 unless a
Responsible Officer of the Trustee at the Corporate Trust Office obtains
actual knowledge of such failure or the Trustee receives written notice of
such failure from the Master Servicer or the Holders of Certificates of any
Class affected thereby, evidencing, as to such Class, Percentage Interests
aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in 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 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.
Section 9.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 9.01:
(i) the Trustee may request and conclusively rely upon, and
shall be protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, 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 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 reliance thereon;
(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement (except its obligation
to act as successor Master Servicer pursuant to Section 8.02), or to
institute, conduct or defend any litigation hereunder or in relation hereto,
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; 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 bad faith in the performance of
any such act; nothing contained herein shall, however, relieve the Trustee
of its obligations, upon the occurrence of an Event of Default (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs;
(iv) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, 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 documents,
unless requested in writing to do so by Holders of Certificates of any Class
affected thereby, evidencing, as to such Class, Percentage Interests
aggregating not less than 51%; 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 cost, expense or liability as a condition
to such proceeding. The reasonable expense of every such examination shall
be paid by the Master Servicer or, if paid by the Trustee, shall be
reimbursed by the Master Servicer upon demand. Nothing in this clause (v)
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian; and
(vii) for purposes of this Agreement, the Trustee shall not be
deemed to have knowledge or notice of any event or fact until such time as
a Responsible Officer of the Trustee has actual knowledge of such event or
fact or the Trustee receives written notice of such event or fact from the
Master Servicer or the Holders of Certificates of any Class affected thereby,
evidencing, as to such Class, Percentage Interests aggregating not less than
51%.
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.
--------------------------------------------------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Master Servicer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and countersignature of the Trustee
on the Certificates) or of any Home Equity Loan or related document. The
Trustee shall not be accountable for the use or application by the Master
Servicer of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Master Servicer or any
Originator in respect of the Home Equity Loans or deposited in or withdrawn
from the Certificate Account by the Master Servicer. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Home Equity
Loan, or the perfection and priority of any Mortgage or the maintenance of
any such perfection or priority, or for or with respect to the sufficiency
of the Trust Fund or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation,
the existence, condition and ownership of any Mortgaged Property; the
existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Master Servicer pursuant to
Section 8.02); the existence and content of any Home Equity Loan on any
computer or other record thereof (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 8.02); the validity of the
assignment of any Home Equity Loan to the Trust Fund or of any intervening
assignment; the completeness of any Home Equity Loan; the performance or
enforcement of any Home Equity Loan (other than if the Trustee shall assume
the duties of the Master Servicer pursuant to Section 8.02); the compliance
by the Depositor or the Master Servicer with any warranty or representation
made under this Agreement or in any related document or the accuracy of any
such warranty or representation prior to the Trustee's receipt of notice or
other discovery of any non-compliance therewith or any breach thereof; any
investment of monies by or at the direction of the Master Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust Fund property that it may hold in its individual
capacity; the acts or omissions of the Depositor, the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant
to Section 8.02), any Subservicer or any Mortgagor; any action of the Master
Servicer (other than if the Trustee shall assume the duties of the master
Servicer pursuant to Section 8.02), any Subservicer, or any custodian of the
Mortgage Files taken in the name of the Trustee; the failure of the Master
Servicer, any Subservicer, or any custodian of the Mortgage Files to act or
perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant
to Section 8.02); provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement or from
any liability for its failure to so perform. The Trustee shall not be liable
or accountable for the acts, omissions, misconduct or negligence of any
Originator acting in its capacity as custodian of any Mortgage Files
hereunder. The Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or otherwise to
perfect or maintain the perfection of any security interest or lien granted
to it hereunder (unless the Trustee shall have become the successor Master
Servicer) or to prepare or file any Securities and Exchange Commission filing
for the Trust Fund or to record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of
Certificates and transact banking and trust business with the Master
Servicer, the Originators and any of their affiliates, with the same rights
as it would have if it were not Trustee.
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses. The
--------------------------------------------------
Master Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of
its powers and duties hereunder, and the Master Servicer will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel, agents and
of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or
which is the responsibility of Certificateholders hereunder. In addition,
the Master Servicer and the Depositor, jointly and severally, covenant and
agree to indemnify the Trustee, its officers, agents and employees, from, and
hold it harmless against, any and all losses, liabilities, damages, claims
or expenses, including the costs and expenses of defending itself against any
claim or liability, arising in connection with its performance hereunder
other than those resulting from the negligence or bad faith of the Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a Person having its principal office in New
York or in the same state as that in which the initial Trustee under this
Agreement has its principal office and organized and doing business under the
laws of such State or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such Person 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
9.06, the combined capital and surplus of such Person 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 the provisions of this Section 9.06, the Trustee
shall resign in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at
---------------------------------
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Master Servicer and each Rating Agency. Upon
receiving such notice of resignation, the Master Servicer shall promptly
appoint a successor Trustee (which successor Trustee shall be reasonably
acceptable to the Depositor) by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one copy
to the successor Trustee. If no successor Trustee shall have been so
appointed and having 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.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Master Servicer, or if at any time the Trustee shall be
legally unable to act, 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, then
the Master Servicer may remove the Trustee. If the Master Servicer removes
the Trustee under the authority of the immediately preceding sentence, the
Master Servicer shall promptly appoint a successor Trustee (which successor
Trustee shall be reasonably acceptable to the Depositor) by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
-----------------
provided in Section 9.07 shall execute, acknowledge and deliver to the Master
Servicer, the Depositor and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Master
Servicer, the predecessor Trustee and the successor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.
Each successor Trustee shall be entitled to receive from the Master
Servicer reasonable compensation for services rendered, and payment and
reimbursement for reasonable expenses, disbursements and advances, as more
specifically set forth in Section 9.05 hereof and according to the same
standard as provided in Section 9.05.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, 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. If the Master Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Master Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any Person into
----------------------------------
which the Trustee may be merged or converted 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 Person succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such Person shall
be eligible under the provisions of Section 9.06, 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.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or any Mortgaged Property may at the time be located,
the Master Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust Fund, or any
part thereof, and, subject to the other provisions of this Section 9.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. The Master Servicer shall not
unreasonably refrain from joining with the Trustee in executing and
delivering such instruments, and if the Master Servicer shall not have joined
in such appointment within 15 days after the receipt by it of a request so
to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Trustee shall notify Moody's of
any appointment of a co-trustee or separate trustee hereunder. The Trustee
shall remain liable hereunder for any actions delegated to a co-trustee or
separate trustee despite such delegation. The Master Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all 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 or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Master Servicer hereunder), 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 singly by
such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee, except that following the occurrence of an Event of Default that
has not been cured, the Trustee acting alone may accept the resignation of
or remove any co-trustee or separate trustee.
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 or co-trustee shall refer to this Agreement
and the conditions of this Article IX. 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 and a copy thereof given to the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee 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.
Section 9.11. Tax Returns. The Trustee, upon request, will furnish the
-----------
Master Servicer with all such information as may be in the possession of the
Trustee and reasonably required in connection with the preparation of all tax
returns of the Trust Fund, and shall, if required by law, upon request,
execute such returns.
Section 9.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto. Any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect
of which such judgment has been recovered.
Section 9.13. Suits for Enforcement. In case an Event of Default or
---------------------
other default by the Master Servicer or the Depositor hereunder shall occur
and be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its right and the rights of the Certificateholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained
in this Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual
to protect and enforce any of the rights of the Trustee or the
Certificateholders.
ARTICLE X
TERMINATION
Section 10.01. Termination Upon Purchase by the Master Servicer or
---------------------------------------------------
Liquidation of All Home Equity Loans. (a) Subject to Section 10.02, the
- ------------------------------------
respective obligations and responsibilities of the Master Servicer and the
Trustee created hereby (other than the obligation of the Trustee to make
certain payments to Certificateholders after the final Distribution Date and
the obligations of the Master Servicer under Section 9.05 and to send certain
notices as hereinafter set forth) shall terminate upon the last action
required to be taken by the Trustee on the final Distribution Date pursuant
to this Article X following the earliest of (i) the purchase by the Master
Servicer of all Home Equity Loans and all property acquired in respect of any
Home Equity Loan remaining in the Trust Fund, as described below, (ii) the
sale of the assets of the Trust Fund as described below or (iii) the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust Fund or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Home Equity Loan; provided, however, that
in no event shall the trust created hereby continue beyond 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,
living on the date hereof.
(b) The Master Servicer (i) may at its option purchase all Home Equity
Loans pursuant to clause (i) of Section 10.01(a) on any Distribution Date
upon which the Pool Balance immediately prior to such Distribution Date shall
be equal to or less than ten percent (10%) of the Cut-off Date Pool Balance
and (ii) should the Trust Balances of any Home Equity Loans remain
outstanding on the Distribution Date in September 2026 shall purchase all
such Trust Balances on such Distribution Date, in each case at a price equal
to the greatest of (x) the aggregate of the Loan Balances of the Home Equity
Loans as of the first day of the Collection Period applicable to such final
Distribution Date, plus one month's interest at the applicable Net Loan Rate
on the Loan Balance of each Home Equity Loan (including any Foreclosed Home
Equity Loans), (y) the aggregate fair market value (as determined by the
Master Servicer as of the close of business on the third Business Day next
preceding the date upon which notice of any such termination is furnished to
Certificateholders pursuant to clause (c) of this Section 10.01) of all of
the assets of the Trust Fund, and (z) the sum of (1) the Class A Certificate
Balance together with any Class A Unpaid Interest Shortfall and interest
accrued during the related Accrual Period thereon at the Class A Pass-Through
Rate, (2) the Class M Certificate Balance together with any Class M Unpaid
Interest Shortfall and interest accrued during the related Accrual Period
thereon at the Class M Pass-Through Rate and (3) the Class B Certificate
Balance together with any Class B Unpaid Interest Shortfall and interest
accrued during the related Accrual Period thereon at the Class B Pass-Through
Rate (the greatest of (x), (y) and (z) being referred to herein as the "Pool
----
Purchase Price"). In connection with such purchase, the Master Servicer
- --------------
shall provide to the Trustee the certification required by Section 3.07 and
the Trustee shall, promptly following payment of the Pool Purchase Price,
execute proper instruments acknowledging termination and discharge of this
Agreement. Any obligation of the Master Servicer to so purchase each Home
Equity Loan as provided herein shall be solely that of the original Master
Servicer and shall survive any resignation or termination of the original
Master Servicer hereunder.
If for any reason the Master Servicer fails to make the purchase
required by clause (ii) of Section 10.01(b), then in accordance with such
procedures as the Trustee in its sole judgment shall deem appropriate, the
Trustee shall conduct an auction (the "Final Auction") of the assets of the
-------------
Trust Fund (other than amounts on deposit in the Certificate Account) in
order to effect a termination of the Trust Fund promptly thereafter. The
Master Servicer or any Affiliate thereof may bid at such Final Auction but
shall not be required to do so. The Trustee shall sell and transfer the
assets of the Trust Fund, without recourse, to the highest bidder therefor
at the Final Auction and shall deposit the purchase price therefor, less all
expenses of the Final Auction, including all reasonable fees and expenses of
any third parties engaged by the Trustee to assist in the Final Auction
process, in the Certificate Account.
(c) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly
by the Trustee (upon receipt of written directions from the Master Servicer,
if the Master Servicer is purchasing the assets of the Trust Fund, which
direction shall be received not later than the first day of the month
preceding the month of such final distribution date) by letter to
Certificateholders mailed not earlier than the 15th day and not later than
the 25th day of the month next preceding the month of such final distribution
specifying (i) the Distribution Date upon which final distribution of the
Certificates will be made upon presentation and surrender of Certificates at
the office or agency of the Trustee therein designated, (ii) the amount of
any such final distribution and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being
made only upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified. In the event written directions
are delivered by the Master Servicer to the Trustee as described in the
preceding sentence, the Master Servicer shall deposit in the Certificate
Account on or before the Distribution Date for such final distribution in
immediately available funds an amount which, when added to the amount on
deposit in the Certificate Account, will be equal to the purchase price for
the assets of the Trust Fund computed as above provided. Such deposit shall
be in lieu of the deposit otherwise required to be made in respect of such
Distribution Date pursuant to Section 4.02.
(d) Upon presentation and surrender of the Certificates, the Trustee
shall, to the extent of funds available in the Certificate Account cause to
be distributed to Certificateholders on the Distribution Date for such final
distribution in proportion to their respective Percentage Interests an amount
equal to (i) in the case of Holders of the Class A Certificates, the Class
A Certificate Balance together with any Class A Unpaid Interest Shortfall
plus interest accrued during the related Accrual Period at the Class A
Pass-Through Rate on such amounts, (ii) in the case of the Class M
Certificates, the Class M Certificate Balance together with any Class M
Unpaid Interest Shortfall plus interest accrued during the related Accrual
Period at the Class M Pass-Through Rate on such amounts and (iii) in the case
of Holders of the Class B Certificates, the Class B Certificate Balance
together with any Class B Unpaid Interest Shortfall plus interest accrued
during the related Accrual Period at the Class B Pass-Through Rate on such
amounts. Upon such termination, any amounts remaining on deposit in the
Certificate Account (other than the amounts retained to meet claims) after
application pursuant to the preceding sentence shall be distributed to
Holders of the Class R Certificates in proportion to their respective
Percentage Interests therein. The distribution on such final Distribution
Date shall be in lieu of the distribution otherwise required to be made on
such Distribution Date in respect of each Class of Certificates.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account
(which shall be an Eligible Account) for the benefit of such
Certificateholders and the Master Servicer (if the Master Servicer has
exercised its right to repurchase the assets of the Trust Fund), or the
Trustee (in any other case) and 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 the
period then specified in the escheat laws of the State of New York after such
notice, such amount remains unclaimed, the Holders of the Class R
Certificates shall be entitled to all unclaimed funds and other assets which
remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds, and the Certificateholders
shall look to the Holder of the Class R Certificates for payment.
Section 10.02. Additional Termination Requirements. (a) In the event
-----------------------------------
of a purchase by the Master Servicer or sale of the Home Equity Loans as
provided in Section 10.01(b), the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
received an Opinion of Counsel to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 10.02 will not (i)
result in the imposition of taxes on "prohibited transactions" of the Trust
Fund as defined in section 860F of the Code, or (ii) cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date,
Holders of the Class R Certificates shall adopt a plan of complete
liquidation of the Trust Fund; and
(ii) at or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date, the
Trustee shall sell all of the assets of the Trust Fund to the Master Servicer
for cash in an amount equal to the Pool Purchase Price; provided, however,
that in the event that a calendar quarter ends after the time of adoption of
such a plan of complete liquidation but prior to such final Distribution
Date, the Trustee shall not sell any of the assets of the Trust Fund prior
to the close of that calendar quarter.
(b) By its acceptance of a Class R Certificate, a Holder thereof hereby
agrees to adopt such a plan of complete liquidation upon the written request
of the Master Servicer and to take such other action in connection therewith
as may be reasonably requested by the Master Servicer.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. This Agreement may be amended from time to
---------
time by the Depositor, the Master Servicer and the Trustee, with the consent
of any Servicer LOC Issuer if its rights are materially and adversely
affected, but without the consent of any of the Certificateholders, to cure
any ambiguity, to correct or supplement any provisions herein or therein
which may be inconsistent with any other provisions herein or therein, as the
case may be, or to add any other provisions with respect to matters or
questions arising under this Agreement, including provisions relating to the
issuance of Definitive Certificates to Certificate Owners in the event that
book-entry registration of the Certificates is no longer permitted, which
shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Certificateholder or a letter from each Rating Agency stating that such
action will not result in a downgrading of the rating of any rated Class of
Certificates.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee, but without the consent of any of the
Certificateholders, to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to (i) maintain the
qualification of the Trust Fund as a REMIC under the Code or avoid, or
minimize the risk of, the imposition of any tax on the Trust Fund under the
Code that would be a claim against the Trust Fund's assets, provided that
there shall have been delivered an Opinion of Counsel addressed to the
Trustee to the effect that such action is necessary or appropriate to
maintain such qualification or avoid any such tax or minimize the risk of its
imposition, or (ii) prevent the Trust Fund from entering into any "prohibited
transaction" as defined in section 860F of the Code provided that there shall
have been delivered an Opinion of Counsel addressed to the Trustee to the
effect that such action is necessary or appropriate to prevent the Trust Fund
from entering into such prohibited transaction.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee, with the consent of (x) any Servicer LOC
Issuer if its rights are materially and adversely affected and (y) Holders
of the Certificates of each Class affected thereby, evidencing, as to such
Class, Percentage Interests aggregating not less than 51%, 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 Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, collections of
payments on Home Equity Loans or distributions which are required to be made
on any Certificate without the consent of the Holder of such Certificate or
(ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Certificates then
outstanding.
At least three Business Days prior to the execution of any such
amendment requiring the consent of the Certificateholders, the Master
Servicer shall furnish written notification of the substance of such
amendment to the Rating Agencies. Promptly after the execution of any such
amendment made with the consent of the Certificateholders, the Master
Servicer shall furnish written notification of the substance of such
amendment to each Certificateholder and fully executed original counterparts
of the instruments effecting any such amendment to the Rating Agencies and
any Servicer LOC Issuer.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment
or consent, 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 Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe. The
Master Servicer is authorized to establish a record date for the purpose of
identifying the Certificateholders eligible to consent to any proposed
amendment hereunder.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and conclusively rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied. The Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Trustee's
own rights, duties or immunities under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Master
Servicer and at its expense if such recordation materially and beneficially
affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death
------------------------------------------
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02, 11.01, 11.07 and this Section 11.03) or in any
manner otherwise control the operation and management of the Trust Fund, or
the obligations of the parties hereto, nor shall anything herein set forth,
or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to
any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
No Certificateholder of any Class shall have any right by virtue or by
availing itself of any provisions 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 default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates of such Class,
evidencing, as to such Class, Percentage Interests aggregating not less than
51% 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 costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 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; 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 itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
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 equal, ratable and common benefit
of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.04. 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.
Section 11.05. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt
requested, to (a) in the case of the Depositor, to Merrill Lynch Mortgage
Investors, Inc., 250 Vesey Street, World Financial Center, North Tower, New
York, New York 10218-1310, Attention: President; (b) in the case of the
Master Servicer and Beneficial, Beneficial Mortgage Corporation, 301 North
Walnut Street, Wilmington, Delaware 19801, Attention: Corporate Secretary;
and (c) in the case of the Trustee, at the Corporate Trust Office, or as to
each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register,
and to each Rating Agency in the same manner at the respective address
provided to the Trustee in writing. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
Section 11.06. 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 11.07. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 7.02 and 7.04, this
Agreement may not be assigned by the Master Servicer without the prior
written consent of Holders of Certificates of any Class affected thereby,
evidencing, as to such Class, Percentage Interests aggregating not less than
66%.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
-----------------------------------------
agree that the Certificateholders shall not be personally liable for
obligations of the Trust Fund, that the beneficial ownership interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust Fund or for any reason whatsoever, and that the
Certificates upon execution, countersignature and delivery thereof by the
Trustee pursuant to Section 2.04 are and shall be deemed fully paid.
Section 11.09. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the Company, Beneficial and the Trustee have caused
this Agreement to be duly executed by their respective officers all as of the
day and year first above written.
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
as the Depositor
By /s/ Peter Cerwin
-----------------------------------------
Name: Peter Cerwin
Title: Vice President
BENEFICIAL MORTGAGE CORPORATION,
as Master Servicer and for purposes of
Section 2.04
By /s/ Samuel F. McMillan
-----------------------------------------
Name: Samuel F. McMillan
Title: Vice President (Chief Financial)
THE CHASE MANHATTAN BANK,
as Trustee
By /s/ Denis Kelly
-----------------------------------------
Name: Denis Kelly
Title: Trust Officer
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Co-Trustee
By /s/ Susan L. Needham
-----------------------------------------
Name: Susan L. Needham
Title: Vice President, Trust Officer
State of New York )
) ss.:
County of New York )
On the 26th day of September, 1996 before me, a notary public in and for
the state of New York, personally appeared Peter Cerwin, known to me who,
being by me duly sworn, did depose and say that he is the Vice President of
Merrill Lynch Mortgage Investors, Inc., a corporation formed under the laws
of the State of Delaware, being among the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of such corporation.
/s/ Marcia D. Brown
_____________________________________
Notary Public
(Notarial Seal)
State of New Jersey )
) ss.:
County of Somerset )
On the 25th day of September, 1996 before me, a notary public in and for
the state of New York, personally appeared Samuel F. McMillian known to me
who, being by me duly sworn, did depose and say that he is the Vice President
(Chief Financial) of Beneficial Mortgage Corporation, a corporation formed
under the laws of the State of Delaware, being among the parties that executed
the foregoing instrument; and that he signed his name thereto by order of
the Board of Directors of such corporation.
/s/ Nancy Ann Spetz
________________________________________
Notary Public
(Notarial Seal)
State of New York )
) ss.:
County of New York )
On the 27th day of September, 1996 before me, a notary public in and for
the state of New York, personally appeared Denis Kelly, known to me who, being
by me duly sworn, did depose and say that he is the Trust Officer of The Chase
Manhattan Bank, one of the parties that executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
bank.
/s/ Josephine Doell
________________________________________
Notary Public
(Notarial Seal)
State of Texas )
) ss.:
County of Harris )
On the 27th day of September, 1996 before me, a notary public in and for
the state of Texas, personally appeared Susan L. Needham, known to me who,
being by me duly sworn, did depose and say that she is the Vice President
and Trust Officer of Texas Commerce Bank National Association, one of the
parties that executed the foregoing instrument; and that she signed her
name thereto by order of the Board of Directors of said bank.
/s/ B.Y. Stampp
________________________________________
Notary Public
(Notarial Seal)
EXHIBIT A
---------
(FORM OF CLASS A CERTIFICATE)
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST THEREIN.)
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
Cut-off Date: August 31, 1996 Denomination: $_______________
First Distribution Date: October 28, 1996 Original Class A Certificate
Balance: $_____________
Certificate No. ______ CUSIP No. __________________
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1996-2
CLASS A CERTIFICATE
evidencing a Percentage Interest in the distributions allocable to
the Class A Certificates with respect to a pool of first and second lien
revolving home equity mortgage loans originated by certain subsidiaries of
Beneficial Corporation (the "Originators"), including Beneficial Mortgage
Corporation, which has acquired the Home Equity Loans from such other
Originators, has sold the Trust Balances of the Home Equity Loans to the
Depositor, which sold such Trust Balances to the Trust Fund, and shall act
as Master Servicer with respect to the Home Equity Loans.
This Certificate does not represent an obligation of or interest in
Merrill Lynch Mortgage Investors, Inc., Beneficial Mortgage Corporation or
the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Home Equity Loans are guaranteed or insured
by any governmental agency or instrumentality.
This certifies that _____________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the Original Class A Certificate Balance)
in certain monthly distributions with respect to a pool of first and second
lien revolving home equity mortgage loans (the "Home Equity Loans"), the
Trust Balances of which have been sold by Beneficial Mortgage Corporation to
the Depositor and by the Depositor to the Trust Fund and with respect to
which Beneficial Mortgage Corporation shall act as master servicer (the
"Master Servicer," which term includes any successor Master Servicer under
the Agreement referred to below). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of September 1, 1996 (as amended,
supplemented or modified from time to time the "Agreement") among Merrill
Lynch Mortgage Investors, Inc., as Depositor, Beneficial Mortgage
Corporation, as Master Servicer, Texas Commerce Bank National Association,
as co-trustee, and The Chase Manhattan Bank, as trustee (the "Trustee," which
term shall include any successor Trustee under the Agreement), a description
of certain of the pertinent provisions of which is set forth hereafter. To
the extent not defined herein, capitalized terms used herein have the
meanings assigned to them in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 28th day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing
on October 28, 1996, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
such Distribution Date (or, if the Certificates all shall be held in the form
of Definitive Certificates, the last day of the calendar month preceding the
month of such Distribution Date) (the "Record Date"), in an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
Class A Distribution Amount required to be distributed to Holders of Class
A Certificates on such Distribution Date.
Distributions on this Certificate will be made by the Trustee by check
or money order mailed to the Person entitled thereto at the address appearing
in the Certificate Register, or upon written request by the
Certificateholder, by wire transfer (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement)
or by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the City and State of New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Home Equity Loan Asset Backed Certificates, Series 1996-2,
issued in four classes (Class A, Class M, Class B and Class R, herein called
the "Certificates"), and representing a beneficial ownership interest in (i)
the Trust Balances of the Home Equity Loans and the proceeds thereof, (ii)
such assets as shall from time to time be identified as credited to the Home
Equity Loan Payment Record or deposited in the Certificate Account in
accordance with the Agreement, (iii) property which secured a Home Equity
Loan and which has been acquired by the Trust Fund through foreclosure or
deed in lieu of foreclosure and (iv) any Servicer LOC.
The Certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Balances of the Home Equity Loans,
all as more specifically set forth in the Agreement. The Certificateholder,
by its acceptance of this Certificate, agrees that it will look solely to the
Trust Fund for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement, and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer and the rights of the Certificateholders under the Agreement,
at any time by the Depositor, the Master Servicer and the Trustee with the
consent of (x) any Servicer LOC Issuer if its rights are materially and
adversely affected and (y) Holders of Certificates of each Class affected
thereby, evidencing, as to such Class, Percentage Interests aggregating not
less than 51%. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of
the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration
of transfer at the office or agency maintained by the Trustee in the City and
State of New York, accompanied by a written instrument of transfer in form
satisfactory to the Master Servicer, the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of
authorized denominations, if applicable, and evidencing the same aggregate
fractional undivided interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of a like Class in authorized
denominations (in the case of the Certificates) and evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment by the Holder of this
Certificate of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Master Servicer, the Trustee and the Certificate Registrar and any
agent of the Master Servicer, the Trustee or the Certificate Registrar may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Master Servicer, the Trustee, the
Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust Fund created thereby shall terminate upon payment to the
Certificateholders, or provision therefor, in accordance with the Agreement
upon (i) the purchase by the Master Servicer or the sale by the Trustee of
the Trust Balance of each Home Equity Loan and all property acquired in
respect of any Home Equity Loan remaining in the Trust Fund at a price
determined as provided in the Agreement or (ii) the later of the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust Fund or the disposition of all property acquired upon foreclosure or
by deed in lieu of foreclosure of any Home Equity Loan. The Master Servicer
(i) may, at its option, purchase the Trust Balance of each Home Equity Loan
and property in respect of any Home Equity Loan on any Distribution Date as
of which the Pool Balance is equal to or less than ten percent (10%) of the
Cut-off Date Pool Balance and (ii) should the Trust Balances of any Home
Equity Loans remain outstanding on the Distribution Date in September 2026,
shall purchase all such Trust Balances pursuant to the Agreement, which
purchase will result in retirement of the Certificates. If the Master
Servicer fails for any reason to purchase the Trust Balances of the Home
Equity Loans on the September 2026 Distribution Date, then the Trustee shall
conduct an auction of the assets of the Trust Fund (other than amounts on
deposit in the Certificate Account) in order to effect a termination of the
Trust Fund promptly thereafter.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By _______________________________________
Authorized Officer
Countersigned:
By: _____________________________________
Authorized Officer of
The Chase Manhattan Bank, not in its
individual capacity but solely as Trustee
EXHIBIT B
---------
(FORM OF CLASS M CERTIFICATE)
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST THEREIN.)
THE RIGHTS OF THE HOLDERS OF THE CLASS M CERTIFICATES TO RECEIVE
DISTRIBUTIONS ON THEIR CLASS M CERTIFICATES ARE SUBORDINATED TO THE RIGHTS
OF THE HOLDERS OF THE CLASS A CERTIFICATES TO RECEIVE SUCH DISTRIBUTIONS, AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
Cut-off Date: August 31, 1996 Denomination: $___________
First Distribution Date: October 28, 1996
Original Class M Certificate Balance:
$__________
Certificate No. _____ CUSIP No. __________________
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1996-2
CLASS M CERTIFICATE (SUBORDINATE)
evidencing a Percentage Interest in the distributions allocable to
the Class M Certificates with respect to a Trust Fund consisting of a pool
of first and second lien revolving home equity mortgage loans originated by
certain subsidiaries of Beneficial Corporation (the "Originators"), including
Beneficial Mortgage Corporation, which has acquired the Home Equity Loans
from such other Originators, has sold the Trust Balances of the Home Equity
Loans to the Depositor, which sold such Trust Balances to the Trust Fund, and
shall act as Master Servicer with respect to the Home Equity Loans.
This Certificate does not represent an obligation of or interest in
Merrill Lynch Mortgage Investors, Inc., Beneficial Mortgage Corporation or
the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Home Equity Loans are guaranteed or insured
by any governmental agency or instrumentality.
This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the Original Class M Certificate Balance)
in certain monthly distributions with respect to a Trust Fund consisting of
a pool of first and second lien revolving home equity mortgage loans (the
"Home Equity Loans"), the Trust Balances of which have been sold by
Beneficial Mortgage Corporation to the Depositor and by the Depositor to the
Trust Fund and with respect to which Beneficial Mortgage Corporation shall
act as master servicer (in such capacity, the "Master Servicer," which term
includes any successor Master Servicer under the Agreement referred to
below). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1996 (as amended, supplemented or modified
from time to time the "Agreement") among Merrill Lynch Mortgage Investors,
Inc., as Depositor, Beneficial Mortgage Corporation, as Master Servicer,
Texas Commerce Bank National Association, as co-trustee, The Chase Manhattan
Bank, as trustee (the "Trustee," which term shall include any successor
Trustee under the Agreement), a description of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein have the meanings assigned to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 28th day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing
on October 28, 1996, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
such Distribution Date (or, if the Certificates all shall be held in the form
of Definitive Certificates, the last day of the calendar month preceding the
month of such Distribution Date) (the "Record Date"), in an amount equal the
product of the Percentage Interest evidenced by this Certificate and the
Class M Distribution Amount required to be distributed to Holders of the
Class M Certificates on such Distribution Date. The rights of the Holders
of the Class M Certificates to receive distributions with respect to
principal are subordinated to the rights of the Holders of the Class A
Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by check
or money order mailed to the Person entitled thereto at the address appearing
in the Certificate Register, or upon written request by the
Certificateholder, by wire transfer (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement)
or by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the City and State of New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Home Equity Loan Asset Backed Certificates, Series 1996-2,
issued in four classes (Class A, Class M, Class B and Class R, herein called
the "Certificates"), and representing a beneficial ownership interest in (i)
the Trust Balances of the Home Equity Loans and the proceeds thereof, (ii)
such assets as shall from time to time be identified as credited to the Home
Equity Loan Payment Record or deposited in the Certificate Account in
accordance with the Agreement, (iii) property which secured a Home Equity
Loan and which has been acquired by the Trust Fund through foreclosure or
deed in lieu of foreclosure and (iv) any Servicer LOC.
The Certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Balances of the Home Equity Loans,
all as more specifically set forth in the Agreement. The Certificateholder,
by its acceptance of this Certificate, agrees that it will look solely to the
Trust Fund for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer, and the rights of the Certificateholders under the
Agreement, at any time by the Depositor, the Master Servicer and the Trustee
with the consent of (x) any Servicer LOC Issuer if its rights are materially
and adversely affected and (y) Holders of Certificates of each Class affected
thereby, evidencing, as to such Class, Percentage Interests aggregating not
less than 51%. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent
is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Certificates.
The Transferee of this Certificate is hereby deemed by the acceptance
or acquisition hereof to represent that such Transferee is not an employee
benefit plan or a collective investment fund or insurance company account
which is treated as holding "plan assets" (a "Plan") subject to 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"), or a trustee
or any other Person acting on behalf of any such Plan. Any purported
Transfer of a Class M Certificate in violation of this restriction on
Transfer will be null and void and vest no rights in the purported
Transferee.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of a like Class in authorized
denominations (in the case of the Certificates) and evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment by the Holder of this
Certificate of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Master Servicer, the Trustee and the Certificate Registrar and any
agent of the Master Servicer, Trustee or the Certificate Registrar may treat
the Person in whose name this Certificate is registered as the owner hereof
for all purposes, and none of the Master Servicer, the Trustee, the
Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust Fund created thereby shall terminate upon payment to the
Certificateholders, or provision therefor, in accordance with the Agreement
upon (i) the purchase by the Master Servicer or the sale by the Trustee of
the Trust Balance of each Home Equity Loan and all property acquired in
respect of any Home Equity Loan remaining in the Trust Fund at a price
determined as provided in the Agreement or (ii) the later of the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust Fund or the disposition of all property acquired upon foreclosure or
by deed in lieu of foreclosure of any Home Equity Loan. The Master Servicer
(i) may, at its option, purchase the Trust Balance of each Home Equity Loan
and property in respect of any Home Equity Loan on any Distribution Date as
of which the Pool Balance is equal to or less than ten percent (10%) of the
Cut-off Date Pool Balance and (ii) should the Trust Balances of any Home
Equity Loans remain outstanding on the Distribution Date in September 2026,
shall purchase all such Trust Balances pursuant to the Agreement, which
purchase will result in retirement of the Certificates. If the Master
Servicer fails for any reason to purchase the Trust Balances of the Home
Equity Loans on the September 2026 Distribution Date, then the Trustee shall
conduct an auction of the assets of the Trust Fund (other than amounts on
deposit in the Certificate Account) in order to effect a termination of the
Trust Fund promptly thereafter.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By _______________________________________
Authorized Officer
Countersigned:
By: _______________________________
Authorized Officer of
The Chase Manhattan Bank,
not in its individual capacity
but solely as Trustee
EXHIBIT C
---------
(FORM OF CLASS B CERTIFICATE)
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY PAYMENT IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST THEREIN.)
THE RIGHTS OF THE HOLDERS OF THE CLASS B CERTIFICATES TO RECEIVE
DISTRIBUTIONS ON THEIR CLASS B CERTIFICATES ARE SUBORDINATED TO THE RIGHTS
OF THE HOLDERS OF THE CLASS A AND CLASS M CERTIFICATES TO RECEIVE SUCH
DISTRIBUTIONS, AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
Cut-off Date: August 31, 1996 Denomination: $___________
First Distribution Date: October 28, 1996
Original Class B Certificate Balance:
$__________
Certificate No. _____ CUSIP No. __________________
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1996-2
CLASS B CERTIFICATE (SUBORDINATE)
evidencing a Percentage Interest in the distributions allocable to
the Class B Certificates with respect to a Trust Fund consisting of a pool
of first and second lien revolving home equity mortgage loans originated by
certain subsidiaries of Beneficial Corporation (the "Originators"), including
Beneficial Mortgage Corporation, which has acquired the Home Equity Loans
from such other Originators, has sold the Trust Balances of the Home Equity
Loans to the Depositor, which sold such Trust Balances to the Trust Fund, and
shall act as Master Servicer with respect to the Home Equity Loans.
This Certificate does not represent an obligation of or interest in
Merrill Lynch Mortgage Investors, Inc. Beneficial Mortgage Corporation or the
Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Home Equity Loans are guaranteed or insured
by any governmental agency or instrumentality.
This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the Original Class B Certificate Balance)
in certain monthly distributions with respect to a Trust Fund consisting of
a pool of first and second lien revolving home equity mortgage loans (the
"Home Equity Loans"), the Trust Balances of which have been sold by
Beneficial Mortgage Corporation to the Depositor and by the Depositor to the
Trust Fund and with respect to which Beneficial Mortgage Corporation shall
act as master servicer (in such capacity, the "Master Servicer," which term
includes any successor Master Servicer under the Agreement referred to
below). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1996 (as amended, supplemented or modified
from time to time the "Agreement") among Merrill Lynch Mortgage Investors,
Inc., as Depositor, Beneficial Mortgage Corporation, as Master Servicer, and
The Chase Manhattan Bank, as trustee (the "Trustee," which term shall include
any successor Trustee under the Agreement), a description of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, capitalized terms used herein have the meanings assigned to
them in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 28th day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing
on October 28, 1996, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
such Distribution Date (or, if the Certificates all shall be held in the form
of Definitive Certificates, the last day of the calendar month preceding the
month of such Distribution Date) (the "Record Date"), in an amount equal the
product of the Percentage Interest evidenced by this Certificate and the
Class B Distribution Amount required to be distributed to Holders of the
Class B Certificates on such Distribution Date. The rights of the Holders
of the Class B Certificates to receive distributions with respect to
principal are subordinated to the rights of the Holders of the Class A and
Class M Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by check
or money order mailed to the Person entitled thereto at the address appearing
in the Certificate Register, or upon written request by the
Certificateholder, by wire transfer (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement)
or by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the City and State of New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Home Equity Loan Asset Backed Certificates, Series 1996-2,
issued in four classes (Class A, Class M, Class B and Class R, herein called
the "Certificates"), and representing a beneficial ownership interest in (i)
the Trust Balances of the Home Equity Loans and the proceeds thereof, (ii)
such assets as shall from time to time be identified as credited to the Home
Equity Loan Payment Record or deposited in the Certificate Account in
accordance with the Agreement, (iii) property which secured a Home Equity
Loan and which has been acquired by the Trust Fund through foreclosure or
deed in lieu of foreclosure and (iv) any Servicer LOC.
The Certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Balances of the Home Equity Loans,
all as more specifically set forth in the Agreement. The Certificateholder,
by its acceptance of this Certificate, agrees that it will look solely to the
Trust Fund for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer, and the rights of the Certificateholders under the
Agreement, at any time by the Depositor, the Master Servicer and the Trustee
with the consent of (x) any Servicer LOC Issuer if its rights are materially
and adversely affected and (y) Holders of Certificates of each Class affected
thereby, evidencing, as to such Class, Percentage Interests aggregating not
less than 51%. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent
is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Certificates.
The Transferee of this Certificate is hereby deemed by the acceptance
or acquisition hereof to represent that such Transferee is not an employee
benefit plan or a collective investment fund or insurance company account
which is treated as holding "plan assets" (a "Plan") subject to 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"), or a trustee
or any other Person acting on behalf of any such Plan. Any purported
Transfer of a Class B Certificate in violation of this restriction on
Transfer will be null and void and vest no rights in the purported
Transferee.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of a like Class in authorized
denominations (in the case of the Certificates) and evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment by the Holder of this
Certificate of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Master Servicer, the Trustee and the Certificate Registrar and any
agent of the Master Servicer, Trustee or the Certificate Registrar may treat
the Person in whose name this Certificate is registered as the owner hereof
for all purposes, and none of the Master Servicer, the Trustee, the
Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust Fund created thereby shall terminate upon payment to the
Certificateholders, or provision therefor, in accordance with the Agreement
upon (i) the purchase by the Master Servicer or the sale by the Trustee of
the Trust Balance of each Home Equity Loan and all property acquired in
respect of any Home Equity Loan remaining in the Trust Fund at a price
determined as provided in the Agreement or (ii) the later of the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust Fund or the disposition of all property acquired upon foreclosure or
by deed in lieu of foreclosure of any Home Equity Loan. The Master Servicer
(i) may, at its option, purchase the Trust Balance of each Home Equity Loan
and property in respect of any Home Equity Loan on any Distribution Date as
of which the Pool Balance is equal to or less than ten percent (10%) of the
Cut-off Date Pool Balance and (ii) should the Trust Balances of any Home
Equity Loans remain outstanding on the Distribution Date in September 2026,
shall purchase all such Trust Balances pursuant to the Agreement, which
purchase will result in retirement of the Certificates. If the Master
Servicer fails for any reason to purchase the Trust Balances of the Home
Equity Loans on the September 2026 Distribution Date, then the Trustee shall
conduct an auction of the assets of the Trust Fund (other than amounts on
deposit in the Certificate Account) in order to effect a termination of the
Trust Fund promptly thereafter.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By _______________________________________
Authorized Officer
Countersigned:
By: _______________________________
Authorized Officer of
The Chase Manhattan Bank,
not in its individual capacity
but solely as Trustee
EXHIBIT D
---------
(FORM OF CLASS R CERTIFICATE)
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
M AND CLASS B CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
TO THE SECURITIES ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT
ARE EXEMPT FROM REGISTRATION UNDER SUCH THE SECURITIES AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS
6.02 AND 6.07 OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS BEEN DESIGNATED BY THE COMPANY REFERRED TO BELOW
AS A "RESIDUAL INTEREST" IN THE TRUST FUND CREATED BY THE POOLING AND
SERVICING AGREEMENT PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
(THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST"
ISSUED UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY
NOT BE TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY
THE TRANSFEREE OF THE DUTIES OF THE MASTER SERVICER UNDER SUCH AGREEMENT.)
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION"
AS DEFINED IN SECTION 860E(e)(5) OF THE CODE. SUCH TERM INCLUDES 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 CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S
COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION
IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS
CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE
PROPOSED TRANSFEREE HAS DELIVERED (1) AN AFFIDAVIT AFFIRMING THAT THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING
THIS CERTIFICATE AS A NOMINEE, TRUSTEE OR AGENT FOR ANY PERSON WHO IS A
DISQUALIFIED ORGANIZATION, AND (2) A COVENANT OF THE PROPOSED TRANSFEREE TO
THE EFFECT THAT THE PROPOSED TRANSFEREE AGREES TO BE BOUND BY AND TO ABIDE
BY THE TRANSFER RESTRICTIONS APPLICABLE TO THIS CERTIFICATE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT
ACTING FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE
YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION
OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THRU ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS.
FOR PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THRU ENTITY" INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF
SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS,
NOMINEES.
Class R _____% Percentage Interest
Subordinate
Cut-off Date: August 31, 1996
First Distribution Date: October 28, 1996
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1996-2
CLASS R CERTIFICATE (SUBORDINATE)
evidencing a percentage interest in any distributions allocable to
the Class R Certificates with respect to a Trust Fund consisting of a pool
of first and second lien revolving home equity mortgage loans originated by
certain subsidiaries of Beneficial Corporation (the "Originators"), including
Beneficial Mortgage Corporation, which has acquired the Home Equity Loans
from such other Originators, has sold the Trust Balances of the Home Equity
Loans to the Depositor, which sold such Trust Balances to the Trust Fund, and
shall act as Master Servicer with respect to the Home Equity Loans.
This Certificate does not represent an obligation of or interest
in Merrill Lynch Mortgage Investors, Inc., Beneficial Mortgage Corporation
or the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Home Equity Loans are guaranteed or insured
by any governmental agency or instrumentality.
This certifies that ________________ is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions
with respect to a Trust Fund consisting of a pool of first and second lien
revolving home equity mortgage loans (the "Home Equity Loans"), the Trust
Balances of which have been sold by Beneficial Mortgage Corporation to the
Trust Fund and with respect to which Beneficial California Inc. shall act as
master servicer (in such capacity, the "Master Servicer," which term includes
any successor Master Servicer under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of September 1, 1996 (as amended, supplemented or modified from time to
time the "Agreement") among Merrill Lynch Mortgage Investors, Inc., as
Depositor, Beneficial Mortgage Corporation, as Master Servicer, Texas
Commerce Bank National Association, as co-trustee, The Chase Manhattan Bank,
as trustee (the "Trustee," which term shall include any successor Trustee
under the Agreement), a description of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 28th day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing
on October 28, 1996, to the Person in whose name this Certificate is
registered at the close of business on the fifth Business Day preceding such
Distribution Date (the "Record Date"), in an amount equal to the product of
the Percentage Interest evidenced by this Certificate and, subject to the
prior rights of Holders of the Class A, Class M and Class B Certificates, and
any amount required to be distributed to Holders of Class R Certificates on
such Distribution Date.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register or by such other means of
payment as such Person and the Trustee shall agree. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Master Servicer of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
This Certificate is one of a duly authorized issue of Certificates
designated as Home Equity Loan Asset Backed Certificates, Series 1996-2,
issued in four Classes (Class A, Class M, Class B and Class R Certificates,
herein collectively called the "Certificates") and representing a beneficial
ownership interest in (i) the Trust Balances of the Home Equity Loans and the
proceeds thereof, (ii) such assets as shall from time to time be identified
as credited to the Home Equity Loan Payment Record or deposited in the
Certificate Account in accordance with the Agreement, (iii) property which
secured a Home Equity Loan and which has been acquired by foreclosure or deed
in lieu of foreclosure and (iv) any Servicer LOC.
The Certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Balances of the Home Equity Loans,
all as more specifically set forth in the Agreement. The Certificateholder,
by its acceptance of this Certificate, agrees that it will look solely to the
funds on deposit in the Certificate Account for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer, and the rights of the Certificateholders under the
Agreement, at any time by the Depositor, the Master Servicer and the Trustee
with the consent of any Servicer LOC Issuer if its rights are materially and
adversely affected and Holders of Certificates of each Class affected
thereby, evidencing, as to such Class, Percentage Interests aggregating not
less than 51%. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the Transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent
is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Certificates.
The Holder of this Certificate hereby consents to any amendment of the
Agreement which, based on an Opinion of Counsel delivered to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly
or indirectly, to a Disqualified Organization and (b) to provide for a means
to compel the Transfer of a Class R Certificate which is held by a
Disqualified Organization to a Holder that is not a disqualified
Organization.
No Transfer of a Class R Certificate shall be made unless such Transfer
is exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with the Securities
Act and laws. In the event that such a Transfer is to be made within three
years from the date of initial issuance of the Certificates pursuant to the
Agreement, (i) the Trustee or the Master Servicer may require an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee
and the Master Servicer that such Transfer is exempt (describing the
applicable exemption and the basis therefor) from or is being made pursuant
to the registration requirements of the Securities Act and of any applicable
state statute, which Opinion of Counsel shall not be an expense of the
Trustee or the Master Servicer, and (ii) the Trustee shall require the
Transferee to execute an investment letter in form and substance satisfactory
to the Trustee and the Master Servicer certifying the facts surrounding such
Transfer, which investment letter shall not be an expense of the Trustee or
the Master Servicer. The Holder hereof desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Trustee and the Master
Servicer and any Paying Agent acting on behalf of the Trustee against any
liability that may result if the Transfer is not so exempt or is not made in
accordance with such federal and state laws.
No Transfer of a Class R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the Transferee
of such Certificate, acceptable to and in form and substance satisfactory to
the Trustee and the Master Servicer, to the effect that such Transferee is
not an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or section 4975 of the Code, nor
a trustee or any other Person acting on behalf of any such plan, which
representation letter shall not be an expense of the Trustee or the Master
Servicer, or (ii) in the case of such Certificate being presented for
registration in the name of an employee benefit plan subject to ERISA or
section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee or any other Person acting on behalf of any such
plan, an Opinion of Counsel satisfactory to the Trustee and the Master
Servicer to the effect that the purchase or holding of such Certificate will
not result in the assets of the Trust Fund being deemed to be "plan assets"
and subject to the prohibited transaction provisions as well as the fiduciary
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the
Agreement, which representation letter or Opinion of Counsel shall not be an
expense of the Trustee or the Master Servicer.
Any purported Transfer of a Class R Certificate in violation of the
restriction on Transfer will be null and void and vest no rights in the
purported Transferee.
No service charge will be made for any such registration of Transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Master Servicer, the Trustee and the Certificate Registrar and any
agent of the Master Servicer, the Trustee or the Certificate Registrar may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Master Servicer, the Trustee, the
Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust Fund created thereby shall terminate upon payment to the
Certificateholders, or provision therefor, in accordance with the Agreement
upon (i) the purchase by the Master Servicer or the sale by the Trustee of
the Trust Balance of each Home Equity Loan and all property acquired in
respect of any Home Equity Loan remaining in the Trust Fund at a price
determined as provided in the Agreement or (ii) the later of the final
payment or other liquidation of the Loan Balance of the last Home Equity Loan
remaining in the Trust Fund or the disposition of all property acquired upon
foreclosure or by deed in lieu of foreclosure of any Home Equity Loan. The
Master Servicer (i) may, at its option, purchase the Trust Balance of each
Home Equity Loan and property in respect of any Home Equity Loan on any
Distribution Date of which the Pool Balance is equal to or less than ten
percent (10%) of the Cut-off Date Pool Balance and (ii) should the Trust
Balances of any Home Equity Loans remain outstanding on the Distribution Date
in September 2026, shall purchase all such Trust Balances pursuant to the
Agreement, which purchase will result in retirement of the Certificates. If
the Master Servicer fails for any reason to purchase the Trust Balances of
the Home Equity Loans on the September 2026 Distribution Date, then the
Trustee shall conduct an auction of the assets of the Trust Fund (other than
amounts on deposit in the Certificate Account) in order to effect a
termination of the Trust promptly thereafter.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By _______________________________________
Authorized Officer
Countersigned:
By: _______________________________
Authorized Officer of
The Chase Manhattan Bank,
not in its individual capacity
but solely as Trustee
EXHIBIT E
---------
Notice of Payment in Full
of Trust Balance of Home Equity Loan
------------------------------------
_________________________
_________________________
_________________________
_________________________
Attention: _________________________
Re: Home Equity Loan Asset Backed Certificates, Series 1996-2
---------------------------------------------------------
Ladies and Gentlemen:
Reference is made to Section 3.07(b) of the Pooling and Servicing
Agreement dated as of September 1, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Agreement") among Merrill Lynch
Mortgage Investors, Inc., as Depositor, Beneficial Mortgage Corporation, as
Master Servicer, The Chase Manhattan Bank, as trustee and Texas Commerce Bank
National Association, as co-trustee. All capitalized terms used but not
defined herein shall have the meanings given to such terms in the Agreement.
The undersigned hereby certifies that the Trust Balance of the Home
Equity Loan(s) listed in Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Home Equity
Loan(s) that were required to be deposited in the Collection Account pursuant
to Section 3.02 of the Agreement have been so deposited.
The undersigned further certifies that he/she is a Servicing Officer of
the Master Servicer holding the office set forth beneath his/her signature
and that he/she is duly authorized to execute this certificate on behalf of
the Master Servicer.
BENEFICIAL MORTGAGE CORPORATION
By: ___________________________________
Name: _____________________________
Title: Servicing Officer
EXHIBIT F
---------
FORM OF FILE REQUEST
(DATE)
___________________________, as Trustee
___________________________
___________________________
___________________________
Attention: ________________________
Re: Home Equity Loan Asset Backed Certificates, Series 1996-2
---------------------------------------------------------
Gentlemen:
In connection with the administration of the Home Equity Loans held by
you as Trustee under the Pooling and Servicing Agreement dated as of
September 1, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Agreement") among Merrill Lynch Mortgage Investors, Inc., as
Depositor, Beneficial Mortgage Corporation, as Master Servicer, The Chase
Manhattan Bank, as trustee, and Texas Commerce Bank National Association, as
co-trustee we hereby request a release of the Mortgage File held by you as
trustee with respect to the following described Home Equity Loan for the
reason indicated below.
Loan No.: ________________
- --------
Reason for requesting file:
- --------------------------
1. Home Equity Loan paid in full. (The Master Servicer hereby
certifies that all amounts received in connection with the payment in full
of the Trust Balance of the Home Equity Loan that are required to be
deposited in the Certificate Account pursuant to Section 4.02 of the
Agreement have been so deposited).
2. Home Equity Loan repurchased. (The Master Servicer hereby
certifies that the Purchase Price of the Home Equity Loan has been deposited
in the Certificate Account pursuant to the Agreement).
3. The Home Equity Loan is being foreclosed.
4. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and
will promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan has been liquidated.
Capitalized terms used herein shall have the meanings assigned to them in the
Agreement.
BENEFICIAL MORTGAGE CORPORATION
By:
______________________________________
Name:
Title: Servicing Officer
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MERRILL LYNCH MORTGAGE INVESTORS, INC.
* * * * * * * * * * * * * * *
Merrill Lynch Mortgage Investors, Inc., a corporation organized and
existing under the General Corporation law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation (the "Board")
has, in accordance with Section 141(f) of the General Corporation Law of the
State of Delaware, by unanimous written consent of all of the members of the
Board which has been filed with the minutes of the proceedings of the Board,
adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation:
RESOLVED, that, pursuant to Section 241 of the Delaware General
Corporation Law, Article Third of the Certificate of Incorporation of the
Corporation be, and it hereby is, amended and restated in its entirety as
follows:
THIRD: The purpose of the Corporation is limited
-----
to: (a) issuing and selling one or more series of bonds secured primarily
by mortgage loans, mortgage collateral, manufactured housing installment
sales contracts and loan agreements (the "Contracts") and/or other
obligations and evidences of indebtedness, and interests in or balances of
any of the foregoing, investing in mortgage loans, mortgage collateral,
Contracts and/or other obligations and evidences of indebtedness, and
interests in or balances of any of the foregoing, to be purchased with the
proceeds of bonds secured by such mortgage loans, mortgage collateral,
Contracts and/or other obligations and evidences of indebtedness, and
interests in or balances of any of the foregoing, and taking certain other
action with respect thereto, (b) selling interests in mortgage loans,
mortgage collateral, Contracts, and/or other obligations and evidences of
indebtedness, and interests in or balances of any of the foregoing,
evidencing such interests with pass-through or other certificates, using the
proceeds of the sale of the pass-through or other certificates to acquire the
mortgage loans, mortgage collateral, Contracts and/or other obligations and
evidences of indebtedness, and interests in or balances of any of the
foregoing, retaining an interest, including a subordinated interest, in the
mortgage loans, mortgage collateral, Contracts and/or other obligations and
evidences of indebtedness, and interests in or balances of any of the
foregoing, acquired and sold and taking certain other action with respect
thereto, and (c) acting as settlor or depositor of trusts formed to issue
series of bonds secured by, or pass-through or other certificates supported
by, mortgage loans, mortgage collateral, Contracts and/or other obligations
and evidences of indebtedness, and interests in or balances of any of the
foregoing, and investing in, selling or otherwise dealing with the same. The
Corporation is not otherwise authorized to trade or deal in securities or
engage in any other activity other than issuing, selling or otherwise dealing
with bonds or pass-through or other certificates under an indenture, trust
agreement, pooling and servicing agreement or other agreement, acting as
settlor or depositor of a trust formed to issue and sell bonds or pass-
through or other certificates and investing in, selling or otherwise dealing
with the same, acquiring, owning, holding and pledging or selling interests
in mortgage loans, mortgage collateral, Contracts and/or other obligations
and evidences of indebtedness, and interests in or balances of any of the
foregoing, investing cash balances on an interim basis in certain short-term
investments and engaging in activities incidental to and necessary or
appropriate to accomplish the foregoing, including without limitation
obtaining credit support.
SECOND: That, in lieu of taking action at a meeting called and held in
accordance with Section 222 of the General Corporation Law of the State of
Delaware, the sole stockholder of the Corporation has, pursuant to Section 228
of the General Corporation Law of the State of Delaware, given unanimous
written consent to the adoption of such amendment.
THIRD: That, therefore, such amendment has been duly adopted in
accordance with the provision of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, Merrill Lynch Investors, Inc. has caused this
certificate to be signed by Michael M. McGovern, its Secretary, and attested
by a duly authorized officer of the Corporation, this 26th day of September,
1996.
/s/ Michael G. McGovern
By____________________________
Michael G. McGovern
Secretary
ATTEST:
/s/ Peter Cerwin
______________________
Peter Cerwin
Vice President
