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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: September 30, 1997
(Date of earliest event reported)
CMC SECURITIES CORPORATION IV
(Exact name of Registrant as specified in its charter)
Delaware 33-47912 75-2431915
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
2711 N. Haskell Avenue
Suite 900
Dallas, Texas 75204
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 874-2323
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Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 33-47912) filed with the Securities and Exchange Commission
(the "Commission") on May 14, 1992, as amended by Amendment No. 1 thereto filed
with the Commission on August 7, 1992, as further amended by Post Effective
Amendment No. 1 thereto filed with the Commission on August 17, 1994
(collectively, the "Registration Statement"), pursuant to which the Registrant
registered $2,000,000,000 aggregate principal amount of its collateralized
mortgage obligations, issuable in various series, for sale in accordance with
the provisions of the Securities Act of 1933, as amended (the "Act"). Reference
is also hereby made to the Prospectus dated September 26, 1997 and the related
Prospectus Supplement, dated September 26, 1997 (collectively, the
"Prospectus"), which are being filed with the Commission concurrently herewith
pursuant to Rule 424(b)(5), with respect to the Registrant's Collateralized
Mortgage Obligations, Series 1997-NAMC 3 (the "Securities").
On September 30, 1997, the Registrant caused the issuance and sale of
$281,194,911 aggregate initial principal amount of Securities. The Securities
are collateralized by mortgage pass-through certificates (the "Conventional
Certificates") evidencing the beneficial ownership interest in entire pools of
certain conventional, fixed-rate, fully- amortizing, one-to four-family, first
lien mortgage loans (the "Mortgage Loans") originated or acquired by North
American Mortgage Company ("NAMC"). The Certificates were created pursuant to a
Pooling and Servicing Agreement dated as of September 1, 1997 (the "Pooling and
Servicing Agreement") by and among the Registrant, as Depositor, NAMC, as
Master Servicer, and The First National Bank of Chicago, as Certificate
Trustee. A copy of the Pooling and Servicing Agreement is filed herewith as
Exhibit 10.1. The Securities were issued pursuant to an Indenture dated as of
September 1, 1997 (the "Indenture"), as supplemented by the Series 1997-NAMC 3
Supplement thereto dated as of September 30, 1997 (the "Series Supplement"),
each by and between the Registrant and The First National Bank of Chicago, as
Indenture Trustee. A copy of the Indenture is filed herewith as Exhibit 4.1 and
a copy of the Series Supplement is filed herewith as Exhibit 4.2. The Mortgage
Loans were sold by NAMC to DLJ Mortgage Capital, Inc. ("DLJMCI") pursuant to a
Seller's Purchase, Warranties and Servicing Agreement dated as of September 15,
1997 between NAMC and DLJMCI, and were subsequently sold by DLJMCI to the
Registrant pursuant to an Assignment and Assumption Agreement dated as of
September 30, 1997 between DLJMCI and the Registrant.
The Offered Securities (as defined in the Prospectus), having an
aggregate principal balance of $278,242,362, have been sold by the Registrant
to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") pursuant to an
Underwriting Agreement dated as of September 26, 1997 (the "Underwriting
Agreement"), as supplemented by a Terms Agreement dated as of September 26,
1997, each among DLJSC, the Registrant and Capstead Mortgage Corporation
("CMC"). A copy of the Underwriting Agreement is filed herewith as Exhibit 1.1.
The Class B-4, Class B-5 and Class B-6 Securities (as defined in the
Prospectus) have been sold by the Registrant to DLJSC pursuant to a Purchase
Agreement dated September 29, 1997, by and among DLJSC, the Registrant and CMC.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement dated as of September
26, 1997 by and among DLJSC, the Registrant
and CMC
4.1 Indenture dated as of September 1, 1997 by
and between the Registrant and The First
National Bank of Chicago, as Indenture
Trustee
4.2 Series 1997-NAMC 3 Supplement dated as of
September 30, 1997 by and between the
Registrant and The First National Bank of
Chicago, as Indenture Trustee
10.1 Pooling and Servicing Agreement dated as of
September 1, 1997 by and among the
Registrant, as Depositor, NAMC, as Master
Servicer, and The First National Bank of
Chicago, as Certificate Trustee
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Signature
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.
CMC SECURITIES CORPORATION IV
October 21, 1997 By:
----------------------------
Wade Walker,
Vice President - Asset and
Liability Management
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Page
- ----------- ----
<S> <C>
1.1 Underwriting Agreement dated as of September 26, 1997
by and among DLJSC, the Registrant and CMC
4.1 Indenture dated as of September 1, 1997 by and between
the Registrant and The First National Bank of Chicago,
as Indenture Trustee
4.2 Series 1997-NAMC 3 Supplement dated as of September 30, 1997
by and between the Registrant and The First National Bank of
Chicago, as Indenture Trustee
10.1 Pooling and Servicing Agreement dated as of September 1, 1997
by and among the Registrant, as Depositor, NAMC, as Master
Servicer, and The First National Bank of Chicago, as Certificate
Trustee
</TABLE>
<PAGE> 1
CMC SECURITIES CORPORATION IV
COLLATERALIZED MORTGAGE OBLIGATIONS
(Issuable in Series)
UNDERWRITING AGREEMENT
September 24, 1997
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
CMC Securities Corporation IV (the "Company"), a Delaware corporation
and wholly-owned subsidiary of Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), proposes to issue its Collateralized Mortgage
Obligations of the series (each, a "Series") and classes designated at the time
of sale (the "Bonds"). The Bonds shall be issued under an indenture, dated as
of September 1, 1997 (the "Original Indenture"), between the Company and The
First National Bank of Chicago, as trustee (the "Trustee"), as supplemented
from time to time by one or more supplemental indentures, each providing for
the issuance of a Series of Bonds (the "Series Supplements") between the
Company and the Trustee. Such Original Indenture, as supplemented from time to
time hereafter, and as supplemented by the Series Supplements, with any changes
therein made with your consent, and, with your consent any other indenture is
herein referred to as the "Indenture." Capstead joins this agreement for the
purposes set forth herein.
Underwritten Offerings of Bonds may be made through you or through an
underwriting syndicate managed by you. The Company proposes to sell one or
more Series of the Bonds or certain Classes of Bonds of one or more Series to
you and to each of the other several underwriters, if any, participating in an
underwriting syndicate managed by you. It is understood, however, that the
Company may elect to retain, through the execution of one or more underwriting
agreements in addition to this Agreement, one or more additional underwriters
other than you to underwrite, or manage the underwriting syndicate with respect
to, any offering of one or more Series of its Bonds.
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Whenever the Company determines to make such an offering of Bonds
through you, it will enter into an agreement (the "Terms Agreement") providing
for the sale of such Bonds to, and the purchase and offering thereof by, you
and such other underwriters, if any, selected by you as have authorized you to
enter into such Terms Agreement on their behalf (the underwriters designated in
any such Terms Agreement being referred to herein as "Underwriters," which term
shall include you whether acting alone in the sale of any Series of Bonds or as
a member of the underwriting syndicate). The Terms Agreement relating to each
offering of Bonds shall specify the principal amount of Bonds to be issued and
their terms not otherwise specified in the Indenture, a brief description of
the Conventional Certificates (as defined below) to be pledged as security
therefor, the names of the Underwriters participating in such offering (subject
to substitution as provided in Section 11 hereof) and the principal amount of
the Bonds which each severally agrees to purchase, the names of such other
Underwriters, if any, acting as co-managers with you in connection with such
offering, the price at which the Bonds are to be purchased by the Underwriters
from the Company, the initial public offering price (or the manner in which
such prices shall be determined), the time and place of delivery of and payment
for the Bonds, and such other information as may be agreed upon. The Terms
Agreement, which shall be substantially in the form of Exhibit A hereto, may
take the form of an exchange of any standard form of written telecommunication
between you and the Company. Each offering of Bonds through you will be
governed by this Agreement, as supplemented by the applicable Terms Agreement,
and this Agreement and such Terms Agreement shall inure to the benefit of and
be binding upon each Underwriter participating in the offering of such Bonds.
At their date of issuance, the Bonds of each Series underwritten by
you will be secured by a pledge to the Trustee of, among other things,
Conventional Certificates (as defined in the Indenture) (collectively, the
"Conventional Certificates"). The Bonds are more fully described in the
Registration Statement (as defined below). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-47912), a related
preliminary prospectus and related preliminary prospectus supplements for the
registration of the Bonds under the Securities Act of 1933 (the "1933 Act"),
which registration statement, as most recently amended, was declared effective
on August 18, 1994. Such registration statement, as from time to time amended
through the date of the Terms Agreement, including all exhibits thereto and all
documents therein incorporated by reference from time to time pursuant to Item
12 of Form S-3 under the 1933 Act that were filed under the Securities Exchange
Act of 1934 (the "1934 Act"), on or before the effective date of such
registration statement, but excluding the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939 (the "1939
Act"), is hereinafter referred to as the "Registration Statement." The
prospectus in the form in which it appears in the Registration Statement,
including all documents therein incorporated by reference from time to time
pursuant to the 1934 Act, is hereinafter referred to as the "Basic Prospectus".
The Basic Prospectus as
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supplemented by the prospectus supplement or supplements relating to a
particular Series of the Bonds each in the form first filed after the date of
the related Terms Agreement with the Commission pursuant to Rule 424 under the
1933 Act, including any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the 1933 Act that were filed under the 1934 Act on or
before the date of such prospectus supplement (such prospectus supplement,
including such incorporated documents, in the form first filed after the date
of the related Terms Agreement pursuant to Rule 424(b) being hereinafter termed
the "Prospectus Supplement"), is hereinafter referred to as the "Final
Prospectus". Any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Final Prospectus
or the Prospectus Supplement shall be deemed to refer to and include the filing
of any document under the 1934 Act after the effective date of the Registration
Statement or the issue date of the Final Prospectus or Prospectus Supplement,
as the case may be, deemed to be incorporated therein by reference pursuant to
Item 12 of Form S-3 under the 1933 Act.
SECTION 1. Representations and Warranties. The Company and
Capstead, jointly and severally, represent and warrant to you as of the date
hereof, and to each Underwriter named in a Terms Agreement as of the date
thereof (in each case the "Representation Date"), as follows:
(a) The Registration Statement, at the time it became
effective, complied and, as of the date hereof, does comply, in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission thereunder (the "1933 Act
Regulations") and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Final
Prospectus at the time it is mailed to the Commission for filing
pursuant to Rule 424 under the Act and at the Closing Time referred to
in Section 2 will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from (i) the Registration Statement or Final Prospectus made
in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through you expressly for use in
the Registration Statement or Final Prospectus or (ii) the Current
Report (as defined in Section 3(b) below), or in any amendment thereof
or supplement thereto, incorporated by reference in such Registration
Statement or such Final Prospectus (or any amendment thereof or
supplement thereto). There are no material contracts or documents of
the Company which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or the 1933 Act Regulations
which have not been so filed.
(b) At the time the Registration Statement became
effective the Trustee was duly qualified under the requirements of the
1939 Act and the rules and regulations of the Commission thereunder
(the "1939 Act Regulations"), and at the Closing Time the Indenture
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will be so qualified and will conform in all material respects with
the requirements of the 1939 Act and the 1939 Act Regulations.
(c) The documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus, at the
time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder,
and, when read together and with the other information in the
applicable Final Prospectus, at the time the Registration Statement
and any amendments thereof became effective, and at the time such
Final Prospectus is filed with the Commission, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to the Current
Report.
(d) The accountants who reported on the balance sheet
included or incorporated by reference in the Registration Statement
are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(e) The balance sheet of the Company included or
incorporated by reference in the Registration Statement presents
fairly the financial position of the Company at the date indicated,
and has been prepared in conformity with generally accepted accounting
principles.
(f) Since the respective dates as of which information is
given in the Registration Statement or, if later, the applicable Final
Prospectus, except as otherwise stated therein, there has been no
material adverse change in the condition, financial or otherwise,
earnings, business affairs, or business prospects of the Company.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described
in the Registration Statement, and, at the Closing Time, the Company
will be duly qualified as a foreign corporation to transact business
and will be in good standing in the State of Texas. The Company is
not required to qualify to do business as a foreign corporation under
the laws of any other state. The Company has no subsidiaries.
(h) The authorized, issued and outstanding capital stock
of the Company is as set forth (or incorporated) in the Registration
Statement, and the shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable, and are owned of record and beneficially by
Capstead, free
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and clear of any lien, charge, option, warrant, security interest,
encumbrance, voting trust or similar arrangement.
(i) Neither the Company nor Capstead is in violation of
its charter or bylaws. The Company is not in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or
by which it or its properties may be bound, which violations or
defaults separately or in the aggregate would have a material adverse
effect on the Company.
(j) The Company owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease, own or license, as the
case may be, and to operate, its properties and to carry on its
business as described in the Registration Statement or, if later, the
applicable Final Prospectus; and the Company has conducted and is
conducting its business so as to comply in all material respects with
all applicable laws, administrative regulations and administrative and
court decrees.
(k) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending against the Company or, to the knowledge of the Company and
Capstead, threatened against the Company (except as set forth in the
Registration Statement or, if later, the applicable Final Prospectus)
which could reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, earnings, business
affairs, or business prospects of the Company which could reasonably
be expected to interfere with or materially and adversely affect the
consummation of the transactions contemplated herein.
(l) The execution and delivery of this Agreement and the
Indenture, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein and therein have
been, and the execution and delivery of each Terms Agreement and the
consummation of the transactions contemplated therein will have been
(before the issuance of the related Bonds), duly authorized by the
Company and/or Capstead, as applicable, by all necessary action
(corporate and other); this Agreement and the Indenture have been, and
the Terms Agreement, when executed and delivered, will have been, duly
executed and delivered by the Company, and/or Capstead, as applicable,
enforceable in accordance with their terms, subject, as to
enforceability of remedies, to applicable bankruptcy, insolvency,
reorganization, or other laws affecting creditors' rights generally,
and to general principles of equity and equitable remedies (regardless
of whether the enforceability of such remedies is considered in a
proceeding in equity or at law). Neither the execution and delivery
of this Agreement, the Indenture or the Terms Agreement, the
incurrence of the obligations herein or therein set forth, nor the
consummation of the
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transactions contemplated herein or therein will conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, mortgage, pledge, charge, security interest or
encumbrance (collectively, "Lien") upon any property or assets of the
Company or Capstead, as applicable, pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or Capstead, as applicable, is a party or by
which any of them may be bound, or to which any of the property or
assets of any of them is subject (other than the Lien created pursuant
to the Indenture), which separately or in the aggregate are material,
nor will any such action result in any violation of the provisions of
the charter or bylaws of either of the Company or Capstead, or, to the
best of such entity's knowledge, of any law, administrative regulation
or administrative or court decree.
(m) The issuance of the Bonds underwritten by you has
been duly authorized by the Company (or will have been so authorized
prior to each issuance of Bonds underwritten by you) and, when such
Bonds are executed and authenticated and delivered in accordance with
the Indenture and sold to the Underwriters pursuant to this Agreement
and any Terms Agreement, such Bonds will be entitled to the benefits
and security provided by the Indenture and will constitute the legal,
valid and binding non-recourse obligations of the Company enforceable
in accordance with their terms, but otherwise subject, as to
enforceability of remedies, to applicable bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally,
and to general principles of equity and equitable remedies (regardless
of whether the enforceability of such remedies is considered in a
proceeding in equity or at law).
(n) The Bonds of each Series underwritten by you and the
Indenture will conform in all material respects to the respective
descriptions thereof contained in the applicable Final Prospectus,
except that no representation or warranty is made that the Bonds
conform with any description thereof contained in the Current Report.
(o) At the Closing Time with respect to a Series of
Bonds, the Company will own (i) the Conventional Certificates listed
in Schedule A to the Series Supplement relating to the applicable
Series of Bonds and (ii) the money or other assets specified or
referred to in the granting clauses of such Series Supplement as being
pledged to the Trustee at Closing Time (together, the "Initial
Collateral"), free and clear of any Lien, except the Lien of the
Indenture; the Company has power and authority (corporate and other)
to assign, pledge and deliver the Initial Collateral to the Trustee
under the Indenture, and will have duly authorized such assignment,
pledge and delivery to the Trustee by all necessary corporate action.
(p) As of the Closing Time with respect to a Series of
Bonds, the Company will have assigned, pledged and delivered to the
Trustee under the Indenture all of its right, title and interest in
and to, among other things, (i) Conventional Certificates with an
aggregate
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outstanding principal balance as of such Closing Time at least equal
to the aggregate original principal amount of the Bonds of the
applicable Series then being issued and (ii) cash and/or other assets,
if any, in the amount set forth in the related Series Supplement.
(q) At the Closing Time with respect to a Series of
Bonds, each Conventional Certificate listed on Schedule A to the
Series Supplement relating to the applicable Series of Bonds will have
been duly and validly assigned, pledged and delivered to the Trustee,
or its nominee, and together with such assignment, pledge and delivery
of each Conventional Certificate, the filing of a UCC-1 financing
statement with respect to the Conventional Certificates in the office
of the Secretary of State of the State of Texas and in such other
jurisdictions, if any, as the Company deems appropriate and the
possession by the Trustee, or its nominee, of the Conventional
Certificates and of the monies and/or other assets, if any, specified
in the related Series Supplement, will create as security for
repayment of the Bonds a valid, perfected first security interest.
The information set forth with respect to the Conventional
Certificates in Schedule A to the related Series Supplement will as of
the Closing Time of such Series be true and correct in all material
respects.
(r) The Company is not, and will not as a result of the
offer and sale of the Bonds as contemplated in this Agreement and any
applicable Terms Agreement become, an "investment company" or under
the "control" of an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment
Company Act") which would be required to register under the Investment
Company Act.
(s) The representations and warranties made by the
Company in the Indenture and made in any Officers' Certificate of the
Company delivered pursuant to the Indenture will be true and correct
at the time made and at the Closing Time.
(t) The Pooling and Servicing Agreement, the Conventional
Certificates created thereby and the mortgage loans evidenced thereby
shall conform in all material respects to the respective descriptions
thereof contained in the applicable Final Prospectus, except that no
representation is made that the Conventional Certificates conform with
the descriptions thereof (if any) contained in the Current Report.
(u) Any certificate signed by an officer of the Company
or Capstead and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company or
Capstead, respectively, to each Underwriter as to the matters covered
thereby.
(v) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body of the United States is required for the issue and sale
of the Bonds, or the consummation by the Company of the other
transactions
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contemplated by this Agreement, each Terms Agreement or the Indenture,
except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Bonds by
the Underwriters or as have been obtained.
(w) At the Closing Time of a Series, the Bonds of such
Series shall have been rated in the highest rating category by at
least two nationally recognized statistical rating organizations or in
such lower rating categories as are acceptable to the Underwriters.
(x) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the related Terms Agreement, the Indenture and the Bonds
have been paid or will be paid at or prior to the Closing Time.
(y) All of the information regarding the characteristics
of the Mortgage Loans contained in the Registration Statement or
furnished to you by the Company in writing or by electronic
transmission is true and correct.
SECTION 2. Sale and Delivery to the Underwriters; Closing. The
several commitments of the Underwriters to purchase Bonds pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, the respective original principal amounts of the Bonds set
forth in the applicable Terms Agreement opposite the name of such Underwriter,
plus any additional original principal amount of Bonds which such Underwriter
may be obligated to purchase pursuant to Section 10 hereof.
Delivery of, and payment of the purchase price for, the Bonds shall be
made at the office of Andrews & Kurth L.L.P., 1717 Main Street, Suite 3700,
Dallas, Texas 75201, or at such other place as shall be agreed upon by you and
the Company, at 10:00 A.M. (Dallas time) on the date set forth in the
applicable Terms Agreement, or such other time as shall be agreed upon by you
and the Company (such time and date being referred to as the "Closing Time").
Payment shall be made in immediately available or next day funds as specified
in the Terms Agreement, payable to or upon the order of the Company, against
delivery to you for the respective accounts of the Underwriters of the Bonds to
be purchased by them. Such Bonds shall be in such denominations and registered
in such names as you may request in writing at least two business days prior to
the Closing Time. The Bonds will be made available for your examination in
Dallas, Texas not later than 10:00 A.M. on the Business Day prior to the
Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with
you, and with each Underwriter participating in the offering of the applicable
Series of Bonds, as follows:
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(a) Immediately following the execution of each Terms
Agreement, the Company will prepare a Final Prospectus setting forth
the principal amount of Bonds covered thereby and their terms not
otherwise specified in the Indenture, the names of the Underwriters
participating in the offering and the principal amount of Bonds which
each severally has agreed to purchase, the names of any Underwriters
acting as co-managers with you in connection with the offering, the
price at which the Bonds are to be purchased by the Underwriters from
the Company, and such other information as you and the Company deem
appropriate in connection with the offering of the Bonds. The Company
will promptly transmit copies of the Final Prospectus to the
Commission for filing pursuant to Rule 424 of the 1933 Act Regulations
and will furnish to the Underwriters named therein as many copies of
the Final Prospectus as you shall reasonably request.
(b) The Company will cause any Computational Materials
(as defined in Section 8 below) with respect to the Bonds that are
delivered by you to the Company pursuant to Section 8 hereof to be
filed with the Commission on a Current Report on Form 8-K (the
"Current Report") pursuant to Rule 13a-11 under the 1934 Act not later
than the Business Day immediately following the Business Day on which
all such Computational Materials are delivered to counsel for the
Company by you prior to 3:00 p.m. Dallas, Texas time, and will
promptly advise you when such Current Report has been filed, provided
that in any event the Company will cause the Computational Materials
to be so filed not later than the date on which the related Final
Prospectus is required to be so filed pursuant to Rule 424 under the
1933 Act. Such Current Report shall be incorporated by reference in
such Final Prospectus and the related Registration Statement.
Notwithstanding the two preceding sentences, the Company shall have no
obligation to file any materials provided by you pursuant to Section 8
("Section 8 Materials") which, in the reasonable determination of the
Company (a "Non-Filing Determination"), are not required to be filed
pursuant to the Kidder Letter (as defined in Section 8 below), or
which contain erroneous information or contain any untrue statement of
a material fact or, when read in conjunction with the Final Prospectus
and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading (it being understood, however, that the Company shall have
no obligation to review or pass upon the accuracy or adequacy of, or
to correct, any Computational Materials provided by you to the Company
pursuant to Section 8 hereof); provided that, in the event of a
Non-Filing Determination, the Company shall immediately notify you in
writing of the reasons for such Non-Filing Determination; and,
provided, further, that the Company shall file those Section 8
Materials for which you have specifically confirmed in writing that
the items giving rise to the Non-Filing Determination are complete and
correct and that you are advising the Company to file such Section 8
Materials.
(c) The Company will notify you immediately, and in
writing confirm the notice, (i) of the receipt of any comments from
the Commission, (ii) of any request by the
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<PAGE> 10
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Final Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) of receipt by the
Company of any notification with respect to the suspension of the
qualification of the Bonds for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose, and (v) of
the happening of any event which makes untrue any statement of a
material fact made in, or results in the omission of material
information from, the Registration Statement or in any Final
Prospectus then required to be distributed or which requires the
making of a change in the Registration Statement or any such Final
Prospectus in order to make any material statements therein, in the
light of the circumstances under which they were made, not misleading.
The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(d) The Company will give you notice of its intention to
file any amendment to the Registration Statement or any amendment or
supplement to the Final Prospectus, whether pursuant to the 1934 Act,
1933 Act or otherwise, and will not file any such amendment or
supplement without furnishing a copy thereof to you and counsel for
the Underwriters and obtaining your consent to such filing, which
consent shall not be unreasonably withheld or delayed.
(e) The Company will deliver to you, as soon as
practicable, as many signed copies of the Registration Statement as
originally filed and of each amendment thereto, with signed consents
and exhibits filed therewith (including exhibits incorporated by
reference therein and documents incorporated by reference in the Final
Prospectus), and will also deliver to you such number of conformed
copies of the Registration Statement as originally filed and of each
amendment thereto (including consents and exhibits) as you may
reasonably request.
(f) The Company will furnish to each Underwriter, from
time to time during the period when the Final Prospectus is required
to be delivered under the 1933 Act, such number of copies of the Final
Prospectus (as amended or supplemented), other than exhibits to the
related Current Report, as it may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act.
(g) If at any time when a prospectus relating to the
Bonds is required to be delivered under the 1933 Act any event occurs
as a result of which the applicable Final Prospectus as then amended
or supplemented would include an untrue statement of a material fact,
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is
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<PAGE> 11
necessary at any time to amend such Final Prospectus to comply with
the 1933 Act, the Company, subject to subparagraph (d) above, promptly
will prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which
will effect such compliance; provided, however, that the Company will
not be required to file any such amendment or supplement with respect
to any Computational Materials incorporated by reference in the Final
Prospectus other than any amendments or supplements of such
Computational Materials that are furnished to the Company by the
Underwriter pursuant to Section 8(g) hereof that the Company
determines to file in accordance therewith.
(h) The Company will endeavor, in cooperation with you
and counsel for the Underwriters, to qualify the Bonds for offering
and sale under the applicable securities and Blue Sky laws of such
jurisdictions as you may reasonably designate, and will maintain such
qualification in effect for a period of not less than one year after
the date hereof, unless the offering and sale of the Bonds is exempt
from such qualification under the Secondary Mortgage Market
Enhancement Act of 1984, and will cooperate with you and counsel for
the Underwriters, to determine the eligibility of the Bonds for
investment by institutional investors in such jurisdictions. The
Company will, at your request or the request of counsel for the
Underwriters, file such statements and reports as may be required by
the laws of each jurisdiction in which the Bonds have been qualified
as above provided. Notwithstanding the foregoing, no such
qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to general service of process,
other than by reason of the offer and sale of the Bonds, qualification
as a foreign corporation or to taxation as a foreign corporation doing
business in such jurisdiction.
(i) The Company will make generally available to its
security holders and will deliver to you as soon as practicable an
earnings statement, conforming to the requirements of Section 11(a) of
the 1933 Act, covering a period of at least twelve months beginning
after the effective date of the Registration Statement. Compliance
with Rule 158 under the 1933 Act shall satisfy the requirements of
this paragraph.
(j) So long as any Bonds are outstanding, the Company
will furnish to you (or cause to be furnished to you) as soon as
practicable upon your written request:
(i) copies of the annual reports and other items
required to be delivered to the Bondholders pursuant to the
Indenture;
(ii) copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange by the Company; and
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<PAGE> 12
(iii) information as to the outstanding principal
balances of the mortgage loans underlying the Conventional
Certificates, and, to the extent that such information has
been maintained in the ordinary course of business by the
Company, such other information as may reasonably be requested
by you which in your judgment is necessary or appropriate to
the maintenance of a secondary market in the Bonds.
(k) So long as any Bonds of any Series underwritten by
you are outstanding, Capstead will furnish to you within five days
after they are available, upon your written request, copies of all
reports filed by Capstead under the 1934 Act.
(l) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13 or 14 of the 1934 Act; provided, however, that the Company will not
be required to file any amendment or supplement to the Current Report
incorporated by reference in the Prospectus other than any amendments
or supplements thereto that are furnished to the Company by you
pursuant to Section 8(g) hereof which the Company determines to file
in accordance therewith.
(m) The Company shall prepare and file with the
Commission, within the period provided in the related Final
Prospectus, its Current Report on Form 8-K which shall include such
detailed information, schedules and reports (the "Detailed
Description") regarding the Conventional Certificates and the mortgage
loans underlying such Conventional Certificates relating to the Series
of Bonds offered by such Final Prospectus (the "Mortgage Loans") as
you may reasonably request.
(n) During the period, if any, commencing on the date of
the applicable Terms Agreement and expiring on the date specified in
such Terms Agreement (the "Stand-Off Period"), neither the Company,
Capstead nor the Partnership or any subsidiary thereof will, without
your prior written consent or as may be otherwise permitted by such
Terms Agreement, offer or sell, or enter into any agreement to sell to
the public, any mortgage-related or mortgage-backed securities issued
by any of them which are similar to the Bonds. The provisions of this
subparagraph (n) do not apply to securities issued or guaranteed by
GNMA, FNMA or FHLMC.
SECTION 4. Payment of Expenses. Unless otherwise specified in
the applicable Terms Agreement, the Company will pay, and Capstead will cause
the Company to pay, all expenses incident to the performance of the Company's
obligations under this Agreement and the applicable Terms Agreement (other than
the expenses of the Independent Accountants under Section 5(f) hereof, which
will be paid by you), including and without limitation those related to: (i)
the filing of the Registration Statement with respect to the Bonds and all
amendments thereto, (ii) the printing
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<PAGE> 13
or photocopying and delivery to the Underwriters, in such quantities as you may
reasonably request, of copies of this Agreement and the Terms Agreement, (iii)
the preparation, registration, issuance and delivery to the Underwriters of the
Bonds underwritten pursuant to this Agreement, (iv) the fees and disbursements
of the Company's counsel and accountants, and of any counsel rendering a
closing opinion with respect to matters of local law, (v) the qualification of
the Bonds underwritten pursuant to this Agreement under securities and Blue Sky
laws and the determination of the eligibility of the Bonds for investment in
accordance with the provisions of Section 3(h), including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Survey and
Legal Investment Survey, (vi) the printing and delivery to the Underwriters, in
such quantities as you may reasonably request, of copies of the Registration
Statement with respect to the Bonds underwritten pursuant to this Agreement and
all amendments thereto, of any preliminary prospectus and preliminary
prospectus supplement and of the Final Prospectus and all amendments and
supplements thereto and all documents incorporated therein (other than exhibits
to the Current Report), and of any Blue Sky Survey and Legal Investment Survey,
(vii) the printing or photocopying and delivery to the Underwriters, in such
quantities as you may reasonably request, of copies of the Indenture, (viii)
the fees charged by investment rating agencies for rating the Bonds
underwritten pursuant to this Agreement, (ix) the fees and expenses, if any,
incurred in connection with the listing of the Bonds underwritten pursuant to
this Agreement on any national securities exchange, and (x) the fees and
expenses of the Trustee and its counsel.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or 10(b)(i), the Company shall, and Capstead will cause
the Company to, reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters to purchase the Bonds pursuant to any Terms Agreement are
subject to the accuracy in all material respects of the representations and
warranties of the Company and Capstead herein contained, to the performance by
the Company and Capstead of their obligations hereunder, and to the following
further conditions:
(a) At the applicable Closing Time (i) no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, (ii) the rating assigned as of the date
of the applicable Terms Agreement by any nationally recognized
securities rating agency to the Bonds to be underwritten at such time
pursuant to this Agreement shall not have been lowered since that date
and (iii) there shall not have come to your attention any fact that
would cause you to believe that the Final Prospectus at the time it
was required to be delivered to a purchaser of the Bonds to be
underwritten at such time pursuant to this Agreement contained an
untrue statement of a material fact or omitted to state a material
fact
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<PAGE> 14
necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading.
(b) At the applicable Closing Time you shall have
received:
(1) An opinion, addressed to the Underwriters and dated the Closing
Time, of Andrews & Kurth L.L.P., counsel to the Company, in form and substance
reasonably satisfactory to you and counsel for the Underwriters, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Company has corporate power and authority
to own, lease and operate its properties and conduct its
business as described in the applicable Final Prospectus; and
the Company is qualified as a foreign corporation to transact
business in the State of Texas and each other jurisdiction
where the nature of its assets requires such qualification.
(iii) All the authorized, issued and outstanding
capital stock of the Company has been duly authorized and
validly issued and is fully paid and non-assessable, and is
owned of record by Capstead, to the knowledge of such counsel,
free and clear of any lien, security interest, encumbrance,
option, warrant, voting trust or similar arrangement.
(iv) The Company is not in violation of its charter
or bylaws. To the best of such counsel's knowledge, the
Company is not in default in the performance or observance of
any obligation, agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by
which it or its properties may be bound.
(v) To the best of such counsel's knowledge, the
Company owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease or own, as the
case may be, and to operate, its properties and to carry on
its businesses as presently conducted; and, to the best of
such counsel's knowledge, the Company has conducted and is
conducting its businesses so as to comply in all material
respects with all applicable laws.
(vi) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the best of
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<PAGE> 15
such counsel's knowledge, threatened against the Company which
could reasonably be expected to interfere with or adversely
affect the consummation of the transactions contemplated
herein.
(vii) The execution and delivery of this Agreement,
the applicable Terms Agreement and the Indenture (including
the applicable Series Supplement), the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein have been
duly authorized by the Company, by all necessary action; this
Agreement and the applicable Terms Agreement have been duly
authorized, executed and delivered by the Company; and the
Indenture (including the applicable Series Supplement) has
been duly authorized, executed and delivered by the Company
and constitutes a legal, valid and binding agreement of
the Company, enforceable in accordance with its terms,
subject, as to enforceability of remedies, to applicable
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and to general principles of
equity and equitable remedies (regardless of whether the
enforceability of such remedies is considered in a proceeding
at law or in equity).
(viii) Neither the execution and delivery of this
Agreement, the applicable Terms Agreement or the Indenture,
the incurrence of the obligations herein or therein set forth,
nor the consummation of the transactions contemplated herein
or therein, to the best of such counsel's knowledge, will
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any Lien upon any
property or assets of the Company pursuant to, any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company is a party or by which
it may be bound, or to which any of its assets is subject
(other than the Lien created by the Indenture) which
separately or in the aggregate are material, nor will any such
action result in any violation of the provisions of the
charter or bylaws of the Company or, to the best of such
counsel's knowledge, of any law, administrative regulation or
administrative or court decree.
(ix) No filing or, registration with, notice to or
consent, approval, authorization or order or other action of,
any court or governmental authority or agency, is required for
the consummation by the Company of the transactions
contemplated by this Agreement or the applicable Terms
Agreement, except such as have been obtained and except such
as may be required under state securities or Blue Sky laws in
connection with the distribution of the Bonds referred to in
such Terms Agreement by the Underwriters.
(x) The issuance of the Bonds to be underwritten at
such time pursuant to this Agreement has been duly authorized
by the Company and such Bonds have been
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<PAGE> 16
duly executed and delivered by the Company and, assuming due
authorization, execution and delivery of the Indenture by the
Trustee, when authenticated by the Trustee in accordance with
the terms of the Indenture and delivered to and paid for by
the Underwriters pursuant to the applicable Terms Agreement,
will constitute legal, valid and binding non-recourse
obligations of the Company, enforceable in accordance with
their terms, subject, as to enforceability of remedies, to
applicable bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and to general
principles of equity and equitable remedies (regardless of
whether the enforceability of such remedies is considered in a
proceeding at law or in equity), and the Bonds are entitled to
the benefits and security provided by the Indenture.
(xi) The Bonds to be underwritten at such time
pursuant to this Agreement and the Indenture conform in all
material respects to the respective descriptions thereof
contained in the applicable Final Prospectus (excluding any
descriptions thereof in the Current Report, as to which no
opinion need be rendered).
(xii) At the Closing Time, the Company had corporate
power and authority to assign, pledge and deliver the Initial
Collateral to the Trustee under the Indenture, and had duly
authorized such assignment, pledge and delivery to the Trustee
by all necessary corporate action.
(xiii) Immediately prior to the grant to the Trustee
of the Conventional Certificates securing the Bonds to be
underwritten at such time pursuant to this Agreement, the
Company owned such Conventional Certificates, free and clear
of any Lien, except the lien of the Indenture; each such
Conventional Certificate has been duly and validly assigned,
pledged and delivered by the Company to the Trustee or its
nominee under the Indenture; the Indenture, together with such
assignment, pledge and delivery of each such Conventional
Certificate, the filing of a UCC-1 financing statement with
respect to the Conventional Certificates with the office of
the Secretary of State of the State of Texas and in such other
jurisdictions, if any, as such counsel deems appropriate, and
the possession by the Trustee, or its nominee, of the
Conventional Certificates not represented by book-entry
accounts and of the other assets comprising the Initial
Collateral, create as security for such Bonds a valid and
perfected security interest in the Trust Estate as security
for the repayment of such Bonds free and clear of any prior
Lien; a UCC-1 financing statement with respect to the security
interest created by the Indenture has been filed in the office
of the Secretary of State of the State of Texas and in such
other offices, if any, as such counsel deems appropriate; no
other recordings or filings in any jurisdiction are necessary
to perfect the security interest of the Trustee in the Initial
Collateral as
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<PAGE> 17
against any third party, and no further action is required to
create, attach or perfect such security interest except that:
(A) appropriate continuation statements with respect to
the UCC-1 financing statements referred to above must
be filed within six months prior to the expiration of
each consecutive five-year period commencing upon the
date of initial filing, and
(B) with respect to items of Initial Collateral and the
distributions thereof, a perfected security interest
in which is perfected by delivery of possession,
possession of such items must be maintained by the
Trustee or its bailee (other than an affiliate of the
Company).
(xiv) The Registration Statement is effective under
the 1933 Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or
threatened by the Commission. The Indenture has been duly
qualified under the 1939 Act.
(xv) The Registration Statement and the applicable
Final Prospectus, and each amendment or supplement thereto
(other than the financial statements, schedules, notes
thereto, and the financial and statistical data included
therein and any documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus,
including without limitation the Current Report, in each case
as to which no opinion need be rendered), as of their
respective effective or issue dates, complied as to form in
all material respects with the requirements of the 1933 Act,
the 1933 Act Regulations, the 1939 Act and the 1939 Act
Regulations; and each document, if any, filed pursuant to the
1934 Act (other than the financial statements, schedules,
notes thereto, and the financial and statistical data included
therein and any documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus,
including without limitation the Current Report, in each case
as to which no opinion need be rendered) and incorporated by
reference in the applicable Final Prospectus, complied when so
filed as to form in all material respects with the 1934 Act
and the rules and regulations thereunder.
(xvi) The statements in the applicable Final
Prospectus under the caption "Certain Federal Income Tax
Consequences", to the extent they constitute matters of law or
legal conclusions, have been prepared or reviewed by such
counsel and correctly represent the opinion of such counsel;
the descriptions in such Final Prospectus of statutes, legal
and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be
shown.
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<PAGE> 18
(xvii) To the best of such counsel's knowledge,
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed therein, nor any
contracts or documents of a character required to be described
or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto (other than financial
statements, schedules, and notes thereto and the financial and
statistical data included therein and the other documents, if
any, incorporated by reference therein, as to which no opinion
need be rendered).
(xviii) The Company is not, and will not as a result
of the offer and sale of the Bonds as contemplated in this
Agreement and any applicable Terms Agreement, become an
"investment company" or under the "control" of an "investment
company" as such terms are defined in the Investment Company
Act which would be required to register under the Investment
Company Act.
(xix) Nothing has come to the attention of such
counsel that would lead them to believe that the Registration
Statement or any amendment thereto (other than the financial
statements, schedules, notes thereto and the financial and
statistical data included therein and any documents
incorporated by reference therein including without limitation
the Current Report related thereto, in each case as to which
no opinion need be rendered), at their respective effective
dates, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Final Prospectus or any amendment or supplement
thereto (other than the Current Report related thereto, in
each case as to which no opinion need be rendered), at their
respective issue dates or, as amended or supplemented (except
as aforesaid), at Closing Time, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(xx) The Bonds to be underwritten at such time
pursuant to this Agreement, or the Classes thereof as are
identified in such opinion for these purposes, will be
"mortgage related securities", as defined in Section 3(a)(41)
of the 1934 Act, so long as such Bonds or the identified
Classes are rated in one of the two highest rating categories
by at least one nationally recognized statistical rating
organization.
(2) The opinion, addressed to the Underwriters and dated the
Closing Time, of counsel to Capstead in form and substance reasonably
satisfactory to you and counsel for the Underwriters, to the effect that:
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<PAGE> 19
(i) Capstead has been duly organized and is validly
existing as a corporation, in good standing under the laws of
the jurisdiction of its organization with corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the applicable Final Prospectus.
(ii) Capstead is not, nor will it be, as a result of
its entering into this Agreement and consummating the
transactions contemplated hereby, in violation of its charter
or bylaws, and to the best of such counsel's knowledge, is not
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its
properties may be bound.
(iii) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the best of such counsel's
knowledge, against Capstead which could reasonably be expected
to interfere with or adversely affect the consummation of the
transactions contemplated herein.
(iv) The execution and delivery of this Agreement
and the applicable Terms Agreement, the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein have been
duly authorized by Capstead by all necessary corporate action;
and this Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by Capstead.
(v) No filing or registration with, notice to or
consent, approval, authorization or order or other action of,
any court or governmental authority or agency, is required for
the consummation by Capstead of the transactions contemplated
by this Agreement or the applicable Terms Agreement, except
such as have been obtained and except such as may be required
under state securities or Blue Sky laws in connection with the
distribution of the Bonds to be underwritten at such time
pursuant to this Agreement by the Underwriters.
(c) At the Closing Time you shall have received the
opinion of Andrews & Kurth L.L.P., addressed to the Underwriters and
dated the Closing Time, with respect to certain tax matters, in
substantially the same form as their opinion filed as Exhibit 8.1 of
the Registration Statement.
(d) At the Closing Time you shall have received the
favorable opinion, dated the Closing Time, of Stroock & Stroock &
Lavan, counsel for the Underwriters, with respect to
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<PAGE> 20
the matters set forth in clauses (i), (vii), (x), (xi), (xiv), (xv),
(xix) and (xx) of paragraph (b)(1) of this Section 5 and in clause
(iv) of paragraph (b)(2) of this Section 5.
(e) At the Closing Time there shall not have been, since
the date of the applicable Terms Agreement or since the respective
dates as of which information is given in the Registration Statement,
any material adverse change in the condition, financial or otherwise,
earnings, business affairs, regulatory situation or business prospects
of the Company or Capstead, whether or not arising in the ordinary
course of business, and you shall have received, at the Closing Time,
a certificate of the Chairman of the Board, the President, any Senior
Executive Vice President, Executive Vice President, Senior Vice
President, Vice President or Authorized Officer of the Company and of
Capstead to the effect that there has been no such material adverse
change and to the effect that the other representations and warranties
of the Company and Capstead contained in Section 1 are true and
correct with the same force and effect as though made at and as of the
Closing Time.
(f) The Company and you shall have received from Deloitte
& Touche LLP (the "Independent Accountants") an agreed upon procedures
letter, dated as of the date of the applicable Terms Agreement and
delivered simultaneously with the printing of the Final Prospectus, in
form and substance satisfactory to you. In addition, the Company and
you shall have received from the Independent Accountants an agreed
upon procedures letter, in form and substance satisfactory to you,
with respect to the Computational Materials that are described in
Section 8(a) hereof.
(g) [Reserved]
(h) At the Closing Time, you and the Company shall have
received the favorable opinion of counsel for the Trustee, addressed
to the Underwriters and the Company and dated the Closing Time, in
form and substance satisfactory to you and counsel for the
Underwriters and the Company, to the effect that:
(i) The Trustee is duly incorporated, validly
existing and in good standing as a national banking
association under the laws of the United States of America,
with full corporate and trust power and authority to conduct
its business and affairs as a trustee;
(ii) The Trustee has full power and authority to
execute and deliver the Indenture and to perform its
obligations thereunder;
(iii) The Trustee has duly accepted the office of
Trustee under the Indenture; and
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<PAGE> 21
(iv) The Trustee has duly authorized, executed and
delivered the Indenture.
(i) At the Closing Time, the Bonds then to be
underwritten pursuant to this Agreement shall be rated in the highest
rating category by the rating agencies requested to rate such Bonds or
such other rating category as the related Terms Agreement shall state.
(j) At the Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions (including
copies of insurance policies described in the applicable Final
Prospectus and opinions of counsel with respect to such policies) as
they may reasonably require for the purpose of enabling them to pass
upon the Registration Statement, the applicable Final Prospectus, the
issuance and sale of the Bonds then to be underwritten pursuant to
this Agreement as contemplated in the applicable Terms Agreement and
related proceedings, or in order to evidence the accuracy of any of
the representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company, Capstead and the Partnership in connection with the issuance
and sale of the Bonds then to be underwritten pursuant to this
Agreement as contemplated in the applicable Terms Agreement and in the
Indenture shall be reasonably satisfactory in form and substance to
you and counsel for the Underwriters.
(k) At the Closing Time, you shall have received a
reliance letter related to each opinion of counsel for the Company
that is delivered to the rating agencies requested to rate the Bonds
then to be underwritten pursuant to this Agreement.
If any condition in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement and the applicable Terms
Agreement may be terminated by you by notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 4.
SECTION 6. Indemnification. (a) The Company and Capstead, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, preliminary
prospectus supplement or the Final Prospectus (or any
amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to
make the statements therein in the
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<PAGE> 22
light of the circumstances under which they were made not
misleading; provided, however, that (A) the Company shall not
be liable in any such case if such untrue statement or
omission or such alleged untrue statement or omission was made
(1) in reliance upon and in conformity with written
information furnished to the Company by any Underwriter
through you expressly for use in the Registration Statement
(or any amendment thereto) or in any preliminary prospectus,
preliminary prospectus supplement or each Final Prospectus (or
any amendment or supplement thereto) or (2) in any Current
Report or any amendment or supplement thereof, except to the
extent that any untrue statement or alleged untrue statement
therein results (or is alleged to have resulted) directly from
an error (a "Mortgage Collateral Error") in the information
concerning the characteristics of the Mortgage Loans furnished
by the Company to you in writing or by electronic transmission
that was used in the preparation of either (x) any
Computational Materials (or amendments or supplements thereof)
included in such Current Report (or amendment or supplement
thereof) or (y) any written or electronic materials furnished
to prospective investors on which the Computational Materials
(or amendments or supplements thereof) were based; (B) such
indemnity with respect to any Corrected Statement (as defined
below) in such Final Prospectus (or supplement thereto) shall
not inure to the benefit of any Underwriter (or any person
controlling any Underwriter) from whom the person asserting
any loss, claim, damage or liability purchased the Bonds that
are the subject thereof if such person did not receive a copy
of a supplement to such Final Prospectus at or prior to the
confirmation of the sale of such Bonds and the untrue
statement or admission of a material fact contained in such
Final Prospectus (or supplement thereto) was corrected (a
"Corrected Statement") in such other supplement and such
supplement was furnished by the Company to you prior to the
delivery of such confirmation; and (C) such indemnity with
respect to any Mortgage Collateral Error shall not inure to
the benefit of any Underwriter (or any person controlling the
Underwriter) from whom the person asserting any loss, claim,
damage or liability received any Computational Materials (or
any written or electronic materials on which the Computational
Materials are based) that were prepared on the basis of such
Mortgage Collateral Error, if, prior to the time of
confirmation of the sale of the applicable Bonds to such
person, the Company notified you in writing of the Mortgage
Collateral Error or provided in written or electronic form
information superseding or correcting such Mortgage Collateral
Error (in any such case a "Corrected Mortgage Collateral
Error"), and such Underwriter failed to notify such person
thereof or to deliver to such person corrected Computational
Materials (or underlying written or electronic materials
relating thereto);
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation,
investigation or proceeding by any governmental agency or
body, commenced or
--22--
<PAGE> 23
threatened, or of any claim whatsoever based, in each case,
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as
incurred (including the reasonable fees and disbursements of
counsel chosen by you) reasonably incurred in investigating,
preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened or any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, Capstead and each person, if any,
who controls the Company or Capstead within the meaning of Section 15
of the 1933 Act and the officers and directors of any such person
against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this
Section, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus,
preliminary prospectus supplement or the Final Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity
with (i) written information furnished to the Company by such
Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or in any preliminary prospectus, preliminary
prospectus supplement or each Final Prospectus (or any amendment or
supplement thereto) or (ii) any Computational Materials (or amendments
or supplements thereof) furnished to the Company by such Underwriter
pursuant to Section 8 hereof and incorporated by reference in such
Registration Statement or the related Final Prospectus or any
amendment or supplement thereto (except that no such indemnity shall
be available for any losses, claims, damages or liabilities, or
actions in respect thereof, resulting from any Mortgage Collateral
Error, other than a Corrected Mortgage Collateral Error).
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect
of which indemnity may be sought hereunder but failure to so notify an
indemnifying party shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense
of such action. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel in connection with
any one action or separate but similar and related actions in the same
jurisdiction arising out of the same general allegations or similar
circumstances.
--23--
<PAGE> 24
(d) The indemnity agreement provided by this Section 6
shall be in addition to any liability the Company and the Underwriters
shall otherwise have.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unavailable to or insufficient to hold
harmless the indemnified parties although applicable in accordance with its
terms, the Company and Capstead, on the one hand, and the Underwriters on the
other, shall:
(a) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) relating to a class or classes of any
Series of Bonds (a "Class" or "Classes," as the case may be) which do
not arise out of or are not based upon any untrue statement or
omission of a material fact in any Computational Materials (or any
amendments or supplements thereof), contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred in respect of any
Class or Classes underwritten pursuant to this Agreement by the
Company or Capstead and the Underwriter of such Class or Classes, as
incurred, in such proportions that the Underwriter of such Class or
Classes is responsible for that portion represented by the percentage
that the difference between the proceeds to the Company appearing on
the cover page of the applicable Final Prospectus and the total of all
proceeds received by such Underwriter from the sale of all Bonds
underwritten by it (the "Underwriting Discount") bears to the total
proceeds received by such Underwriter from such Bonds, and the Company
and Capstead are responsible for the balance;
(b) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which arise out of or are based upon
any untrue statement or omission of a material fact in any
Computational Materials (or any amendments or supplements thereof),
contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement
incurred in respect of any Class or Classes underwritten pursuant to
this Agreement by the Company or Capstead, and the Underwriter of such
Class or Classes, as incurred, in such proportion as is appropriate to
reflect the relative fault of the Company and Capstead on the one hand
and such Underwriter on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities,
claims, damages and expenses (or actions in respect thereof) as well
as any other relevant equitable considerations; provided that in no
event shall such Underwriter be responsible for an amount greater than
the excess, if any, of (i) the total proceeds received by such
Underwriter in the sale of all Bonds underwritten by it (taking into
account any gains or losses realized by such Underwriter in any
hedging transactions directly related to the Bonds) over (ii) the
proceeds received by the Company in respect of the Bonds purchased by
such Underwriter.
--24--
<PAGE> 25
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter and each director of
the Company, each officer of the Company and Capstead who signed the
Registration Statement, and each person, if any, who controls the Company or
Capstead within the meaning of Section 15 of the 1933 Act and the officers and
directors of any such person shall have the same rights to contribution as the
Company or Capstead.
SECTION 8. Computational Materials. (a) As soon as
practicable and in no event later than 3:00 p.m. Dallas, Texas time three
Business Days before the date on which the Final Prospectus relating to the
Bonds of a Series is required to be filed by the Company with the Commission
pursuant to Rule 424 under the 1933 Act, you shall deliver to the Company five
complete copies of all materials provided by you to prospective investors
regarding the Class or Classes being underwritten by you which constitute
"Computational Materials" within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated,
and Kidder Structured Asset Corporation (the "Kidder Letter"), and the filing
of which material is a condition of the relief granted in such letter (such
materials being the "Computational Materials"). Each delivery of Computational
Materials to the Company pursuant to this paragraph (a) shall be effected by
delivering four copies of such materials to counsel for the Company at Andrews
& Kurth L.L.P., 4400 Thanksgiving Tower, Dallas, Texas 75201, or such other
address specified by such counsel to you in writing, and one copy of such
materials to the Company.
(b) You represent and warrant to and agree with the
Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) the Computational Materials furnished to the
Company pursuant to Section 8(a) constitute (either in
original, aggregated or consolidated form) all of the
materials furnished to prospective investors by the
Underwriters prior to the time of delivery thereof to the
Company that are required to be filed with the Commission with
respect to the related Bonds in accordance with the Kidder
Letter, and such Computational Materials comply with the
requirements of the Kidder Letter; and
(ii) on the date any such Computational Materials
with respect to such Bonds (or any written or electronic
materials furnished to prospective investors on which the
Computational Materials are based) were last furnished to each
prospective investor and on the date of delivery thereof to
the Company pursuant to Section 8(a) and on the related
Closing Date, such Computational Materials (or materials) did
not and will not include any untrue statement of a material
fact or, when read in
--25--
<PAGE> 26
conjunction with the Final Prospectus and Prospectus
Supplement, omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
Notwithstanding the foregoing, you make no representation or warranty as to
whether any Computational Materials (or any written or electronic materials on
which the Computational Materials are based) included or will include any
untrue statement resulting directly from any Mortgage Collateral Error (except
any Corrected Mortgage Collateral Error, with respect to materials prepared
after the receipt by you from the Company of notice of such Corrected Mortgage
Collateral Error or materials superseding or correcting such Corrected Mortgage
Collateral Error).
(c) You acknowledge and agree that the Company has not authorized
and will not authorize the distribution of any Computational Materials to any
prospective investor, and agree that any Computational Materials with respect
to any Series of Bonds furnished to prospective investors from and after the
date hereof shall include a disclaimer in form reasonably satisfactory to the
Company. You agree that you will not represent to investors that any
Computational Materials were prepared or disseminated on behalf of the Company.
This disclaimer shall not alter the rights or obligations of the parties hereto
pursuant to Sections 6 and 7 hereof.
(d) If, at any time when a prospectus relating to the Bonds of a
Series is required to be delivered under the 1933 Act, it shall be necessary to
amend or supplement the related Final Prospectus as a result of an untrue
statement of a material fact contained in any Computational Materials provided
by you pursuant to this Section 8 or the omission to state therein a material
fact required, when considered in conjunction with the Final Prospectus and
Prospectus Supplement, to be stated therein or necessary to make the statements
therein, when read in conjunction with the Final Prospectus and Prospectus
Supplement, not misleading, or if it shall be necessary to amend or supplement
any Current Report to comply with the 1933 Act or the rules thereunder, you
promptly will prepare and furnish to the Company for filing with the Commission
an amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. You represent and warrant to the
Company, as of the date of delivery of such amendment or supplement to the
Company, that such amendment or supplement will not include any untrue
statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Company shall have no obligation to file such amendment or supplement if
the Company determines that (i) such amendment or supplement contains any
untrue statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood, however, that the Company shall have no obligation to
review or pass upon the accuracy or adequacy of, or to correct, any such
amendment or supplement provided by the Underwriter to the Company pursuant to
this paragraph (d)) or (ii) such filing is not required under the Act; provided
that, in the event the
--26--
<PAGE> 27
Company makes such a determination, it shall immediately notify you in writing
of the reasons for such determination; and, provided, further, that it shall
file such amendment or supplement if you specifically confirm in writing to the
Company that (A) such amendment or supplement does not contain any untrue
statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading
and (B) you are advising the Company to file such amendment or supplement.
(e) You will cooperate with, and provide any information necessary to
the Independent Accountants so that they may complete and deliver their
agreed-upon procedures letter described in Section 5(f) hereof in a timely
manner so that such letter may be delivered to the Company by not later than
5:00 p.m. New York time, on the Business Day before the date on which the
Current Report described in Section 3(b) is required to be filed with the
Commission.
SECTION 9. Representations, Warranties, and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or Capstead
submitted pursuant hereto or as contemplated hereby, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of the Company or Capstead or a controlling person thereof, and shall survive
delivery of any Bonds to the Underwriters.
SECTION 10. Termination of Agreement. (a) This Agreement may be
terminated for any reason at any time by either the Company or you upon the
giving of thirty days' written notice of such termination to the other party
hereto; provided, however, that if a Terms Agreement has been entered into but
the applicable Closing Time has not occurred, this Agreement shall not be
terminated pursuant to this Section 10(a) prior to such Closing Time.
(b) You may terminate this Agreement or such Terms Agreement, by
notice to the Company, at any time at or prior to the Closing Time, (i) if
there has been, since the respective dates as of which information is given in
the Registration Statement or the applicable Final Prospectus, any material
adverse change in the condition, financial or otherwise, earnings, business
affairs, regulatory situation or business prospects of the Company, Capstead or
the Partnership, whether or not arising in the ordinary course of business,
(ii) if there shall have occurred any material adverse change in the financial
markets of the United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis the effect of which is such
as to make it, in your judgment, impracticable to market the Bonds or enforce
contracts for the sale of the Bonds, or (iii) if trading in any securities of
the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange shall have been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either of said exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium shall have
--27--
<PAGE> 28
been declared by either Federal or New York authorities, or (iv) if the rating
assigned by any nationally recognized securities rating agency requested to
rate any specific debt securities of the Company as of the date of any
applicable Terms Agreement shall have been lowered since that date or if any
such rating agency shall have publicly announced that it has under surveillance
or review, with possible negative implications, its requested rating of such
debt securities of the Company, or (v) if there shall have come to your
attention any facts that would cause you to believe that the applicable Final
Prospectus, at the time it was required to be delivered to a purchaser of the
Bonds offered thereby, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time of such delivery,
not misleading.
(c) In the event of any such termination, (i) the covenants set
forth in Section 3 with respect to any offering of Bonds shall remain in effect
so long as any Underwriter owns any such Bonds purchased from the Company
pursuant to the applicable Terms Agreement and (ii) the covenant set forth in
Section 3(i), the provisions of Section 4, the indemnity agreement set forth in
Section 6, the contribution provisions set forth in Section 7, and the
provisions of Sections 8, 9 and 14 shall remain in effect.
SECTION 11. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time to purchase the Bonds
which it or they are obligated to purchase hereunder and under the applicable
Terms Agreement (the "Defaulted Bonds"), you shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Bonds in such amounts as may be agreed upon and upon the
terms herein set forth and under the applicable Terms Agreement. If, however,
you have not completed such arrangements within such 24-hour period, then:
(a) if the aggregate original principal amount of
Defaulted Bonds does not exceed 10% of the aggregate original
principal amount of the Bonds to be purchased pursuant to such Terms
Agreement, the non-defaulting Underwriters named in such Terms
Agreement shall be obligated to purchase the full amount thereof in
the proportions that their respective underwriting obligations
thereunder bear to the underwriting obligations of all non-defaulting
Underwriters; and
(b) if the aggregate original principal amount of
Defaulted Bonds exceeds 10% of the aggregate original principal amount
of the Bonds to be purchased pursuant to such Terms Agreement, the
applicable Terms Agreement shall terminate without any liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 11 and nothing in this
Agreement shall relieve any defaulting Underwriter from liability in respect of
its default.
--28--
<PAGE> 29
In the event of any such default which does not result in a
termination of this Agreement or such applicable Terms Agreement, either you or
the Company shall have the right to postpone the Closing Time for a period of
time not exceeding seven days in order to effect any required changes in the
Registration Statement or in any other documents or arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Company shall be directed to its agent for service set forth on the cover page
of the Registration Statement, notices to the Company shall be directed to it
at CityPlace Center East, 2711 N. Haskell Avenue, Suite 900, Dallas, Texas
75204, Attention: Ronn K. Lytle and notices to you shall be directed to you
c/o Donaldson Lufkin & Jenrette Securities Corporation, 277 Park Avenue, 9th
Floor, New York, New York 10172, Attention: Paul Najarian, or in respect of
any Terms Agreement, to such other person and place agreed upon by those of you
who are parties to such Terms Agreements.
SECTION 13. Parties. This Agreement shall inure to the benefit of
and be binding upon you, the Company and Capstead, and any Terms Agreement
shall inure to the benefit of and be binding upon the Company and Capstead and
any Underwriter who becomes a party to such Terms Agreement, and their
respective successors. Nothing expressed or mentioned in this Agreement or any
Terms Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any Terms Agreement or
any provision herein or therein contained. This Agreement and any Terms
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and thereto and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Bonds from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT AND EACH TERMS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
--29--
<PAGE> 30
If the foregoing is in accordance with your understanding hereof, the
form of acceptance set forth below should be signed by you, whereupon this
instrument along with all counterparts will become a binding agreement among
the Company, Capstead, and us in accordance with its terms.
Very truly yours,
CMC SECURITIES CORPORATION IV
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
CAPSTEAD MORTGAGE CORPORATION
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
ACCEPTED at New York, New York as
of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Underwriting Agreement - Signature Page
<PAGE> 31
EXHIBIT A
CMC SECURITIES CORPORATION IV
(a Delaware corporation)
Collateralized Mortgage Obligations, Series 199_-__
Terms Agreement
Dated: ___________________
CMC Securities Corporation IV
CityPlace Center East
2711 N. Haskell Avenue
Suite 900
Dallas, Texas 75204
Re: Underwriting Agreement dated ________ __, 199_
Title of Bonds:
Section 1. The Bonds: The Series 199_-__ Bonds (the "Series 199_-__ Bonds")
shall be as follows:
(a) Principal amount to be issued: $_____________
(b) Public offering price:
(c) Purchase price:
[plus accrued interest from _______________.]
(d) Payment Dates:
(e) Accrual Periods:
(f) Bond Rating: It is a condition to the issuance of the Series 199_-__
Bonds that they be rated "___" by _______________.
<PAGE> 32
Section 2. Closing; Stand-Off Period:
(a) Closing date and location:
(b) Type of funds to be delivered by the Underwriters at the Closing:
(c) Expiration date of Stand-Off Period:
(d) Securities excluded from Stand-Off Period restrictions:
Section 3. Co-managers:
Section 4. Purchase by the Underwriter(s):
The Underwriter(s) agrees, subject to the terms and provisions herein and
of the above-referenced Underwriting Agreement (as modified and amended by the
terms hereof), which is incorporated herein in its entirety and made a part
hereof, to purchase [the entire aggregate principal amount of the Series
199_-__ Bonds in the Classes set forth in Section 1 hereof].
[Name of Underwriter]
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
[Name of Underwriter]
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted:
CMC SECURITIES CORPORATION IV
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted:
CAPSTEAD MORTGAGE CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 1
CMC SECURITIES CORPORATION IV,
Issuer,
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
INDENTURE
Dated as of September 1, 1997
Relating to
COLLATERALIZED MORTGAGE OBLIGATIONS
(Issuable in Series)
(Senior/Subordinate Bonds)
<PAGE> 2
TABLE OF CONTENTS
Page
-i-
<PAGE> 3
INDENTURE, dated as of September 1, 1997 (herein, as amended or
supplemented from time to time as permitted hereby, called this "Indenture"),
between CMC Securities Corporation IV, a Delaware corporation (herein, together
with its permitted successors and assigns, called the "Issuer"), and The First
National Bank of Chicago, as trustee (herein, together with its permitted
successors in the trusts hereunder, called the "Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more series (a "Series") of its Collateralized
Mortgage Obligations ("Bonds"), issuable as provided in this Indenture. Each
Series of such Bonds will be issued only under a separate supplement to this
Indenture duly executed and delivered by the Issuer and the Trustee and limited
to the amount therein described. Each Series of Bonds shall be non-recourse
obligations of the Issuer and shall be limited in right of payment to amounts
available from the Trust Estate (as defined herein) relative thereto as
provided in this Indenture and the Issuer shall not otherwise be liable for
payments on the Bonds. All covenants and agreements made by the Issuer herein
are for the benefit and security of the holders of the Bonds. The Issuer is
entering into this Indenture, and the Trustee is accepting the trusts created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
-1-
<PAGE> 4
ARTICLE I
DEFINITIONS
Section 1.1 General Definitions.
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below (as
supplemented, to the extent indicated below, by the provisions of the Series
Supplement for a particular Series) for all purposes of this Indenture, and the
definitions of such terms are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such terms. Whenever any reference is made to an amount the
determination or calculation of which is governed by Section 1.3, the
provisions of Section 1.3 shall be applicable to such determination or
calculation, whether or not reference is specifically made to Section 1.3,
unless some other method of calculation or determination is expressly specified
in the particular provision. Whenever reference is made herein to an Event of
Default or Default necessitating or involving action by the Trustee, such
reference shall be construed to refer only to an Event of Default or Default of
which the Trustee is deemed to have notice or knowledge pursuant to Section
6.1(d). All other terms used herein which are defined in the Trust Indenture
Act (as hereinafter defined), either directly or by reference therein, have the
meanings assigned to them therein.
"Accountant": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Issuer or an Affiliate of the Issuer.
"Accrual Date": With respect to any Series, the date upon which
interest begins accruing on the Bonds of such Series, as specified in such
Bonds and the related Series Supplement.
"Act": With respect to any Bondholder, as defined in Section 11.3.
"Accrued Bond Interest": With respect to any Bond of a Series, other
than a Principal Only Bond, on any Interest Payment Date an amount equal to the
interest accrued on the Imputed Principal Balance or Notional Amount, as
applicable, thereof prior to such Interest Payment Date during the related
Interest Accrual Period at the applicable Bond Interest Rate, less such Bond's
share of any Net Interest Shortfalls and the interest portion of any Excess
Losses and Realized Losses incurred on the mortgage loans underlying the
Conventional Certificates securing such Series in the calendar month preceding
the month in which such Interest Payment Date occurs and which are then
allocable to the Class of such Bonds, in accordance with the provisions of the
related Series Supplement. Interest accrued on a Bond for the purposes of this
definition shall be calculated on the basis of a 360-day year consisting of
twelve months of thirty days each.
-2-
<PAGE> 5
"Administrator": As to each Series and at any relevant time, the
Person then acting as administrator under the Pooling and Administration
Agreement applicable to such Series.
"Advice": With respect to an Uncertificated Certificate, an
instrument or instruments evidencing and acknowledging the transfer or pledge
of such Uncertificated Certificate to the Trustee, issued by one or more
entities maintaining books on which transfers or pledges of such Uncertificated
Certificate are recorded in accordance with applicable statutes and
regulations.
"Affiliate": of any specified Person: Any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent": Any Bond Registrar, Paying Agent or Authenticating Agent.
"Aggregate Certificate Balance": With respect to the Certificates
securing a Series, the aggregate of the Certificate Principal Balances for all
such Certificates as of the date of determination.
"Aggregate Current Principal Balance": With respect to any Series,
the sum of the Class Current Principal Amounts of all Classes of Bonds of such
Series Outstanding at the time of determination.
"Aggregate Imputed Principal Balance": With respect to any Series,
the sum of the Class Imputed Principal Balances of all Classes of Bonds of such
Series Outstanding at the time of determination.
"Assumed Reinvestment Rate": With respect to any Series for any
period, the respective percentage or percentages per annum, if any, specified
in the related Series Supplement, compounded monthly unless otherwise specified
in the related Series Supplement.
"Authenticating Agent": With respect to any particular Series, the
Person, if any, named as Authenticating Agent for such Series in the related
Series Supplement or appointed by the Trustee at the request of the Issuer
pursuant to Section 6.15, until any successor Authenticating Agent for such
Series is named, and thereafter "Authenticating Agent" shall mean such
successor.
"Available Funds": With respect to a Series of Bonds, as defined in
the Series Supplement relative thereto.
-3-
<PAGE> 6
"Bankruptcy Coverage Termination Date": With respect to any relevant
Series of Bonds, the earlier of (a) the Payment Date on which the amount of
Bankruptcy Losses incurred on the mortgage loans underlying the Conventional
Certificates securing such Series of Bonds and not previously deducted from the
Bankruptcy Loss Amount relative to such Series of Bonds equals or exceeds such
Bankruptcy Loss Amount on such Payment Date, and (b) the Cross-over Date
relative to such Series of Bonds.
"Bankruptcy Loss": Unless otherwise specified in the related Series
Supplement, a loss incurred on a mortgage loan underlying a Conventional
Certificate securing a Series of Bonds as a consequence of a Debt Service
Reduction or a Deficient Valuation.
"Bankruptcy Loss Amount": With respect to any relevant Series of
Bonds, the amount specified in the related Series Supplement, as adjusted from
time to time in accordance with such Series Supplement.
"Beneficial Owner": With respect to a Book Entry Bond, the Person who
is the beneficial owner of such Bond as reflected on the books of the Clearing
Agency for the Class or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Board of Directors": Either the Board of Directors of the Issuer or
the Executive Committee or Finance Committee, if any, of that Board.
"Bondholder" or "Holder": The Person in whose name a Bond is
registered in the Bond Register.
"Bond Interest Rate": With respect to any Series or Class, the annual
rate at which interest accrues on the Bonds of such Series or Class, as
specified in the related Series Supplement.
"Bond Redemption Date": With respect to a Series of Bonds, as defined
in the Series Supplement relative thereto.
"Bond Register" and "Bond Registrar": As defined in Section 2.7.
"Bonds": Any bonds authorized by, and authenticated and delivered
under, this Indenture.
"Book Entry Bonds": As specified in the related Series Supplement,
Bonds of any Class which are issued in book entry form and held in the form of
a single certificate issued in the name of a Clearing Agency registered with
the Commission.
"Book Entry Nominee": As defined in Section 2.15.
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"Book Entry Termination": The time at which the book entry
registration of the Book Entry Bonds shall terminate, as specified in Section
2.14.
"Business Day": Any day that is not a Saturday, Sunday or other day
on which commercial banking institutions in the City of New York or in the city
in which the Corporate Trust Office is located are authorized or obligated by
law or executive order to be closed, or as otherwise set forth in the related
Series Supplement.
"Certificate": A Conventional Certificate which is Granted to the
Trustee under this Indenture and the related Series Supplement as security for
a particular Series. The term "Certificates" means all of the Conventional
Certificates (if any) Granted to the Trustee under this Indenture and the
related Series Supplement as security for a particular Series. The term
"outstanding Certificates" as of any date means all of the Certificates other
than any Certificates which have been fully paid as of such date.
"Certificate Account": With respect to a Series of Bonds
collateralized by Conventional Certificates, the account designated as the
Certificate Account in respect thereof in the related Pooling and
Administration Agreement.
"Certificate Principal Balance": As of the date of any determination
with respect to any Certificate, the aggregate of the Scheduled Principal
Balances of the mortgage loans underlying such Certificate at such time.
"Certificate Rate": With respect to any Certificate, the pass-through
rate of interest payable to the holder thereof as indicated thereon. In the
event that any Certificate provides for a pass-through rate of interest which
is calculated on a mortgage loan by mortgage loan basis (equal as to each such
mortgage loan to the interest rate borne thereby less the servicing,
Certificate Trustee and other fees specified in such Certificate) the
Certificate Rate for such Certificate at the time of any determination shall be
the weighted average of such individual mortgage loan coupon rates less such
servicing, certificate trustee and other fees, as applicable.
"Certificate Trustee": With respect to any Series of Bonds
collateralized by Conventional Certificates, the entity designated as Trustee
under the related Pooling and Administration Agreement.
"Class": With respect to any Series, each subdivision of the Bonds
created pursuant to the related Series Supplement, such subdivisions having the
characteristics and designations set forth in such related Series Supplement.
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"Class Current Principal Balance": With respect to any Class of Bonds
of any Series, and as of any date of determination, the sum of the Current
Principal Balances of all Outstanding Bonds of such Class at such date.
"Class Imputed Principal Balance": With respect to any Class of Bonds
of a Series as of any date of determination, the sum of the Imputed Principal
Balance of all Outstanding Bonds of such Class at such date.
"Class Original Principal Amount": With respect to any Class of Bonds
of a Series, the aggregate Original Principal Amount of the Bonds of such Class
on the date of issuance thereof, as specified in the related Series Supplement.
"Class Redemption Amount": With respect to any Class or Classes of
Bonds of any Series, the amount or amounts described in Section 10.4(b) hereof
and determined in accordance with the provisions of the applicable Series
Supplement.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder. The Clearing Agency for any
Class of Book Entry Bonds will be specified in the related Series Supplement.
"Clearing Agency Participants": The entities for whom the Clearing
Agency will maintain book entry records of ownership and transfer of Book Entry
Bonds, which may include securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations.
"Closing Date": With respect to any Series, the date on which Bonds
of such Series are first executed, authenticated and delivered.
"Code": The Internal Revenue Code of 1986, as it may be amended from
time to time and as it may be interpreted under regulations promulgated by the
Treasury Department and published rulings issued by the United States Internal
Revenue Service from time to time.
"COFI": The per annum rate equal to the monthly weighted average cost
of funds for member institutions of the Eleventh District of the Federal Home
Loan Bank System, as published by the Federal Home Loan Bank of San Francisco.
"COFI Bond": With respect to any relevant Series, any Bond thereof
the interest rate on which is determined by reference to COFI, as specified in
the related Series Supplement.
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"Collateral Group": With respect to any Series, a group of one or
more outstanding Certificates and/or any other assets which may be included in
the Trust Estate securing such Series which have the characteristics described
in the related Series Supplement.
"Collection Account": With respect to any Series, the trust account
or accounts created and maintained pursuant to Section 8.2, which account shall
be an Eligible Account.
"Commission": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at
such time under the Trust Indenture Act or similar legislation replacing the
Trust Indenture Act.
"Compound Interest Bond": A Bond on which interest accrues and is
added to the principal of such Bond on each related Interest Payment Date
through the Initial Interest Payment Date for such Bond, but with respect to
which neither interest nor principal is due or payable until such Initial
Interest Payment Date.
"Conventional Certificate": A conventional mortgage pass through
certificate administered by the Administrator for a particular Series (or one
of the Administrators if there is more than one for a particular Series) and
representing a fractional undivided interest in a pool of conventional mortgage
loans secured by single family (one-to-four unit) or multifamily residences,
which certificate is Granted to the Trustee under this Indenture and the
related Series Supplement as security for such Series. The term "outstanding
Conventional Certificates" as of any date means the Conventional Certificates
other than the Conventional Certificates which have been fully paid as of such
date.
"Conventional Certificate Prepayment Reserve Amount": With respect to
the Straight Pass-Through Conventional Certificates, if any, securing a Series
at any time, an amount equal to interest for such period of time, if any, as
may be specified in the related Series Supplement, at the respective
Certificate Rates for such Conventional Certificates, on their respective
Certificate Principal Balances as of the date of determination.
"Corporate Trust Office": The principal corporate trust office of the
Trustee located at One First National Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Corporate Trust Department or at such other address as
the Trustee may designate from time to time by notice to the Bondholders and
the Issuer, or the principal corporate trust office of any successor Trustee.
"Cross-over Date": With respect to a Series of Bonds, unless
otherwise specified in the Series Supplement relative thereto, the Payment Date
on which the Class Imputed Principal Balances of all Classes of Junior Bonds of
such Series have been reduced to zero.
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"Current Principal Amount": With respect to any Bond of any Series as
of any date of determination, the sum of:
(a) the Original Principal Amount of such Bond, and
(b) if such Bond is a Compound Interest Bond, the
aggregate amount of interest, if any, accrued on such Bond and added
to the principal thereof on each Interest Payment Date for such Series
through the Interest Payment Date immediately preceding such date of
determination,
reduced by all prior payments, if any, made with respect to principal
(including payments with respect to amounts previously added to principal as
described in clause (b) above) of such Bond.
"Debt Service Reduction": With respect to a mortgage loan underlying
the Conventional Certificates securing a Series, as defined in the related
Pooling and Administration Agreement.
"Debt Service Requirement": Except as otherwise provided in the
related Series Supplement, with respect to a particular Payment Date for a
Series, the Available Funds.
"Deceased Holder Bonds": Bonds as to which redemption is requested
pursuant to Section 10.4 by the personal representative, surviving joint tenant
or surviving tenant by the entirety of a deceased Holder.
"Default": Any occurrence which is, or with the giving of notice or
the lapse of time or both would become, an Event of Default.
"Deficient Valuation": With respect to a mortgage loan underlying any
Conventional Certificate securing a Series of Bonds, as defined in the related
Pooling and Administration Agreement.
"Definitive Bonds": Bonds other than Book Entry Bonds.
"Disqualified Organization": As defined in Section 2.15.
"Distribution": With respect to any Certificate, the amount of the
monthly remittance payable to the holder of such Certificate in accordance with
its terms.
"Distribution Date": The date on which a particular Distribution is
payable to the holder of the related Certificate in accordance with its terms,
as more particularly described in the related Series Supplement.
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"Eligible Account": With respect to any Series, as defined in the
related Pooling and Administration Agreement.
"Eligible Investments": Except to the extent expanded or restricted
by the Series Supplement for the Series of which such obligations or securities
form part of the Trust Estate, each of the following:
(i) obligations of, or guaranteed as to 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;
(ii) repurchase agreements on obligations of, or
guaranteed as to 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, provided that the
unsecured obligations of the party agreeing to repurchase such
obligations are at the time of purchase rated by the Rating Agency in
its highest long-term rating category;
(iii) certificates of deposit, time deposits and bankers
acceptances of any United States bank or trust company incorporated
under the laws of the United States or any state, including the
Trustee; provided that the debt obligations of such bank or trust
company (or, in the case of a subsidiary in a bank holding system,
debt obligations of the bank holding company) at the date of the
acquisition thereof have been rated by the Rating Agency in its
highest long-term rating category;
(iv) pooled or common trust funds of the Trustee, acting
as trustee and custodian and not in its commercial capacity and
representing ownership solely of the investments listed in clauses (i)
through (iii) above which have been approved by any Rating Agency
requesting to review such funds; any pooled or common trust funds
which provide for demand withdrawals shall be conclusively deemed to
satisfy any maturity requirements for Eligible Investments set forth
in this Indenture;
(v) deposits, including deposits with the Trustee, which
are fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, as the case may be;
(vi) participation certificates and senior debt
obligations issued by FHLMC;
(vii) commercial paper of any corporation incorporated
under the laws of the United States or any state thereof, including
corporate affiliates of the Trustee, which has an original maturity of
not more than 365 days and which, at the time of purchase, is rated by
the Rating Agency in its highest short-term rating category;
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(viii) debt obligations rated by the Rating Agency at the
time at which the investment is made in its highest long-term rating
category (or those investments specified in (iii) above with
depository institutions which have debt obligations rated by the
Rating Agency in its highest long-term rating category);
(ix) money market funds which, at the time of purchase,
are rated AAA/m by Standard & Poor's and by the Rating Agency (or, if
the Rating Agency is Duff & Phelps Credit Rating Co., by Moody's
Investors Service, Inc.) in its highest long-term rating category, and
which funds invest only in other Eligible Investments, any such money
market funds which provide for demand withdrawals being conclusively
deemed to satisfy any maturity requirements for Eligible Investments
set forth in this Indenture; or
(x) any other demand, money market or time deposit
obligation, security or investment which is acceptable to each of the
Rating Agencies rating such obligation, security or investment.
provided, however, that no instrument or security shall be an Eligible
Investment if such instrument or security evidences either (a) a right
to receive only interest payments with respect to the obligations
underlying such instrument, or (b) both principal and interest
payments derived from obligations underlying such instrument and the
interest and principal payments with respect to such instrument
provide a yield to maturity greater than 120% of the yield to maturity
at par of the underlying obligations; and provided, further, that if
any such instrument is redeemable by the issuer thereof, it shall not
be redeemable at less than par and if redeemable by any party, such
redemption must be without penalty or discount.
If the Bonds are rated by more than one Rating Agency, each reference in this
definition of "Eligible Investments" to the Rating Agency shall be construed,
in the case of each of subparagraphs (ii), (iii), (iv), (vii), (viii), (ix) and
(x), as a reference to each Rating Agency rating the Bonds that has assigned a
rating to the type of Eligible Investments referred to in such subparagraph.
"Eligible Substitute Certificate": A Certificate Granted pursuant to
Section 8.11 for one or more Certificates previously Granted to the Trustee as
collateral for a Series of Bonds, which substituted Certificate, unless
otherwise specified in the related Series Supplement (i) is a Certificate
issued by the same entity (i.e., sponsor of conventional pass-through
certificates) which issued the Certificate for which it is substituted; (ii)
has an annual interest rate (pass-through rate) which is not more than 1%
greater or not more than 1% less than the interest rate of the Certificate for
which it is substituted; (iii) has scheduled Distributions for each
Distribution Date subsequent to the Distribution Date on or preceding which
such substitution occurs which will not cause any Class of Bonds of such Series
to be paid in full later than the Stated Maturity of such Class of Bonds; (iv)
has a maturity date not earlier than one year prior to, and in no event later
than, the maturity date of the Certificate for which it is substituted; and (v)
the outstanding Certificate Principal Balance of
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which is at least equal to the outstanding Certificate Principal Balance of the
Certificate for which it is substituted.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Prohibited Bonds": With respect to a Series of Bonds, the
Classes of Bonds designated as such in the related Series Supplement.
"ERISA Restricted Bonds": With respect to a Series of Bonds, the
Classes of Bonds designated as such in the related Series Supplement.
"Event of Default": The meaning specified in Section 5.1.
"Excess Bankruptcy Loss": With respect to a Series of Bonds and any
Payment Date in respect thereof on which a Bankruptcy Loss or Bankruptcy Losses
is or are allocable to the Bonds of such Series, the amount, if any, by which
such Bankruptcy Loss or Bankruptcy Losses exceeds or exceed the applicable
Bankruptcy Loss Amount (excluding the principal portion of any Debt Service
Reductions that would otherwise be included in such excess amount).
"Excess Fraud Loss": With respect to a Series of Bonds and any
Payment Date in respect thereof on which a Fraud Loss or Fraud Losses is or are
allocable to the Bonds of such Series, the amount, if any, by which such Fraud
Loss or Fraud Losses exceeds or exceed the applicable Fraud Loss Amount.
"Excess Losses": With respect to a Series of Bonds and a Payment
Date, an amount equal to the sum of Excess Bankruptcy Losses (other than Debt
Service Reductions), Excess Fraud Losses and Excess Special Hazard Losses.
"Excess Special Hazard Loss": With respect to a Series of Bonds and
any Payment Date in respect thereof on which a Special Hazard Loss is allocable
to the Bonds of such Series, the amount, if any, by which such Special Hazard
Loss or Special Hazard Losses exceeds or exceed the applicable Special Hazard
Loss Amount.
"Expense Fund": With respect to any Series, the account, if any,
required to be created and maintained with the Trustee pursuant to Section 8.1
which account shall be an Eligible Account.
"Expense Reserve Amount": With respect to any Series, the amount, if
any, specified in the related Series Supplement.
"FHLMC": Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
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"First SAB Paydown Date": With respect to a Class of SAB Bonds, the
first Principal Payment Date for such Class as specified in the related Series
Supplement.
"FNMA": Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
"Formula Rate Bond": A Bond, if any, designated as such in a Series
Supplement.
"Fraud Loss": With respect to any Series and any mortgage loan
underlying a Conventional Certificate collateralizing such Series, a loss on
such Mortgage Loan by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with such mortgage loan, including loss by
reason of the denial of coverage under any related primary mortgage insurance
policy because of such fraud, dishonesty or misrepresentation.
"Fraud Loss Amount": With respect to any relevant Series of Bonds,
the amount specified in the related Series Supplement, as adjusted from time to
time in accordance with such Series Supplement.
"Fraud Loss Coverage Termination Date": With respect to any relevant
Series of Bonds, the earlier of (a) the Payment Date on which the amount of
Fraud Losses incurred on the mortgage loans underlying the Conventional
Certificates securing such Series of Bonds and not previously deducted from the
Fraud Loss Amount relative to such Series of Bonds, equals or exceeds the Fraud
Loss Amount on such Payment Date, and (b) the Cross-over Date relative to such
Series of Bonds.
"Future Value": With respect to any cash or Eligible Investment held
or to be deposited in a Pledged Account for a Series, as of any particular date
subsequent to the date of determination, the sum of such cash or Eligible
Investment and the investment income which can be earned thereon to such
subsequent date, determined in accordance with such assumptions or requirements
as may be specified in the related Series Supplement.
"GNMA": The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within the Department of Housing
and Urban Development, or any successor thereto.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security
interest in and right of set-off against, deposit, set over and confirm. A
Grant of a Certificate or of any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including without limitation the immediate and continuing right to
claim for, collect, receive and give receipts for principal and interest
payments in respect of such Certificate and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all
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rights and options, to bring Proceedings in the name of the Granting party or
otherwise, and generally to do and receive anything which the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Guarantor": The party to a Guaranty Agreement with the Issuer and the
Trustee.
"Guaranty Agreement": As to any Series or any Class of Bonds of any
Series which is directly insured, guaranteed or otherwise backed, the insurance
policy, surety bond, letter of credit or similar agreement pursuant to which
such insurance, guaranty or other backing is furnished.
"Highest Lawful Rate": As defined in Section 11.18.
"Highest Priority Junior Class": At any time and with respect to any
Series, that Class of Junior Bonds having (a) the then highest priority of
payment of principal under the related Series Supplement (determined without
regard to any acceleration pursuant to Article V) and (b) a Class Imputed
Principal Balance greater than zero.
"Holder": A Bondholder.
"Imputed Principal Balance": With respect to a Bond of a Series as of
any date of determination, the amount equal to the lesser of (a) the Current
Principal Amount of such Bond at such date or, in the case of an Interest Only
Bond, the Notional Amount thereof at such date, and (b) the Original Principal
Amount of such Bond or, in the case of an Interest Only Bond, the Notional
Amount thereof on the date of issuance thereof, plus, in the case of a Compound
Interest Bond, the aggregate amount of interest, if any, accrued on such Bond
and added to the principal thereof on each Interest Payment Date for such
Series through the Interest Payment Date immediately preceding such date of
determination, less the sum of (i) all amounts paid on account of principal on
such Bond, or, in the case of an Interest Only Bond, applied in reduction of
the Notional Amount thereof, prior to such date of determination; (ii) all
Realized Losses allocated to such Bond, or, in the case of an Interest Only
Bond, applied in reduction of the Notional Amount thereof, prior to such date
of determination which remain unpaid on such date of determination; and (iii)
the portion of any Junior Bond Writedown Amount allocated to such Bond prior
to such date of determination.
"Indenture" or "this Indenture": This instrument as originally
executed and, if from time to time supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended. All references in this
instrument to designated "Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein",
"hereof", "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.
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"Independent": When used with respect to any specified Person means
such a Person who (1) is in fact independent of the Issuer and any other
obligor upon the Bonds, (2) does not have any direct financial interest or any
material indirect financial interest in the Issuer or in any such other obligor
or in an Affiliate of the Issuer or such other obligor, and (3) is not
connected with the Issuer or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Trustee, such Person shall be
appointed by an Issuer Order and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning thereof.
"Index": With respect to a Series of Bonds a Class or Classes of
which are Variable Rate Bonds the interest rate on which is determined from
time to time by reference to a predetermined index, as defined in the related
Series Supplement.
"Individual Bond": A Bond of an Original Principal Amount equal to
the lesser of (1) the minimum denomination for Bonds of that Series and Class
as specified in the related Series Supplement, and if the Bonds of such Series
and Class are issuable in a minimum denomination and whole multiples of some
amount smaller than such minimum denomination in excess thereof, such smaller
amount.
"Initial Interest Payment Date": With respect to any Class of
Compound Interest Bonds of any Series, the Principal Payment Date on which the
outstanding principal of the Class of Bonds of such Series whose final
installment of principal has the latest Stated Maturity of principal prior to
the Stated Maturity of the final installment of principal of such Class of
Compound Interest Bonds is paid in full.
"Interest Accrual Period": With respect to any Payment Date or
Redemption Date for a Series of Bonds, the period specified in the related
Series Supplement for which interest accrued on the Outstanding Bonds of such
Series, or a certain Class thereof, as specified in the related Series
Supplement, during such period is to be paid or, if applicable, deferred and
added to principal, including, unless expressly stated to the contrary or the
context otherwise requires, each Variable Rate Interest Accrual Period.
"Interest Delay Period": With respect to any Class of Bonds of a
Series, the length of time, if any, between the end of each Interest Accrual
Period and the day immediately preceding the corresponding Interest Payment
Date.
"Interest Determination Date": With respect to any Class or Classes
of Variable Rate Bonds of a Series, the date specified in the related Series
Supplement on which the Bond Interest Rate at which interest shall accrue on
such Variable Rate Bonds during the next succeeding Variable Rate Interest
Accrual Period is determined.
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"Interest Only Bond": A Bond of a Series which is entitled only to
payments of interest thereon on the basis of the Notional Amount thereof, and
on which no principal is payable, as more particularly described in the related
Series Supplement.
"Interest Payment Date": As to any Series or Class, any date
specified in the related Series Supplement as one of the fixed dates on which
an installment of interest on the Bonds of such Series or Class is due and
payable to the extent of Available Funds on such date.
"Interest Shortfall": Unless otherwise specified in the related
Series Supplement, with respect to a mortgage loan underlying a Conventional
Certificate securing a Series of Bonds, as defined in the related Pooling and
Administration Agreement.
"Issuer": CMC Securities Corporation IV, a Delaware corporation,
until a successor Person shall have become the Issuer pursuant to the
applicable provisions of this Indenture, and thereafter "Issuer" shall mean
such successor Person.
"Issuer Order" and "Issuer Request": A written order or request
signed in the name of the Issuer by its Chairman, President, or a Vice
President, and by its Treasurer, an Assistant Treasurer, Controller, an
Assistant Controller, Secretary, or an Assistant Secretary, and delivered to
the Trustee.
"Issuer Resolution": A copy of a resolution certified by the
Chairman, President, any Vice President, Secretary or any Assistant Secretary
of the Issuer to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Trustee.
"Junior Bond": With respect to a Series of Bonds, a Bond of a Class
of such Series which Class is subordinated in right of payment of principal
and/or interest to the Classes of Senior Bonds of such Series, as more
particularly described in the related Series Supplement.
"Junior Bond Writedown Amount": Except as otherwise specified in the
related Series Supplement, with respect to any Class of Junior Bonds of a
Series and a Payment Date, the amount by which the sum of the Class Imputed
Principal Balances of all Classes of Bonds of such Series, after reducing such
Class Imputed Principal Balances on such Payment Date by payments of principal
then made thereon and the allocation of Realized Losses then allocable thereto,
exceeds the related Pool Scheduled Principal Balance of the Mortgage Loans
underlying the Conventional Certificates collateralizing such Series of Bonds.
"Junior Imputed Principal Balance": With respect to a Series of Bonds
and a Payment Date, the amount equal to the sum of the Class Imputed Principal
Balances of the Junior Bonds outstanding at such time.
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"Letter Agreement": With respect to a Class of Book Entry Bonds, the
letter agreement among the Issuer, the Trustee and the Clearing Agency
governing book entry transfers of, and certain other matters with respect to,
such Book Entry Bonds and attached as an exhibit to the related Series
Supplement.
"LIBOR": As set forth in the related Series Supplement for any Class
of Variable Rate Bonds the Bond Interest Rate on which is determined by
reference to the London Interbank Offered Rate from time to time, as determined
in the manner specified in the related Series Supplement.
"LIBOR Bond": With respect to any relevant Series, any Bond thereof
the interest rate on which is determined by reference to LIBOR, as specified in
the related Series Supplement.
"LIBOR Interest Accrual Period": With respect to any Class of LIBOR
Bonds of a Series, the interest accrual period in respect thereof, as specified
in the related Series Supplement.
"Liquidated Mortgage Loan": With respect to a Series of Bonds
collateralized by Conventional Certificates, as defined in the related Pooling
and Administration Agreement.
"Liquidation Proceeds": With respect to a Series of Bonds
collateralized by Conventional Certificates, as defined in the related Pooling
and Administration Agreement.
"Manager": The entity, if any, specified in the related Series
Supplement which shall perform certain administrative functions with respect to
a Series of the Bonds.
"Maturity": With respect to any Bond, the date on which the entire
unpaid principal amount of such Bond becomes due and payable as therein or
herein provided, whether at the Stated Maturity of the final installment of
such principal or by declaration of acceleration, call for redemption or
otherwise.
"Maximum Bond Interest Rate Assumption": With respect to any relevant
Series and any relevant Class or Classes of Variable Rate Bonds, if any, for
any Variable Rate Interest Accrual Period for which the applicable interest
rate on such Variable Rate Bonds has not yet been determined in accordance with
Section 2.3, an assumed interest rate on such Bonds as specified in the related
Series Supplement.
"Maximum Variable Interest Rate": With respect to any relevant Series
and any relevant Class or Classes of Variable Rate Bonds thereof, the Bond
Interest Rate specified as such for any Class of Variable Rate Bonds in the
related Series Supplement.
"Month of Closing": With respect to any Series, the month in which
the Closing Date occurs.
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"Monthly Payment": With respect to a mortgage loan underlying a
Conventional Certificate, as defined in the related Pooling and Administration
Agreement.
"Mortgaged Properties": Unless otherwise specified in the related
Series Supplement, as to any Series, the properties securing the mortgage notes
evidencing the mortgage loans pooled to form the Conventional Certificates
securing such Series.
"Net Interest Shortfall": Unless otherwise defined in the related
Series Supplement, with respect to any Series and any Payment Date in respect
thereof, the amount defined as such in the related Pooling and Administration
Agreement by reference to the immediately preceding Distribution Date.
"Net Liquidation Proceeds": With respect to a Series of Bonds
collateralized by Conventional Certificates, as defined in the related Pooling
and Administration Agreement.
"New York Agent": With respect to each Series, the agent initially
appointed by the Issuer for purposes of presentation and surrender of Bonds for
registration of transfer and exchange and for notices and demands to or upon
the Issuer pursuant to Section 3.2, as specified in the related Series
Supplement.
"New York Office": With respect to each Series, the office initially
appointed by the Issuer for purposes of presentation and surrender of Bonds for
registration of transfer and exchange and for notices and demands to or upon
the Issuer pursuant to Section 3.2, as specified in the related Series
Supplement.
"Non-Disqualification Opinion": Except as otherwise provided in the
related Series Supplement, with respect to any action proposed to be taken
under this Indenture where an election to treat the Trust Estate securing a
Series (or any portion thereof) and any other assets set forth in such election
as one or more REMICs has been made or will be made, an Opinion of Counsel to
the effect that the taking of such action will not cause a REMIC Loss.
"Non-permitted Foreign Holder": As defined in Section 2.15.
"Non-U.S. Person": An individual, corporation, partnership or other
person other than: a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust that
is subject to U.S. federal income tax regardless of the source of its income.
"Notional Amount": With respect to an Interest Only Bond of a Series,
the notional amount forming the basis of the determination of interest accrued
on such Bond, as more particularly described in the related Series Supplement.
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"Officers' Certificate": A Certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Controller, an Assistant Controller, the Secretary or an Assistant
Secretary of the Issuer or of such other Person as is delivering such
certificate, and delivered to the Trustee. Unless otherwise specified, any
reference in this Indenture to an Officers' Certificate shall be to an
Officers' Certificate of the Issuer.
"Opinion of Counsel": A written opinion of counsel who may, except as
otherwise expressly provided in this Indenture, be counsel for the Issuer and
who shall be satisfactory to the Trustee.
"Original Principal Amount": In respect of a Bond, its outstanding
principal amount on the date of issuance thereof.
"Outstanding": With respect to Bonds of a Series, as of the date of
determination, all Bonds of such Series theretofore authenticated and delivered
under this Indenture except:
(i) Definitive Bonds theretofore cancelled by the
Bond Registrar or delivered to the Bond Registrar for
cancellation;
(ii) Bonds or portions thereof for whose payment
or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Issuer) in trust for the Holders of such
Bonds; provided, however, that if such Bonds are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor, satisfactory
to the Trustee, has been made;
(iii) Bonds in exchange for or in lieu of which
other Bonds have been authenticated and delivered pursuant to
this Indenture unless proof satisfactory to the Trustee is
presented that any such Bonds are held by a bona fide
purchaser; and
(iv) Bonds alleged to have been destroyed, lost or
stolen which have been paid as provided for in Section 2.8;
provided, however, that in determining whether the Holders of the requisite
percentage of the Aggregate Current Principal Amount of the Outstanding Bonds
or of the Outstanding Bonds of any Series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds owned by
the Issuer, any other obligor upon the Bonds or any Affiliate of the Issuer or
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, or
waiver, only Bonds which the Trustee knows to be so owned shall be so
disregarded. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Bonds and that the
pledgee is not the Issuer, any other obligor upon the Bonds
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or any Affiliate of the Issuer or such other obligor. If an election has been
made or will be made to treat the Trust Estate and any other assets securing
such Series set forth in such election, as one or more REMICs, solely for
purposes of a Non-Disqualification Opinion and for purposes of determining
whether a Non-Disqualification Opinion must be delivered pursuant to any
requirement of this Indenture, a Bond shall not be deemed to cease to be
Outstanding pursuant to clause (ii) above prior to the date on which the money
is payable to Holders of the Bonds.
"Overdue Bond": As defined in Section 2.9(c).
"Paying Agent": The Trustee or any other depository institution or
trust company that is authorized by the Issuer pursuant to Section 3.3 to pay
the principal of, or interest on, any Bonds on behalf of the Issuer.
"Payment Date": As to any Series or Class, any day which is specified
in the related Series Supplement as an Interest Payment Date or Principal
Payment Date for the Bonds of such Series or Class.
"Payment Date Statement": As defined in Section 2.9(e).
"Permitted Encumbrance": Any lien, charge, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) Granted
by the Issuer in any portion of a Trust Estate, provided that:
(i) such lien, charge, security interest or
encumbrance extends only to a portion of such Trust Estate
which is limited to cash deliverable or payable to or at the
order of the Issuer,
(ii) such lien, charge, security, interest,
mortgage or other encumbrance secures, directly or indirectly,
indebtedness which the Issuer is permitted to incur under the
terms of this Indenture and its Certificate of Incorporation,
and
(iii) the beneficiary of such lien, charge,
security interest, mortgage or other encumbrance shall have
agreed that in connection with the enforcement thereof it will
not bring any Proceeding seeking, or which would result in,
the sale of any portion of any Trust Estate and will not file
any petition for the commencement of insolvency proceedings
with respect to the Issuer under the federal bankruptcy laws,
as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or for
the appointment of any receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of
the Issuer or of any of its property, or seeking an order for
the winding up or liquidation of the affairs of the Issuer
until not less than 91 days after payment in full of all
Outstanding Bonds.
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"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Plan": Any Person which is an employee benefit plan, trust or
account subject to Title I of ERISA or an individual retirement account or
employee benefit plan, trust or account subject to Section 4975 of the Code or
comparable provisions of any subsequent enactment or a governmental plan
defined in Section 3(2) of ERISA subject to any federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code.
"Pledged Account": With respect to a Series of Bonds, the Collection
Account relative thereto.
"Pool Scheduled Principal Balance": With respect to a Series of Bonds
collateralized by Conventional Certificates, as defined in the related Pooling
and Administration Agreement.
"Pooling and Administration Agreement": As to any Conventional
Certificate, the agreement pursuant to which such Conventional Certificate was
issued and is governed.
"Predecessor Bonds": With respect to any particular Bond of a Series
and Class, every previous Bond of that Series and Class evidencing all or a
portion of the same debt as that evidenced by such particular Bond; and, for
the purpose of this definition, any Bond of a Series authenticated and
delivered under Section 2.8 in lieu of a lost, destroyed or stolen Bond of the
same Series shall be deemed to evidence the same debt as the lost, destroyed or
stolen Bond.
"Prepayment Period": With respect to a Series of Bonds and a
Principal Payment Date, the calendar month preceding such Payment Date.
"Principal Distribution Amount": With respect to any Payment Date for
a Series, an amount determined as provided in the related Series Supplement
(which amount may, to the extent specified in the related Series Supplement, be
a negative number).
"Principal Only Bond": A Bond of a Series which is entitled only to
payments of principal thereof and on which no interest will accrue or be
payable.
"Principal Payment Date": With respect to any Series or Class, any
date specified in the related Series Supplement as a fixed date on which an
installment of principal is due and payable to the extent of Available Funds on
such date.
"Principal Prepayment": With respect to any Series, as defined in the
related Pooling and Administration Agreement.
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"Principal Receipts": With respect to any Series, as defined in the
related Series Supplement.
"Principal Reduction Date": With respect to a particular Series, any
Principal Payment Date.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Qualified GIC": A guaranteed investment contract or surety bond
Granted or to be Granted to the Trustee to provide for the investment of funds
in a Pledged Account for a particular Series and ensuring a minimum rate of
return on investments of such funds, which contract or surety bond shall
(a) be an obligation of an insurance company or other
corporation whose claims paying ability rating or credit standing, as
applicable, is acceptable to each of the Rating Agencies which at all
times that such contract is in force, are rating the Bonds of such
Series;
(b) provide that the Trustee may exercise all of the
rights of the Issuer under such contract or surety bond without the
necessity of the taking of any action by the Issuer;
(c) provide that if at any time the then current claims
paying ability rating or credit standing, as applicable, of the
obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds included in
the Trust Estate for such Series would result in a downgrading of any
rating of the Bonds of such Series, the Trustee may terminate such
contract and be entitled to the return of all funds previously
invested thereunder, together with accrued interest thereon at the
interest rate provided under such contract through the date of
delivery of such funds to the Trustee; and
(d) meet such other standards as may be specified in the
Series Supplement for such Series.
"Qualified Liquidation": With respect to any Series, the plan or
plans for the complete liquidation of the REMIC or REMICs, as applicable,
relative to such Series, within the meaning of Section 860F(a)(4), adopted by
the Issuer within 90 days prior to the final Payment Date of such Series.
"Qualified Nominee": A Person in whose name Certificates or Eligible
Investments Granted to the Trustee may be registered as nominee of the Trustee
in lieu of registration directly in the name of the Trustee, provided that the
following conditions shall be satisfied in connection with such registration:
(a) the instruments governing the creation and operation
of the nominee provide that neither the nominee nor any owner of an
interest in the nominee (other than the Trustee)
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shall have any interest, beneficial or otherwise, in any Certificates
or Eligible Investments at any time held in the name of the nominee,
except for the purpose of transferring and holding legal title
thereto;
(b) the nominee and the Trustee have entered into a
binding agreement:
(i) establishing that any Certificates or
Eligible Investments held in the name of the nominee are to be
held by the nominee as agent (other than commission agent or
broker) or nominee for the account of the Trustee, and
(ii) appointing the Trustee as the agent and
attorney of the nominee with full power and authority
irrevocably to sell, assign, endorse, transfer and deliver any
Certificates or Eligible Investments standing in the name of
the nominee, and to execute and deliver all such instruments
as may be necessary and proper for such purpose; and
(c) in connection with the registration of any
Certificate or Eligible Investment in the name of the nominee, all
requirements under applicable governmental regulations necessary to
effect a valid registration of transfer of such Certificate or
Eligible Investment are complied with.
"Rating Agency" or "Rating Agencies": With respect to each Series of
Bonds at any relevant time, the rating agency or agencies requested by the
Issuer to rate, and then rating, the Bonds of such Series. The Rating Agencies
for each Series of Bonds will be specified in the related Series Supplement.
"Realized Losses": With respect to any Series collateralized by
Conventional Certificates, as defined in the related Pooling and Administration
Agreement, including Excess Losses.
"Record Date": With respect to any Series or Class, a date specified
in the related Series Supplement as a date on which the Holders of Bonds of
such Series or Class entitled to receive a payment of principal or interest (or
notice of a payment in full of principal) on the succeeding Payment Date are
determined.
"Redemption Date": With respect to any Series of Bonds, any Payment
Date on which Bonds of such Series may be redeemed at the option of the Issuer
pursuant to Section 10.1 or Section 10.4.
"Redemption Price": Except as otherwise specified in the related
Series Supplement, with respect to any Bond of a particular Series to be
redeemed in whole or in part pursuant to Article X hereof, an amount equal to
100% of the Imputed Principal Balance of the Bond to be so redeemed, together
with (except in the case of a Principal Only Bond) interest on such amount at
the applicable
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Bond Interest Rate through the Interest Accrual Period for the date of
redemption, other than any installments of interest due and payable on or
before the applicable Redemption Date.
"Reference Bank": A bank providing quotations for use in determining
LIBOR as specified in the related Series Supplement for any Series of Bonds
having one or more Classes of LIBOR Bonds.
"Reinvestment Income": With respect to a Series of Bonds and any
related Payment Date, all interest, income and other return on capital received
from the investment of amounts standing to the credit of the related Collection
Account since the previous Payment Date or in the case of the first Payment
Date, since the Closing Date.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code. References herein to "a REMIC", "each
REMIC", "the REMIC", or "any REMIC" are to each REMIC established pursuant to
each Series Supplement.
"REMIC Loss": The failure of a REMIC to qualify or to continue to
qualify as a REMIC or the imposition of a tax under the REMIC Provisions on any
income of a REMIC.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and rulings promulgated thereunder, as the foregoing are in
effect from time to time.
"Remittance Date": Unless otherwise specified in the related Series
Supplement, the 18th day of any month or if such 18th day is not a Business
Day, the Business Day immediately preceding.
"Reserve Interest Rate": With respect to any Class of Variable Rate
Bonds of a Series, as set forth in the related Series Supplement.
"Residual Bond": With respect to any Series, as defined in the
related Series Supplement.
"Residual Interest": Except as otherwise provided in the related
Series Supplement, with respect to any Series for which a REMIC election or
elections has or have been made or will be made in respect of the Trust Estate
or other assets specified in such election and securing such Series, any rights
to receive payments under this Indenture which rights are designated as a
residual interest in a REMIC within the meaning of Section 860G(a)(2) of the
Code.
"Residual Interest Holders": Except as otherwise provided in the
related Series Supplement, with respect to any Series for which a REMIC
election or elections has or have been made or will be made in respect of the
Trust Estate or other assets specified in such election and securing such
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Series, the owner or assignee of the Residual Interest of each such REMIC or an
undivided interest in the Residual Interest of each such REMIC.
"Responsible Officer": With respect to the Trustee, the chairman or
vice-chairman of the board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the president, any Vice
President, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any trust officer or assistant trust officer, the
controller, any assistant controller 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 corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Bond": With respect to any relevant Series, as defined in
the related Series Supplement.
"SAB Amount": With respect to any SAB Bond of a Series comprising a
Class or Classes of SAB Bonds, and any SAB Payment Date, the scheduled
principal payment for such Bond as determined from the table of Scheduled
Principal Balances of SAB Bonds in the related Series Supplement.
"SAB Bond": A Scheduled Amortization Bond, as specifically identified
in the related Series Supplement, with respect to which principal is payable on
each SAB Payment Date of such Series only up to the amount of the SAB Principal
Payment indicated for such SAB Payment Date.
"SAB Payment Date": With respect to any Series that includes a Class
or Classes of SAB Bonds, any Payment Date on which a payment of principal on
the SAB Bonds of such Series is required to be made, the first of such dates
being the First SAB Paydown Date.
"SAB Principal Payment": With respect to any Series of Bonds that
includes a Class or Classes of SAB Bonds, and to each SAB Payment Date relative
to such Series, the SAB Amount for such SAB Payment Date plus any portion of a
SAB Amount unpaid from a previous SAB Payment Date, all as specified in the
related Series Supplement.
"Sale": As defined in Section 5.17.
"Schedule of Certificates": Schedule A to a Series Supplement
listing, the Conventional Certificates being Granted to the Trustee on the
Closing Date for such Series.
"Scheduled Principal Balance": With respect to a mortgage loan
underlying a Conventional Certificate, as defined in the related Pooling and
Administration Agreement.
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"Senior Bond": With respect to a Series of Senior/Subordinated Bonds,
a Bond of a Class of such Series which Class is preferred in right of payment
of principal and/or interest to the Classes of Junior Bonds of such Series, as
more particularly described in the related Series Supplement.
"Series": Each separate series of Bonds issued pursuant to this
Indenture and a Series Supplement thereto setting forth the specific terms of
such Series of Bonds, which series may, as provided in the related Series
Supplement, be divided into two or more Classes.
"Series Supplement": A supplemental indenture to this Indenture that
authorizes a particular Series of Bonds.
"Special Hazard Loss": Unless otherwise specified in the related
Series Supplement, with respect to a mortgage loan underlying a Conventional
Certificate securing a Series of Bonds, the principal portion of such mortgage
loan not recovered from insurance proceeds and liquidation proceeds or
otherwise as a result of any casualty loss not covered by standard hazard
insurance, including a loss resulting from vandalism, earthquake, flood, mud
flow, and a loss from partial damage caused by reason of application of any
coinsurance clause in an applicable standard hazard policy, including the
amount of any unrecovered advance made by the servicer of each mortgage loan
incurring a Special Hazard Loss.
"Special Hazard Loss Amount": With respect to any relevant Series of
Bonds, the amount specified in the related Series Supplement, as adjusted from
time to time in accordance with such Series Supplement.
"Special Hazard Coverage Termination Date": With respect to any
relevant Series of Bonds, the earlier of (a) the Payment Date on which the
amount of Special Hazard Losses incurred on the mortgage loans underlying the
Conventional Certificates securing such Series of Bonds and not previously
deducted from the Special Hazard Loss Amount relative to such Series of Bonds,
equals or exceeds the Special Hazard Loss Amount on such Payment Date, and (b)
the Cross-over Date relative to such Series of Bonds.
"Special Payment Date": With respect to any Overdue Bond of any
Series or Class, the fixed day specified in the related Series Supplement
during each month following the month in which any amount due on such Overdue
Bond was not paid.
"Special Payment Date Statement": As defined in Section 2.9(f).
"Special Record Date": With respect to any Special Payment Date for
the Bonds of a Series, the date as of which the Holders of Bonds of the related
Series or any Class within such Series entitled to receive a payment of
principal (other than a payment in full of all unpaid principal of a Bond) or
interest, or notice of payment in full of principal, on such Special Payment
Date are to be determined, which date shall be as specified in the related
Series Supplement.
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"Startup Day": With respect to any Series in respect of which one or
more REMIC elections have been made, as defined in the Series Supplement
relative thereto in respect of each such REMIC.
"Stated Maturity": With respect to any installment of principal of or
interest on any Bond, the date specified in such Bond as the fixed date on
which such installment is due and payable to the extent of Available Funds.
"Straight Pass-Through Conventional Certificate": A Conventional
Certificate under the terms of which no interest is distributable to the holder
thereof with respect to prepaid principal of any underlying mortgage loan for
any period after the date of any such prepayment, with the result that the
amount of interest distributable to the holder of such Conventional Certificate
on the Distribution Date on which such prepaid principal is distributed might
be less than one month's interest at the applicable Certificate Rate on the
Certificate Principal Balance of such Certificate, determined before giving
effect to the Distribution due on such Distribution Date.
"Tender Date": With respect to a Series, a day specified in the
related Series Supplement for each Payment Date on or before which date a
Bondholder must submit notice to the Trustee requesting redemption of his or
its Bonds or submit notice requesting withdrawal of such a request for
redemption pursuant to Section 10.4.
"Trust Estate": With respect to any Series, all money, instruments
and other property subject or intended to be subject to the lien of this
Indenture for the benefit of such Series as of any particular time (including,
without limitation, all property and interests Granted to the Trustee in the
Series Supplement for such Series), including all proceeds thereof.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939 as it
may be amended from time to time.
"Trustee": The First National Bank of Chicago, as trustee, until a
successor Person shall have become the Trustee pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean such
successor Person. Pursuant to Section 6.16, the Issuer may appoint a different
Person to serve as an alternate to the Trustee and when a different Person is
so appointed pursuant to Section 6.16 and the related Series Supplement, the
term Trustee shall, with respect to such Series of Bonds, refer to the
alternate Person so appointed.
"Uncertificated Certificate": A Certificate issued in book-entry form
and not represented by an instrument.
"Unpaid Interest": With respect to a Class and an Interest Payment
Date, the excess of the Accrued Bond Interest for such Class on such Interest
Payment Date over the amount actually paid in respect of interest on such Class
on such Interest Payment Date.
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"Variable Rate Bond Redemption Price": With respect to a Series that
includes one or more Classes of Variable Rate Bonds, as defined in the related
Series Supplement.
"Variable Rate Bonds": A Bond (including a LIBOR Bond) on which
interest accrues at any time at a Bond Interest Rate that is adjusted,
according to a predetermined index, at fixed periodic intervals, all as set
forth in the related Series Supplement.
"Variable Rate Interest Accrual Period": The period specified in the
related Series Supplement for any Class of Variable Rate Bonds, and including
each LIBOR Interest Accrual Period.
"Vice President": With respect to the Issuer or the Trustee, any vice
president, whether or not designated by a number or a word or words added
before or after the title "vice president".
"Voting Record Date": Unless specified otherwise in the related
Series Supplement for any Series of Bonds, the record date specified in TIA
Section 316(c).
Section 1.2 RESERVED.
Section 1.3 Calculations Respecting Mortgage Loans Underlying
Certificates.
(a) In connection with all calculations required to be
made pursuant to this Indenture with respect to Distributions on any
Certificate, any payments on the underlying mortgage loans or any
payments on any other assets included in a Trust Estate, and with
respect to the income which can be earned from the reinvestment of
Distributions and of any other amounts receivable for deposit in a
Pledged Account, the rules set forth in this Section 1.3 shall be
applied except to the extent supplemented or modified herein or in the
Series Supplement for any particular Series.
(b) If a Series Supplement provides that calculations
with respect to Distributions on all or any part of the Certificates
securing the related Series shall be made on a mortgage
loan-by-mortgage loan basis, then such calculations shall be based
upon current information as to the terms of such mortgage loans and
reports of payments received on such mortgage loans supplied to the
Trustee or the Issuer, as the case may be, by the Person responsible
for the servicing thereof and satisfying such requirements, if any, as
may be set forth in such Series Supplement. To the extent it is not
patently incorrect on its face, such information may be conclusively
relied upon in making such calculation.
(c) For any Certificate with respect to which
calculations required to be made pursuant to this Indenture are not
made on a mortgage loan-by-mortgage loan basis, such calculations
shall be made on the basis of information or accountings as to
Distributions on such Certificate furnished by the related
Administrator and satisfying such requirements, if
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any, with respect thereto as may be set forth in the Series Supplement
for the Series secured thereby.
To the extent they are not patently incorrect on their face, such
information or accountings may be conclusively relied upon in making
such calculations.
(d) Except as specified in a particular Series
Supplement, each Distribution receivable with respect to a
Certificate, unless actually received earlier, shall be assumed to be
received at the time specified in the related Series Supplement and
shall be assumed to be immediately deposited in the related Collection
Account and reinvested on the next succeeding Business Day at the
applicable Assumed Reinvestment Rate. Unless the related Series
Supplement provides otherwise, all principal of and interest on
investments held in a Pledged Account shall be assumed to be received
on the date due and immediately deposited in such Pledged Account and
reinvested on the next succeeding Business Day at the applicable
Assumed Reinvestment Rate. Unless the related Series Supplement
provides otherwise, all funds assumed to be reinvested at the
applicable Assumed Reinvestment Rate shall be assumed to remain so
invested until the Business Day next preceding the Principal Reduction
Date or Interest Payment Date on which they are required to be
available in the related Collection Account for application, in
accordance with the terms hereof and of the related Series Supplement,
to payments of principal of or interest on the Bonds of the related
Series. All funds eligible to be invested pursuant to a Qualified GIC
shall (subject, however, to any limitations contained in such
Qualified GIC) be assumed to be invested thereunder on the next
Business Day after the assumed date of receipt and to remain invested
thereunder until the Business Day preceding the Principal Reduction
Date on which such funds are, or might be, required to be available
for application pursuant to this Indenture or the applicable Series
Supplement.
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ARTICLE II
THE BONDS
Section 2.1 Forms Generally.
The Bonds of each Series and the Trustee's certificate of
authentication thereon shall be in substantially the form or forms set forth in
the Series Supplement pursuant to which such Bonds are constituted and as may
in the Issuer's judgment be necessary, appropriate or convenient to permit the
Bonds to be issued and sold to or held in bearer form by non-United States
Persons, to establish entitlement to an exemption from United States
withholding tax or reporting requirements with respect to payments on the
Bonds, or to comply, or facilitate compliance, with other applicable laws.
Each Series of Bonds may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Bonds
may be listed, or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution thereof. While Bonds may
contain the above-referenced provisions with respect to Bonds issued in bearer
form, no Bonds may actually be issued in bearer form until the Issuer and the
Trustee shall have entered into an appropriate supplemental indenture pursuant
to Section 9.1(8) providing for such issuance. Any portion of the text of any
Bond may be set forth on the reverse thereof with an appropriate reference on
the face of the Bond.
The definitive Bonds shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Bonds may be listed, all as determined by the officers
executing such Bonds, as evidenced by their execution thereof.
Each Class of Book Entry Bonds shall be evidenced by one or more
certificates physically held by the Clearing Agency, which certificates may be
typewritten, printed, lithographed, mimeographed or otherwise produced.
Section 2.2 Form of Trustee's Certificate of Authentication the
form of the Trustee's certificate of authentication is as follows:
This is one of the Bonds referred to in the within-mentioned
Indenture.
________________________________________
as Trustee
By______________________________________
Authorized Signatory
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Section 2.3 Bonds Issuable in Series and Classes; General
Provisions with Respect to Principal and Interest Payments.
The aggregate principal amount of Bonds that may be issued pursuant to
this Indenture is unlimited.
The Bonds may, as provided herein, at the election of and as
authorized by the Board of Directors, be issued in one or more Series, each of
which Series may consist of only one Class of Bonds or may be divided into two
or more Classes, and shall be designated generally as the "Collateralized
Mortgage Obligations" of the Issuer, with such further particular designations
added or incorporated in such title for the Bonds of any particular Series or
Class as the Board of Directors may determine. Each Series shall include at
least one Class of Bonds which are not Compound Interest Bonds and may, but
need not, include one or more Classes of Compound Interest Bonds.
If a Series of Bonds includes more than one Class, the Classes of
Bonds of such Series shall have such Stated Maturities as shall be specified in
the related Series Supplement. Subject to the provisions of Section 3.1,
Section 5.19 and Section 8.2(d), the principal of each Bond shall be payable in
installments ending no later than the Stated Maturity of the final installment
of the principal thereof unless the unpaid principal of such Bond becomes due
and payable at an earlier date by declaration of acceleration, redemption or
otherwise.
All payments of principal on the Bonds of a Series shall be applied on
each Payment Date prior to the occurrence of an Event of Default among the
Classes of such Bonds in accordance with the order of priority of payment set
out, and otherwise upon the terms specified in, the related Series Supplement.
Except to the extent specified in the related Series Supplement for a Series of
Bonds, payments of principal on each Class of Bonds, other than a Class of
Bonds subject to redemption at the request of a Holder, shall be made pro rata
among all Outstanding Bonds of such Class, without preference or priority of
any kind.
The aggregate amount of principal of and interest on the Bonds of a
Series due and payable on each Payment Date for such Series shall be equal to
the Debt Service Requirement for such Series for such Payment Date. All
payments made with respect to any Bond shall be applied first to the interest
then due and payable on such Bond and then to the principal thereof. All
computations of interest accrued on any Bond shall be made as if each year
consisted of twelve months of thirty days each.
Interest shall accrue on the Imputed Principal Balance of each
Outstanding Bond of a Series at the Bond Interest Rate relative thereto over
the related Interest Accrual Period and (other than interest accrued on any
Compound Interest Bonds of such Series, which shall be payable as described
below) shall be payable on each Interest Payment Date for such Series in an
amount equal to the lesser of (a) Available Funds on such Interest Payment
Date, after payment of all amounts
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payable in priority to such interest payment, as determined pursuant to the
related Series Supplement, and (b) Accrued Bond Interest for such Interest
Payment Date.
Interest at the applicable Bond Interest Rate shall accrue on the
Imputed Principal Balance of each Outstanding Compound Interest Bond of a
Series from the Accrual Date for such Series, but none of such accrued interest
shall be payable until the Initial Interest Payment Date for such Compound
Interest Bond (or the first Interest Payment Date thereafter if the Debt
Service Requirement for such Initial Interest Payment Date is exactly equal to
the aggregate amount of principal of and interest on all other Classes of Bonds
of such Series which is payable on such Initial Interest Payment Date). On
each Interest Payment Date prior to the Initial Interest Payment Date for a
Compound Interest Bond, Accrued Bond Interest on such Bond during the related
Interest Accrual Period shall be added to the Current Principal Amount of such
Bond and shall thereafter accrue interest. Except as otherwise specified in
the related Series Supplement, on the Initial Interest Payment Date for the
Compound Interest Bonds of a Series, Accrued Bond Interest on such Bonds for
the related Interest Accrual Period shall be payable in an amount not in excess
of the difference between (a) the Debt Service Requirement on the related
Series for such Initial Interest Payment Date and (b) the aggregate amount of
principal of and interest on all other Bonds of the related Series required to
be paid on such date. The portion, if any, of such interest which is not paid
on such Initial Interest Payment Date shall be added to the principal of such
Compound Interest Bonds on such Initial Interest Payment Date and shall
thereafter accrue interest in the manner set forth above. On each Interest
Payment Date after the Initial Interest Payment Date for a Class of Compound
Interest Bonds Accrued Bond Interest on the Class Imputed Principal Balance of
such Class shall be payable to the extent of Available Funds as specified in
the related Series Supplement.
In the case of a Class or Classes of Bonds which are Variable Rate
Bonds, the related Series Supplement shall specify the method of calculating
the Bond Interest Rate at any time to be borne by such Variable Rate Bonds. On
each Interest Determination Date relative to a Class of Variable Rate Bonds the
interest rate of which is calculated by reference to an Index, until such
Variable Rate Bonds are paid in full, the Trustee shall determine the rate of
interest pursuant to the relevant Index for the purposes of such Interest
Determination Date in accordance with the mechanism specified in the related
Series Supplement, and the resulting Bond Interest Rate to be applicable to
such Variable Rate Bonds for the next Variable Rate Interest Accrual Period.
Promptly after its determination thereof, the Trustee shall advise the
Issuer of the rate of interest applicable to each Class of Variable Rate Bonds
of a Series for the next succeeding Variable Rate Interest Accrual Period.
In determining LIBOR or the Reserve Interest Rate and the resulting
Bond Interest Rate for each relevant Variable Rate Interest Accrual Period for
any relevant Class of Variable Rate Bonds, the Trustee may conclusively rely
and shall be protected in relying upon the offered rates quoted (whether quoted
in writing, electronically or orally) by the Reference Banks or other banks as
to LIBOR or the Reserve Interest Rates, as appropriate, in effect from time to
time. The Trustee shall
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have no liability or responsibility to any Person for (i) its selection of
other banks for purposes of determining the Reserve Interest Rate or (ii) its
inability, following a good faith reasonable effort, to determine LIBOR or a
Reserve Interest Rate, all as provided for in the definition of "LIBOR" in the
related Series Supplement.
The establishment of a rate of interest by reference to an Index and
the Reserve Interest Rate and the resulting Bond Interest Rate for each
relevant Variable Rate Interest Accrual Period relative to a Series of Bonds
shall (in the absence of manifest error) be final, conclusive and binding upon
the Holder or the Issuer and any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns.
Unless otherwise specified in the related Series Supplement,
calculation of the amount of interest accrued on the Bonds of any Class of any
Series during an Interest Accrual Period shall be made on the assumption that
any payment of principal on the Bonds of such Class made on a Principal
Reduction Date occurring during such Interest Accrual Period (other than on the
first day thereof) was instead paid on the first day of such Interest Accrual
Period.
Any Unpaid Interest on a Class of Bonds shall be paid subject to and
as provided in the related Series Supplement. Unless otherwise specified in
the related Series Supplement, no interest shall accrue on any Unpaid Interest.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Bonds, if the Bonds of a Series
have become or been declared due and payable following an Event of Default and
such acceleration of maturity and its consequences have not been rescinded and
annulled, payments of principal of and interest on such Bonds shall be made in
accordance with Section 5.8.
Each Bond shall bear upon the face thereof the designation so selected
for the Series and Class to which it belongs.
Each Series of Bonds shall be created by a Series Supplement
authorized by the Board of Directors and establishing the terms and provisions
of such Series, specifying the Certificates and any other property to be
included in the Trust Estate therefor and Granting such Trust Estate as
security for the Series of Bonds created thereby. The several Series may
differ in respect of any of the following matters:
(1) designation of the Series;
(2) dating of the Bonds of the Series and Accrual Date;
(3) the number of Classes, including the number of Classes of
Compound Interest Bonds, if any, the number of Classes of SAB
Bonds, if any, the number of Classes
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of Variable Rate Bonds, if any, the number of Classes of
Formula Rate Bonds, if any, the number of Classes of Senior
Bonds, if any, the number of Classes of Junior Bonds, if any,
and the maximum aggregate principal amount of Bonds of each
such Class which may be issued;
(4) the Bond Interest Rate (if any) for each Class, and if such
Series of Bonds includes a Class or Classes of Variable Rate
Bonds, the method of calculating the Bond Interest Rate borne
at any time by such Variable Rate Bonds; and if such Series of
Bonds includes a Class of Formula Rate Bonds, the method of
calculating the Bond Interest Rate borne at any time by such
Formula Rate Bonds;
(5) the Stated Maturity of the final installment of principal of
each Class of Bonds of such Series entitled to payments of
principal;
(6) the place or places for the payment of the final installment
of principal;
(7) the priority of principal payments among the Classes entitled
to payments of principal and within each Class of the Series
entitled to payments of principal;
(8) the denominations of the Bonds of such Series;
(9) if such Series of Bonds includes a Class of Formula Rate
Bonds, restrictions relating to the transfer of such Class of
Formula Rate Bonds;
(10) whether the Bonds of such Series may be authenticated by an
Authenticating Agent, and, if so, the Person appointed as
Authenticating Agent for such Series;
(11) the Interest Payment Dates, Principal Payment Dates and
Special Payment Dates;
(12) the amount, if any, to be deposited at the Closing Date in the
Collection Account for such Series;
(13) whether a Qualified GIC is to be Granted to the Trustee with
respect to the investment of funds in any Pledged Account for
such Series, and, if so, the standards applicable to such
Qualified GIC, including the conditions, if any, under which
the Trustee shall be required to terminate such Qualified GIC;
(14) any items required to be delivered to the Trustee on the
Closing Date for such Series pursuant to the last paragraph of
Section 2.12;
(15) whether calculations with respect to the mortgage loans
underlying the Certificates securing such Series are to be
made on a mortgage loan-by-mortgage loan basis or
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on the basis of the assumptions set forth in Section 1.3, and,
if applicable, any modifications to such assumptions to be
used in making calculations with respect to the Certificates
securing such Series;
(16) if calculations with respect to the mortgage loans underlying
the Certificates securing such Series are to be made on a
basis other than mortgage loan-by-mortgage loan, the
characteristics to be used in grouping such Certificates (and
any other assets to be included in any Collateral Group) into
Collateral Groups;
(17) (a) the requirements for verification of data supplied in
connection with the Conventional Certificates securing such
Series by the related Administrator regarding the underlying
mortgage loans, and (b) the documents relating to such
Conventional Certificates required to be delivered to the
Trustee pursuant to Section 2.12(k);
(18) the circumstances, if any, under which the Bonds of such
Series will be subject to redemption by Holders pursuant to
Article X and any supplement to or modification of the
requirements of Section 10.4 which are to apply to such
Series;
(19) the extent to which all or any portion of the interest accrued
but not payable on any Compound Interest Bonds of such Series
is to be included in the calculation of the Principal
Distribution Amount for any Payment Date for such Series;
(20) if an election has been or will be made to treat the Trust
Estate or any other assets specified in such election and
securing the Series or any portion thereof as a REMIC, the
designation of a certain Class or Classes of such Series as
"regular interests" in each such REMIC established in respect
of such Series and the designation of a single Class of such
Series as the "residual interest" in each such REMIC
established in respect of such Series;
(21) provisions with respect to the following terms for which the
definitions set forth in Article I require or permit further
specification, to the extent applicable to any Series of
Bonds, in the related Series Supplement:
(a) "Accrued Bond Interest",
(b) "Assumed Reinvestment Rate",
(c) "Available Funds",
(d) "Bankruptcy Loss Amount",
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(e) "Book Entry Termination" (if each Series is
issued with Book Entry Bonds),
(f) "Calculation Date",
(g) "COFI",
(h) "Collateral Group",
(i) "Debt Service Requirement",
(j) "Earliest Bond Redemption Date",
(k) "ERISA Prohibited Bond",
(l) "ERISA Restricted Bond",
(m) "Eligible Investments" (if the definition of
such term is to be expanded or restricted for
such Series),
(n) "Expense Reserve Amount",
(o) "First SAB Paydown Date" (if such Series is
issued with one or more Classes of SAB
Bonds),
(p) "Formula Rate Bond" (if such Series is issued
with a Class of Formula Rate Bonds),
(q) "Fraud Loss Amount",
(r) "Highest Bond Interest Rate",
(s) "Index",
(t) "Interest Accrual Period",
(u) "Interest Determination Date",
(v) "LIBOR",
(w) "LIBOR Interest Accrual Period",
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(x) "Manager",
(y) "Maximum Bond Interest Rate Assumption",
(z) "Maximum Variable Interest Rate",
(aa) "Net Interest Shortfall",
(bb) "New York Agent",
(cc) "New York Office",
(dd) "Paying Agent" (if there will be a Paying
Agent other than the Trustee for such
Series),
(ee) "Principal Distribution Amount",
(ff) "Record Date",
(gg) "Redemption Price",
(hh) "Restricted Bond",
(ii) "SAB Bond" (if such Series is issued with one
or more Classes of SAB Bonds),
(jj) "SAB Payment Date" (if such Series is issued
with one or more Classes of SAB Bonds),
(kk) "Special Allocation Bonds" (if such Series is
issued with one or more Special Allocation
Funds),
(ll) "Special Hazard Loss Amount",
(mm) "Special Record Date",
(nn) "SAB Principal Payment" (if such Series is
issued with one or more Classes of SAB
Bonds),
(oo) "Tender Date",
(pp) "Termination Date" (if such Series is issued
with Book Entry Bonds);
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(qq) "Variable Rate Interest Accrual Period" (if
such Series is issued with one or more
Classes of Variable Rate Bonds), and
(rr) "Variable Rate Bond Redemption Price",
(22) if applicable, registration, payment and other procedures to
be followed with respect to Certificates issued in book entry
form;
(23) any other provisions expressing or referring to the terms and
conditions upon which the Bonds of that Series are to be
issued under this Indenture; and
(24) The Series Supplement relative to each Series of Bonds secured
by assets in respect of which one or more REMIC elections have
been made shall specify each of the following in respect of
each such REMIC:
(i) the "Startup Day" for the purposes
of the REMIC Provisions;
(ii) the "latest possible maturity date"
of the regular interests of such REMIC for the
purposes of Section 860(G)(a)(1) of the Code;
(iii) each regular interest and Residual
Interest in such REMIC; and
(iv) the Prepayment Assumption in respect
of such Series of Bonds.
Section 2.4 Denominations.
The Bonds of each Series shall be issuable only as registered Bonds in
the denominations prescribed by the terms of the Series Supplement creating the
particular Series.
Section 2.5 Execution, Authentication, Delivery and Dating.
The Bonds shall be executed on behalf of the Issuer by its Chairman,
President or one of its Vice Presidents under its corporate seal which may be
in facsimile form and be imprinted or otherwise reproduced thereon and attested
by its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Bonds or did not hold
such offices at the date of such Bonds.
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At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Bonds executed by the Issuer to the
Trustee for authentication; and the Trustee shall authenticate and deliver such
Bonds as in this Indenture provided and not otherwise.
Each Bond shall be dated as of the date specified in the related Series
Supplement.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or by any Authenticating Agent for the Series of which
it is a part by the manual signature of one of its authorized officers or
employees, and such certificate upon any Bond shall be conclusive evidence, and
the only evidence, that such Bond has been duly authenticated and delivered
hereunder.
Section 2.6 Temporary Bonds.
Pending the preparation of Definitive Bonds, the Issuer may execute,
and upon Issuer Order the Trustee shall authenticate and deliver, temporary
Bonds which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
Definitive Bonds in lieu of which they may be so issued and with such
variations as the officers executing such Bonds may determine, as evidenced by
their execution of such Bonds.
If temporary Bonds are issued, the Issuer will cause Definitive Bonds
to be prepared without unreasonable delay. After the preparation of Definitive
Bonds, the temporary Bonds shall be exchangeable for Definitive Bonds upon
surrender of the temporary Bonds at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender or cancellation of any one or more temporary Bonds, the Issuer shall
execute and the Trustee shall authenticate and deliver and exchange therefor a
like principal amount of Definitive Bonds of the same Series and Class and of
authorized denominations. Until so exchanged, the temporary Bonds shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Bonds of the same Class and Series.
Section 2.7 Registration, Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and the registration of transfers
of Bonds. The Trustee is hereby initially appointed "Bond Registrar" for the
purpose of registering Bonds and transfers of Bonds as herein provided. Upon
any resignation of any Bond Registrar appointed by the Issuer, the Issuer shall
promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Bond Registrar. In the event that the Trustee is acting
as Bond Registrar and the Trustee resigns as Trustee with respect to one or
more Series of Bonds, the Trustee may resign as Bond Registrar with respect to
the Bonds of such Series or Classes, as applicable.
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Each Authenticating Agent for a Series, unless it is appointed Bond
Registrar for such Series, and the Trustee, for any Series for which it is not
the Bond Registrar, shall be a co-Bond Registrar for such Series. The Issuer
shall cause each co-Bond Registrar for a Series to furnish the Bond Registrar
for such Series promptly after each authentication of a Bond by it appropriate
information with respect thereto for entry by the Bond Registrar into the Bond
Register. If the Trustee shall at any time not be authorized to keep and
maintain the Bond Register, the Trustee shall have the right to inspect such
Bond Register at all reasonable times and to rely conclusively upon a
certificate of the Person in charge of the Bond Register as to the names and
addresses of the Holders of the Bonds and the principal amounts and numbers of
such Bonds as held. In the event that the Trustee is acting as Authenticating
Agent and the Trustee resigns as Trustee with respect to one or more Series of
Bonds, the Trustee may resign as Authenticating Agent with respect to the Bonds
of such Series or Classes, as applicable.
Subject to restrictions, if any, in the related Series Supplement,
upon surrender for registration of transfer of any Bond at the office or agency
of the Issuer to be maintained as provided in Section 3.2, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Bonds of any authorized
denominations, of the same Series and of a like aggregate principal amount and
Class.
At the option of the Holder, Bonds may be exchanged for other Bonds of
any authorized denominations, of the same Series and of a like aggregate
initial principal amount and Class, upon surrender of the Bonds to be exchanged
at such office or agency. Bonds (other than Book Entry Bonds) of a Class which
are subject to redemption at the request of Bondholders and which are redeemed
in part, but not in whole, pursuant to Section 10.4 shall be surrendered at
such office or agency in exchange for new Bond certificates, without service
charge, in an aggregate principal amount equal to and in exchange for the
unredeemed portion of such Bond so surrendered. Whenever any Bonds are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Bonds which the Bondholder making the exchange is
entitled to receive.
Subject to restrictions, if any, in the related Series Supplement, all
Bonds issued upon any registration of transfer or exchange of Bonds shall be
the valid obligations of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Bonds surrendered upon such
registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Bonds, but the Issuer or the Bond Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge as may be
imposed in connection with any registration of transfer or exchange of Bonds,
other than exchanges pursuant to Section 2.8 not involving any transfer.
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Except as otherwise specified in the related Series Supplement,
neither the Issuer nor the Bond Registrar shall be required to issue, register
the transfer of or exchange any Bonds which are subject to redemption at the
request of Bondholders of any Series during a period beginning at the opening
of business five (5) Business Days prior to the selection of Bonds of that
Series to be redeemed pursuant to Bondholder redemption under Section 10.4 and
ending at the close of business on the day of the mailing of any relevant
notice of redemption. No Bond which has been tendered for Bondholder
redemption may be transferred or exchanged unless such request for redemption
is withdrawn.
In the case of a Class of Book Entry Bonds, the provisions of this
Section 2.7 may be supplemented by provisions in the related Series Supplement
and by applicable rules established by the Clearing Agency for such Class
providing for transfer of registration of Book Entry Bonds on the books of the
Clearing Agency.
Section 2.8 Mutilated, Destroyed, Lost or Stolen Bonds.
If (1) any mutilated Bond is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Bond, and (2) there is delivered to the Trustee such security or indemnity as
may be required by it to save each of the Issuer and the Trustee harmless,
then, in the absence of notice to the Issuer or the Trustee that such Bond has
been acquired by a bona fide purchaser, the Issuer shall execute and upon its
request the Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Bond, a new Bond or Bonds of
the same Series, tenor, aggregate initial principal amount and Class bearing a
number not contemporaneously outstanding; provided, however, that if any such
mutilated, destroyed, lost or stolen Bond shall have become or shall be about
to become due and payable, or shall have become subject to redemption in full,
instead of issuing a new Bond, the Issuer may pay such Bond without surrender
thereof, except that any mutilated Bond shall be surrendered. If, after the
delivery of such new Bond or payment of a destroyed, lost or stolen Bond
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Bond in lieu of which such new Bond was issued presents for payment
such original Bond, the Issuer and the Trustee shall be entitled to recover
such new Bond (or such payment) from the Person to whom it was delivered or any
Person taking such new Bond from such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor
to the extent of any loss, damage, cost or expenses incurred by the Issuer or
the Trustee in connection therewith.
Upon the issuance of any new Bond under this Section, the Issuer or
the Bond Registrar 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 reasonable expenses (including the fees and expenses of the Trustee or
Bond Registrar) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the
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destroyed, lost or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds of the same Series duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Bonds.
Section 2.9 Payments of Principal and Interest.
(a) Any installment of interest or principal on a Bond,
or the Redemption Price of any Bond called for redemption, payable on
any Bonds of any Series which is punctually paid or duly provided for
by the Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Bond (or one or more Predecessor Bonds) is
registered at the close of business on the Record Date for such
Payment Date by (i) check mailed to such Person's address as it
appears in the Bond Register on such Record Date, or (ii) upon written
request made at least five business days prior to the applicable
Record Date by any Holder of a Bond or Bonds of a particular Class
having an aggregate Original Principal Amount that is in excess of the
lesser of (x) $5,000,000 and (y) two-thirds of the aggregate Original
Principal Amount of all Bonds of such Class, by wire transfer to a
U.S. depository institution satisfactory to the Trustee, or by such
other means of payment as such Holder and the Trustee may agree. Any
installment of interest or principal not punctually paid or duly
provided for shall be payable in the manner and to the Persons
specified in subsection (c) of this Section 2.9.
(b) All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of installments of
principal made on any Payment Date or by the allocation of any
Realized Losses or a Junior Bond Write Down Amount to such Bond shall
be binding upon all Holders of such Bond and of any Bond issued upon
the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment or allocation of losses is
noted on such Bond. The final installment of principal of each Bond
(including the Redemption Price of any Bond called for redemption, if
such redemption will result in payment of the entire unpaid principal
amount of such Bond) shall be payable only upon presentation and
surrender thereof on or after the Payment Date therefor at the office
or agency of the Issuer maintained by it for such purpose in the
Borough of Manhattan, the City of New York, State of New York,
pursuant to Section 3.2.
Whenever, on the basis of Distributions on the Certificates
securing a Series received and expected to be received on the related
Distribution Date, the Issuer expects that the entire remaining unpaid
principal amount of any Bonds of such Series will become due and
payable on the next Principal Payment Date, unless specified otherwise
in the related Series Supplement it shall mail or cause to be mailed,
no later than five days prior to such Principal
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Payment Date, to each Person in whose name a Bond to be so retired is
registered at the close of business on the tenth Business Day prior to
such Principal Payment Date, notwithstanding the Record Date otherwise
applicable with respect to such Series, a notice to the effect that:
(i) the Issuer expects that funds sufficient to
pay such final installment will be available in the Collection
Account on such Principal Payment Date, and
(ii) if such funds are available, (A) such final
installment will be payable on such Principal Payment Date,
but only upon presentation and surrender of such Bond at the
office or agency of the Issuer maintained for such purpose
pursuant to Section 3.2 (the address of which shall be set
forth in such notice), and (B) no interest shall accrue on
such Bond after such Principal Payment Date.
Notices in connection with redemptions or special redemptions of Bonds
shall contain the information set forth in, and be mailed in
accordance with, Section 10.2.
(c) If the entire amount of Accrued Bond Interest on any
Class of Bonds of a Series is not paid in full on any Interest Payment
Date by reason of a shortfall in Available Funds over the amount
required to pay such Accrued Bond Interest and any amount required to
be paid out of Available Funds in priority to such Accrued Bond
Interest, the amount of interest not paid on such Interest Payment
Date (such amount being the "Unpaid Interest") shall be payable on the
following Interest Payment Date, to the extent that Available Funds on
such following Interest Payment Date are sufficient and subject at all
times to any order of priority of payments out of Available Funds
specified in the related Series Supplement. No interest shall accrue
or be payable on any amounts of Unpaid Interest.
If the entire Principal Distribution Amount or aggregate
Accrued Bond Interest payable out of Available Funds on any Series of
Bonds on a Payment Date, or the entire Redemption Price payable in
connection with the redemption in whole of any Bond, which is due and
payable on any Redemption Date, shall not have been punctually paid or
duly provided for when and as due and payable (any Bond on which such
an amount due and payable has not been punctually paid or duly
provided for being hereinafter referred to as an "Overdue Bond"), then
each such amount, together with, in the case of any Redemption Price
not paid when due, interest thereon from the date such amount was due
until paid, at the Bond Interest Rate of the related Bonds, shall be
payable on each subsequent Special Payment Date, to the extent only
that funds are available therefor in the related Collection Account,
to the Person entitled thereto as provided below. No interest shall
accrue or be payable on any Overdue Bond or any unpaid interest in
respect thereof except as expressly provided above.
Any reduction in the principal amount of any Overdue Bond (or
one or more Predecessor Bonds) effected by any payments made on a
Special Payment Date shall be
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binding upon all Holders of such Bond and of any Bond issued upon the
registration of transfer thereof or in exchange therefor or in lieu
thereof, whether or not such payment is noted on such Bond. Payments
of interest on any overdue portion of the Redemption Price of any Bond
called for redemption shall, except as provided below with respect to
payment of the entire amount remaining due on an Overdue Bond, be made
to the Person entitled thereto as provided below by check mailed to
such Person's address as it appears in the Bond Register or, if the
criteria specified in paragraph (ii) of Section 2.9(a) are fulfilled,
by wire transfer to a depository institution satisfactory to the
Trustee, or by such other means as may be agreed between the Trustee
and the Holder of such Bond.
If funds sufficient to pay the entire amount remaining due on
any Overdue Bonds of a particular Class are expected to be available
on the next Special Payment Date for such Series, as shown on the
Special Payment Date Statement for such Special Payment Date, the
Trustee, on behalf of the Issuer, will notify each Person in whose
name an Overdue Bond to be so retired is registered at the close of
business on the Special Record Date that would otherwise be applicable
to such Special Payment Date, by notice mailed no later than five days
after such otherwise applicable Special Record Date, that sufficient
funds are expected to be available to make such payment and that, if
such funds are available, such payment will be made only upon
presentation and surrender of such Overdue Bond at the office or
agency of the Issuer maintained for such purpose pursuant to Section
3.2 (the address of which shall be set forth in such notice). Upon
the giving of such notice, the entire amount then due and payable on
any such Overdue Bond shall, if sufficient funds are so available
therefor, be payable only upon presentation and surrender of such
Overdue Bond to the office or agency of the Issuer maintained for that
purpose.
Other amounts payable with respect to any Overdue Bond as
provided above on any Special Payment Date shall be payable (i) to the
Person in whose name that Bond (or one or more Predecessor Bonds) is
registered at the close of business on the Special Record Date for
such Special Payment Date or (ii) in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Bond may be listed and upon such notice as may be required by
such exchange, if, after notice given by the Issuer to the Trustee of
the proposed payment pursuant to this provision, such manner of
payment shall be deemed practicable by the Trustee.
(d) Subject to the foregoing provisions of this Section,
each Bond delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Bond shall carry the
rights to unpaid principal and interest that were carried by such
other Bond. Any checks mailed pursuant to subsection (a) or (c) of
this Section 2.9 and returned undelivered shall be held in accordance
with Section 3.3.
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(e) Not later than each Calculation Date for a Series,
the Trustee shall prepare and deliver to the Issuer a Payment Date
Statement with respect to the following Payment Date setting forth:
(i) the Debt Service Requirement with respect to
such Series for the following Payment Date;
(ii) the aggregate amount of interest accrued
during the Interest Accrual Period relating to such Payment
Date on all Outstanding Bonds of such Series;
(iii) the aggregate amount of Accrued Bond Interest
payable (to the extent of Available Funds) on each Class of
Bonds of such Series then Outstanding, in accordance with the
order of priority of payment in the Series Supplement;
(iv) the amount of Net Interest Shortfalls and the
interest portion of all Realized Losses allocable to the Bonds
of such Series, or any Class or Classes thereof, on such
Payment Date;
(v) the aggregate amount of principal payable out
of Available Funds for such Payment Date in respect of each
Class of Bonds of such Series then Outstanding, the principal
portion of any Realized Losses then allocable to the Bonds of
such Series and the Classes of Bonds to which such Realized
Losses are required to be allocated pursuant to the related
Series Supplement, and the amount of any Junior Bond Writedown
Amount then allocable to any Class of Junior Bonds of such
Series and the Class or Classes of Junior Bonds to which it is
allocable;
(vi) if such following Payment Date is an Initial
Interest Payment Date for any Class of Compound Interest Bonds
of such Series, the amount of interest payable thereon on such
Interest Payment Date, the amount of the installment of
principal, if any, due and payable on such Class of Compound
Interest Bonds on such Payment Date, and the amount, if any,
of accrued interest to be added to the principal of such Class
of Compound Interest Bonds on such Payment Date;
(vii) whether the amount expected to be available
in the Collection Account on such Payment Date will be
sufficient to pay on such Payment Date all amounts specified
in clauses (iii) and (v) above, and, if not, the percentages
of each such amount which may be paid in accordance with the
priorities set forth in Section 8.2 from the amounts expected
to be available in the Collection Account for such Series;
(viii) the amounts included in such statement
pursuant to clauses (iii) and (v) above, expressed in each
case per Individual Bond, to be paid on such Payment
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Date and the amount of Realized Losses and the portion of the
Junior Bond Write Down Amount, if any, to be allocated to each
Individual Bond of a Class of such Series;
(ix) Reserved
(x) Reserved
(xi) Reserved
(xii) Reserved
(xiii) the amount, if any, to be withdrawn from the
Collection Account by the Trustee in respect of the following
Payment Date pursuant to Section 8.2(d);
(xiv) the amount, if any, to be withdrawn from the
Collection Account and paid over to any firm of Independent
Accountants in respect of the following Payment Date pursuant
to Section 8.2(d);
(xv) Reserved
(xvi) the amount, if any, to be withdrawn from the
Collection Account after such following Payment Date and
transferred to the Expense Fund pursuant to Section 8.2(d);
(xvii) the amount, if any, to be withdrawn from the
Collection Account and paid over to the Issuer or its assignee
or the Residual Interest Holders in respect of the following
Payment Date pursuant to Section 8.2(d); and
(xviii) the Class Imputed Principal Balance and the
Class Current Principal Amount of the Bonds of each Class of
such Series which will remain after giving effect to the
payments and allocating all Realized Losses and Junior Bond
Write Down Amounts to be made or allocated on such Payment
Date (and, in the case of Compound Interest Bonds, after
giving effect to the interest accrued during the Interest
Accrual Period for such Payment Date and added to the
principal thereof) expressed both on an aggregate basis and
per Individual Bond.
Each Payment Date Statement shall be delivered by the Trustee
to the Issuer and, where required by the applicable Series Supplement,
to the firm of Independent Accountants appointed by the Issuer
pursuant to Section 8.9(a). If the actual amount of Distributions
received by the Trustee on a Distribution Date differs from the
expected amount of Distributions used by the Trustee in accordance
with Section 1.3(b) or 1.3(c), whichever is
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applicable, in determining the Debt Service Requirement for a Payment
Date, the Trustee shall immediately on such Distribution Date (i)
recompute all amounts in the related Payment Date Statement to reflect
the actual amount of Distributions on such Distribution Date, (ii)
revise such Payment Date Statement accordingly, and (iii) deliver such
revised Payment Date Statement to the Issuer and, where required by
the applicable Series Supplement, to the Independent Accountants.
Upon such delivery, such revised Payment Date Statement shall be
controlling for all purposes under this Indenture.
(f) Not later than the fifth day after the Special Record
Date applicable to any Special Payment Date for any Overdue Bond of a
particular Series, the Trustee shall deliver to the Issuer a statement
(a "Special Payment Date Statement") with respect to such Series
setting forth:
(i) the amount of any overdue principal or any
overdue portion of the Redemption Price of any Overdue Bond of
such Series called for redemption and all unpaid interest
accrued on any Overdue Bonds called for redemption through the
preceding Special Payment Date or the Interest Accrual Period
for the preceding Payment Date (in the case of the first
Special Payment Date after such Bonds became Overdue Bonds)
which was not paid on such preceding Special Payment Date or
Payment Date, expressed both on an aggregate basis and per
Individual Bond of each Class included in such Overdue Bonds,
(ii) the amount of interest due and payable on
such Special Payment Date on the overdue portion of the
Redemption Price of any Bond of such Series called for
redemption, expressed both on an aggregate basis and per
Individual Bond of each Class included in such Overdue Bonds,
(iii) if such Special Payment Date is also a
Payment Date for that Series, the amounts required to be set
forth in clauses (i) through (v) of the Payment Date Statement
with respect to such Payment Date,
(iv) whether the amount expected to be on deposit
in the related Collection Account and available for payment to
the Bondholders in accordance with the priorities set forth in
Section 8.2(c) on such Special Payment Date and, if
applicable, such Payment Date is sufficient to pay on such
Special Payment Date all amounts specified in clauses (i)
through (iii) above, and, if not, the percentages of each
amount specified in clauses (i) through (iii) above which may
be paid, in accordance with the priorities set forth in said
Section 8.2(c), from the amount expected to be on deposit in
the Collection Account for such Series on such Special Payment
Date and, if applicable, such Payment Date, and
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(v) the amounts included in such Special Payment
Date Statement pursuant to clauses (i) through (iii) above,
expressed in each case per Individual Bond of each Class of
Bonds of such Series covered by such Special Payment Date
Statement which will remain unpaid after giving effect to
payment of the amounts expected to be on deposit in the
related Collection Account and available for payment on such
Special Payment Date and, if applicable, such Payment Date.
Section 2.10 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Trustee, any Agent and any other agent of the Issuer or the Trustee
may treat the Person in whose name any Bond is registered as the owner of such
Bond (a) on the applicable Record Date or Special Record Date for the purpose
of receiving payments of the principal of and interest on such Bond and (b) on
any other date for all other purposes whatsoever, whether or not such Bond is
an Overdue Bond, and neither the Issuer, the Trustee, any Agent nor any other
agent of the Issuer or the Trustee shall be affected by notice to the contrary.
Section 2.11 Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange
or redemption shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Issuer may
at any time deliver to the Trustee for cancellation any Bond previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Bonds so delivered shall be promptly cancelled by
the Trustee. No Bonds shall be authenticated in lieu of or in exchange for any
Bonds cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Bonds held by the Trustee shall be held by the
Trustee in accordance with its standard retention policy, unless the Issuer
shall direct by an Issuer Order that they be destroyed or returned to it.
Section 2.12 Authentication and Delivery of Bonds.
Bonds of any one or more Series may from time to time be executed by
the Issuer and delivered to the Trustee for authentication, and thereupon the
same shall be authenticated and delivered by the Trustee, upon Issuer Request
and upon receipt by the Trustee of the following:
(a) an Issuer Resolution authorizing the execution,
authentication and delivery of such Bonds and the related Series
Supplement;
(b) in case the Bonds to be authenticated and delivered
are of any Series not theretofore created, an appropriate Series
Supplement, accompanied by an Issuer Resolution authorizing such
Series Supplement (and, in the case of the first Series to be
authenticated and delivered hereunder, authorizing this Indenture),
designating the new Series to be created
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and prescribing, consistent with the applicable provisions of this
Indenture, the terms and provisions relating to the Bonds of such
Series;
(c) Opinions of Counsel addressed to the Trustee,
complying with the requirements of Section 11.1, and, except to the
extent provided otherwise in the related Series Supplement, to the
effect that:
(i) all instruments furnished to the Trustee in
connection with such Bonds conform to the requirements of this
Indenture and constitute all the documents required to be
delivered hereunder for the Trustee to authenticate and
deliver the Bonds then applied for;
(ii) all conditions precedent provided for in this
Indenture relating to the authentication and delivery of the
Bonds applied for have been complied with;
(iii) the Issuer has corporate power to execute and
deliver the Series Supplement relating to such Bonds (and, in
the case of the first Series to be authenticated and delivered
hereunder, this Indenture), and to issue such Bonds and has
duly taken all necessary corporate action for those purposes;
(iv) assuming due execution and delivery thereof
by the Trustee, this Indenture and the related Series
Supplement, as executed and delivered by the Issuer, are the
valid, legal and binding obligations of the Issuer,
enforceable in accordance with their terms, subject to
bankruptcy, reorganization, insolvency, arrangement,
moratorium, fraudulent or preferential conveyance and other
similar laws of general application affecting the enforcement
of creditors' rights generally and to general principles of
equity (regardless whether such enforceability is considered
in a proceeding in equity or at law); and the execution of
such Series Supplement is authorized or permitted by Section
9.1 of this Indenture;
(v) the Bonds then applied for, when issued,
delivered, authenticated and paid for, will be the valid,
legal and binding non-recourse obligations of the Issuer,
entitled to the benefits of this Indenture and the related
Series Supplement, equally and ratably with all other Bonds of
such Series, except to the extent specified otherwise in the
related Series Supplement, if any, theretofore issued,
authenticated, delivered and paid for and then Outstanding
hereunder, and enforceable in accordance with their terms,
subject to bankruptcy, reorganization, insolvency,
arrangement, moratorium, fraudulent or preferential conveyance
and other similar laws of general application affecting the
enforcement of creditors' rights generally and to general
principles of equity (regardless whether such enforceability
is considered in a proceeding in equity or at law);
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(vi) if a Guaranty Agreement applies to such
Series, such Guaranty Agreement has been duly executed and
delivered by the Guarantor and constitutes a valid, legal and
binding obligation of the Guarantor enforceable in accordance
with its terms, subject to bankruptcy, reorganization,
insolvency, arrangement, moratorium, fraudulent or
preferential conveyance and other similar laws of general
application affecting creditors' rights generally and to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity);
(vii) the Issuer has corporate power and authority
to Grant the Trust Estate for such Series to the Trustee as
security for the Bonds of such Series and has duly authorized
such Grant to the Trustee by all necessary corporate action;
(viii) the Series Supplement delivered to the
Trustee with such Opinion of Counsel creates a valid lien
and/or security interest in and subjects the Certificates
securing such Series and all proceeds therefrom and the
Pledged Accounts or Funds for such Series to the lien and
security interest of this Indenture;
(ix) such action has been taken with respect to
delivery of possession of the Trust Estate and with respect to
the recording and filing of this Indenture, the Series
Supplement for such Series, any other indentures supplemental
hereto and any other requisite documents and with respect to
the execution and filing of any financing statements as is
necessary to make effective and to perfect a first priority
lien and security interest created by this Indenture in the
Trust Estate for such Series, with either the details of such
action being recited therein, or the absence of any such
action being necessary to make such lien and security interest
effective and perfected being stated therein; and, with any
recording, filing, re-recording and re-filing of this
Indenture, the Series Supplement for such Series, any other
indentures supplemental hereto and any other requisite
documents and any execution and filing of any financing
statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and
security interest created by this Indenture in the Trust
Estate for such Series until February 15 of the year in which
the first Opinion of Counsel with respect to such Series is
required to be delivered under Section 3.6 being described
therein;
(x) this Indenture and the Series Supplement for
such Series have been duly qualified under the TIA, or that no
qualification of such Indenture under the TIA is necessary;
the execution of the Series Supplement for such Series
requires the requalification of this Indenture under the TIA,
or that no requalification of the Indenture under the TIA is
necessary by virtue of the execution of such Series
Supplement;
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(xi) the Issuer is not required to register as an
"investment company" under the Investment Company Act, as such
term is defined thereunder, and the Issuer is not under the
"control" of an "investment company," as such terms are
defined in the Investment Company Act;
(xii) the Pooling and Administration Agreement for
each such Conventional Certificate has been duly authorized,
executed and delivered by the Administrator and constitutes
the legal, valid and binding agreement of the Administrator
enforceable in accordance with its terms, subject to
bankruptcy, reorganization, insolvency, arrangement,
moratorium, fraudulent or preferential conveyance and other
similar laws of general application affecting creditors'
rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity);
(xiii) each Conventional Certificate Granted to the
Trustee is validly issued and outstanding and entitled to the
benefit of the related Pooling and Administration Agreement;
(xiv) no authorization, approval or consent of any
governmental body having jurisdiction in the premises which
has not been obtained by the Issuer is required for the valid
issuance and delivery of the Bonds; and
(xv) if an election or elections has or have been
or will be made to treat the Trust Estate securing the Series,
or any other assets securing a Series, as identified in such
election or elections, as a REMICs, (1) assuming the proper
making of each such election, (2) compliance with the
pertinent provisions of this Indenture, and (3) continuing
compliance with the applicable provisions of the Code, the
Trust Estate or such assets will qualify as a REMIC, each
Class of Bonds designated in the related Series Supplement as
"regular interests" in a REMIC will be treated as "regular
interests" in such REMIC and each Class of Bonds or other
security designated in the related Series Supplement as a
"residual interest" in a REMIC will be treated, in the
aggregate, as the single Class of "residual interests" in such
REMIC.
The Opinion of Counsel delivered to the Trustee at the closing
of the related Series of Bonds may differ from the Opinion of Counsel
described in this Section 2.12(c) so long as the Opinion of Counsel so
delivered is acceptable to each Rating Agency, which shall be
conclusively evidenced by the delivery at the Closing of each such
Rating Agency's rating letter.
(d) an Officers' Certificate complying with the
requirements of Section 11.1 and stating that:
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(i) the Issuer is not in Default under this
Indenture and the issuance of the Bonds applied for will not
result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, the Issuer's
certificate of incorporation or by-laws or any indenture,
mortgage, deed of trust or other agreement or instrument to
which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may
be bound or to which it may be subject;
(ii) all conditions precedent provided in this
Indenture relating to the authentication and delivery of the
Bonds applied for have been complied with;
(iii) the Issuer is the owner of each Certificate
securing such Series, has not assigned any interest or
participation in any such Certificate (or, if any such
interest or participation has been assigned, it has been
released) and has the right to Grant each such Certificate to
the Trustee;
(iv) the Issuer has Granted to the Trustee all of
its right, title, and interest in each such Certificate; and
(v) attached thereto are true and correct copies
of letters signed by one or more nationally recognized
statistical rating agencies confirming that the Bonds of such
Series have been rated in the rating category specified for
such Class in the Prospectus Supplement or Private Placement
Memorandum (as applicable) relative to such Series by each
such rating agency.
(e) [Reserved]
(f) All of the Certificates and any other assets to be
included in a Collateral Group securing such Series, or, in the case
of Uncertificated Certificates, Advices issued for each such
Uncertificated Certificate by the Person or Persons in whose name such
Uncertificated Certificate is registered, in each case as listed on
Schedule A to the applicable Series Supplement; which Certificates,
assets and Uncertificated Certificates
(i) shall have
(A) an aggregate initial Certificate
Principal Amount at least equal to the aggregate
initial Original Principal Amount of the Bonds
proposed to be authenticated and delivered, and
(B) aggregate scheduled Distributions on
each Distribution Date which, together with
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(1) the amount, if any, to be
deposited in the Collection Account on the
Closing Date pursuant to clause (g) below,
(2) income that can be earned from
the reinvestment of Distributions and to
which the Bondholders are entitled (as
specified in the related Series Supplement)
and all other amounts receivable with respect
to the assets securing such Series, computed
as described in subsection (e)(i)(E) above,
and
(3) all other amounts, if any,
available for such purpose and required
hereby or by the related Series Supplement to
be deposited in the Collection Account on or
prior to the Payment Date immediately
following the related Distribution Date, are
sufficient,
when applied, in accordance with the terms hereof and
the related Series Supplement, to payments of
principal of and interest on the Bonds (under the
Maximum Bond Interest Rate Assumption if such Series
of Bonds includes a Class or Classes of Variable Rate
Bonds),
(1) to pay on each Payment Date for
such Series (after deduction of all fees and
expenses then due to the Trustee pursuant to
the related Series Supplement) all interest
(under the Maximum Bond Interest Rate
Assumption if such Series of Bonds includes a
Class or Classes of Variable Rate Bonds) then
due and payable on the Bonds proposed to be
authenticated and delivered, and
(2) to pay the entire principal
amount of each Class of such Bonds on or
prior to the Stated Maturity of the final
installment of principal thereof;
The certificate delivered to the Trustee pursuant to Section 2.12(d)
shall conclusively evidence compliance with such requirement.
(ii) shall otherwise satisfy each of the
requirements established for such Certificates in the related
Series Supplement; and
(iii) shall have been registered in the name of the
Trustee (or, if requested by the Trustee, in the name of a
Qualified Nominee); provided, that the Issuer may, at its sole
option, instead request the Trustee to cause all of such
Certificates to be so registered promptly following the
Closing Date for such Series, in which event such Certificates
shall be accompanied by such powers and shall otherwise be in
such
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form as shall permit the registration thereof in the name of
the Trustee or its Qualified Nominee without the taking of any
further action other than presentation for registration of
transfer and payment of the applicable fees in connection
therewith. (The Trustee, by its acceptance of such
Certificates, shall be deemed to have agreed to present them
for registration of transfer no later than the opening of
business on the last Business Day of the Month of Closing and
to pay the applicable transfer fees, subject to its right of
reimbursement under Section 6.7); and, provided, further that
in the case of Certificates issuable in book-entry form only,
in lieu of delivering such Certificates the Issuer shall take
such actions to effect the Grant thereof to the Trustee as are
specified in the related Series Supplement.
(g) Cash in the amount, if any, required by the terms of
the related Series Supplement to be deposited in the Collection
Account for such Series and held by the Trustee and applied in
accordance with Section 8.2, and if there is an Expense Fund for such
Series, cash or Eligible Investments in the amount specified in the
related Series Supplement.
(h) [Reserved]
(i) Such certificates, insurance policies, surety bonds,
instruments, opinions or other documents as may be required by the
terms of the Series Supplement creating such Series.
(j) If such Series or any Class or Classes of such Series
is directly insured, guaranteed or otherwise backed, the Guaranty
Agreement for such Series.
(k) A certificate of an Independent Person appointed by
an Issuer Order, whose regular business activity includes valuing
securities similar to the Certificates securing such Series, as to the
fair market value of such Certificates, which determination of fair
market value shall, unless otherwise provided in the related Series
Supplement, be based upon generally available market quotations as of
a date not earlier than three Business Days prior to the related
Closing Date.
(l) Such other documents, certificates, instruments or
opinions as may be required by the terms of the Series Supplement
creating such Series of Bonds.
Section 2.13 Book Entry Bonds.
Unless provided otherwise in the related Series Supplement, each Class
of Bonds subject to redemption at the request of Bondholders shall, and any
other class of any Series, may, if specified in the related Series Supplement,
be issued initially as a single certificate in the name of a Clearing Agency
maintaining book entry records with respect to ownership and transfer of such
Bonds, or its nominee, or a custodian bank of such Clearing Agency, or its
nominee, and registration of such
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Bonds may not be transferred by the Trustee or Bond Registrar except under the
conditions, if any, described in the related Series Supplement. In such case,
the Trustee shall deal with the Clearing Agency and Clearing Agency
Participants as representatives of the Beneficial Owners of such Bonds for
purposes of exercising the rights of Bondholders hereunder, as provided in the
related Series Supplement. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Section 2.14 Termination of Book Entry System.
(a) Except as otherwise provided in the related Series Supplement,
the book entry system through the Clearing Agency with respect to any Class of
Book Entry Bonds may be terminated upon the happening of any of the following:
(i) The Clearing Agency or the Issuer advises the Trustee
that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities under the respective Letter Agreement
and the Issuer is unable to locate a qualified successor clearing
agency satisfactory to the Trustee and the Issuer;
(ii) The Issuer, in its sole discretion but with the
consent of the Trustee, elects to terminate the book entry system by
notice to the Clearing Agency and the Trustee; or
(iii) After the occurrence of an Event of Default (at which
time the Trustee shall use all reasonable efforts to promptly notify
each Beneficial Owner through the Clearing Agency of such Event of
Default when such notice shall be given pursuant to Section 6.2, the
Beneficial Owners of a majority in Aggregate Current Principal Amount
of the Book Entry Bonds advise the Trustee in writing, through the
related Clearing Agency Participants and the Clearing Agency, that the
continuation of a book entry system through the Clearing Agency to the
exclusion of any Definitive Bond certificates being issued to any
person other than the Clearing Agency or its nominee is no longer in
the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a)
above, the Trustee shall use all reasonable efforts to notify all Beneficial
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Bond certificates to Beneficial Owners requesting
the same, in an Aggregate Current Principal Amount representing the interest of
each, making such adjustments and allowances as it may find necessary or
appropriate as to accrued interest and previous calls for redemption or special
redemption. Definitive Bond certificates shall be issued only upon surrender
to the Trustee of the Bond by the Clearing Agency, accompanied by registration
instructions for the Definitive Bond certificates. Neither the Issuer 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 issuance of the Definitive Bond certificates, all references herein and in
the Series Supplement to obligations imposed upon or to be performed by
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the Clearing Agency shall cease to be applicable and the provisions relating to
Definitive Bonds shall be applicable.
Section 2.15 Restrictions on Transfer of Certain Classes of Bonds.
(a) No legal or beneficial interest in all or any portion
of any Residual Bonds of any Series may be transferred directly or
indirectly to (i) a Disqualified Organization or a an agent of a
Disqualified Organization (including a broker, nominee, or middleman),
(ii) an entity that holds REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through
electronic book entry changes in accounts of participating
organizations (a "Book-Entry Nominee"), or (iii) an individual,
corporation, partnership or other person unless such transferee (A) is
not a Non-U.S. Person or (B) is a Non-U.S. Person that will hold such
Residual Bond in connection with the conduct of a trade or business
within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or (C) is
a Non-U.S. Person that has delivered to both the transferor and the
Trustee an opinion of a nationally recognized tax counsel to the
effect that the transfer of a Residual Bond to it is in accordance
with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Residual Bond will not be
disregarded for federal income tax purposes (any such person who is
not covered by clause (A), (B) or (C) above being referred to herein
as "Non-permitted Foreign Holder"), and any such purported transfer
shall be void and have no effect. The Trustee shall not authenticate
and deliver a Residual Bond in connection with any transfer thereof
unless the transferor shall have provided to the Trustee an affidavit,
substantially in the form attached as Exhibit B to the related Series
Supplement, signed by the transferee.
The affidavit described in the preceding paragraph, if not
executed in connection with the initial issuance of the Residual Bonds
of any relevant Series, shall be accompanied by a written statement in
the form attached as Exhibit E to the related Series Supplement,
signed by the transferor of any such Residual Bond. The Residual
Bonds (if any) of each Series shall bear a legend referring to the
foregoing restrictions contained in this paragraph and the preceding
paragraph.
Upon written notice to the Trustee that any legal or
beneficial interest in any portion of a Residual Bond of any Series
has been transferred, directly or indirectly, to a Disqualified
Organization or agent thereof (including a broker, nominee, or
middleman) in contravention of the foregoing restrictions, (i) such
transferee shall be deemed to hold such Residual Bond in constructive
trust for the last transferor who was not a Disqualified Organization
or agent thereof, and such transferor shall be restored as the owner
of such Residual Bond as completely as if such transfer had never
occurred, provided that the Trustee may, but is not required to,
recover any payments made to such transferee with respect to such
Residual Bond and return such recovery to the transferor, and (ii) the
Trustee agrees, at the Issuer's expense, to furnish to the Internal
Revenue Service and to any transferor of such Residual
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Bond or such agent (within 60 days of the request therefor by the
transferor or agent) such information necessary to the application of
Section 860E(e) of the Code as may be required by the Code, including
but not limited to the present value of the total anticipated excess
inclusions with respect to such Residual Bond (or portion thereof) for
periods after such transfer. At the election of the Trustee, the cost
to the Trustee of computing and furnishing such information may be
charged to the transferor or such agent referred to above; however,
the Trustee shall in no event be excused from furnishing such
information.
The restrictions on transfers of the Residual Bonds of any
Series set forth in the preceding three paragraphs shall cease to
apply to transfers (and the applicable portions of the legend to such
Residual Bonds may be deleted) after delivery to the Trustee of an
Opinion of Counsel to the effect that the elimination of such
restrictions will not cause a REMIC Loss.
(b) No transfer of a Restricted Bond of any Series shall
be made unless such transfer is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"),
and any applicable state securities laws, or is made in accordance
with the Act and any applicable state securities laws. As a condition
precedent to the transfer of a Restricted Bond, (i) the Trustee shall
require a written opinion of counsel, which counsel shall be
acceptable to the Trustee, that such transfer may be made pursuant to
an exemption from the Act and any applicable state securities laws
(which opinion shall not be at the expense of the Trustee) or (ii) the
Trustee shall require the transferee to execute an investment letter
in the form substantially as set forth in Exhibit F to the related
Series Supplement or in such other form as may be acceptable to the
Trustee, certifying as to the facts surrounding such transfer. The
holder of any Restricted Bond desiring to effect the transfer thereof
shall, and hereby agrees to, indemnify the Trustee and the Issuer
against any liability that may result if the transfer thereof is not
so exempt or is not made in accordance with such federal and state
laws. Such agreement to so indemnify the Trustee and the Issuer shall
survive the termination of this Agreement.
(c) No transfer of an ERISA Restricted Bond (if any) of a
Series shall be made to any Person unless the Trustee has received (A)
either (i) a certificate substantially in the form of Exhibit D to the
related Series Supplement, from such transferee to the effect that
such transferee is not a Plan or a Person that is using the assets of
a Plan to acquire such ERISA Restricted Bond or (ii) a certificate in
such form and substance as shall be satisfactory to the Trustee and
the Issuer in lieu of the Certificate attached as Exhibit D or (B) an
opinion of counsel, which counsel shall be satisfactory to the Trustee
and the Issuer to the effect that the purchase and holding of such
ERISA Restricted Bond will not constitute or result in the assets of
the Trust Estate being deemed to be "plan assets" subject to the
prohibited transactions provisions of ERISA or Section 4975 of the
Code and will not subject the Trustee, the Certificate Trustee, the
Administrator relative to such Series or the
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Issuer to any obligation in addition to those undertaken in this
Indenture or in the related Pooling and Administration Agreement;
provided, however, that the Trustee will not require such certificate
or opinion if, as a result of a change of law or otherwise, counsel
satisfactory to the Trustee has rendered an opinion to the effect that
the purchase and holding of an ERISA Restricted Bond by a Plan or a
Person that is purchasing or holding such ERISA Restricted Bond with
the assets of a Plan will not constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code. The preparation
and delivery of the certificate and opinions referred to above shall
not be an expense of the Trust Estate, the Trust, the Certificate
Trustee, the Administrator relative to such Series or the Issuer.
(i) No transfer of an ERISA Prohibited Bond shall
be made to any Person unless the Trustee has received a
certificate (substantially in the form of Exhibit B to the
related Series Supplement in the case of a Residual Bond, or
containing a certification substantially as set forth in
paragraph 17 of Exhibit B to the related Series Supplement, in
the case of an ERISA Prohibited Bond that is not a Residual
Bond) from such transferee to the effect that, among other
things, such transferee is not a Plan or a Person that is
using the assets of a Plan to acquire any such Bond. The
preparation and delivery of such certificate shall not be an
expense of the Trust Estate, the Trustee, the Issuer.
(d) Subject to Section 6.1 hereof, the Trustee may
conclusively rely upon any certificate, affidavit or opinion delivered
pursuant to Section 2.15(a), (b), or (c).
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ARTICLE III
COVENANTS
Section 3.1 Payment of Bonds.
The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Bonds of each Series in accordance with the
terms of such Bonds and this Indenture. The Bonds of each Series shall be non-
recourse obligations of the Issuer and shall be limited in right of payment to
amounts available from the Trust Estate relative to such Series as provided in
this Indenture and the Issuer shall not otherwise be liable for payments on the
Bonds. No person shall be personally liable for any amounts payable under the
Bonds. If any other provision of this Indenture conflicts or is deemed to
conflict with the provisions of this Section 3.1, the provisions of this
Section 3.1 shall control.
Section 3.2 Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, the City of New
York, the State of New York an office or agency where Bonds may be presented or
surrendered for payment or may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Bonds and this Indenture may be served. The Issuer will give prompt written
notice to the Trustee of the location and any change in the location of such
office or agency. Until written notice of any change in the location of such
office or agency is delivered to the Trustee or if at any time the Issuer shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, Bonds may be so presented or surrendered,
and such notices and demands may be made or served, at the New York Office, and
the Issuer hereby appoints the New York Agent as its agent in the City of New
York, for the foregoing purposes.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Bonds may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that (i) no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York, the
State of New York for the purposes set forth in the preceding paragraph, (ii)
presentations or surrenders of Bonds for payment may be made only in the City
of New York, the State of New York and (iii) any designation of an office or
agency for payment of Bonds shall be subject to Section 3.3. The Issuer will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
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Section 3.3 Money for Bond Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Bonds
which are to be made from amounts withdrawn from the related Collection Account
pursuant to Section 8.2(c) or Section 5.8 shall be made on behalf of the Issuer
by the Trustee or by a Paying Agent, and no amounts so withdrawn from a
Collection Account for payments of Bonds shall be paid over to the Issuer under
any circumstances except as provided in this Section 3.3 or in Section 5.8.
When the Issuer shall have a Paying Agent for a Series that is not
also the Bond Registrar for such Series, it shall furnish, or cause the Bond
Registrar for such Series to furnish, no later than
(a) the fifth calendar day after each Record Date for such Series,
and
(b) the fifth calendar day after each Special Record Date
applicable to a Special Payment Date for such Series,
a list, in such form as such Paying Agent may reasonably require, of the names
and addresses of the Holders of Bonds of such Series and of the number of
Individual Bonds of each Class of such Series held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the Trustee,
it will, on or before the Business Day next preceding each Payment Date and
Special Payment Date for each Series of Bonds, direct the Trustee to deposit
with such Paying Agent an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Collection Account for such Series), such sum to be held in trust for the
benefit of the Persons entitled thereto. Any moneys deposited with a Paying
Agent in excess of an amount sufficient to pay the amounts then becoming due on
the Bonds with respect to which such deposit was made shall, upon Issuer Order,
be paid over by such Paying Agent to the Trustee for application in accordance
with Article VIII.
Any Paying Agent shall be appointed by Issuer Order. The Issuer shall
not appoint any Paying Agent (other than the Trustee) which is not, at the time
of such appointment, a depository institution or trust company whose
obligations would be Eligible Investments pursuant to clause (ii) of the
definition of the term "Eligible Investment". In the event that the Trustee is
acting as Paying Agent and the Trustee resigns as Trustee with respect to one
or more Series of Bonds (or to the extent permitted in any Series Supplement,
with respect to one or more Classes within a Series), the Trustee may resign as
Paying Agent with respect to the Bonds of such Series or Classes, as
applicable. The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section, that such Paying
Agent will:
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(1) allocate all sums received for payment to the Holders
of Bonds of each Series for which it is acting as Paying Agent on each
Payment Date and Special Payment Date among such Holders in the
proportion specified in the applicable Payment Date Statement and
Special Payment Date Statement, as the case may be, in each case to
the extent permitted by applicable law;
(2) hold all sums held by it for the payment of amounts
due with respect to the Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(3) if such Paying Agent is not the Trustee, immediately
resign as a Paying Agent and forthwith pay to the Trustee all sums
held by it in trust for the payment of Bonds if at any time it ceases
to meet the standards set forth above required to be met by a Paying
Agent at the time of its appointment;
(4) if such Paying Agent is not the Trustee, give the
Trustee notice of any Default by the Issuer (or any other obligor upon
the Bonds) in the making of any payment required to be made with
respect to any Series of Bonds for which it is acting as Paying Agent;
(5) if such Paying Agent is not the Trustee, at any time
during the continuance of any such Default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust
by such Paying Agent; and
(6) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on any Class of Bonds,
the Issuer shall have first provided the calculations pertaining
thereto to the Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent, if other than the Trustee, to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Except as provided by applicable law, any money held by the Trustee or
any Paying Agent in trust for the payment of any amount due with respect to any
Bond and remaining unclaimed for two and one-half years after such amount has
become due and payable to the Holder of such Bond (or, if earlier, three months
prior to the date on which such amount would escheat to a governmental
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entity under applicable law) shall be discharged from such trust and paid to
the Issuer; and the Holder of such Bond shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that if an election has been or will be made to treat the
Trust Estate securing the Series or any other assets specified in a REMIC
election relative to such Series, as a REMIC, any such unclaimed funds shall be
paid to the state pursuant to applicable escheat laws and in such event the
Holder of such Bond shall thereafter look only to such state for payment
thereof and all liability of the Issuer, the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease. The Trustee may adopt and
employ, at the expense of the Issuer, any reasonable means of notification of
such repayment (including, but not limited to, mailing notice of such repayment
to Holders whose Bonds have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or any Agent, at the
last address of record for each such Holder).
Section 3.4 Corporate Existence.
(a) Subject to Section 3.4(b) and (c), the Issuer will
keep in full effect its existence, rights and franchises as a
corporation under the laws of the State of Delaware or under the laws
of any other state or the United States of America, and will obtain
and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this
Indenture, the Bonds or any of the Certificates.
(b) Any corporation into which the Issuer hereunder may
be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which such Issuer
hereunder shall be a party, shall be the successor Issuer under this
Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, anything
herein, or in any agreement relating to such merger or consolidation,
by which any such Issuer may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such
merger or consolidation, to the contrary notwithstanding.
(c) Upon any consolidation or merger of or other
succession to the Issuer in accordance with Section 3.4(b) hereof, the
Person formed by or surviving such consolidation or merger (if other
than the Issuer) may exercise every right and power of the Issuer
under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
Section 3.5 Protection of Trust Estate.
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The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to
(i) Grant more effectively all or any portion of a Trust
Estate,
(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof,
(iii) perfect, publish notice of, or protect the validity
of, any Grant made or to be made by this Indenture,
(iv) enforce any of the Certificates, or
(v) preserve and defend title to any Certificate or other
instrument included in a Trust Estate and the rights of the Trustee,
and of the Bondholders of the Series secured thereby, in such
Certificate or other instrument against the claims of all persons and
parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute, upon the Issuer's failure to do so, any financing statement,
continuation statement or other instrument required pursuant to this Section
3.5; provided, however, that such designation shall not be deemed to create a
duty in the Trustee to monitor the compliance of the Issuer with the foregoing
covenants and provided, further, that the duty of the Trustee to execute any
instrument required pursuant to this Section 3.5 shall arise only if the
Trustee has knowledge of any failure of the Issuer to comply with the
provisions of this Section 3.5.
Section 3.6 Opinions as to Trust Estate.
On or before February 15 in each calendar year, beginning, with
respect to each Series, with the first calendar year commencing more than three
months after the Closing Date for such Series, the Issuer shall furnish to the
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and re-filing of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as is necessary
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate for such Series and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and re-filing of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be
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required to maintain the lien and security interest of this Indenture with
respect to the Trust Estate for such Series until February 15 in the following
calendar year.
The Trustee shall not remove any portion of any Trust Estate that
consists of money or is evidenced by an instrument, certificate or other
writing from the jurisdiction in which it was held at the date the most recent
opinion of Counsel was delivered pursuant to this Section 3.6 (or from the
jurisdiction in which it was held as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.12(c), if no Opinion of
Counsel has yet been delivered pursuant to this Section 3.6) or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such date unless the Trustee shall have first received an
Opinion of Counsel to the effect that the lien and security interest created by
this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.7 Performance of Obligations.
The Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's covenants or
obligations under any instrument included in a Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument, except as
expressly provided in this Indenture.
Section 3.8 Negative Covenants.
The Issuer will not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of a Trust Estate except as expressly permitted by this
Indenture;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Bonds by reason of the
payment of any taxes levied or assessed upon any portion of a Trust
Estate;
(c) (i) engage in any business or activity other than in
connection with, or relating to, the issuance of Bonds pursuant to
this Indenture or any Series Supplement or the issuance of bonds
permitted under clause (d) below, or (ii) amend Article III or VIII of
its Certificate of Incorporation, as in effect on the Closing Date for
the initial Series of Bonds, without, in each case, the consent of the
Holders of not less than 66 2/3% of the Aggregate Current Principal
Amount of the Bonds of each Series then Outstanding;
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(d) issue bonds under any other indenture unless such
bonds are non-recourse obligations of the Issuer;
(e) incur, assume, guaranty or agree to indemnify any
indebtedness of any Person, except for such indebtedness as may be
incurred by the Issuer in connection with the issuance of a Series of
Bonds pursuant to this Indenture or any Series Supplement or as
permitted under clause (d) above or indebtedness which, if consisting
of indebtedness other than Bonds or indebtedness permitted under
clause (d) above, (i) shall either be (1) subordinate to each Series
of Bonds issued pursuant to the Indenture or (2) secured by collateral
other than the Trust Estate and to which the creditor with respect to
such indebtedness has recourse only to such collateral and not to any
other assets of the Issuer and (ii) shall provide that the holder
thereof may not file a petition in any bankruptcy or insolvency
proceeding with respect to the Issuer until not less than 91 days
after payment in full of all Outstanding Bonds issued pursuant to this
Indenture;
(f) dissolve or liquidate in whole or in part;
(g) merge or consolidate with any corporation other than
an Affiliate of the Issuer, any such merger or consolidation with an
Affiliate of the Issuer to be subject to the following conditions:
(1) the surviving or resulting entity shall be a
corporation organized under the laws of the United States or
any state thereof and its certificate of incorporation shall
contain substantially the same restrictions as are contained
in Articles III and VIII of the Issuer's Certificate of
Incorporation;
(2) the surviving or resulting corporation (if
other than the Issuer) shall expressly assume by an indenture
supplemental hereto all of the Issuer's obligations hereunder;
(3) the consummation of such merger or
consolidation shall not result in the lowering of any rating
of the Outstanding Bonds of any Series by the rating agencies
that rated the initial Series of Bonds; and
(4) immediately after consummation of the merger
or consolidation no Default shall exist with respect to any
Series;
(h) (1) permit the validity or effectiveness of this
Indenture or any Grant under the related Series Supplement to be
impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged with respect to
any Series, or permit any Person to be released from any covenants or
obligations with respect to any Series under this Indenture, except as
may be expressly permitted hereby or by any Series
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Supplement, (2) permit any lien, charge, security interest, mortgage
or other encumbrance (other than the lien of this Indenture or any
Permitted Encumbrance) to be created on or extend to or otherwise
arise upon or burden the Trust Estate for any Series or any part
thereof or any interest therein or the proceeds thereof, so long as
such proceeds remain a part of the Trust Estate, or (3) permit the
lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate securing any Series; or
(i) take any action, or omit to take any action, if such
action or omission may (i) cause any Trust Estate or any other assets
securing a Series of Bonds and in respect of which a REMIC election
has been made to fail to qualify as a REMIC during any taxable year,
or (ii) cause or permit any REMIC relative to any Series to engage in
any "prohibited transaction" as defined in Section 860F of the Code.
Section 3.9 Annual Statement as to Compliance.
On or before 120 days after the end of the first fiscal year of the
Issuer which ends more than three months after the Closing Date for a Series,
and each fiscal year thereafter, the Issuer shall deliver to the Trustee a
brief statement with respect to such Series, signed by its principal executive
officer, principal financial officer or principal accounting officer, that
(1) a review of the fulfillment by the Issuer during such
year of its obligations under this Indenture has been made under such
officer's supervision; and
(2) to the best of such officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture 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.
For purposes of this paragraph, such compliance shall be determined
without regard to any period of grace or requirement of notice
provided under the Indenture.
Section 3.10 Contribution of Assets.
Except as otherwise provided in the related Series Supplement, if an
election has been made or will be made to treat the Trust Estate or any other
assets specified in such election securing the related Series as a REMIC,
following the Closing Date, the Trustee shall not accept any contribution of
additional assets to the Trust Estate or such other assets, unless it has
received a Non-Disqualification Opinion with respect thereto and an opinion of
counsel that the contribution will not result in the imposition of a penalty
tax under the Code on the related REMIC.
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Section 3.11 Successor Substituted.
Upon any consolidation or merger in accordance with Section 3.8(g),
the person resulting from or surviving such consolidation or merger (if other
than the Issuer) shall succeed to, and be substituted for, and may exercise
every right and power of the Issuer under the Indenture with the same effect as
if such Person had been named as the Issuer herein. Promptly upon the
occurrence of any such succession, such Person shall give notice thereof to the
Trustee.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied with
respect to a Series:
(1) either
(A) all Bonds of such Series theretofore
authenticated and delivered (other than (i) Bonds which have
been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.8, and (ii) Bonds for whose
payment money has theretofore been deposited in trust and
thereafter repaid to the Issuer, as provided in Section 3.3)
have been delivered to the Trustee for cancellation; or
(B) all Bonds of such Series not theretofore
delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the
Stated Maturity of the final installment of the
principal thereof within one year, or
(iii) are to be called for redemption
within one year under irrevocable arrangements
satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and, in the case of any Series in respect of the assets
securing which a REMIC election or elections have been made,
the Issuer has delivered to the Trustee a Non-Disqualification
Opinion relevant to the actions specified in clauses (i), (ii)
or (iii) above, and has deposited or caused to be deposited
with the Trustee, in trust for such purpose, an amount
sufficient to pay and discharge the Aggregate Imputed
Principal Balance at such time of the Bonds of such Series,
together with an amount equal to the aggregate amount of
interest that will have accrued on such Series of Bonds (under
the Maximum Bond Interest Rate Assumption if such Series of
Bonds includes a Class or Classes of Variable Rate Bonds);
(2) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series; and
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(3) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for the satisfaction and discharge of this
Indenture with respect to such Series have been complied with;
then, upon Issuer Request, authorized by a Board Resolution, this Indenture and
the related Series Supplement and the lien, rights and interests created hereby
and thereby shall cease to be of further effect with respect to such Series,
and the Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Issuer, execute and deliver all
such instruments as may be necessary to acknowledge the satisfaction and
discharge of this Indenture and the related Series Supplement with respect to
such Series and shall pay, or assign or transfer and deliver, all cash,
securities and other property held by it as part of the Trust Estate or other
assets for such Series remaining after satisfaction of the conditions specified
in clauses (1) and (2) above, (x) with respect to each Series of Bonds for
which an election to treat the Trust Estate and any other assets specified in
such election and securing the Bonds as one or more REMICs has not been made
and will not be made, to the Issuer or upon Issuer Order or (y) with respect to
each Series of Bonds for which such an election has been made or will be made,
and upon receipt by the Trustee of a Non-Disqualification Opinion as required
by Section 4.3, as provided in the related Series Supplement.
In the absence of an Issuer Request authorized by a Board Resolution,
the payment of all Outstanding Bonds of all Series shall not render this
Indenture inoperative or prevent the Issuer from issuing additional Series of
Bonds from time to time thereafter as herein provided.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a Series, the obligations of the Issuer to the Trustee under Section
6.7, the obligations of the Trustee to the Issuer and to the Holders of Bonds
of such Series under Section 3.3, the obligations of the Trustee to the Holders
of Bonds of such Series under Section 4.2, the obligation of the Trustee to
determine and publish notices of the rates to be borne by the Variable Rate
Bonds pursuant to Section 2.3, the provisions of Article II with respect to
lost, stolen, destroyed or mutilated Bonds of such Series, registration of
transfers of Bonds of such Series, and rights to receive payments of principal
of and interest on the Bonds of such Series, and the rights, privileges and
immunities of the Trustee under Article VI shall survive.
Section 4.2 Application of Trust Money.
All money deposited with the Trustee pursuant to Sections 3.3 and 4.1
shall be held in trust and applied by it, in accordance with the provisions of
the Bonds and this Indenture, to the payment, either directly or through any
Paying Agent, as the Trustee may determine, to the Persons entitled thereto, of
the principal and interest for whose payment such money has been deposited with
the Trustee.
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Section 4.3 REMIC Matters.
(a) Each Series Supplement shall contain a statement
specifying whether or not it is intended that one or more REMIC
elections be made in respect of the Trust Estate and other assets
specified in such Series Supplement and securing the Bonds issued
thereby. If an election or elections are made as aforesaid, it is
intended that each REMIC specified in the related Series Supplement
shall constitute, and the affairs thereof shall be conducted so as to
qualify each such REMIC as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions.
In furtherance of such intention, and with respect to each such REMIC,
the Issuer covenants and agrees that it shall:
(i) prepare and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066) and prepare
and file or cause to be prepared and filed with the Internal
Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with
respect to each calendar year as the taxable year and the
accrual method of accounting, containing such information and
at the times and in the manner as may be required by the Code
or state or local tax laws, regulations, or rules, and shall
furnish or cause to be furnished to the related Bondholders
the schedules, statements or information at such times and in
such manner as may be required thereby;
(ii) within thirty days of the Closing Date of
each such Series, shall furnish or cause to be furnished to
the Internal Revenue Service, on Form 8811 or as otherwise may
be required by the Code, the name, title, address, and
telephone number of the person that the holders of the related
Bonds may contact for tax information relating thereto (and
the Issuer shall act as the representative of each relevant
Trust Estate for this purpose), together with such additional
information as may be required by such Form, and shall update
such information at the time or times in the manner required
by the Code;
(iii) make or cause to be made an election on
behalf of such REMIC, to be treated as a REMIC on its federal
tax return for its first taxable year (and, if necessary,
under applicable state law);
(iv) prepare and forward, or cause to be prepared
and forwarded, to the related Bondholders and to the Internal
Revenue Service and, if necessary, state tax authorities, all
information returns or reports, or furnish or cause to be
furnished by telephone, mail, publication or other appropriate
method such information, as and when required to be provided
to them in accordance with the REMIC Provisions,
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including without limitation, the calculation of any original
issue discount using the Prepayment Assumption specified in
the related Series Supplement;
(v) provide information necessary for the
computation of tax imposed on the transfer of a Residual
Interest of each such REMIC (including the information
required by Treasury Regulation 1.860D-1(b)(5)(ii)) to the
Internal Revenue Service and to a Disqualified Organization,
or an agent (including a broker, nominee or other middleman)
of a Disqualified Organization, or a pass-through entity in
which a Disqualified Organization is the record holder of an
interest and to any other Person specified in Section
860E(e)(3) and (6) of the Code as liable for the tax imposed
under Section 860E(e) of the Code (the reasonable cost of
computing and furnishing such information may be charged to
the Person liable for such tax);
(vi) conduct the affairs of each such REMIC at all
time that any Bonds relative thereto are Outstanding so as to
maintain the status thereof as a REMIC under the REMIC
Provisions;
(vii) not knowingly or intentionally take any
action or omit to take any action that would cause the
termination of the REMIC status of each such REMIC;
(viii) exercise reasonable care not to allow the
creation of any "interests" in each such REMIC within the
meaning of Section 860D(d)(2) of the Code other than as
provided in the related Series Supplement;
(ix) exercise reasonable care not to allow the
occurrence of any "prohibited transactions" within the meaning
of Section 860F of the Code in respect of any such REMIC,
unless the Issuer shall have provided a Non-Disqualification
Opinion to the Trustee that such occurrence would not result
in a REMIC Loss in respect of such REMIC;
(x) exercise reasonable care not to allow such
REMIC to receive income from the performance of services or
from assets not permitted under the REMIC Provisions to be
held by a REMIC;
(xi) pay from amounts in the Trust Estate the
amount of any federal or state law, including prohibited
transaction taxes, taxes on certain contributions to such
REMIC after the Startup Day relative thereto, and taxes on net
income from foreclosure property, imposed on such REMIC and as
the same shall be due and payable (but such obligation shall
not prevent the Issuer or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall
not prevent the Issuer from withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings);
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(xii) ensure that all federal, state or local
income tax or information returns shall be signed by the
Issuer or such other person as may be required to sign such
returns by the Code or state or local laws, regulations or
rules; and
(xiii) maintain such records relating to each such
REMIC, including but not limited to the income, expenses,
individual mortgage loans (including mortgaged property)
relative to such REMIC, other assets and liabilities of the
Trust Estate relative to such REMIC, and the fair market value
and adjusted basis of the property of each determined at such
intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statement or
information.
(b) Reserved
(c) The Issuer shall cause the first federal income tax
return of each REMIC relative to a Series of Bonds to include the
information required by Treasury Regulation Section 1.860D-1(d)(2) and
Treasury Regulation Section 1.860F-4(b)(2).
(d) Except as otherwise provided in the related Series
Supplement, where an election has been made or will be made to treat
the Trust Estate or any other assets specified in such election and
securing the Series as one or more REMICs, the termination of each
such REMIC shall be effected by the Issuer pursuant to a Qualified
Liquidation and only after delivery by the Issuer to the Trustee of a
Non-Disqualification Opinion.
Section 4.4 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Sections 4.1 and 4.2 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Issuer's
obligations under the Indenture and the Bonds shall be revived and reinstated
as though no deposit had occurred pursuant to Section 4.1 until such time as
the Trustee or such Paying Agent is permitted to apply all such money or
obligations in accordance with Sections 4.1 and 4.2; provided, however, that if
the Issuer has made payment of interest on or principal of any of the Bonds
because of the reinstatement of its obligations, the Issuer shall be subrogated
to the Holders of the Bonds to receive such payment from the money or
obligations held by the Trustee or such Paying Agent.
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ARTICLE V
DEFAULTS AND REMEDIES
Section 5.1 Event of Default.
(A) "Event of Default", wherever used herein, means, with respect
to a Series of Bonds issued hereunder, except to the extent specified otherwise
in the related Series Supplement for such Series of Bonds, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) if the Issuer shall
(A) subject to clause 5.1(B) hereof, default in
the payment when and as due of any installment of principal of
or interest on any Bond of such Series, or
(B) default in the payment of the Redemption
Price of any Bond of such Series which has been called for
redemption pursuant to Article X,
and, except in the case of any such default in the payment of
principal, such default or failure shall continue for a period of five
days;
(2) if the Issuer shall breach or default in the due
observance of any one or more of the covenants set forth in clauses
(a), (c)(ii), (f) or (g) of Section 3.8;
(3) Reserved
(4) Reserved
(5) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Issuer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or of
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Issuer of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state
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bankruptcy, insolvency or similar law, or the consent by the Issuer to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or of any substantial part of its property or the making
by the Issuer of an assignment for the benefit of creditors or the
failure by the Issuer generally to pay its debts as such debts become
due or the taking of corporate action by the Issuer in furtherance of
any of the foregoing.
(B) Neither (a) the allocation of Realized Losses to any Class of
Bonds of a Series, nor (b) the reduction of the Imputed Principal Balance of
any Bond of any Class of a Series by reason of the application of a Junior Bond
Write Down Amount, nor (c) the failure to pay the full amount of any principal
entitlement or any Accrued Bond Interest or any Unpaid Interest on any Class of
Bonds of a Series by reason of the insufficiency of Available Funds on a
Payment Date and the order of allocation of payments from Available Funds
specified in the related Series Supplement, shall constitute an Event of
Default under this Indenture or any Series Supplement, it being expressly
agreed and understood that the Issuer's obligation to make payment on the Bonds
of any Series on any Payment Date constitutes an obligation to pay an aggregate
amount equal to the Available Funds on such Payment Date.
(C) Payments on the Bonds of any Series shall be made on each
Payment Date from Available Funds subject to and in accordance with the order
of priority of payments specified in the related Series Supplement. No
recourse shall be had to the Issuer or any of its assets, other than the Trust
Estate securing the related Series, in the event of (a) a failure by any Holder
of a Bond of any Series to recover by the Stated Maturity thereof or at all the
Current Principal Amount of such Bond by reason of the incurrence of
delinquencies or Realized Losses on the mortgage loans evidenced by the
Conventional Certificates securing such Series or by the application to such
Bond of any portion of a Junior Bond Write Down Amount, or (b) a failure by any
Holder of a Bond of any Series to recover the full amount of any Accrued Bond
Interest or Unpaid Interest thereon by reason of the insufficiency of Available
Funds on any Payment Date and the order of allocation of payments from
Available Funds specified in the related Series Supplement.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
(A) Except to the extent specified otherwise in the Series
Supplement relating to any Series of Bonds, if an Event of Default occurs and
is continuing with respect to a Series, then and in every such case the Holders
of Senior Bonds representing not less than 100% of the Aggregate Current
Principal Amount of the Outstanding Senior Bonds of that Series may declare all
the Bonds of that Series to be immediately due and payable, by a notice in
writing to the Issuer and the Trustee, and upon any such declaration of such
Bonds, an amount equal to (i) the Aggregate Imputed Principal Balance of the
Bonds of such Series at the time of such declaration; (ii) the aggregate of (x)
Accrued Bond Interest on each Class of Bonds of such Series that is due and
unpaid as of the Interest Payment Date most recently preceding such
declaration, and (y) any Unpaid Interest outstanding as of the date of such
declaration, and (iii) an amount equal to the excess of (x) the
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Aggregate Current Principal Amount of such Bonds of such Series over (y) the
Aggregate Imputed Principal Balance of the Bonds of such Series, calculated at
the time of such declaration, shall, subject to Section 5.3 hereof, become
immediately due and payable.
(B) Except to the extent specified otherwise in the Series
Supplement relating to any Series of Bonds, the Holders of Junior Bonds of such
Series shall have no right to exercise the rights referred to in clause (A)
above until the Class Imputed Principal Balance of each Class of the Senior
Bonds of such Series has been reduced to zero. If any date on or after the
date on which the Class Imputed Principal Balance of each Class of the Senior
Bonds of a Series has been reduced to zero, an Event of Default occurs and is
continuing with respect to such Series, then and in every such case the Holders
of the Highest Priority Junior Class of such Series representing not less than
66 2/3% of the Aggregate Current Principal Amount of such Class may declare all
the Bonds of that Series to be immediately due and payable, by notice in
writing to the Issuer and the Trustee, in which event the outstanding Bonds of
such Series shall be accelerated in the same manner and with the same effect as
provided in clause (A) above.
(C) Except to the extent specified otherwise in the Series
Supplement relating to any Series of Bonds, at any time after such a
declaration of acceleration of maturity of the Bonds of a Series has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Holders of Bonds
representing 100% of the Aggregate Current Principal Amount of the Outstanding
Senior Bonds of such Series (if such declaration is made pursuant to clause (A)
above), or the Holders of the Highest Priority Junior Class of such Series
representing not less than 66 2/3% of such Class (if such declaration is made
pursuant to clause (B) above), by written notice to the Issuer and the Trustee,
may rescind and annul such declaration and its consequences if
(1) the Issuer delivered to the Trustee a
Non-Disqualification Opinion regarding the actions described in this
subsection, if one or more REMIC elections has or have been made in
respect of the assets securing the Series, and the Issuer has paid or
deposited with the Trustee a sum sufficient to pay
(i) all payments of principal of, and interest
on, all Bonds of that Series and all other amounts which would
then be due hereunder or upon such Bonds if the Event of
Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default in respect to such Series,
other than the nonpayment of the principal of Bonds of that Series
which have become due solely by such acceleration, have been cured or
waived as provided in Section 5.14.
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No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
Section 5.3 Proceedings.
Subject to the provisions of Section 3.1 and the following sentence,
if an Event of Default occurs and is continuing with respect to a Series, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Bondholders by such appropriate Proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or enforce any other proper
remedy. Any proceedings brought by the Trustee on behalf of the Bondholders or
any Bondholder against the Issuer shall be limited to the preservation,
enforcement and foreclosure of the liens, assignments, rights and security
interests under the Indenture and no attachment, execution or other unit or
process shall be sought, issued or levied upon any assets, properties or funds
of the Issuer, other than the Trust Estate relative to the Series of Bonds in
respect of which such Event of Default has occurred. If there is a foreclosure
of any such liens, assignments, rights and security interests under this
Indenture, by private power of sale or otherwise, no judgment for any
deficiency upon the indebtedness represented by the Bonds may be sought or
obtained by the Trustee or any Bondholder against the Issuer.
Section 5.4 Remedies.
If an Event of Default shall have occurred and be continuing in
respect to a Series of Bonds and the Bonds of such Series have been declared
due and payable and such declaration and its consequences have not been
rescinded and annulled, the Trustee may do one or more of the following:
(a) institute Proceedings for the collection of all
amounts then payable on the Bonds of that Series, or under this
Indenture in respect to that Series of Bonds, whether by declaration
or otherwise, enforce any judgment obtained and collect from the
Issuer (other than from the Trust Estate or other assets securing any
other Series of Bonds) moneys adjudged due;
(b) in accordance with Section 5.17, sell the Trust
Estate and other assets, if any, securing the Bonds of that Series or
any portion thereof or rights or interest therein, at one or more
public or private Sales called and conducted in any manner permitted
by law;
(c) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate securing the Bonds of that Series; and
(d) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to
protect and enforce the rights and remedies of the
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Trustee or the Holders of the Bonds hereunder, including, without
limitation, any action specified in the Series Supplement for any
Series of Bonds.
Section 5.5 [Reserved].
Section 5.6 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Issuer or any other obligor upon any of the Bonds or
the property of the Issuer or of such other obligor or their creditors, the
Trustee (irrespective of whether the Bonds of any Series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Issuer for the payment of
any overdue principal or interest) shall be entitled and empowered, by
intervention in such Proceeding or otherwise, to
(i) file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Bonds of
each Series issued hereunder and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Bondholders allowed in such Proceeding, and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each
Bondholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any plan
of reorganization, arrangement, adjustment, or composition affecting any of the
Bonds or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Bondholder in any such Proceeding.
Section 5.7 Trustee May Enforce Claims without Possession of
Bonds.
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All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any Proceeding relating thereto,
and any such Proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall be, in
accordance with Section 5.8, for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel
and, except to the extent specified otherwise in the Series Supplement for any
Series of Bonds, for the ratable benefit of the Holders of the Bonds of the
Series in respect of which such judgment has been recovered.
Section 5.8 Application of Money Collected.
If the Bonds of a Series have been declared due and payable following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, any money collected by the Trustee with respect to such
Series of Bonds pursuant to this Article or otherwise and any monies that may
then be held or thereafter received by the Trustee with respect to such Series
of Bonds shall be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of the entire amount due on
account of principal of, and interest on, such Bonds, upon presentation and
surrender thereof:
First: To the payment of all amounts due the Trustee under
Section 6.7;
Second: Except to the extent specified otherwise in the Series
Supplement for any Series of Bonds, to the payment of amounts then due
and unpaid upon the Outstanding Bonds of such Series for:
(a) the aggregate of the Accrued Bond Interest on
each Class of Bonds Outstanding that is due and unpaid as of
the Interest Payment Date most recently preceding date of any
declaration made pursuant to Section 5.2(A), together with any
Unpaid Interest outstanding as of such date of declaration,
such amount to be paid ratably among the Bonds of such Series
without preference or priority of any kind
(b) interest on the Class Imputed Principal
Balance of each Class of Bonds (including interest on any
Class of Compound Interest Bonds) of such Series then
Outstanding at the Bond Interest Rate applicable thereto, for
the period from the end of the Interest Accrual Period with
respect to the Interest Payment Date most recently preceding
the date of any declaration made pursuant to Section 5.2(A),
to the date specified for such Class in the related Series
Supplement, (less such Class' share of the Net Interest
Shortfalls and the interest portion of any Realized Losses
incurred during the aforesaid accrual period on the mortgage
loans underlying the Conventional Certificates securing such
Series), such amount to be paid ratably among the Bonds of
such Series, without preference or priority of any kind;
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Third: Except to the extent specified otherwise in the Series
Supplement for any Series of Bonds, to the payment of the Aggregate
Imputed Principal Balance of the Bonds of such Series, the Imputed
Principal Balance of each Bond of such Series ratably, without
preference or priority of any kind;
Fourth: Except to the extent specified in the Series
Supplement for any Series of Bonds, to the payment of the excess of
(a) the Aggregate Current Principal Amount of the Bonds of such Series
over (b) the Aggregate Imputed Principal Balance of such Bonds, each
such Bond's respective share of such excess amount, ratably, without
preference or priority of any kind; and
Fifth: Except as otherwise provided in the related Series
Supplement, to the payment of the remainder, if any, (i) to the Issuer
or any other Person legally entitled thereto if one or more REMIC
elections has or have not been made in respect of the assets securing
the Bonds of such Series or (ii) if such an election or elections has
or have been or will be made, to the Residual Interest in the REMIC
that includes such assets, as stipulated in the related Series
Supplement.
Section 5.9 Limitation on Suits.
No Holder of a Bond of any Series shall have any right to institute
any Proceedings, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to such
Series;
(2) (a) all of the Holders of the Classes of Senior Bonds
of such Series having Class Imputed Principal Balances greater than
zero or (b) in the event that no Class of Senior Bonds of such Series
has a Class Imputed Principal Balance greater than zero, the Holders
of the Highest Priority Junior Class of such Series representing not
less than 66 2/3% of the Aggregate Current Principal Amount of such
Class shall have made written request to the Trustee to institute
Proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such Proceeding; and
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(5) no direction inconsistent with such written requests
has been given to the Trustee during such 60-day period by (a) any
Holder of a Class of Senior Bonds of such Series having Class Imputed
Principal Balances greater than zero or (b) in the event that no Class
of Senior Bonds of such Series has a Class Imputed Principal Balance
greater than zero, any Holder of the Highest Priority Junior Class of
such Series;
it being understood and intended that no one or more Holders of Bonds shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Bonds or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all the
Holders of Bonds of the same Series, except to the extent specified otherwise
in the Series Supplement for any Series.
Section 5.10 Restoration of Rights and Remedies.
If the Trustee or any Bondholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Bondholder, then and in every such case the Issuer, the
Trustee and the Bondholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Bondholders shall continue as though no such Proceeding had been instituted.
Section 5.11 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Bondholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.12 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Bond to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Bondholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Bondholders, as the
case may be.
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Section 5.13 Control by Bondholders.
If an Event of Default is declared by or at the direction of the
Holders of Senior Bonds of a Series pursuant to Section 5.2(A) above, the
Holders of Bonds representing more than 50% of the Aggregate Current Principal
Amount of the Outstanding Senior Bonds of such Series shall have the right to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Trustee with respect to such Series or exercising any trust or
power conferred on the Trustee with respect to such Series. If an Event of
Default is declared by or at the direction of the Holders of the Highest
Priority Junior Class of a Series pursuant to Section 5.2(B) above (and subject
to the conditions therein contained), the Holders of the Highest Priority
Junior Class of such Series representing more than 50% of the Aggregate Current
Principal Amount of such Class shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Trustee
with respect to such Series or exercising any trust or power conferred on the
Trustee. Any direction given by the Holders of Senior Bonds or Junior Bonds
pursuant to this Section 5.13 shall be subject to the following conditions:
(1) such direction shall not be in conflict with any rule
of law or with this Indenture,
(2) any direction to the Trustee to undertake a Sale of a
Trust Estate shall be by the Holders of Bonds secured thereby
representing the percentage of the Aggregate Current Principal Amount
of the Outstanding Bonds specified in Section 5.17(b)(1), unless
Section 5.17(b)(2) is applicable, or except to the extent specified
otherwise in the Series Supplement for any Series of Bonds,
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not
take any action which it determines might involve it in liability or
be unjustly prejudicial to the Bondholders not consenting.
Section 5.14 Waiver of Past Defaults.
(a) Except to the extent specified otherwise in the Series
Supplement for any Series of Bonds, the Holders of Bonds representing 100% of
the Aggregate Current Principal Amount of the Outstanding Senior Bonds of a
Series may on behalf of the Holders of all the Bonds of such Series waive any
past Default hereunder with respect to such Series and its consequences, except
a Default in the payment of any installment of principal of, or interest on,
any Bond of that Series.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
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(b) Except to the extent specified otherwise in the Series
Supplement for any Series of Bonds, the Holders of the Highest Priority Junior
Class of such Series representing not less than 66 2/3% of the Aggregate
Current Principal Amount of such Class may on behalf of all the Junior Bonds of
such Series waive any past Default hereunder in respect of which such Holders
would have been entitled to exercise their rights pursuant to Section 5.2(B),
and may waive the consequences of such Default, except, in either case, a
Default
(1) in the payment of any installment of principal of, or
interest on, any Bond of that Series, or
(2) in respect of a covenant or provision hereof which
under Section 9.2 cannot be modified or amended without the consent of
each Outstanding Junior Bond affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 5.15 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Bond by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, except to the extent specified otherwise in the Series Supplement
relating to any Series of Bonds, to any suit instituted by any Bondholder, or
group of Bondholders, holding in the aggregate Bonds representing more than 10%
of the Aggregate Current Principal Amount of the Outstanding Bonds of a Series,
or to any suit instituted by any Bondholder for the enforcement of the payment
of any installment of interest on any Bond on or after the Stated Maturity
thereof expressed in such Bond or for the enforcement of the payment of the
entire remaining unpaid principal amount of any Bond on or after the Stated
Maturity of the final installment of the principal thereof (or, in the case of
any Bond called for redemption, on or after the applicable Redemption Date).
Section 5.16 Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
in, or the performance of, this Indenture; and the Issuer (to the extent that
it may lawfully
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do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 5.17 Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any
portion of a Trust Estate pursuant to Section 5.4 shall not be
exhausted by any one or more Sales as to any portion of such Trust
Estate remaining unsold, but shall continue unimpaired until the
entire such Trust Estate shall have been sold or all amounts payable
on the Bonds of the Series secured thereby and under this Indenture
with respect thereto shall have been paid. The Trustee may from time
to time postpone any public Sale by public announcement made at the
time and place of such Sale. The Trustee hereby expressly waives its
right to any amount fixed by law as compensation for any Sale.
(b) To the extent permitted by law, and except as
specified otherwise in the Series Supplement for any Series of Bonds,
the Trustee shall not in any private Sale sell or otherwise dispose of
the Trust Estate, or any portion thereof, securing a Series of Bonds
which has been declared due and payable unless
(1) if such Sale is effected consequent on a
declaration made by the Holders of Senior Bonds of a Series
pursuant to Section 5.2(A), the Holders of all Outstanding
Senior Bonds of such Series consent to, or direct the Trustee
to make, such Sale, or, if such Sale is effected consequent on
a declaration made by the Holders of the Highest Priority
Junior Class of such Series representing not less than 66 2/3%
of the Aggregate Current Principal of such Class pursuant to
Section 5.2(B), the Holders of the Highest Priority Junior
Class of such Series representing not less than 66 2/3% of the
Aggregate Current Principal of such Class consent to, or
direct the Trustee to make, such a Sale, or
(2) the proceeds of such Sale would be not less
than the entire amount which would be distributable to the
Holders of the Senior Bonds or the Junior Bonds, as the case
may be, of such Series, in full payment thereof in accordance
with Section 5.8.
The foregoing provisions shall not preclude or limit the ability of
the Trustee to purchase all or any portion of the Trust Estate at a
private Sale, provided that, unless otherwise specified in the related
Series Supplement, in no event (except as may be compelled or required
by applicable law or court order in which case the provisions of
Section 4.3 shall apply if appropriate) shall the Trustee purchase or
sell the Trust Estate or any portion thereof (if an election or
elections has or have been made or will be made to treat the Trust
Estate or such other assets specified in such election securing the
Series as a REMIC) unless it either (i) has
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received a Non-Disqualification Opinion, or (ii) the proceeds of such
Sale net of any tax on "prohibited transactions" as defined in Section
860F of the Code that is payable from the Trust Estate would be not
less than the entire amount that would be distributable to the Holders
of the Bonds, in full payment thereof in accordance with Section 5.8,
and such sale meets the requirements of Section 4.3.
(c) Except as otherwise provided in the related Series
Supplement, unless the Holders of all Outstanding Bonds have otherwise
consented or directed the Trustee, at any public Sale of all or any
portion of a Trust Estate at which a minimum bid equal to or greater
than the amount described in paragraph (2) of subsection (b) of this
Section 5.17 and the amount of any tax on "prohibited transactions" as
defined in Section 860F of the Code that would be payable from the
Trust Estate if an election or elections has or have been made or
will be made to treat the Trust Estate or such other assets specified
in such election securing the Series as a REMIC, has not been
established by the Trustee and no Person bids an amount equal to or
greater than such amount, the Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of a
Trust Estate
(1) any Holder or Holders of Bonds of the Series
secured thereby may bid for and purchase the property offered
for Sale, and upon compliance with the terms of such Sale may
hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money
therefor, deliver any Outstanding Bonds of such Series or
claims for interest thereon in lieu of cash up to the amount
which shall, upon distribution of the net proceeds of such
Sale, be payable thereon, and such Bonds, in case the amounts
so payable thereon shall be less than the amount due thereon,
shall be returned to the Holders thereof after being
appropriately stamped to show such partial payment; for the
purposes of this clause (1), the principal amount of
indebtedness of the Issuer evidenced by any Outstanding Bond
delivered in lieu of cash shall be the Imputed Principal
Balance of such Bond.
(2) the Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale
thereof, and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting the gross Sale
price against the sum of (A) the amount which would be
distributable to the Holders of the Bonds of the Series
secured thereby as a result of such Sale in accordance with
Section 5.8 and (B) the expenses of the Sale and of any
Proceedings in connection therewith which are reimbursable to
it, without being required to produce the Bonds of such Series
in order to complete any such Sale or in order for the net
Sale price to be credited against such Bonds, and any property
so acquired by the Trustee shall be held and dealt with by it
in accordance with the provisions of this Indenture;
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(3) the Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest
in any portion of such Trust Estate in connection with a Sale
thereof;
(4) the Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Issuer to transfer and
convey its interest in any portion of such Trust Estate in
connection with a Sale thereof, and to take all action
necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale
shall be bound to ascertain the Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to
the application of any moneys.
(e) Notwithstanding anything in this Indenture to the
contrary, if an Event of Default specified in Section 5.1(A)(1) is the
Event of Default, or one of the Events of Default, on the basis of
which the Bonds of a Series have been declared due and payable, then
the Trustee may, in its sole discretion, sell the Trust Estate
securing such Series without compliance with this Section 5.17, but
except as otherwise provided in the related Series Supplement, subject
to and in compliance with Section 4.3.
Section 5.18 Action on Bonds.
The Trustee's right to seek and recover judgment on a Series of Bonds
or under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the Trustee or
the Holders of Bonds of any Series shall be impaired by the recovery of any
judgment by the Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Estate securing such Series.
Section 5.19 No Recourse to Other Trust Estates or Other Assets
of the Issuer.
Except to the extent provided otherwise in the related Series
Supplement, the Trust Estate Granted to the Trustee as security for a
particular Series will serve as security only for that Series. Except to the
extent provided otherwise in the related Series Supplement, Holders of Bonds of
one Series shall have no recourse against the Trust Estate Granted to the
Trustee as security for any other Series, and no judgment against the Issuer
for any amount due with respect to one Series of Bonds may be enforced against
either the Trust Estate securing any other Series or any other assets of the
Issuer, nor may any prejudgment lien or other attachment be sought against any
such other Trust Estate or any other assets of the Issuer.
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Section 5.20 Application of the TIA.
(a) Pursuant to Section 3.16(a) of the TIA, all
provisions automatically provided for in Section 3.16(a) are hereby
expressly excluded.
(b) Section 3.16(b) of the TIA requires the following
provision to be included herein:
Notwithstanding any other provision of the indenture
to be qualified, the right of any holder of any indenture
security to receive payment of the principal of and interest
on such indenture security, on or after the respective due
dates expressed in such indenture security, or to institute
suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without
the consent of such holder, except as to a postponement of an
interest payment consented to as provided in paragraph (2) of
subsection (a), and except that such indenture may contain
provisions limiting or denying the right of any such holder to
institute any such suit, if and to the extent that the
institution or prosecution thereof or the entry of judgment
therein would, under applicable law, result in the surrender,
impairment, waiver, or loss of the lien of such indenture upon
any property subject to such lien.
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ARTICLE VI
THE TRUSTEE
Section 6.1 Duties of Trustee.
(a) The Trustee shall be subject to TIA Section 315(c).
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties
that are specifically set forth in this Indenture and no
others and no implied covenants or obligations of the Trustee
shall be read into this Indenture.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
The Trustee shall, however, examine such certificates and
opinions to determine whether they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own
wilful misconduct, except that:
(1) This paragraph does not limit the effect of
subsection (b) of this Section.
(2) The Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
5.4 or Section 5.17.
(d) For all other purposes under this Indenture, the
Trustee shall not be deemed to have notice of any Event of Default
described in Section 5.1(A)(2), 5.1(A)(5) or 5.1(A)(6) or any default
(other than a default in payment to the Trustee) under any Pooling and
Administration Agreement or any Guaranty Agreement unless a
Responsible Officer assigned to and working in the Trustee's corporate
trust department has actual knowledge thereof or unless written notice
of any event which is in fact such an Event of Default or
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Default is received by the Trustee at the Corporate Trust Office, and
such notice references the Bonds generally, the Bonds of any Series,
the Issuer, any Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it; provided, however, that the Trustee shall not refuse or
fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and further provided that
nothing in this Section 6.1(e) shall be construed to limit the
exercise by the Trustee of any right or remedy permitted under this
Indenture or otherwise in the event of the Issuer's failure to pay the
Trustee's fees and expenses pursuant to Section 6.7. In determining
that such repayment or indemnity is not reasonably assured to it, the
Trustee must consider not only the likelihood of repayment or
indemnity by or on behalf of the Issuer but also the likelihood of
repayment or indemnity from amounts payable to it from the applicable
Trust Estate pursuant to Sections 6.7 and 8.2(d).
(f) Every provision of this Indenture that in any way
relates to the Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right,
title and interest of the Issuer in and to the Trust Estate following
an Event of Default and a consequent declaration of acceleration of
the Maturity of the Bonds, whether such extinguishment occurs through
a Sale of the Trust Estate to another Person, the acquisition of the
Trust Estate by the Trustee or otherwise, the rights, powers and
duties of the Trustee with respect to the Trust Estate (or the
proceeds thereof) and the Holders of the Bonds and the rights of the
Bondholders shall, to the extent permitted by law, continue to be
governed by the terms of this Indenture.
Section 6.2 Notice of Default.
Within 90 days after the occurrence of any Default known to the
Trustee, the Trustee shall transmit by mail to all Holders of Bonds of each
Series as to which such Default has occurred notice of each such Default,
unless such Default shall have been cured or waived, provided, however, that
except in the case of a Default of the type described in Section 5.1(A)(1), the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of the Bonds of
the Series affected by such Default.
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Section 6.3 Rights of Trustee.
(a) The Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
Section 6.4 Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the
certificates of authentication on the Bonds, shall be taken as the statements
of the Issuer, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations with respect to any Trust Estate or as to
the validity or sufficiency of this Indenture or of the Bonds. The Trustee
shall not be accountable for the use or application by the Issuer of Bonds or
the proceeds thereof or any money paid to the Issuer or upon Issuer Order
pursuant to the provisions hereof.
Section 6.5 May Hold Bonds.
The Trustee, any Agent, or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Bonds and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer or any
Affiliate of the Issuer with the same rights it would have if it were not
Trustee, Agent, or such other agent.
Section 6.6 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by this Indenture or by law, but
shall be accounted for separately for each Series. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Issuer and except to the extent of income or other
gain on investments which are obligations of the Trustee, in its commercial
capacity, and income or other gain actually received by the Trustee on
investments, which are obligations of others.
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Section 6.7 Compensation and Reimbursement.
(a) The Issuer agrees
(1) subject to any separate written agreement with the
Trustee, to pay the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to
hold them harmless against, any loss, liability or expense incurred
without negligence or bad faith on their part, arising out of, or in
connection with, the acceptance or administration of this trust,
including the costs and expenses of defending themselves against any
claim in connection with the exercise or performance of any of their
powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee
shall have given the Issuer written notice thereof promptly
after the Trustee shall have knowledge thereof;
(ii) while maintaining absolute control over its
own defense, the Trustee shall cooperate and consult fully
with the Issuer in preparing such defense; and
(iii) notwithstanding anything to the contrary in
this Section 6.7(a)(3), the Issuer shall not be liable for
settlement of any such claim by the Trustee entered into
without the prior consent of the Issuer.
Subject to Section 6.10, the Trustee agrees to fully perform its
duties under this Indenture notwithstanding any failure on the part of the
Issuer to make any payments, reimbursements or indemnifications to the Trustee
pursuant to this Section 6.7.
(b) The Issuer may remit payment for such fees and expenses to the
Trustee or, in the absence thereof, the Trustee may reimburse itself from time
to time pursuant to Section 8.2(d) hereof for payments of its fees and expenses
hereunder from moneys on deposit in the Collection Account.
(c) Notwithstanding the provisions of Section 6.1(e) and
6.7(a)(1), (2) and (3) hereof, the fees, expenses, disbursements and advances
payable to the Trustee pursuant to Section 6.7(a)(1) and
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(2) and any indemnity payments due to the Trustee pursuant to Section 6.7(a)(3)
shall not in the aggregate on any Payment Date exceed the Expense Reserve
Amount, if any; provided, however, that the Trustee shall advance any amounts
in excess thereof due under this Section 6.7.
(d) If the Bonds have been declared due and payable following an
Event of Default pursuant to Section 5.2, which acceleration of Maturity and
its consequences have not been rescinded and annulled and moneys collected by
the Trustee are being applied in accordance with Section 5.8 as may be amended
by any Series Supplement, expenses, disbursements and advances due the Trustee
under 6.7(a)(2) and indemnity payments due to the Trustee under Section
6.7(a)(3) hereof shall no longer be subject to the provisions of Section
6.7(c).
(e) As security for the payment obligations of the Issuer pursuant
to the foregoing provisions of this Section 6.7, the Issuer hereby Grants to
the Trustee a lien ranking at all times senior to the lien of the Bonds with
respect to which any claim of the Trustee under this Section arose and senior
to all other liens, if any, upon all property and funds held or collected as
part of the Trust Estate for such Bonds by the Trustee in its capacity as such.
The Trustee shall not (i) exercise or enforce such senior lien in any manner,
or (ii) institute any Proceeding against the Issuer for any payments,
reimbursements, or indemnifications to the Trustee or to enforce such lien, in
either case unless (i) the Bonds have been declared due and payable following
an Event of Default pursuant to Section 5.2, (ii) such acceleration of Maturity
and its consequences have not been rescinded and annulled, and (iii) moneys
collected by the Trustee are being applied in accordance with Section 5.8, as
may be amended by any Series Supplement.
(f) Subject to the last sentence of Section 6.7(e), nothing in
this Section 6.7 shall be construed to limit (except as otherwise expressly
provided in subsection (e) of this Section 6.7) the exercise by the Trustee of
any right or remedy permitted under the Indenture or otherwise in the event of
the Issuer's failure to pay the amounts due the Trustee pursuant to this
Section 6.7.
Section 6.8 Disqualification; Conflicting Interests.
In addition to the conflicting interests specified in TIA Section
310(b), the Trustee shall be deemed to have a conflicting interest under said
Section 310(b) upon the occurrence of a default, if by reason of supplements
or amendments to this Indenture as originally executed there shall be created
covenants, restrictions, conditions or additional events of default which
(1) unless otherwise provided in the related Series
Supplement, would give the Holders of Bonds of any Series any rights
with respect to the Trust Estate or any other property held by the
Trustee for the benefit of Holders of Bonds of any other Series with
respect to which it is also serving as Trustee, or
(2) is sufficiently likely to involve a material conflict
of interest between Series of Bonds that it is advisable in the public
interest or for the protection of Holders of Bonds
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of any Series that the Trustee disqualify itself from acting as such
with respect to one or more applicable Series of Bonds.
Section 6.9 Eligibility; Trustee's Capital and Surplus.
The Trustee shall at all times meet the then current capital and
surplus requirements of the TIA and shall have a combined capital and surplus
of at least $50,000,000 or be a member or subsidiary of a bank holding system,
the aggregate combined capital and surplus of which is at least $50,000,000. If
the Trustee or the members of the bank holding company system of which it is a
part publish annual reports of condition of the type described in TIA Section
310(a)(2), its (or such bank holding company system's) combined capital and
surplus for purposes of TIA Section 310(a)(2) shall be as set forth in the
latest such report or reports. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) Subject to the provisions of the Series Supplement
with respect to any Series of Bonds, the Trustee may resign at any
time with respect to the Bonds of one or more Series (or for fewer
than all Classes within any such Series) by giving written notice
thereof to the Issuer. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
(b) The Trustee may be removed at any time with respect
to any Series, or any Class within any Series, by Act of the Holders
representing more than 50% of the Aggregate Current Principal Amount
of the Outstanding Bonds of that Series, delivered to the Trustee and
to the Issuer.
(c) If at any time following a default:
(1) the Trustee shall have a conflicting interest
under Section 6.8 and TIA Section 310(b) and shall fail to
resign or eliminate such conflicting interest in accordance
with TIA Section 310(b) after written request therefor by the
Issuer or by any Bondholder, or
(2) the Trustee shall cease to be eligible under
Section 6.9 or shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation,
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then, in any such case, (i) the Issuer by a Board Resolution may
remove the Trustee, and the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint a successor Trustee and to vest in such
successor Trustee any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Indenture;
provided, however, if the Issuer does not join in such appointment
within fifteen (15) days after the receipt by it of a request to do
so, or in case an event of default has occurred and is continuing, the
Trustee may petition a court of competent jurisdiction to make such
appointment, or (ii) subject to Section 5.15, and, in the case of a
conflicting interest as described in clause (1) above, unless the
Trustee's duty to resign has been stayed as provided in TIA Section
310(b), any Bondholder who has been a bona fide Holder of a Bond for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(d) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the
Trustee with respect to the Bonds of one or more Series, or any Class
within such Series, for any cause, the Issuer by a Board Resolution
shall promptly appoint a successor Trustee with respect to such Series
or such Class. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Trustee
with respect to any Series shall be appointed by Act of the Holders of
Bonds representing more than 50% of the Aggregate Current Principal
Amount of the Outstanding Bonds of that Series delivered to the Issuer
and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the
Issuer. If no successor Trustee shall have been so appointed by the
Issuer or Bondholders and shall have accepted appointment in the
manner hereinafter provided, any Bondholder who has been a bona fide
Holder of a Bond for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) The Issuer shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor
Trustee to the Holders of Bonds of each Series affected thereby. Each
notice shall include the name of the successor Trustee and the address
of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties
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of the retiring Trustee. Notwithstanding the foregoing, on request of the
Issuer or the successor Trustee, such retiring Trustee shall, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee (provided, however, that if the
retiring Trustee has been removed or has resigned, pursuant to Section 6.10,
with respect to less than all Series for which it is Trustee, or for less than
all Classes within any such Series, then such transfer shall be limited to its
rights and powers with respect to each Series or Class with respect to which it
has resigned or been removed), and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder (provided, however, that if the retiring Trustee has been removed or
has resigned, pursuant to Section 6.10, with respect to less than all Series
for which it is Trustee, or for less than all Classes within any such Series,
then such assignment, transfer and delivery by the retiring Trustee shall be
limited to the property and money held by it for the benefit of the Holders of
Bonds of the Series or Class with respect to which it has resigned or been
removed); provided, however, that the execution and delivery of any such
instruments by the retiring Trustee and the succession of a new Trustee shall
not in any way (i) impair or release the liens of the retiring Trustee provided
for in Section 6.7, (ii) constitute a waiver of any charges due the retiring
Trustee under the Indenture, or (iii) constitute a waiver of any right of the
retiring Trustee to institute proceedings to enforce any rights or remedies
available to the retiring Trustee pursuant to this Indenture. Upon request of
any such successor Trustee, the Issuer shall execute and deliver any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Bonds have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Bonds so authenticated with the same effect as
if such successor Trustee had authenticated such Bonds.
Section 6.13 Preferential Collection of Claims Against Issuer.
The Trustee, and any co-trustee or separate trustee authorized in
Section 6.14, shall be subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b), and a Trustee,
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co-trustee or separate trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
Section 6.14 Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of a Trust Estate
may at the time be located, or the requirements of the Series Supplement with
respect to any Series of Bonds, the Issuer and the Trustee shall have power to
appoint, and, upon the written request of the Trustee or of the Holders of
Bonds representing more than 50% of the Aggregate Current Principal Amount of
the Outstanding Bonds of the Series or Class, as the case may be, secured by
the Trust Estate with respect to which a co-trustee or separate trustee is
being appointed, the Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Trustee either to act
as co-trustee, jointly with the Trustee, of all or any part of such Trust
Estate, or to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other provisions of this
Section. If the Issuer does not join in such appointment within 15 days after
the receipt by it of a request so to do, or in case an Event of Default has
occurred and is continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(1) The Bonds shall be authenticated and delivered and
all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall
be exercised, solely by the Trustee.
(2) The Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by a
Board Resolution, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section, and, in
case an Event of Default has occurred and is continuing, the Trustee
shall have power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of the Issuer.
Upon the written request of the Trustee, the Issuer shall join with
the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or
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proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be appointed
in the manner provided in this Section.
(3) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee, or
any other such trustee hereunder, and the Trustee shall not be
personally liable by reason of any act or omission of any co-trustee
or other such separate trustee hereunder.
(4) Any Act of Bondholders delivered to the Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
Section 6.15 Authenticating Agents.
Upon the request of the Issuer, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Bonds of each Series
designated for such authentication by the Issuer and containing provisions
therein for such authentication (or with respect to which the Issuer has made
other arrangements, satisfactory to the Trustee and such Authenticating Agent,
for notation on the Bonds of such Series of the authority of an Authenticating
Agent appointed after the initial authentication and delivery of such Bonds) in
connection with transfers and exchanges under Sections 2.6 and 2.7, as fully to
all intents and purposes as though the Authenticating Agent had been expressly
authorized by those Sections to authenticate and deliver Bonds of such Series.
Notwithstanding the foregoing, if an Authenticating Agent for a Series is
designated in the related Series Supplement, no separate request or appointment
shall be required. For all purposes of this Indenture (other than in
connection with the authentication and delivery of Bonds pursuant to Sections
2.5 and 2.12 in connection with their initial issuance and for purposes of
Section 2.8), the authentication and delivery of Bonds by the Authenticating
Agent pursuant to this Section shall be deemed to be the authentication and
delivery of Bonds "by the Trustee." Such Authenticating Agent shall at all
times be a Person that both meets the requirements of Section 6.9 for the
Trustee hereunder and has its principal office in the Borough of Manhattan,
City and State of New York.
Any Authenticating Agent for a Series shall also serve as Bond
Registrar or co-Bond Registrar for such Series, as provided in Section 2.7.
Any Authenticating Agent appointed by the Trustee pursuant to the terms of this
Section 6.15 or pursuant to the terms of any Supplemental Indenture shall
deliver to the Trustee as a condition precedent to the effectiveness of such
appointment an instrument accepting the trusts, duties and responsibilities of
Authenticating Agent and of Bond Registrar or co-Bond Registrar and
indemnifying the Trustee for and holding the Trustee harmless against, any
loss, liability or expense (including reasonable attorneys, fees) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance, administration of the trust or exercise of authority by
such Authenticating Agent, Bond Registrar or co-Bond Registrar.
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Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and the Issuer. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Issuer. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section, the
Trustee shall promptly appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Issuer and shall mail notice of such
appointment to all Holders of Bonds of the applicable Series.
The Trustee agrees, subject to Section 6.1(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its services
and the Trustee shall be entitled to be reimbursed for such payments, subject
to Section 6.7. The provisions of Sections 2.10, 6.4 and 6.5 shall be
applicable to any Authenticating Agent.
Section 6.16 Alternate Trustees.
Whenever the Issuer shall so determine, a Person different than the
initial Trustee may be appointed by the Issuer to act as an alternate Trustee
with respect to any Series of Bonds proposed to be issued hereunder. Such
alternate Trustee shall also satisfy the eligibility requirements of the TIA
and this Article VI. The Issuer shall have the power to appoint a separate
Trustee to act as Trustee with respect to any Series of Bonds proposed to be
issued hereunder and each such alternate Trustee and the Issuer alone shall
have the power to execute and deliver an agreement supplemental hereto, which
agreement supplemental hereto may be the Series Supplement for such Series of
Bonds, which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trust and duties of the
Trustee with respect to the Outstanding Bonds of any Series as to which the
Trustee initially named in the Series Supplement for such Series is not
retiring, shall continue to be vested in such initial Trustee, and shall add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trust hereunder by more
than one Trustee with respect to the Outstanding Bonds of any Series as to
which the initial Trustee named herein is not to be the Trustee or with respect
to any proposed Series of Bonds, it being understood that nothing herein or in
such supplemental agreement shall constitute such Trustees as co-Trustees of
the same trust and that each such Trustee shall be a Trustee of a separate
trust or trusts with respect to different Series of Bonds each concurrently
Outstanding. No separate or alternate Trustee shall accept its appointment
unless, at the time of such acceptance such separate Trustee shall be qualified
and eligible under this Article VI.
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ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
Section 7.1 Issuer to Furnish Trustee Names and Addresses of
Bondholders.
(a) The Issuer will furnish or cause to be furnished to
the Trustee (i) semi-annually, not less than 45 days nor more than 60
days after each Interest Payment Date for a Series, a list, in such
form as the Trustee may reasonably require, of the names and addresses
of the Holders of Bonds of such Series, and (ii) at such other times,
as the Trustee may request in writing, within 30 days after receipt by
the Issuer of any such request, a list of similar form and content as
of a date not more that 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Bond
Registrar, no such list shall be required to be furnished. If the
Bonds of a particular Series have Interest Payment Dates which are
more frequent than semi-annual, then the applicable Interest Payment
Dates for purposes of clause (i) of the preceding sentence shall be
the Interest Payment Date occurring closest to six months after the
Closing Date for such Series and each Interest Payment Date occurring
at six-month intervals thereafter.
(b) In addition to furnishing to the Trustee the
Bondholder lists, if any, required under subsection (a), the Issuer
shall also furnish all Bondholder lists, if any, required under
Section 3.3 at the times required by said Section 3.3.
Section 7.2 Preservation of Information; Communications to
Bondholders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of
Bonds contained in the most recent list, if any, furnished to the
Trustee as provided in Section 7.1 and the names and addresses of the
Holders of Bonds received by the Trustee in its capacity as Bond
Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) The Issuer, the Trustee and the Bond Registrar shall
have the protection of TIA Section 312(c).
Section 7.3 Reports by Trustee.
(a) In addition to any report required to be delivered by
the Trustee to the Holders of Bonds of any Series pursuant to TIA
Section 313(a), additional reports may be required to be delivered by
the Trustee as set forth in the Series Supplement for any Series of
Bonds.
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(b) For purposes of the information required to be
included in any reports to be delivered by the Trustee pursuant to TIA
Sections 313(a)(3), 313(b)(1) (if applicable), 313(b)(2), or pursuant
to the Series Supplement for any Series of Bonds as may be required
pursuant to Section 7.3(a), the principal amount of "indenture
securities" outstanding on the date as of which such information is
provided shall be the Aggregate Current Principal Amount of the then
Outstanding Bonds of the particular Series covered by the report.
(c) With respect to any report required to be delivered
by the Trustee pursuant to TIA Section 313(a) or (b), or as otherwise
required pursuant to Section 7.3(a), the Trustee shall mail any such
report to all Holders of such Series of Bonds within 30 days after
May 15 of each year (the "reporting date"), commencing with the year
after the issuance of such Series of Bonds.
(d) Unless provided otherwise in the Series Supplement
for any Series of Bonds, upon written request in form satisfactory to
the Trustee received by the Trustee at least fifteen days prior to the
next Payment Date, the Trustee will provide notice to a Bondholder on
such Payment Date of such Bondholder's priority status with respect to
such Bondholder's requests for redemption pursuant to Section 10.4.
Section 7.4 Reports by Issuer.
The Issuer (a) shall file with the Trustee within 15 days after it
files them with the Commission copies of the annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Issuer is required to file with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 and (b) shall also comply with the
other provisions of TIA Section 314(a).
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ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.1 Collection of Moneys.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to this
Indenture. The Trustee shall hold all such money and property received by it
as part of the Trust Estate with respect to which it was received, and shall
apply it as provided in this Indenture. If the Trustee shall not have received
a Distribution with respect to any Certificate by the Business Day immediately
following the related Distribution Date, the Trustee shall, unless the Issuer
shall have made provisions satisfactory to the Trustee for delivery to the
Trustee of an amount equal to such Distribution, request the issuer or
guarantor of such Certificate, as appropriate, to make such payment as promptly
as practicable or legally permitted. If the Trustee shall subsequently receive
any such Distribution, it may withdraw such request. Notwithstanding any other
provision hereof, the Trustee shall deliver to the Issuer or its designee or
assignee any Distribution received with respect to a Certificate after the
related Distribution Date to the extent that the Issuer previously made payment
or provision for payment with respect to such Distribution in accordance with
this Section 8.1, and any such Distribution shall not be deemed part of the
Trust Estate for the related Series.
Except as otherwise expressly provided in this Indenture, if,
following any request by the Trustee for payment of a late Distribution, any
default occurs in the making of such payment, or if a default occurs in any
other performance required under any Certificate with respect to any Series,
the Trustee may, and upon the request of the Holders of Bonds representing more
than 50% of the Aggregate Current Principal Amount of the Outstanding Bonds of
the affected Series shall, take such action as may be appropriate to enforce
such payment or performance including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default with respect to such Series under
this Indenture and to proceed thereafter as provided in Article V.
Section 8.2 Collection Accounts.
(a) On or before the Closing Date for a Series, the
Issuer shall open, at the Corporate Trust Office, one or more accounts
(each of which shall be an Eligible Account) which shall collectively
be the "Collection Account" for such Series. The Trustee shall
promptly deposit in the related Collection Account all Distributions
received by it with respect to Certificates securing the Bonds of a
Series (other than Distributions required to be delivered to the
Issuer pursuant to Section 8.1). All Distributions deposited from
time to
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time in a Collection Account, any amount required to be deposited in
the Collection Account for a Series pursuant to Section 2.12(g) and
the terms of the related Series Supplement, all other deposits therein
pursuant to this Indenture, and all investments made with such moneys,
including all income or other gain from such investments, shall be
held by the Trustee in such Collection Account as part of the Trust
Estate for the related Series as herein provided, subject to
withdrawal by the Trustee for the purposes set forth in subsections
(c) and (d) of this Section 8.2. All funds withdrawn from a
Collection Account pursuant to subsection (c) of this Section 8.2 for
the purpose of making payments to the Holders of Bonds of the related
Series shall be applied in accordance with Section 3.3.
(b) So long as no Default or Event of Default shall have
occurred and be continuing with respect to a Series of Bonds, all or a
portion of the related Collection Account shall be invested and
reinvested by the Trustee at the Issuer's direction or pursuant to the
provisions of the related Series Supplement in one or more Eligible
Investments bearing interest or sold at discount. No such investment
shall mature later than the Business Day immediately preceding the
next Principal Reduction Date for such Series unless permitted
otherwise by the Rating Agencies.
Notwithstanding the foregoing,
(i) except as permitted by clause (ii) below, no
investment of any amount held in a Collection Account may
mature later than the Business Day immediately preceding the
next Payment Date for Bonds of the related Series unless
permitted otherwise by the Rating Agencies,
(ii) any investment (including repurchase
agreements) on which the Trustee (or any agent of the Trustee
acceptable to the Rating Agency or Agencies that rated such
Series) is the obligor, may mature on a Payment Date or
Special Payment Date if, under this Section 8.2, such
investment could otherwise mature on the Business Day
immediately preceding such Payment Date or Special Payment
Date and
(iii) if there are any Overdue Bonds of a
Series Outstanding, funds then in the related Collection
Account may be invested in investments maturing later than the
Business Day immediately preceding the next Special Payment
Date, unless permitted otherwise by the Rating Agencies, only
to the extent that after giving effect to such proposed
investment the amount of funds that would be on deposit in the
Collection Account (including therein the amount of
Distributions and proceeds of investments scheduled to be
deposited in such Collection Account prior to such next
Special Payment Date) and would be available to make payments
on the Bonds of such Series on such next Special Payment Date,
exceeds any payments of principal
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of or interest on any Overdue Bonds of such Series due and
payable on such next Special Payment Date.
All income or other gains from investment of moneys deposited
in a Collection Account shall be deposited by the Trustee in such
Collection Account immediately upon receipt, and any loss resulting
from such investment shall be charged to such Collection Account.
(c) Unless the Bonds of a Series have been declared due
and payable pursuant to Section 5.2 and moneys collected by the
Trustee with respect to such Series are being applied in accordance
with Section 5.8, amounts on deposit in the related Collection Account
on any Payment Date or Special Payment Date shall be withdrawn from
such Collection Account, in the amounts required, for application as
follows:
(i) on any Special Payment Date, except to the
extent provided otherwise in the applicable Series Supplement
and to the extent permitted by applicable law,
first, to the payment of all interest due
with respect to any Overdue Bonds of such Series
called for redemption, pro rata without any
preference or priority as to Maturity, and
second, to the payment of amounts due with
respect to principal of such Overdue Bonds
(including any portion of an installment of
principal required to be paid which was not paid
therefor, and any amounts remaining unpaid on
Bonds with respect to which the Redemption Price
was not paid in full on the applicable Redemption
Date), in the order in which such amounts became
due and pro rata among all amounts which became
due on the same date, each such amount being the
amount thereof set forth in the applicable
Special Payment Date Statement; and
(ii) on any Payment Date, in accordance with the
order of priority of payment specified in the related Series
Supplement;
each such amount being the amount thereof set forth in the applicable
Special Payment Date Statement or Payment Date Statement, as the case
may be.
(d) On or after each Payment Date for a Series, so long
as the Trustee shall have prepared a Payment Date Statement in respect
of such Payment Date and shall have made, or, in accordance with
Section 3.3, set aside from amounts in the Collection Account for such
Series an amount sufficient to make the payment of principal of and
interest on the Bonds of such Series then required to be made as
indicated in such Payment Date Statement, the cash balance, if any,
then remaining in the related Collection Account, less the amount of
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Distributions due on the related Certificates but not received on the
immediately preceding Distribution Date and the amount of any
Reinvestment Income then payable to the Bond Manager, shall be
withdrawn from such Collection Account by the Trustee and applied
first, to the payment of any unpaid amount due the
Trustee pursuant to Section 6.7,
second, to the payment of any unpaid amount due any
firm of Independent Accountants pursuant to Section 8.9(a),
third, to the extent required by the related Series
Supplement, to deposit an amount in the related Expense Fund
(any amount so deposited being released from the lien of the
Indenture pursuant to Section 8.10).
Except as otherwise provided in the related Series Supplement, the
balance, if any, of the amount so withdrawn shall be released from the
lien of this Indenture and paid by the Trustee (i) with respect to
each Series of Bonds for which a REMIC election or elections has or
have not been made and will not be made, to the Issuer or, upon Issuer
Order, to its assignee, or (ii) where such an election or elections
has or have been made or will be made, to the Residual Interest that
is entitled to such assets as stipulated in the related Series
Supplement, in each case subject to satisfaction of the following
conditions:
(i) no Default or Event of Default shall have
occurred and be continuing,
(ii) an Independent Accountant shall have
delivered to the Trustee the certificate or opinion in respect
of such Payment Date required by Section 8.9(b);
(iii) the Issuer shall have delivered to the
Trustee an Officers' Certificate stating that all conditions
precedent to such release specified in this subsection (d)
have been satisfied, and
(iv) the Issuer shall have delivered to the
Trustee an Opinion of Counsel to the effect that all documents
delivered to the Trustee in connection with such release
comply as to form with the requirements of this subsection (d)
and all conditions precedent to such release specified in this
subsection (d) have been satisfied.
Section 8.3 Reserved.
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Section 8.4 Reserved.
Section 8.5 Reserved.
Section 8.6 General Provisions Regarding Pledged Accounts.
(a) Each Pledged Account shall relate solely to the Bonds
of the Series with respect to which it was established and to the
Certificates and other property securing such Series. Funds and other
property in each Pledged Account shall not be commingled with any
other moneys or property of the Issuer or any Affiliate thereof.
Notwithstanding the foregoing, the Trustee may hold any funds or other
property received or held by it as part of a Pledged Account in
collective accounts maintained by it in the normal course of its
business and containing funds or property held by it for other Persons
(which may include the Issuer or an Affiliate), provided that such
accounts are under the sole control of the Trustee and the Trustee
maintains adequate records indicating the ownership of all such funds
or property and the portions thereof held for credit to each Pledged
Account.
(b) The Issuer will not direct the Trustee to make any
investment of any funds in a Pledged Account or to sell any investment
held in a Pledged Account except under the following terms and
conditions:
(i) each such investment shall be made in the
name of the Trustee (in its capacity as such) or in the name
of a Qualified Nominee of the Trustee (or, if, as indicated by
an Opinion of Counsel delivered to the Trustee, applicable law
provides for perfection of pledges of an investment not
evidenced by a certificate or other instrument through
registration of such pledge on books maintained by or on
behalf of the issuer of such investment, such pledge may be so
registered),
(ii) the Trustee shall have sole control over such
investment, the income thereon and the proceeds thereof,
(iii) any certificate or other instrument
evidencing such investment shall be delivered directly to the
Trustee or its agent, and
(iv) the proceeds of each sale of such an
investment shall be remitted by the purchaser thereof directly
to the Trustee for deposit in the Pledged Account in which
such investment was held.
(c) Except as otherwise provided in the related Series
Supplement, if a REMIC election or elections has or have been made or
will be made in respect of the assets securing such Series, prior to
any disposition of any investment in a Pledged Account that would
result in a gain to a REMIC of such Series, the Trustee shall inform
the Issuer of its intention
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to dispose of such investment and of the possibility that such
disposition could result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code. If any amounts
are needed for disbursement from a Pledged Account and sufficient
uninvested funds are not available therein to make such disbursement,
in the absence of an Issuer Order for the liquidation of investments
held therein in an amount sufficient to provide the required funds,
the Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Pledged Account.
(d) The Trustee shall not in any way be held liable by
reason of any insufficiency in any Pledged Account except for losses
on investments which are liabilities of the Trustee (or of any agent
of the Trustee).
(e) All investments of funds in a Pledged Account and all
sales of investments held in a Pledged Account shall, except as
provided below, be made by the Trustee in accordance with an Issuer
Order. Subject to compliance with the requirements of Section 8.2(b),
such Issuer Order may authorize the Trustee to make the specific
investments set forth therein, to make investments from time to time
consistent with the general instructions set forth therein, or to make
specific investments pursuant to written, telegraphic or telephonic
instructions of the employees or agents of the Issuer identified
therein, in each case in such amounts as such Issuer Order shall
specify.
In the event that:
(i) the Issuer shall have failed to give
investment directions to the Trustee by 12:30 p.m. Eastern
Time on any Business Day authorizing the Trustee to invest the
funds then in a Pledged Account,
(ii) a Default or Event of Default with respect to
such Series shall have occurred and be continuing but the
Bonds of such Series shall not have been declared due and
payable pursuant to Section 5.2, or
(iii) an Event of Default with respect to such
Series shall have occurred and be continuing, the Bonds of
such Series shall have been declared due and payable pursuant
to Section 5.2, and amounts collected or receivable from the
related Trust Estate are being applied in accordance with
Section 5.8,
the Trustee shall invest and reinvest the funds then in each related
Pledged Account to the fullest extent practicable, in such manner as
the Trustee shall from time to time determine, but only in one or more
Eligible Investments bearing interest or sold at a discount. All
investments made pursuant to clause (i) above shall mature on the next
Business Day following the date of such investment, all such
investments made pursuant to clause (ii) above shall mature no later
than the maturity date therefor permitted by Section 8.2(b), or
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by the terms of any related Series Supplement, whichever is
applicable, and all investments made pursuant to clause (iii) above
shall mature no later than the first date following the date of such
investment on which the Trustee proposes to make a distribution to
Holders of Bonds of the related Series pursuant to Section 5.8.
(f) Subject to the restriction on the maturity of
investments set forth in Sections 8.2(b), or in any related Series
Supplement, and notwithstanding paragraph (e) above, the Issuer will
give appropriate and timely investment directions to the Trustee such
that at the close of business on not more than two Business Days in
any one calendar year not more than an aggregate of $50,000 of funds
in the Pledged Accounts for a Series are not invested pursuant,
directly or indirectly, to an Issuer Order in Eligible Investments
bearing interest or sold at a discount which mature on or after the
opening of business on the next Business Day.
(g) Unless it shall have otherwise agreed in writing with
the Issuer, the Trustee shall not be required to enter into repurchase
obligations for the investment of funds in any Pledged Account with
any Person whose repurchase obligations would be Eligible Investments
only if the requirements of subclause (b) of clause (iii) of the
definition of the term "Eligible Investments" were complied with in
connection with such investment.
Section 8.7 Reports by Trustee to Bondholders.
On each Payment Date for a Series the Trustee shall deliver a written
report
(a) to each Holder of Bonds of a Class of such Series on
which a payment of principal and interest is then being made, setting
forth the amount of such payment which represents principal and the
amount which represents interest, and the principal amount of an
Individual Bond of each such Class after giving effect to the payment
of principal made on such Payment Date;
(b) to each Holder of Bonds of a Class of such Series on
which a payment of interest only is then being made, setting forth the
Class Current Principal Amount and Class Imputed Principal Balance of
Bonds of each Class of such Series Outstanding after giving effect to
the payment of principal made on such Payment Date and the allocation
of all Realized Losses and any Junior Bond Writedown Amount then
allocable to such Class and after including in the aggregate principal
amount of Compound Interest Bonds Outstanding the amount of any
accrued interest added to the principal amount thereof on such Payment
Date; and
(c) to each Holder of a Compound Interest Bond of such
Series (but only if such Holder shall not have received on such
Payment Date a payment of interest equal to the
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entire amount of Accrued Bond Interest on such Bond for such Payment
Date, or since the related Accrual Date if no Payment Date has yet
occurred), setting forth
(i) the information contained in the report
delivered pursuant to clause (b) above,
(ii) the interest accrued on an Individual Bond of
such Class of Compound Interest Bonds through the Interest
Accrual Period for such Payment Date and added to the
principal of such Compound Interest Bond, and
(iii) the principal amount of an Individual Bond of
such Class of Compound Interest Bonds after giving effect to
the addition thereto of interest accrued thereon during the
Interest Accrual Period for such Payment Date.
(d) to each Holder of Bonds of a Class of such
Series, the aggregate amount of Realized Losses and any Junior
Bond Write Down Amount allocated to the Bonds of such Class on
such Payment Date;
(i) the amount of any Realized Losses or portion
of any Junior Bond Write Down Amount allocated to an
Individual Bond of such Class on such Payment Date; and
(ii) the Imputed Principal Balance and the Current
Principal Amount of an Individual Bond of such Class on such
Payment Date,
in the case of (iii) above, after application of all payments of principal on
such Bonds and allocation of any Realized Losses and the Junior Bond Write Down
Amount, if any, allocable on such Payment Date.
Section 8.8 Reports by Trustee.
In addition to any statements required to be delivered or prepared by the
Trustee pursuant to Sections 2.9 or 8.2, the Trustee shall deliver to the
Issuer and the Independent Accountants appointed pursuant to Section 8.9,
within two Business Days after the request of either the Issuer or such
Independent Accountants, a written report setting forth the amount of each
Pledged Account or Fund established hereunder and the identity of the
investments included therein. Without limiting the generality of the
foregoing, the Trustee shall, upon the request of the Issuer, promptly transmit
to the Issuer copies of all accountings of, and information with respect to,
Distributions furnished it by the issuer of, or the paying agent for, each
Certificate and shall promptly notify the Issuer if, or on the third Business
Day after any Distribution Date in the case of a Conventional Certificate, any
related Distribution then due or any portion thereof has not been received by
the Trustee.
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Section 8.9 Reports by Independent Accountants.
(a) At the Closing Date for a Series the Issuer shall
appoint the firm of Independent Accountants which prepares and
delivers the certificate or opinion required to be delivered under
Section 2.12(e) as its Independent Accountants for purposes of
preparing and delivering the reports or certificates with respect to
such Series required by this Section 8.9. Upon any resignation by
such firm the Issuer shall promptly notify the Trustee and appoint a
successor thereto that shall also be a firm of Independent Accountants
of recognized national reputation. If the Issuer shall fail to
appoint a successor to a firm of Independent Accountants which has
resigned on or before the fifteenth day after such resignation, the
Trustee shall promptly notify the Issuer of such failure in writing.
If the Issuer shall not have appointed a successor within ten days
thereafter the Trustee shall promptly appoint a successor firm of
Independent Accountants of recognized national reputation. The fees
of such successor shall be payable by the Issuer, and any fees not so
paid by the Issuer may be paid by the Trustee on behalf of the Issuer,
from amounts otherwise payable to the Issuer from the related
Collection Account pursuant to Section 8.2(d).
(b) The Issuer, or the Trustee on behalf of the Issuer,
shall direct the firm of Independent Accountants appointed pursuant to
subsection (a) (or any successor firm so appointed) to review, and
prepare and deliver to the Trustee a report or certificate with
respect to each Payment Date Statement specified in the related Series
Supplement delivered by the Trustee pursuant to Section 2.9(e).
Such report or certificate shall state that
(i) such Independent Accountants have reviewed
such Payment Date Statement,
(ii) they have performed the calculations required
to be made in connection therewith,
(iii) they have reviewed the accountings of the
related Distributions and of the related Collection Account
furnished by the Trustee with respect to the Distribution Date
relative to such Payment Date Statement, and
(iv) based upon such review, such firm of
Independent Accountants has no material exceptions to the
Trustee's calculations set forth in any of such Statements, or
that all of such exceptions are set forth in such report or
certificate.
Such report or certificate shall be delivered to the Trustee, and a
copy of such report or certificate shall be delivered to the Issuer,
prior to the close of business on the second
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Business Day following the related Calculation Date. If such firm of
Independent Accountants sets forth any material exceptions to the
Trustee's Payment Date Statement in its report or certificate, the
Trustee's Payment Date Statement shall be deemed to have been amended
to reflect such exceptions, and a copy of such report shall be
delivered to each Rating Agency rating the related Bonds.
(c) If the Trustee shall fail to deliver to the Issuer
any Payment Date Statement by the due date therefor, the Issuer shall,
at the opening of business on the next Business Day after such due
date, direct the firm of Independent Accountants appointed pursuant to
subsection (a) to prepare and deliver to the Trustee such Payment Date
Statement at the expense of the Issuer, no later than 2:00 p.m. on the
Business Day following the day on which such direction was given. Any
fees of such Independent Accountants not paid by the Issuer may be
paid by the Trustee, on behalf of the Issuer, from amounts otherwise
payable to the Issuer from the related Collection Account pursuant to
Section 8.2(d).
Section 8.10 Expense Fund.
(a) Except as otherwise provided in the related Series
Supplement, any cash or Eligible Investments received by the Trustee
for deposit in the Expense Fund for a Series pursuant to Sections
2.12(g) or 8.2(d) hereof, together with any other Eligible Investments
in which amounts in such Expense Fund are or will be invested or
reinvested during the term of the Bonds of such Series, shall be held
by the Trustee subject to disbursement and withdrawal as herein
provided, but shall not be security for the Bonds of such Series.
(b) Except as otherwise provided in the related Series
Supplement all or a portion of the Expense Fund for a Series shall be
invested and reinvested at the Issuer's direction in one or more
Eligible Investments.
(c) Except as otherwise provided in the related Series
Supplement amounts on deposit in the Expense Fund for a Series shall
be applied by the Trustee to the payment of expenses relating to the
administration of the Bonds of such Series (other than interest
expense on such Bonds) specified in the related Series Supplement to
the extent that such expenses have not been paid by the Issuer or from
other sources.
(d) Except as otherwise provided in the related Series
Supplement, upon full and final payment of all Outstanding Bonds of
the related Series and payment of all unpaid expenses relating to the
administration of the Bonds of such Series (other than interest
expense on such Bonds) covered by such Expense Fund, the Trustee shall
pay to or upon the order of the Issuer all amounts remaining on
deposit in the Expense Fund for such Series.
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Section 8.11 Substitution of Certificates with Eligible
Substitute Certificates.
(a) Except as otherwise provided in the related Series
Supplement, the Issuer shall have the right to Grant one or more
Eligible Substitute Certificates for any one or more Certificates
securing a Series of Bonds, any such substitution to take place on a
Payment Date, subject, however, to satisfaction of the following
conditions:
(i) no Default or Event of Default shall have
occurred and be continuing;
(ii) if the Eligible Substitute Certificates to be
Granted in substitution for the Certificates to be released
are issued in definitive or certificated form, such Eligible
Substitute Certificates, registered in the name of the Trustee
(or, if requested by the Trustee, in the name of its Qualified
Nominee) shall have been delivered to the Trustee;
(iii) if the Eligible Substitute Certificates to be
Granted in substitution for the Certificates to be released
are issuable in book entry form only, the Trustee shall have
received (A) written notification or confirmation from the
operator of the book-entry system that ownership of such
Eligible Substitute Certificates has been registered in the
name of the Trustee or a Qualified Nominee or (B) notification
from a bank, broker, clearing corporation or other Person that
maintains securities accounts for the Issuer or the Trustee
and is acting in that capacity with respect to such Eligible
Substitute Certificates that either (1) ownership of such
Eligible Substitute Certificates in the name of the Issuer and
the Grant thereof to the Trustee have been entered on the
securities accounts books of such Person or (2) ownership of
such Eligible Substitute Certificates in the name of the
Trustee has been entered on the securities accounts books of
such Person;
(iv) the Trustee shall have received a certificate
or opinion from a firm of Independent Accountants stating that
(A) such firm has reviewed (1) the terms of the Certificates
proposed to be released and of the Eligible Substitute
Certificates proposed to be Granted in substitution therefor,
(2) the Issuer's calculations of the Certificate Principal
Balance of the Certificates to be released and of the
Eligible Substitute Certificates to be granted in substitution
therefor and the Issuer's calculations of the aggregate
Certificate Principal Balance of all of the Certificates
pledged to secure the Bonds immediately following the
substitutions and (3) the Issuer's calculations demonstrating
that the Eligible Substitute Certificates proposed to be
Granted in substitution for the Certificates to be released
satisfy all conditions precedent to such release and
substitution set forth in the Indenture and the related Series
Supplement that are of a type that can be verified by
mathematical computations and (B) based on such review,
nothing has come to their attention that
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the Issuer's calculations were not made in compliance with the
terms of the Indenture and the related Series Supplement and
are not mathematically correct;
(v) the Trustee shall have received an Officers'
Certificate stating that all conditions precedent to such
release specified in this subsection (a) and in the related
Series Supplement have been satisfied;
(vi) the Trustee shall have received an Opinion of
Counsel to the effect (A) that all documents delivered to the
Trustee in connection with such release comply as to the form
with the requirements of this subsection (a) and the
requirements, if any, set forth in the related Series
Supplement, (B) that all conditions to such release specified
in this subsection (a) and in the related Series Supplement
have been satisfied and (C) of the opinion required by Section
2.12(c) but only as applicable to the portion of the Trust
Estate comprised of the Eligible Substitute Certificates; and
(vii) the Trustee shall have received a certificate
of an Independent Person, whose regular business activity
includes valuing securities similar to such Eligible
Substitute Certificates, as to the fair market value of such
Eligible Substitute Certificates, which determination of fair
market value shall be based upon generally available market
quotations as of a date not earlier than three Business Days
prior to the date of Grant to the Trustee.
(b) Upon any such Grant, the Trustee shall transfer and
assign the replaced Certificates to the Issuer whereupon they shall be
released from, and no longer subject to, the lien of the Indenture.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures without Consent of Bondholders
Without the consent of the Holders of any Bonds, the Issuer, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to
assure, convey and confirm unto the Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(2) to add to the conditions, limitations and
restrictions on the authorized amount, terms and purposes of the
issuance, authentication and delivery of any Series of Bonds, as
herein set forth, additional conditions, limitations and restrictions
thereafter to be observed;
(3) to set forth the terms of, and security for, any
Series that has not theretofore been authorized by a Series
Supplement;
(4) to modify or eliminate any of the terms of this
Indenture; provided, however, that
(A) such supplemental indenture shall expressly
provide that any such modifications or eliminations shall not
be effective with respect to any Outstanding Bond of any
Series created prior to the execution of such supplemental
indenture; and
(B) the Trustee may, in its discretion, decline
to enter into any such supplemental indenture which, in its
opinion, would adversely affect its own rights, duties or
immunities;
(5) to evidence the succession of another Person to the
Issuer, and the assumption by any such successor of the covenants of
the Issuer herein and in the Bonds contained, or the appointment of an
alternate Trustee under Section 6.16;
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(6) to add to the covenants of the Issuer, for the
benefit of the Holders of all Bonds or of the Bonds of any Series, or
to surrender any right or power herein conferred upon the Issuer;
(7) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to amend any other provisions with respect to
matters or questions arising under this Indenture; provided that such
action shall not adversely affect in any material respect the
interests of the Holders of any Series of Bonds; and provided,
further, that the amendment shall not be deemed to adversely affect in
any material respect the interests of the Holders of any Series of
Bonds if the Person requesting the amendment obtains a letter from
each Rating Agency that the amendment would not result in the
downgrading or withdrawal of the ratings then assigned to any Series
of Bonds;
(8) to provide for the issuance of Bonds of any Series
(including Bonds of a Series theretofore authorized and then
Outstanding) or any Class within such Series in bearer form with
coupons ("Bearer Bonds") and for the exchangeability of Bearer Bonds
and Bonds of the same Series and Class issued in registered form
("Registered Bonds"); any such supplemental indenture may provide for
payments on Bearer Bonds only outside the United States and for
appointment of a foreign Paying Agent that does not satisfy the
requirements of clause (ii) of the definition of the term "Eligible
Investments" but is otherwise acceptable to the rating agencies that
rated the initial Series of the Bonds and may also contain any
provisions as may in the Issuer's judgment be necessary, appropriate
or convenient (a) to permit the Bonds to be issued and sold to or held
in bearer form by non-United States Persons, (b) to establish
entitlement to an exemption from United States withholding tax or
reporting requirements with respect to payments on the Bonds, (c) to
comply, or facilitate compliance, with other applicable laws or
regulations, (d) to provide for usual and customary provisions for
communication (by notice publication, maintenance of lists of holders
of Bearer Bonds who have provided names and addresses for such
purpose, or otherwise) with holders of Bearer Bonds, or (e) to
otherwise effectuate provisions for the issuance of Bearer Bonds and
their exchangeability with Registered Bonds (under no circumstances
will this provision allow the Trustee or the Issuer to issue a second
Class of "residual interests" as defined in the Code);
(9) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under TIA or under any similar federal
statute hereafter enacted, and to modify, eliminate or add to the
provisions of this Indenture to such extent as shall be necessary or
appropriate to conform to any provisions of the TIA, as the same may
from time to time be amended; or
(10) if a REMIC election or elections has or have been
made or will be made in respect of the Trust Estate or such other
assets specified in such election and securing the
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Bonds of a Series, to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary (i) to maintain
the qualification of such assets as a REMIC under the Code or (ii) to
avoid or minimize the risk of the imposition of any tax on the Issuer,
the Trust Estate or another Person under the Code that would be a
claim against the Issuer, Trust Estate or such other Person, as the
case may be, or (iii) to prevent a REMIC Loss, provided that (a) there
shall have been delivered an Opinion of Counsel to the effect that
such action is necessary to maintain such qualification or to avoid
any such tax or minimize the risk of its imposition or to prevent such
prohibited transaction, respectively, and (b) such supplemental
indenture shall not have any of the effects described in paragraphs
(1) through (6) of the proviso to Section 9.2 of this Indenture.
Section 9.2 Supplemental Indentures with Consent of
Bondholders.
With the consent of the Holders of Bonds representing not less than
two-thirds of the Aggregate Current Principal Amount of all Outstanding Bonds
in case Outstanding Bonds of all Series are to be affected or with the consent
of the Holders of Bonds representing not less than 66 2/3% of the Aggregate
Current Principal Amount of the Outstanding Bonds of each Series to be affected
in case one or more, but less than all, of the Series of Outstanding Bonds are
to be affected, by Act of said Holders delivered to the Issuer and the Trustee,
the Issuer, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions, of this Indenture relating to such Series or of modifying in any
manner the rights of the Holders of the Bonds of such Series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Bond affected thereby:
(1) change the Stated Maturity of the final installment
of the principal of, or any installment of interest on, any Bond or
reduce the principal amount thereof, the Bond Interest Rate thereon or
the Redemption Price with respect thereto, change Bond Redemption Date
for any Series of Bonds, change any place of payment where, or the
coin or currency in which, any Bond or any interest thereon is
payable, or impair the right to institute suit for the enforcement of
the payment of any installment of interest due on any Bond on or after
the Stated Maturity thereof or for the enforcement of the payment of
the entire remaining unpaid principal amount of any Bond on or after
the Stated Maturity of the final installment of the principal thereof
(or, in the case of redemption, on or after the applicable Redemption
Date);
(2) reduce the percentage of the Aggregate Current
Principal Amount of the Outstanding Bonds of any Series, the consent
of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with provisions of this Indenture or Defaults
hereunder and their consequences provided for in this Indenture;
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(3) modify any of the provisions of this Section, Section
5.13 or Section 5.17(b), except to increase any percentage specified
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Bond affected thereby;
(4) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(5) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to any part
of a Trust Estate or terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Bond
of the security afforded by the lien of this Indenture; or
(6) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the Debt Service
Requirement for any Payment Date for any Series of Bonds (including
the calculation of any of the individual components of such Debt
Service Requirement) or to affect rights of the Holders of Bonds of
any Series to the benefits of any provisions for the mandatory
redemption of Bonds of such Series contained herein or in the related
Series Supplement.
Notwithstanding any of the foregoing, prior to the date on which the
Class Imputed Principal Balance of each Class of Senior Bonds of a Series has
been reduced to zero, no amendment, variation or modification shall be made to
Article V hereof in respect of any Series of Bonds without the consent of the
Holders representing not less than 100% of the Aggregate Current Principal
Amount of all Outstanding Senior Bonds of such Series. The consent of the
Holders of any Junior Bonds of such Series shall not be required to be obtained
prior to making any amendment for such series to Article V above for so long as
any Senior Bond of such Series is Outstanding. Upon reduction to zero of the
Class Imputed Principal Balance of each Class of Senior Bonds of a Series, no
amendment, variation or modification to Article V hereof shall be made in
respect of such Series of Bonds without the consent of the Holders representing
not less than 66 2/3% of the Aggregate Current Principal Amount of the Highest
Priority Junior Class of such Series.
The Trustee may in its discretion determine whether or not any Bonds
of any particular Series would be affected by any supplemental indenture and
any such determination shall be conclusive upon the Holders of all Bonds,
whether theretofore or thereafter authenticated and delivered hereunder. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Bondholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
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Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Issuer shall mail to the
Holders of the Bonds of each Series to which such supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Issuer to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. In addition, in executing any
supplemental indenture which modifies an existing trust created by this
Indenture, the Trustee shall require, as a condition of such execution or
acceptance if a REMIC election or elections has or have been made or will be
made in respect of the Trust Estate or such other assets specified in such
election and securing such Series of Bonds, a Non-Disqualification Opinion.
The Trustee may, but shall not (except to the extent required in the case of a
supplemental indenture entered into under Section 9.1(8)) be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Bonds of any Series to which such supplemental indenture relates
which have theretofore been or thereafter are authenticated and delivered
hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of TIA as then in effect so long as this Indenture
shall then be qualified under TIA.
Section 9.6 Reference in Bonds to Supplemental
Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article which relates to the Series of
which such Bonds are a part may, and if required by the Issuer shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer shall so determine, new Bonds so
modified as to conform, in the opinion of Trustee and the Issuer, to any such
supplemental indenture which relates to the Series
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of which such Bonds are a part may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding Bonds of
such Series.
Section 9.7 Amendments to Governing Documents.
Except as is otherwise provided in Section 3.8(c) the Trustee shall,
upon Issuer Request, consent to any proposed amendment to the Issuer's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the Issuer's governing documents, such consent to be given
without the necessity of obtaining the consent of the Holders of any Bonds upon
receipt by the Trustee of:
(1) an Officer's Certificate, to which such proposed
amendment or waiver shall be attached, stating that such attached copy
is a true copy of the proposed amendment or waiver and that all
conditions precedent to such consent specified in this Section 9.7
have been satisfied; and
(2) written confirmation from each of the rating agencies
that rated any Series of the Issuer's Bonds that the implementation of
the proposed amendment or waiver will not adversely affect their
respective ratings of any Series of Bonds.
Notwithstanding the foregoing, the Trustee may decline to consent to a
proposed waiver or amendment that adversely affects its own rights, duties or
immunities under the Indenture or otherwise.
Nothing in this Section 9.7 shall be construed to require that any
Person obtain the consent of the Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Trustee is not prohibited by
the Indenture or by the terms of the document that is the subject of the
proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF BONDS
Section 10.1 Redemption.
All the Bonds of a Series may be redeemed in whole, but not in part,
on any Payment Date for such Series in accordance with and subject to the
provisions relating to such redemption contained in the related Series
Supplement. If the Issuer shall elect to redeem the Bonds of a Series pursuant
to this Section 10.1 and the related Series Supplement, it shall furnish notice
of such election to the Trustee not later than thirty (30) days prior to the
Payment Date selected for such redemption, whereupon all such Bonds shall be
due and payable on such Payment Date upon the furnishing of a notice pursuant
to Section 10.2 to each Holder of such Bonds.
Section 10.2 Form of Redemption Notice.
Unless otherwise specified in the related Series Supplement notices of
redemptions of Bonds shall be given by the Trustee in the name and at the
expense of the Issuer and shall be mailed, or caused to be mailed, no later
than five days prior to such Payment Date on which such Bonds are to be
redeemed to the Persons who were Holders of such Bonds at the close of business
on the tenth Business Day prior to such Payment Date notwithstanding the Record
Date otherwise applicable.
Unless otherwise provided in the related Series Supplement, no prior
notice of redemption at the request of a Bondholder or redemption of Book Entry
Bonds shall be required.
All notices of redemption shall state:
(1) the Payment Date on which such redemption will take
place,
(2) the Redemption Price at which the Bonds of such
Series will be redeemed,
(3) the fact of payment in full on such Bonds, the place
where such Bonds are to be surrendered for payment of the Redemption
Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.2), and that no interest shall
accrue on such Bond for any period after the date fixed for
redemption.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Bond selected for redemption shall not impair or affect the validity of the
redemption of any other Bond.
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Section 10.3 Bonds Payable on Payment Date.
Notice of redemption having been given as provided in Section 10.2,
the Bonds or portions thereof so to be redeemed shall, on the applicable
Payment Date, become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price) no interest shall
accrue on such Payment Date.
Section 10.4 Right of Redemption by Holder.
(a) Unless the Bonds of a Series have been declared due
and payable prior to their Stated Maturity by reason of an Event of
Default, a Holder may request the redemption of Bonds of one or more
Classes of such Series if the related Series Supplement provides that
such Class or Classes shall be subject to redemption as so provided in
this Section 10.4. A Bondholder may request redemption by delivering
the following to the Trustee on or before the Tender Date: (i) a
written request for redemption in form satisfactory to the Trustee
(such as the form appearing on the back of each Bond), by the
Bondholder or the Bondholder's legal representative, with appropriate
evidence of authority; (ii) in the case of Definitive Bonds, the
certificate or certificates representing the Bond or Bonds for which
redemption is being requested, and (iii) in the case of a request on
behalf of a deceased Holder, appropriate evidence of death and any tax
waivers requested by the Trustee. With respect to each Class of Bonds
subject to redemption at the request of Holders, on each Payment Date
for such Series, the Issuer shall redeem Bonds with respect to which
redemption has been properly requested in the order of priority
described in paragraph (b) of this Section 10.4 and subject to the
limitations that (1) except as set forth in such subsection (b), the
Issuer shall not, on any one Payment Date, redeem from any personal
representative, surviving joint tenant or surviving tenant by the
entirety of a deceased Holder more than one hundred Individual Bonds
of such Series or redeem from any other Holder more than ten
Individual Bonds of such Series, unless all other Holders of Bonds for
which redemption has been properly requested for such Payment Date
have had their Bonds redeemed up to such limitations, and (2) with
respect to each Class of a Series subject to redemption pursuant to
this Section 10.4, the Issuer shall, on each Redemption Date, only
make redemptions to the extent of the aggregate amount of principal
payable on the Bonds of such Class on such Payment Date, rounded down
to the nearest Individual Bond (the "Class Redemption Amount"). Bonds
which have been accepted for Redemption shall become due and payable
on the applicable Redemption Date and shall cease to bear interest as
of the end of the Interest Accrual Period for such Redemption Date.
Upon presentation and surrender of such Bonds for redemption on or
after the Redemption Date therefor, such Bonds shall be redeemed by
the Issuer at the Redemption Price, together with accrued interest.
Installments of interest due on or prior to a Redemption Date shall
continue to be payable to the Holders of such Bonds as of the
applicable Record Date according to their terms and the provisions of
Section 2.9.
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(b) Subject to the limitations provided in subsection (a)
of this Section 10.4, with respect to each Redemption Date and with
respect to each Class, requests for redemption of Deceased Holder
Bonds shall be accepted in the order of receipt of such requests by
the Trustee to the extent permitted by the one hundred Individual Bond
limitation referred to in Section 10.4(a); requests for redemption of
Bonds other than Deceased Holder Bonds shall be accepted in the order
of receipt of such requests by the Trustee to the extent permitted by
the ten Individual Bond limitation referred to in Section 10.4(a),
after all requests for redemption of Deceased Holder Bonds of the same
Class theretofore submitted have been accepted within the one hundred
Individual Bond limitation. With respect to each Redemption Date, the
Issuer shall accept requests for redemption of Deceased Holder Bonds
in excess of the one hundred Individual Bond limitation, but only to
the extent of the Class Redemption Amount for such Class for such
Series after all requests for redemption in this subsection (b) with
respect to such Redemption Date within the one hundred Individual Bond
and ten Individual Bond limitations set forth above have been
accepted. With respect to each Redemption Date, the Issuer shall
accept requests for redemption of Bonds other than Deceased Holder
Bonds in excess of the ten Individual Bond limitation, but only to the
extent of the Class Redemption Amount for such Class for such Series
after all other requests for redemption in this subsection (b) with
respect to such Redemption Date within the one hundred Individual Bond
and ten Individual Bond limitations set forth above have been
accepted. With respect to each Redemption Date, the Issuer shall
accept requests for redemption of Bonds other than Deceased Holder
Bonds in excess of the ten Individual Bond limitation, but only to the
extent of the Class Redemption Amount for such Class for such Series
after all other requests for redemption in this subsection (b) with
respect to such Redemption Date have been accepted. Subject to the
foregoing provisions, requests for redemption shall be accepted in the
order that they were received by the Trustee.
(c) In order to obtain redemption, the Holder or the
personal representative, surviving joint tenant or surviving tenant by
the entirety of a deceased Holder must deliver to the Trustee on or
before the Tender Date preceding the Redemption Date: (i) a written
request for redemption in form satisfactory to the Trustee (such as
the form appearing on the certificate representing the Bonds), signed
by the Holder or the Holder's legal representative (with appropriate
evidence of authority), (ii) the certificates representing the Bond or
Bonds for which redemption is being requested, and (iii) in the case
of Deceased Holder Bonds, appropriate evidence of death and any tax
waivers required by the Trustee. No particular forms of request for
redemption or authority to request redemption are necessary (but the
form set forth on the form of Bond in Section 2.2 shall be
sufficient). Requests for redemption of Bonds received by the Trustee
after the Tender Date preceding the Redemption Date, and requests for
redemption not accepted in respect of such Redemption Date, whether on
behalf of a deceased Holder or otherwise, will be treated as a request
for redemption on the next succeeding Redemption Date, and the Bonds
submitted will be held by the Trustee, until the request is accepted
or withdrawn, except that the Trustee, in its discretion, may cancel
the certificates representing any such Bonds provided that it shall
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maintain a record of the Bonds so cancelled and such Bonds shall
continue to be deemed Outstanding for all purposes. Within the first
five Business Days of any month, the Trustee shall notify each Holder
whose Bonds have been accepted for redemption in whole or in part on
the Redemption Date in such month. Only whole Individual Bonds may be
redeemed.
(d) For purposes of this Section, the death of a tenant
by the entirety, joint tenant or tenant in common will be deemed the
death of a Holder, and the entire principal amount of the Bond so held
will be deemed to be a Deceased Holder Bond. The death of a person
who, during his lifetime, was entitled to substantially all of the
beneficial interests of ownership of a Bond will be deemed the death
of the Holder, regardless of the registered Holder, if such beneficial
interest can be established to the satisfaction of the Trustee. Such
beneficial interest shall be deemed to exist in typical cases of
street name of nominee ownership, ownership under the Uniform Gifts to
Minors Act, community property or other joint ownership arrangement
between a husband and wife, and trust and certain other arrangements
where a person has substantially all of the beneficial ownership
interests in the Bonds during his or her lifetime. Beneficial
interest shall include the power to sell, transfer or otherwise
dispose of a Bond and the right to receive the proceeds therefrom, as
well as interest and principal payable with respect thereto.
(e) To the extent that the Class Redemption Amount as
defined under Section 10.4(a) for a Principal Payment Date exceeds the
aggregate amount of Bonds of a Class to be redeemed on such Principal
Payment Date at the option of the Holders of such Class, Bonds of such
Class shall be mandatorily redeemed by the Issuer at the price
specified in the related Series Supplement. Unless otherwise provided
in the related Series Supplement, if less than all of the Bonds of any
such Class are to be redeemed, the particular Bonds to be redeemed
shall be selected by the Trustee from the Outstanding Bonds of such
Series not previously called or accepted for redemption, not more than
30 days prior to the applicable Principal Payment Date. The Trustee
shall select the Bonds to be redeemed by random lot. Only whole
Individual Bonds may be redeemed.
The Trustee shall promptly notify the Issuer in writing of the
Individual Bonds selected for redemption pursuant to this Section
10.4(e) and, in the case of any Bond selected for partial redemption,
the principal amount thereof to be redeemed.
(f) Beneficial Owners of Book Entry Bonds may tender
their interest in Bonds for redemption on any Principal Payment Date
subject to the limitations established in this Section 10.4. If, and
to the extent provided in the related Series Supplement, the Clearing
Agency will receive requests for redemption and requests for
withdrawal, determine the order of receipt of request for redemption,
select Bonds to be mandatorily redeemed, provide notices of redemption
and/or make payments of the redemption price and accrued interest, if
any, in accordance with the terms and provisions of the related Series
Supplement and the rules and procedures of the Clearing Agency.
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(g) Each of the terms and provisions of this Section 10.4
may be modified, with respect to any Series, by the related Series
Supplement.
Section 10.5 Withdrawal of Requests.
Any requests for redemption pursuant to Section 10.4 may be withdrawn
by the persons making the same upon the delivery of a written request for such
withdrawal received by the Trustee not later than the Tender Date for a given
Redemption Date on which such Bond would otherwise be redeemable pursuant to
Section 10.4. If not so withdrawn, the redemption request will be irrevocable
with respect to the selection of Bonds for redemption on the Redemption Date
within such month. In the event a request for redemption has been withdrawn as
provided herein, the Trustee shall return the certificate representing the Bond
or Bonds in respect of which the redemption request has been withdrawn or, in
the case of Bonds the certificates of which were cancelled by the Trustee
pursuant to Section 10.4(c), the Issuer shall execute, and the Trustee shall
authenticate and deliver, new certificates representing the Bonds in respect of
which the redemption request has been withdrawn, such new Bonds to be of the
same date and tenor as the Bonds cancelled under Section 10.4(c) in the amount
which remains outstanding.
Section 10.6 Redemption Register.
The Trustee shall maintain at its Corporate Trust Office a register in
which it shall record, in the order of receipt, all requests for redemption
received by the Trustee under Section 10.4. The Trustee may establish such
procedures as it may deem fair and equitable in order to determine the order of
receipt of requests for redemption received by the Trustee on a single day, and
any such determination shall be conclusive. In establishing procedures for
determining the order of receipt of request for redemption, the Trustee may
designate from time to time any particular person, department or office as the
designated recipient of such requests and provide that, after Holders have been
notified in writing of such designation, no request for redemption will be
deemed received until received by the person, department or office so
designated. Unless withdrawn as provided in Section 10.5, all such requests
shall remain in effect until the Bonds which are the subject of such request
have been redeemed.
Section 10.7 Reserved.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, including one furnished
pursuant to specific requirements of this Indenture relating to a particular
application or request (other than certificates provided pursuant to TIA
Section 314(a)(4)) shall include and shall be deemed to include (regardless of
whether specifically stated therein) the following:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 11.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other
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such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such officer or counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such Opinion of Counsel
shall be accompanied by a copy of such other counsel's opinion and shall
include a statement to the effect that such counsel believes that such counsel
and the Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however,
be construed to affect the Trustee's right to rely upon the truth and accuracy
of any statement or opinion contained in any such document as provided in
Section 6.1(b)(2).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Trustee at the request or
direction of the Issuer, then notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request
or direction, the Trustee shall be protected in acting in accordance with such
request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.1(d).
Section 11.3 Acts of Bondholders.
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(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to
be given or taken by Bondholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Bondholders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to
the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Bondholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.1) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a
witness of such execution or by the certificate of any notary public
or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf
of such corporation or partnership, such certificate or affidavit
shall also constitute sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the Bond
Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any Bonds
shall bind the Holder of every Bond issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Bonds.
(e) The Voting Record Date specified in this Indenture,
or in the related Series Supplement for any Series of Bonds, shall be
applicable with respect to all Acts of Bondholders under this Section
11.3.
Section 11.4 Notices, etc. to Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with
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(1) the Trustee by any Bondholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Trustee at its
Corporate Trust Office, or
(2) the Issuer by the Trustee or by any Bondholder shall
be sufficient for every purpose hereunder (except as provided in
Section 5.1(A)(3) and (4)) if in writing and mailed, first-class
postage-prepaid, to the Issuer addressed to it at 2711 N. Haskell,
Suite 1000, Dallas, Texas 75204 or at any other address previously
furnished in writing to the Trustee by the Issuer.
Section 11.5 Notices and Reports to Bondholders; Waiver of Notices.
Where this Indenture provides for notice to Bondholders of any event
or the mailing of any report to Bondholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder as
it appears on the Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice or the
mailing of such report. In any case where a notice or report to Bondholders is
mailed in the manner provided above, neither the failure to mail such notice or
report, nor any defect in any notice or report so mailed, to any particular
Bondholder shall affect the sufficiency of such notice or report with respect
to other Bondholders, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Bondholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Bondholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 11.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for any meeting of Bondholders.
Any Agent may make reasonable rules and set reasonable requirements for its
functions.
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Section 11.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with the duties
imposed by operation of TIA Section 318(c), the imposed duties under the TIA
shall control.
Section 11.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 11.9 Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
Section 11.10 Severability.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.11 Benefits of Indenture.
Nothing in this Indenture or in the Bonds, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or co-trustee appointed under Section 6.14, any
alternate trustee appointed under Section 6.16 and the Bondholders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
Section 11.12 Legal Holidays.
In any case where the date of any Payment Date, Redemption Date,
Special Payment Date, or any other date on which principal of or interest on
any Bond or Overdue Bond is proposed to be paid shall not be a Business Day,
then (notwithstanding any other provision of the Bonds or this Indenture)
payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the nominal date of
any such Payment Date, Redemption Date, Special Payment Date, or other date for
the payment of principal of or interest on any Bond or Overdue Bond, as the
case may be, and no interest shall accrue for the period from and after any
such nominal date, provided such payment is made in full on such next
succeeding Business Day.
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Section 11.13 GOVERNING LAW.
IN VIEW OF THE FACT THAT BONDHOLDERS ARE EXPECTED TO RESIDE IN MANY
STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY
THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN,
THIS INDENTURE, EACH SERIES SUPPLEMENT AND EACH BOND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 11.14 Counterparts.
This instrument 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.
Section 11.15 Recording of Indenture.
This Indenture is subject to recording in any appropriate public
recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.12(c) or 3.6.
Section 11.16 Corporate Obligation.
No recourse may be taken, directly or indirectly, against any
incorporator, subscriber to the capital stock, stockholder, officer or director
of the Issuer or the Trustee or of any predecessor or successor of the Issuer
or the Trustee with respect to the Issuer's obligations with respect to the
Bonds or the obligations of the Issuer or the Trustee under this Indenture or
any certificate or other writing delivered in connection herewith or therewith.
Section 11.17 Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Trustee, during the Issuer's normal business hours, to
examine all of the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent Accountants selected by the Trustee, and to discuss its
affairs, finances and accounts with its officers, employees and Independent
Accountants (and by this provision the Issuer hereby authorizes its Accountants
to discuss with such representatives such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
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expense incident to the exercise by the Trustee of any right under this Section
11.17 shall be borne by the Issuer.
Section 11.18 Usury.
The amount of interest payable or paid on any Bond under the terms of
this Indenture shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the United
States or the State of New York (whichever shall permit the higher rate), which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Bond exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Trustee, acting
on behalf of the Holder of such Bond, and the Issuer, and the Holder receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Trustee, refund the amount of such excess or, at
the option of the Trustee, apply the excess to the payment of principal of such
Bond, if any, remaining unpaid. In addition, all sums paid or agreed to be
paid to the Trustee for the benefit of Holders of Bonds for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Bonds.
Section 11.19 REMIC Status.
The provisions of this Indenture shall be construed so as to carry out
the intention of the parties that the Trust Estate and any other assets
specified in such REMIC election or elections and securing a Series of Bonds,
be treated as a REMIC, if a REMIC election or elections has or have been made
or will be made in respect of the Trust Estate or such other assets, at all
times so long as any Bond of such Series is Outstanding (or would be treated as
Outstanding for purposes of a Non-Disqualification Opinion).
Section 11.20 Reserved.
Section 11.21 Appointment of Tax Matters Partner.
If a REMIC election or elections has or have been made or will be made
in respect of the Trust Fund or any other assets specified in such REMIC
election or elections which assets secure the Bonds of a Series, the tax
matters partner for each such REMIC and for all purposes of the Code shall be
the Person designated as such in the related Series Supplement.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
CMC SECURITIES CORPORATION IV
By:
-----------------------------------------
Name: Wade Walker
Title: Vice President-
Asset and Liability Management
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the 26th day of September, 1997, before me personally came Wade
Walker to me known, who, being by me duly sworn, did depose and say that he
resides in Dallas, Texas; that he is a Vice President of CMC SECURITIES
CORPORATION IV, the corporation described in and that executed the above
instrument; and that he signed his name thereto by order of the Board of
Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________________
Notary Public
Indenture - Signature Page
<PAGE> 132
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the 26t day of September, 1997 before me personally came
_____________ to me known, who, being by me duly sworn, did depose and say that
he resides in Chicago, Illinois; that he is an __________________ of The First
National Bank of Chicago, the national banking association described in and
that executed the above instrument as Trustee; and that he signed his name
thereto by order of the Board of Directors of said national banking
association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________________
Notary Public
Indenture - Signature Page
<PAGE> 1
CMC SECURITIES CORPORATION IV,
Issuer
and
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
Series 1997-NAMC 3 Supplement
Dated as of September 1, 1997
to
INDENTURE
Dated as of September 1, 1997
$281,194,912
COLLATERALIZED MORTGAGE OBLIGATIONS
Series 1997-NAMC 3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PRELIMINARY STATEMENT.............................................................................................1
GRANTING CLAUSES..................................................................................................4
Section 1. The Securities.......................................................................4
Section 2. Registration of Transfer and Exchange of Securities..................................6
Section 3. [RESERVED]...........................................................................7
Section 4. [RESERVED]...........................................................................8
Section 5. Collection Account; Payments.........................................................8
Section 6. Statements to Securityholders.......................................................24
Section 7. Allocation of Realized Losses.......................................................26
Section 8. Compliance with Withholding Requirements............................................27
Section 9. Transfer of Certificates to Trustee; Deposits to
Collection Account; Pledged Accounts................................................28
Section 10. Requirements for Issuance of Series 1997-NAMC 3 Securities..........................28
Section 11. Calculations with Respect to Underlying Mortgage Loans..............................28
Section 12. Certain Defined Terms...............................................................28
Section 13. Actions by Trustee as Holder of Certificates........................................55
Section 14. [RESERVED]..........................................................................57
Section 15. REMIC Administration................................................................57
Section 16. Prohibited Transactions and Activities..............................................60
Section 17. Trustee Indemnification.............................................................60
Section 18. Information Regarding Mortgage Loans................................................60
Section 19. Supplements, Modifications and Ratifications of Indenture...........................60
Section 20. Consent to Investment of Funds with the Trustee.....................................62
Section 21. Redemption..........................................................................62
Section 22. Counterparts........................................................................62
Section 23. Governing Law.......................................................................62
Section 24. Notices.............................................................................62
</TABLE>
Exhibits
Exhibit A-1 -- Form of Security (Class A-1, A-3, A-9, FXA)
Exhibit A-2 -- Form of Security (Class B-1, B-2 and B-3)
Exhibit A-3 -- Form of Security (Class B-4, B-5 and B-6)
Exhibit A-4 -- Form of Security (Class A-2)
Exhibit A-5 -- Form of Security (Class FXS)
Exhibit A-6 -- Form of Security (Class S)
Exhibit A-8 -- Form of Security (Class R, RP)
Exhibit B -- Transferee Affidavit and Agreement (Residual)
Exhibit C-1 -- Investor Representation Letter (Private Securities)
Exhibit C-2 -- Transferor Representation Letter (Private Securities)
<PAGE> 3
Exhibit C-3 -- Rule 144A Investment Representation (Private Securities)
Exhibit D -- Investor Representation Letter (ERISA Restricted)
Exhibit E -- Transferor Certificate (Residual)
<PAGE> 4
Series 1997-NAMC 3 Supplement dated as of September 1, 1997, between CMC
SECURITIES CORPORATION IV, a Delaware corporation (together with its successors
and assigns as provided in the Indenture referred to below, the "Issuer"), and
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association (together
with its successors in trust thereunder as provided in the Indenture, the
"Trustee"), as trustee under an Indenture dated as of September 1, 1997 (such
Indenture, as thereafter amended and supplemented, is referred to herein as the
"Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Indenture provides, among other things, that the
Issuer, when authorized by its Board of Directors, and the Trustee may enter
into an indenture supplemental to the Indenture for the purpose of authorizing
a Series of Bonds and to specify certain terms of such Series of Bonds. The
Board of Directors of the Issuer has duly authorized the creation of a Series
of Bonds in an aggregate principal amount of $281,194,912 to be known as its
Collateralized Mortgage Obligations, Series 1997-NAMC 3 (the "Securities"), and
the Issuer and the Trustee are executing and delivering this Series 1997-NAMC 3
Supplement in order to provide for the Securities. The Securities shall be
"Bonds" for all purposes of the Indenture. All terms used in this Series
1997-NAMC 3 Supplement that are defined in the Indenture, either directly or by
reference therein, have the meanings assigned to them therein as supplemented
by Section 12 hereof, if applicable, except to the extent the context clearly
requires otherwise. Any such defined term that is defined in the Indenture as
relating to a particular Series rather than to all Bonds generally shall, when
used in this Series 1997-NAMC 3 Supplement, relate to the Series 1997-NAMC 3
Securities, whether or not expressly so stated herein. Unless provided to the
contrary, references to Sections shall be references to Sections of this Series
Supplement. If any provision of the Indenture conflicts with any provision of
this Series Supplement, the provisions of this Series Supplement shall control.
<PAGE> 5
The following table sets forth the designations, types, Security Interest
Rates and aggregate initial Security Principal Balances or the aggregate
Initial Notional Amounts for each Class of Securities.
<TABLE>
<CAPTION>
AGGREGATE INITIAL
SECURITY PRINCIPAL
SECURITY BALANCE OR INITIAL
DESIGNATION TYPE INTEREST RATE NOTIONAL AMOUNT
- ----------- ---- ------------- ---------------
<S> <C> <C> <C>
Class FXA-1 Senior 7.25% $ 30,303,753.00
Class FXA-2 Interest Only 7.25 42,890,000.00
Class FXA-3 Senior 7.25 28,034,220.00
Class FXA-4 Senior 7.25 2,548,566.00
Class FXA-5 Senior 7.25 25,799,934.00
Class FXA-6 Senior 7.25 5,994,000.00
Class FXA-7 Senior 7.25 3,979,000.00
Class FXP Principal Only (1) 5,749.90
Class FXS Interest Only 7.25 22,244,414.34 (N)
Class A-1 Senior 6.60 23,013,349.00
Class A-2 Interest Only 7.25 2,063,265.77 (N)
Class A-3 Senior 7.25 7,802,000.00
Class A-4 Senior 7.25 24,641,327.00
Class A-5 Senior 7.25 6,257,404.00
Class A-6 Senior 7.25 3,000,000.00
Class A-7 Senior 7.25 30,570,762.00
Class A-8 Senior 7.25 25,233,795.00
Class A-9 Senior 7.25 2,688,000.00
Class P Principal Only (1) 155,182.00
Class S Interest Only 7.25 8,500,913.79 (N)
Class B-1 Subordinate 7.25 9,982,419.00
Class B-2 Subordinate 7.25 3,655,534.00
Class B-3 Subordinate 7.25 1,687,169.00
Class B-4 Subordinate 7.25 1,349,736.00
Class B-5 Subordinate 7.25 702,987.00
Class B-6 Subordinate 7.25 899,826.60
Class RP Residual 7.25 100.00
Class R Residual 7.25 100.00
</TABLE>
(1) No interest is payable on Principal Only securities.
(N) Designates a Notional Amount.
As of the Cut-off Date, the Mortgage Loans have an aggregate Stated
Principal Balance equal to approximately $281,194,913.
<PAGE> 6
The following table sets forth the designations, Security Interest Rates,
Initial Subaccount Principal Balances or Notional Amounts and Corresponding
Classes of Securities for the Subaccounts, which represent the regular
interests in the Lower REMIC (the "Lower REMIC Regular Interests").
<TABLE>
<CAPTION>
AGGREGATE INITIAL
SUBACCOUNT
SECURITY PRINCIPAL CORRESPONDING
INTEREST BALANCES OR CLASS(ES) OF
DESIGNATION RATE NOTIONAL AMOUNTS SECURITIES
----------- ---- ---------------- ----------
<S> <C> <C> <C>
Class FXA-1 Subaccount 7.25% $ 30,303,753.00 Class FXA-1
Class FXA-2 Subaccount 7.25 42,890,000.00 Class FXA-2
Class FXA-3 Subaccount 7.25 28,034,220.00 Class FXA-3
Class FXA-4 Subaccount 7.25 2,548,566.00 Class FXA-4
Class FXA-5 Subaccount 7.25 25,799,934.00 Class FXA-5
Class FXA-6 Subaccount 7.25 5,994,000.00 Class FXA-6
Class FXA-7 Subaccount 7.25 3,979,000.00 Class FXA-7
Class FXP Subaccount (1) 5,749.90 Class FXP
Class FXS Subaccount 7.25 22,244,414.34 (N) Class FXS
Class A-1 Subaccount (2) 6.60 23,013,349.00 Class A-1
Class A-2 Subaccount 7.25 2,063,265.77 (N) Class A-2
Class A-3 Subaccount 7.25 7,802,000.00 Class A-3
Class A-4 Subaccount 7.25 24,641,327.00 Class A-4
Class A-5 Subaccount 7.25 6,257,404.00 Class A-5
Class A-6 Subaccount 7.25 3,000,000.00 Class A-6
Class A-7 Subaccount 7.25 30,570,762.00 Class A-7
Class A-8 Subaccount 7.25 25,233,795.00 Class A-8
Class A-9 Subaccount (3) 7.25 2,688,000.00 Class A-9
Class P Subaccount (1) 155,182.00 Class P
Class S Subaccount 7.25 8,500,913.79 (N) Class S
Class IB Subaccount 7.25 9,701,788.09 (4)
Class IIB Subaccount 7.25 8,575,883.51 (4)
Class R Subaccount 7.25 100.00 Class R
</TABLE>
(1) No interest is payable on Principal Only securities.
(2) The Class A-1 Subaccount shall consist of two components: Class A-1
Component 1 and Class A-1 Component 2.
(3) The Class A-9 Subaccount shall consist of two components: Class A-9
Component 1 and Class A-9 Component 2.
(4) Each Class of Class B Securities shall be a "Corresponding Class" of both
Class B Subaccounts.
(N) Designates a Notional Amount.
<PAGE> 7
GRANTING CLAUSES
The Issuer hereby Grants to the Trustee, for the exclusive benefit of the
Holders of the Series 1997-NAMC 3 Securities, all of the Issuer's right, title
and interest in and to (a) the Certificates (which are the "Conventional
Certificates" with respect to the Securities as referred to in the Indenture),
which the Issuer has caused to be delivered to the Trustee herewith, and all
Distributions with respect thereto payable at any time on or after the first
Payment Date, (b) each Pledged Account for the Series 1997-NAMC 3 Securities,
including all income from the investment of funds in each such Pledged Account,
(c) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property, and (d) the Loan Sale Agreement
(as defined in the Pooling and Servicing Agreement). Such Grants are made,
however, in trust, to secure the Series 1997-NAMC 3 Securities, equally and
ratably, without prejudice or distinction between any Series 1997-NAMC 3
Security and any other Series 1997-NAMC 3 Security by reason of difference in
time of issuance or otherwise, and to secure (i) the payment of all amounts due
on the Series 1997-NAMC 3 Securities as such amounts become due in accordance
with their terms, (ii) the payment of all other sums payable under the
Indenture or this Series 1997-NAMC 3 Supplement with respect to the Series
1997-NAMC 3 Securities, and (iii) compliance with the provisions of the
Indenture and this Series 1997-NAMC 3 Supplement with respect to the Series
1997-NAMC 3 Securities, all as provided in the Indenture and this Series
1997-NAMC 3 Supplement.
The Trustee acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof and of the Indenture, and agrees to
perform the duties herein or therein required in accordance with Article VI of
the Indenture.
1. The Securities.
(a) The Securities shall be designated generally as the Issuer's
Collateralized Mortgage Obligations, Series 1997-NAMC 3. The
Securities will be substantially in the respective forms annexed
hereto as Exhibits A-1 through A-8. The Securities will be
issuable in registered form only. Each of the Class FXA-6, Class
FXA-7, Class A-3, Class A-6, and the Principal Only Securities
will be issuable in denominations evidencing initial Security
Principal Balances of not less than $1,000 and integral multiples
of $1,000 in excess thereof and each of the Class FXA-1, Class
FXA-2, Class FXA-3, Class FXA-4, Class FXA-5, Class A-1, Class
A-4, Class A-5, Class A-7, Class A-8, Class A-9 and the Class B
Securities will be issuable in denominations evidencing initial
Security Principal Balances of not less than $250,000 and
integral multiples of $1,000 in excess thereof, except that one
Security of each such Class may be issued in an amount (whether
greater or less than the applicable minimum denomination) such
that the denomination of such Security and the aggregate
denomination of all other outstanding Securities of such Class
together equal the aggregate initial Security Principal Balance
of such Class. Each Class of the Strip Securities will be
issuable in denominations evidencing an initial Notional Amount
of not less than $1.00 and integral multiples of $1.00 in excess
thereof,
<PAGE> 8
except that one Security of each such Class will be issuable in
an amount such that the denomination of such Security and the
aggregate denomination of all other outstanding Securities of
such Class together equal the related initial Notional Amount of
such Class. Each of the Class R and Class RP Securities will each
be issuable in denominations evidencing initial Security
Principal Balances of not less than $10.00 and integral multiples
of $1.00 in excess thereof, such that the denomination of such
Security and the aggregate denomination of all other outstanding
Securities of such Class together equal the aggregate initial
Security Principal Balance of such Class.
Upon original issue, the Securities shall, upon the written request of the
Issuer executed by an officer of the Issuer, be executed and delivered by the
Trustee, authenticated by the Trustee and delivered to or upon the order of the
Issuer. The Securities shall be executed by manual or facsimile signature on
behalf of the Trustee in its capacity as trustee hereunder by a Responsible
Officer. Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. No Security shall be entitled
to any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Security a certificate of authentication substantially in the
form provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. All Securities issued on the Closing Date shall be dated the Closing
Date and any Securities delivered thereafter shall be dated the date of their
authentication.
(b) None of the Principal Only Securities, Class B-4 Securities,
Class B-5 Securities, Class B-6 Securities, Class R Securities
and Class RP Securities shall be Book-Entry Securities. Each
Class of the Strip Securities, the Class FXA Securities, the
Class A Securities, and the Class B-1, Class B-2, and Class B-3
Securities shall initially be issued as one or more Securities
registered in the name of the Depository or its nominee and,
except as provided below, registration of such Securities may not
be transferred by the Trustee except to another Depository that
agrees to hold such Securities for the respective Security Owners
with Ownership Interests therein. The Security Owners shall hold
their respective Ownership Interests in and to each of the Strip
Securities, the Class FXA Securities, the Class A Securities, and
the Class B-1, Class B-2, and Class B-3 Securities through the
book-entry facilities of the Depository and, except as provided
below, shall not be entitled to Definitive Securities in respect
of such Ownership Interests. All transfers by Security Owners of
their respective Ownership Interests in the Book-Entry Securities
shall be made in accordance with the procedures established by
the Depository Participant or brokerage firm representing such
Security Owner. Each Depository Participant shall transfer the
Ownership Interests only in the Book-Entry Securities of Security
<PAGE> 9
Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
The Trustee, the Master Servicer and the Issuer may for all purposes
(including the making of payments due on the respective Classes of Book-Entry
Securities) deal with the Depository as the authorized representative of the
Security Owners with respect to the respective Classes of BookEntry Securities
for the purposes of exercising the rights of Securityholders hereunder. The
rights of Security Owners with respect to the respective Classes of Book-Entry
Securities shall be limited to those established by law and agreements between
such Security Owners and the Depository Participants and brokerage firms
representing such Security Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of any Class of Book-Entry Securities with
respect to any particular matter shall not be deemed inconsistent if they are
made with respect to different Security Owners. The Trustee shall utilize the
next available record date in connection with solicitations of consents from or
voting by Securityholders and shall give notice to the Depository of such
record date.
If (i)(A) the Issuer advises the Trustee in writing that the Depository is
no longer willing or able to properly discharge its responsibilities as
Depository and (B) the Issuer is not able to locate a qualified successor or
(ii) the Issuer at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository, the Trustee shall
notify all Security Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Securities to Security Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry Securities
by the Depository, accompanied by registration instructions from the Depository
for registration of transfer, the Trustee shall, at the Master Servicer's
expense or, if so requested by the Issuer, at the Issuer's expense, issue the
Definitive Securities. Such Definitive Securities will be issued in
denominations as provided in paragraph (a) above. Neither the Issuer nor the
Trustee shall be liable for any actions taken by the Depository or its nominee,
including, without limitation, 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 Securities all references herein
to obligations imposed upon or to be performed by the Depository in connection
with the issuance of the Definitive Securities pursuant to this Section 1 shall
be deemed to be imposed upon and performed by the Trustee, and the Trustee and
the Issuer recognize the Holders of the Definitive Securities as
Securityholders hereunder.
2. Registration of Transfer and Exchange of Securities.
(a) The Trustee shall maintain a Bond Register in which, subject to
such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Securities and of transfers
and exchanges of Securities as herein provided.
(b) Except as provided in Section 2(c), no transfer, sale, pledge or
other disposition of a Class B-4 Security, Class B-5 Security, or
Class B-6 Security, shall be made unless such transfer, sale,
pledge or other disposition is exempt from the registration
<PAGE> 10
requirements of the Securities Act of 1933, as amended (the
"Act"), and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that a transfer
of a Class B-4 Security, Class B-5 Security, or Class B-6
Security is to be made under this Section 2(b), (i) except with
respect to sales by the Initial Purchaser, the Issuer may direct
the Trustee to require an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Issuer
that such transfer shall be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from
said Act and laws or is being made pursuant to said Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee,
the Issuer or the Master Servicer, provided that such Opinion of
Counsel will not be required in connection with the initial
transfer of any such Security by the Issuer or any affiliate
thereof, to an affiliate of the Issuer or the Initial Purchaser
and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit C-1
hereto, and the Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit C-2
hereto, each acceptable to and in form and substance satisfactory
to the Issuer and the Trustee certifying to the Issuer and the
Trustee the facts surrounding such transfer, which representation
letters shall not be an expense of the Trustee, the Issuer or the
Master Servicer; provided however that such representation
letters will not be required in connection with any transfer of
any such Security by the Issuer to an affiliate of the Issuer, or
the Initial Purchaser and the Trustee shall be entitled to
conclusively rely upon a representation (which, upon the request
of the Trustee, shall be a written representation) from the
Issuer of the status of such transferee as an affiliate of the
Issuer. Any such Securityholder (other than the Initial
Purchaser) desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee, the Issuer, the Loan
Seller 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 applicable federal and state laws.
(c) Transfers of Class B-4, Class B-5 and Class B-6 Securities may be
made in accordance with this Section 2(c) if the prospective
transferee of a Security provides the Trustee and the Issuer with
an investment letter substantially in the form of Exhibit C-3
attached hereto, which investment letter shall not be an expense
of the Trustee or the Issuer, and which investment letter states
that, among other things, such transferee is a "qualified
institutional buyer" as defined under Rule 144A. Such transfers
shall be deemed to have complied with the requirements of Section
2(b) hereof; provided, however, that no Transfer of any of the
Securities may be made pursuant to this Section 2(c) by the
Issuer. Any such Securityholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the
Issuer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such applicable
federal and state laws.
<PAGE> 11
(d) The Securities may be authenticated by the Trustee at the
Trustee's office in the City and State of New York currently
located at 14 Wall Street, 8th Floor, New York, New York 10005
(the "New York Office"). There shall be no Authenticating Agent
for the Securities unless the appointment of an Authenticating
Agent is required as a condition to the listing of the Securities
or any state exchange.
(e) At the option of the Securityholders, Securities may be exchanged
for other Securities of authorized denominations of the same
Class of a like aggregate initial Security Principal Balance,
upon surrender of the Securities to be exchanged at the office of
the Trustee. Whenever any Securities are so surrendered for
exchange the Trustee shall execute, authenticate and deliver the
Securities which the Securityholder making the exchange is
entitled to receive. Every Security presented or surrendered for
transfer or exchange shall (if so required by the Trustee or the
Bond Registrar) be duly endorsed by, or be accompanied by a
written instrument of transfer in the form satisfactory to the
Trustee or the Bond Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to the Securityholders for any
transfer or exchange of Securities, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or
exchange of Securities.
(g) All Securities surrendered for transfer and exchange shall be
canceled and retained by the Trustee in accordance with the
Trustee's standard procedures.
(h) No transfer of an ERISA Restricted Bond or an ERISA Prohibited
Bond may be made except as provided in Section 2.15 of the
Indenture.
3. [RESERVED].
4. [RESERVED].
5. Collection Account; Payments.
(a) In accordance with Section 8.2 of the Indenture, the Trustee
shall establish and maintain a Collection Account, into which the
Trustee shall cause to be deposited on or before 12:30 P.M.
(Pacific Standard Time) on each Payment Date by wire transfer of
immediately available funds an amount equal to all Distributions
received in respect of the Certificates on such Payment Date.
(b) On each Payment Date, the Trustee shall be deemed to have paid
from the Collection Account the Subaccount Payment Amount to the
Subaccounts and from the Collection Account shall distribute to
the Class RP Securityholders the amounts to
<PAGE> 12
be paid to the Class RP Securityholders pursuant to Section
5(b)(1) or 5(b)(2) hereof, as applicable, for such Payment Date,
all in accordance with written statements prepared pursuant to
Section 4.03(a) of the Pooling and Servicing Agreement, by wire
transfer in immediately available funds or by any other means of
payment acceptable to the Class RP Securityholder.
Notwithstanding any other provision of this Agreement, no actual
payments pursuant to this Section 5(b) shall be made on account
of the deemed payments described in this paragraph other than
amounts payable to the Class RP Securities.
(1) For any Payment Date prior to the Credit Support Depletion Date,
the applicable Available Payment Amounts with respect to the
Series 1997-NAMC 3-A Certificates and the Series 1997-NAMC 3-B
Certificates shall be deemed to be paid to the Subaccounts in
the order and priority as follows:
(a) With respect to the Class FX Subaccounts, the Class R
Subaccount and the Class RP Securities, to the extent
of the Available Payment Amount with respect to the
Series 1997-NAMC 3-A Certificates and such Payment
Date:
(i) first, to the Class R Subaccount and the Class
RP Securities, on a pro rata basis, until the
Subaccount Principal Balance and Security
Principal Balance, respectively, thereof have
been reduced to zero;
(ii) second, to the Class FXP Subaccount, the Class
FXP Discount Mortgage Loan Principal Payment
Amount;
(iii) third, to the Class FXA, Class FXS and Class R
Subaccounts, and the Class RP Securities, on a
pro rata basis (based on the aggregate Accrued
Interest payable thereon), Accrued Interest
for such Payment Date, plus any Accrued
Interest thereon remaining unpaid from any
previous Payment Dates;
(iv) fourth, to the Class FXA Subaccounts, as
principal, the Class FXA Principal Payment
Amount in the following order (with amounts
specified to be allocated on a pro rata basis
to Class FXA Subaccounts being allocated to
such Class FXA Subaccounts on a pro rata basis
based on the Subaccount Principal Balances
thereof):
(A) first, to the Class FXA-5 Subaccount, an
amount, up to the amount of the Class
FXA-5 Lockout Principal Payment Amount,
if any, to the Class FXA-5
<PAGE> 13
Subaccount, until the Subaccount
Principal Balance thereof has been
reduced to zero;
(B) second, concurrently, to the Class
FXA-2, Class FXA-3 and Class FXA-4
Subaccounts, respectively, in the
following amounts, until the Subaccount
Principal Balance of the Class FXA-2
Subaccount has been reduced to
$40,259,293.46: (I) 39.6326019839% of
the Class FXA Principal Payment Amount
remaining after the payments described
in clause (A) above to the Class FXA-3
and Class FXA-4 Subaccounts, on a pro
rata basis and (II) 60.3673980161% of
such amount remaining, as follows: (x)
54.1706485011% to the Class FXA-2
Subaccount and (y) 45.8293514989% to the
Class FXA-3 and Class FXA-4 Subaccounts,
on a pro rata basis;
(C) third, concurrently, to the Class FXA-1,
Class FXA-2, Class FXA-3 and Class FXA-4
Subaccounts, respectively, in the
following amounts, until the Subaccount
Principal Balance of the Class FXA-1
Subaccount has been reduced to zero: (I)
61.0908624618% of the Class FXA
Principal Payment Amount remaining after
the payments in clauses (A) and (B)
above as follows: (x) 54.1706485011% to
the Class FXA-2 Subaccount, and (y)
45.8293514989% to the Class FXA-3 and
Class FXA-4 Subaccounts, on a pro rata
basis, and (II) 38.9091375382% of such
amount remaining to the Class FXA-1
Subaccount;
(D) fourth, concurrently, to the Class
FXA-2, Class FXA- 3 and Class FXA-4
Subaccounts, respectively, in the
following amounts, until the Subaccount
Principal Balances of the Class FXA-2,
Class FXA-3 and Class FXA-4 Subaccounts
have been reduced to zero: (I)
16.9028616814% of the Class FXA
Principal Payment Amount remaining after
the payments in clauses (A), (B) and (C)
above as follows: (x) 54.1706485011% to
the Class FXA-2 Subaccount, and (y)
45.8293514989% to the Class FXA-3 and
Class FXA-4 Subaccounts, on a pro rata
basis, (II)
<PAGE> 14
11.0978227448% of such amount remaining
to the Class FXA-3 and Class FXA-4
Subaccounts, on a pro rata basis; and
(III) 71.9993155738% of such amount
remaining to the Class FXA-2 Subaccount;
(E) fifth, all of the Class FXA Principal
Payment Amount remaining after the
payments in clauses (A), (B) (C) and (D)
above to the Class FXA-6 Subaccount
until the Subaccount Principal Balance
thereof has been reduced to zero;
(F) sixth, all of the Class FXA Principal
Payment Amount remaining after the
payments in clauses (A), (B), (C), (D)
and (E) above to the Class FXA-7
Subaccount until the Subaccount
Principal Balance thereof has been
reduced to zero; and
(G) seventh, all of the Class FXA Principal
Payment Amount remaining after the
payments in clauses (A), (B), (C), (D),
(E) and (F) above to the Class FXA-5
Subaccount until the Subaccount
Principal Balance thereof has been
reduced to zero;
(v) fifth, for so long as the Subordinate
Securities are outstanding, to the Class FXP
Subaccount, the sum of (a) principal in an
amount equal to the Discount Fraction of any
Realized Losses on a Group I Discount Mortgage
Loan other than Excess Special Hazard Losses,
Excess Fraud Losses, Excess Bankruptcy Losses
or Extraordinary Losses (for purposes of this
paragraph, the "Losses Payable") to the extent
of amounts otherwise available to pay the
Subordinate Principal Payment Amount (without
regard to clause (B) of the definition of such
term) on such Payment Date and (b) the sum of
amounts, if any, by which the Losses Payable
on each prior Payment Date exceeded the amount
actually paid in respect thereof on such prior
Payment Dates and not subsequently paid, to
the extent of amounts otherwise available to
pay the Subordinate Principal Payment Amount
on such Payment Date (any amounts paid in
respect of Losses Payable pursuant to this
paragraph shall not cause a further reduction
in the Subaccount Principal Balance of the
Class FXP Subaccount); provided, that if the
amounts otherwise available to pay the
Subordinate Principal Payment Amount
<PAGE> 15
for any such Payment Date are insufficient to
cover such outstanding Losses Payable for the
Class FXP Subaccount as provided above and
Class P Subaccount as provided in Section
5(b)(1)(c)(v) below, then the amounts
otherwise available to pay the Subordinate
Principal Payment Amount shall be allocated
pro rata to the Class FXP and Class P
Subaccounts based on the amount such
Subaccounts are entitled to receive pursuant
to this clause, in the case of the Class FXP
Subaccount, and Section 5(b)(1)(c)(v) below,
in the case of the Class P Subaccount;
(b) With respect to either the Class FX or the Class II
Subaccounts, in addition to the amounts to be paid in
Section 5(b)(1)(a) and 5(b)(1)(c), the remaining
Available Payment Amount for each Mortgage Loan Group
shall be deemed paid to the Subaccounts in the order
and priority as follows:
(i) if the Subaccount Principal Balances of either
of the Class FX or the Class II Subaccounts
have been reduced to zero and (x) the then
current Class B Percentage is less than two
(2) times the initial Class B Percentage as of
the Closing Date, or (y) the average
outstanding Stated Principal Balance of the
Mortgage Loans in either Mortgage Loan Group
that are delinquent sixty (60) days or more
over the last six months, as a percentage of
the related Class B Loan Group Component
Balance, is greater than or equal to 50%, then
all principal on the Mortgage Loans in Group I
(if the Subaccount Principal Balances of the
Class FX Subaccounts have been reduced to
zero), or in Group II (if the Subaccount
Principal Balances of the Class II Subaccounts
have been reduced to zero) shall be deemed
paid to the remaining Class FX or Class II
Subaccounts in the order and priority set
forth in Sections 5(b)(1)(a)(iv)(B)-(G) (with
respect to deemed payments on the Class FX
Subaccounts) or Sections 5(b)(1)(c)(iv)(B)-(E)
(with respect to deemed payments on the Class
II Subaccounts), as appropriate;
(ii) if either:
(A) as of any Payment Date, the Class FX
Subaccounts would otherwise be
Undercollateralized and the Class II
Subaccounts would otherwise be
Overcollateralized, then notwithstanding
the other
<PAGE> 16
provisions of this Section 5, (x) there
shall be withheld from the Available
Payment Amount in respect of Group II
remaining, after payments on the Class
II Subaccounts pursuant to Section
5(b)(1)(c)(i) - (ii), an amount equal to
the lesser of (1) 30 days' interest at
7.25% per annum on the amount by which
the Class FX Subaccounts are
Undercollateralized and (2) the amount
necessary to pay in full, after giving
effect to the payments otherwise to be
made on such Payment Date pursuant to
Section 5(b)(1)(a), the sum of (I)
Accrued Interest with respect to the
Class FX Securities and prior Payment
Dates that would otherwise be unpaid as
of such Payment Date (II) interest on
the Accrued Interest referred to in the
preceding clause (I) at the rate of
7.25% per annum from the date such
Accrued Interest became due and payable
to such Payment Date and (III) Accrued
Interest with respect to the Class FX
Securities and such Payment Date that
would otherwise be unpaid as of such
Payment Date and (y) such withheld
amount shall be paid as interest on the
Class FX Subaccounts as if such amount
were being paid pursuant to Section
5(b)(1)(a)(iii); or
(B) as of any Payment Date, the Class II
Subaccounts would otherwise be
Undercollateralized and the Class FX
Subaccounts would otherwise be
Overcollateralized, then notwithstanding
the other provisions of this Section 5,
(x) there shall be withheld from the
Available Payment Amount in respect of
Group I remaining, after payments on the
Class FX Subaccounts pursuant to Section
5(b)(1)(a)(i) - (iii), an amount equal
to the lesser of (1) 30 days' interest
at 7.25% per annum on the amount by
which the Class II Subaccounts are
Undercollateralized and (2) the amount
necessary to pay in full, after giving
effect to the payments otherwise to be
made on such Payment Date pursuant to
Section 5(b)(1)(c), the sum of (I)
Accrued Interest with respect to the
Class II Securities and prior Payment
Dates that would otherwise be unpaid as
of such Payment Date (II) interest on
the Accrued Interest referred to in the
preceding clause (I) at the
<PAGE> 17
rate of 7.25% per annum from the date
such Accrued Interest became due and
payable to such Payment Date and (III)
Accrued Interest with respect to the
Class II Securities and such Payment
Date that would otherwise be unpaid as
of such Payment Date and (y) such
withheld amount shall be paid as
interest on the Class II Subaccounts as
if such amount were being paid pursuant
to Section 5(b)(1)(c)(ii); and
(iii) if either:
(A) as of any Payment Date, the Class FX
Subaccounts would otherwise be
Undercollateralized and the Class II
Subaccounts would otherwise be
Overcollateralized, then notwithstanding
the other provisions of this Section 5,
the portion of the Available Payment
Amount in respect of principal on the
Group II Mortgage Loans remaining after
payments of principal to the Class II
Subaccounts, shall be paid as principal
to the Class FX Subaccounts in
accordance with the priority set forth
in Sections 5(b)(1)(a)(iv)(B) through
(G) until the aggregate Subaccount
Principal Balance of the Class FX
Subaccounts equals the sum of aggregate
Stated Principal Balance of the Group I
Mortgage Loans minus the Discount
Fraction of the Group I Discount
Mortgage Loans; or
(B) as of any Payment Date, the Class II
Subaccounts would otherwise be
Undercollateralized and the Class FX
Subaccounts would otherwise be
Overcollateralized, then notwithstanding
the other provisions of this Section
5(b), the portion of the Available
Payment Amount in respect of principal
on the Group I Mortgage Loans remaining
after payments of principal to the Class
FX Subaccounts, shall be paid as
principal to the Class II Subaccounts in
accordance with the priority set forth
in Section 5(b)(1)(c)(iv)(B) through (E)
until the aggregate Subaccount Principal
Balance of the Class II Subaccounts
equals the sum of aggregate Stated
Principal Balance of the Group II
Mortgage Loans
<PAGE> 18
minus the Discount Fraction of the Group
II Discount Mortgage Loans;
(c) With respect to the Class II Subaccounts, to the
extent of the Available Payment Amount with respect
to the Series 1997-NAMC 3-B Certificates and such
Payment Date:
(i) first, to the Class P Subaccount, the Class P
Discount Mortgage Loan Principal Payment
Amount;
(ii) second, to the Class II Subaccounts (other
than the Class P Subaccount), on a pro rata
basis (based upon the Accrued Interest payable
thereon), Accrued Interest for such Payment
Date, plus any Accrued Interest thereon
remaining unpaid from any previous Payment
Dates; provided that, on each Payment Date
through the applicable Accretion Termination
Date, Accrued Interest with respect to the
Class A-9 Component 1 and Class A-9 Component
2 shall not be paid pursuant to this clause
(ii) but shall be paid pursuant to the
immediately following clause (iii);
(iii) third, on each Payment Date through the Class
A-9 Component 1 Accretion Termination Date, as
principal, the Class A-9 Component 1 Accretion
Amount for such Payment Date to the Class A-7
Subaccount until the applicable Class A-7
Targeted Principal Balance thereof is reached
and then to Class A-9 Component 1 until the
Component Principal Balance thereof is reduced
to zero; on each Payment Date through the
Class A-9 Component 2 Accretion Termination
Date, as principal, and the Class A-9
Component 2 Accretion Amount to the Class A-8
Subaccount until the applicable Class A-8
Targeted Principal Balance thereof is reached
and then to Class A-9 Component 2 until the
Component Principal Balance thereof is reduced
to zero;
(iv) fourth, to the Class A Subaccounts, as
principal, the Class A Principal Payment
Amount in the following order:
(A) first, to the Class A-4 Subaccount, an
amount, up to the Class A-4 Lockout
Principal Payment Amount, if any, to the
Class A-4 Subaccount, until the
Subaccount Principal Balance thereof has
been reduced to zero;
<PAGE> 19
(B) second, concurrently, to the Class A-1,
Class A-5, Class A-6, Class A-7, Class
A-8, and Class A-9 Subaccounts,
respectively, in the following amounts,
until the Subaccount Principal Balances
of the Class A-5 and Class A-6
Subaccounts are reduced to zero: (I)
10.9493055910% of the Class A Principal
Payment Amount remaining after the
payments in clause (A) above to the
Class A-5 and Class A-6 Subaccounts,
sequentially, until the Subaccount
Principal Balances thereof have been
reduced to zero; (II) 48.1887076414% of
such amount remaining as follows: (v) to
the Class A-1 Component 1 Component of
the Class A-1 Subaccount until the
applicable Class A-1 Component 1 Planned
Component Principal Balance thereof is
reached, (w) to the Class A-7 Subaccount
until the applicable Class A-7 Targeted
Principal Balance thereof is reached,
(x) to the Class A-9 Component 1
Component of the Class A-9 Subaccount
until the Component Principal Balance
thereof is reduced to zero, (y) to the
Class A-7 Subaccount until the
Subaccount Principal Balance thereof is
reduced to zero, and (z) to the Class
A-1 Component 1 Component of the Class
A-1 Subaccount until the Component
Principal Balance thereof is reduced to
zero; and (III) 40.8619867676% of such
amount remaining as follows: (v) to the
Class A-1 Component 1 Component of the
Class A-1 Subaccount until the
applicable Class A-1 Component 2 Planned
Component Principal Balance thereof is
reached, (w) to the Class A-8 Subaccount
until the applicable Class A-8 Targeted
Principal Balance thereof is reached,
(x) to the Class A-9 Component 2
Component of the Class A-9 Subaccount
until the Component Principal Balance of
Class A-9 Component 2 is reduced to
zero, (y) to the Class A-8 Subaccount
until the Subaccount Principal Balance
thereof is reduced to zero, and (z) to
the Class A-1 Component 1 Component of
the Class A-1 Subaccount until the
Component Principal Balance thereof is
reduced to zero;
<PAGE> 20
(C) third, concurrently, to the Class A-1,
Class A-7, Class A-8 and Class A-9
Subaccounts, respectively, in the
following amounts, until the Subaccount
Principal Balances thereof have been
reduced to zero: (I) 54.1137941813% of
the Class A Principal Payment Amount
remaining after the payments in clauses
(A) and (B) above as follows: (x)
100.00000000% to the following: (1) to
the Class A-1 Component 1 Component of
the Class A-1 Subaccount until the
applicable Class A-1 Component 1 Planned
Component Principal Balance is reached,
(2) to the Class A-7 Subaccount until
the applicable Class A-7 Targeted
Principal Balance thereof is reached,
(3) to the Class A-9 Component 1
Component of the Class A-9 Subaccount
until the Component Principal Balance
thereof is reduced to zero, (4) to the
Class A- 7 Subaccount until the
applicable Class A-7 Targeted Principal
Balance thereof is reduced to zero, (5)
to the Class A-1 Component 1 Component
of the Class A-1 Subaccount until the
Component Principal Balance thereof is
reduced to zero; and (y) 100.00000000%
to the Class A-3 Subaccount until the
Subaccount Principal Balance thereof is
reduced to $2,606,265.00; and (II)
45.8862058187% of such amount remaining
as follows: (x) 100.00000000% to the
following: (1) to the Class A-1
Component 2 Component of the Class A-1
Subaccount until the applicable Class
A-1 Component 2 Planned Component
Principal Balance is reached, (2) to the
Class A-8 Subaccount until the
applicable Class A-8 Targeted Principal
Balance thereof is reached, (3) to the
Class A-9 Component 2 Component of the
Class A-9 Subaccount until the Component
Principal Balance thereof is reduced to
zero, (4) to the Class A-8 Subaccount
until the Subaccount Principal Balance
thereof is reduced to zero, (5) to the
Class A-1 Component 2 Component of the
Class A-1 Subaccount until the Component
Principal Balance thereof is reduced to
zero; and (6) 100.00000000% to the Class
A-3 Subaccount until the Subaccount
Principal Balance thereof is reduced to
$2,606,265.00;
<PAGE> 21
(D) fourth, all of the Class A Principal
Payment Amount remaining after the
payments in clauses (A), (B) and (C) to
the Class A-3 Subaccount, until the
Subaccount Principal Balance of the
Class A-3 Subaccount has been reduced to
zero; and
(E) fifth, all of the Class A Principal
Payment Amount remaining after the
payments in clauses (A), (B), (C) and
(D) to the Class A-4 Subaccount, until
the Subaccount Principal Balance thereof
has been reduced to zero;
(v) fifth, for so long as the Subordinate
Securities are outstanding, to the Class P
Subaccount, the sum of (x) principal in an
amount equal to the Discount Fraction of any
Realized Losses on a Group II Discount
Mortgage Loan other than Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy
Losses or Extraordinary Losses (for purposes
of this paragraph, the "Losses Payable") to
the extent of amounts otherwise available to
pay the Subordinate Principal Payment Amount
(without regard to clause (B) of the
definition of such term) on such Payment Date
and (y) the sum of amounts, if any, by which
the Losses Payable on each prior Payment Date
exceeded the amount actually paid in respect
thereof on such prior Payment Dates and not
subsequently paid, to the extent of amounts
otherwise available to pay the Subordinate
Principal Payment Amount on such Payment Date
(any amounts paid in respect of Losses Payable
pursuant to this paragraph shall not cause a
further reduction in the Subaccount Principal
Balance of the Class P Subaccount); provided,
that if the amounts otherwise available to pay
the Subordinate Principal Payment Amount for
any such Payment Date are insufficient to
cover such outstanding Losses Payable for the
Class P Subaccount as provided above and Class
FXP Subaccount as provided in paragraph
5(b)(1)(a)(v) above, then the amounts
otherwise available to pay the Subordinate
Principal Payment Amount will be allocated pro
rata to the Class FXP and Class P Subaccounts
based on the amount such Subaccounts are
entitled to receive pursuant to this clause,
in the case of the Class P Subaccount, and
paragraph 5(b)(1)(a)(v) above, in the case of
the Class FXP Subaccount;
<PAGE> 22
(d) With respect to the Class B Subaccounts and
the Class RP Securities, subject to the
payment of the Class FX and Class II
Subaccounts and the Class RP Securities as
described above in Section 5(b)(1)(a),
5(b)(1)(b) and 5(b)(1)(c), and to the extent
of the Available Payment Amounts for both
Mortgage Loan Groups remaining, if any,
following prior payments on such Payment Date:
(i) first, to the Class B Subaccounts,
Accrued Interest for such Payment Date,
plus any Accrued Interest thereon
remaining unpaid from any previous
Payment Date;
(ii) second, to the Class IB Subaccount and
the Class IIB Subaccount, principal
payments equal to (A) in the case of the
Class IB Subaccount, the amount, if any,
by which the Subaccount Principal Balance
immediately before such Payment Date (but
after reflecting any allocations of
Realized Losses) exceeds the Class B Loan
Group I Component Balance (calculated as
of the immediately preceding Due Date
after giving effect to principal payments
scheduled to be received as of such Due
Date, whether or not received, and after
giving effect to any Principal
Prepayments to be paid on the current
Payment Date and after reflecting any
Realized Losses and after giving effect
to principal payments to be made with
respect to the Class FX Securities on the
current Payment Date) and (B) in the case
of the Class IIB Subaccount, the amount,
if any, by which the Subaccount Principal
Balance immediately before such Payment
Date (but after reflecting any
allocations of Realized Losses) exceeds
the Class B Loan Group II Component
Balance (calculated as of the immediately
preceding Due Date after giving effect to
principal payments scheduled to be
received as of such Due Date, whether or
not received, and after giving effect to
any Principal Prepayments to be paid on
the current Payment Date and after
reflecting any Realized Losses and after
giving effect to principal payments to be
made with respect to the Class II
Securities on the current Payment Date);
and
(iii) third, to the Class RP Securities, the
remaining portion, if any, of such
Available Payment Amounts for such
Payment Date.
(2) On each Payment Date on or after the Credit Support
Depletion Date, payments will be made in the order
and priority as follows:
<PAGE> 23
(a) With respect to the Class FX Subaccounts and
Class RP Securities, subject, in each case, to
the extent of the Available Payment Amount for
Group I remaining following prior payments, if
any, on such Payment Date:
(i) first, to the Class FXP Subaccount, the
Class FXP Discount Mortgage Loan
Principal Payment Amount;
(ii) second, to the Class FX Subaccounts
(other than the Class FXP Subaccount),
and the Class RP Securities, Accrued
Interest for such Payment Date, plus any
Accrued Interest thereon remaining unpaid
from any previous Payment Date;
(iii) third, to the Class FXA Subaccounts, the
Class R Subaccount and the Class RP
Securities the Class FXA Principal
Payment Amount, pro rata according to
their respective Subaccount Principal
Balances or Security Principal Balances;
(iv) fourth, to the Class II Subaccounts, the
remaining portion, if any, of the
Available Payment Amount for Group I for
such Payment Date, to be paid pursuant to
paragraph (2)(b) hereof until the
outstanding Subaccount Principal Balance
thereof has been reduced to zero; and
(v) fifth, to the Class RP Securities, the
remaining portion, if any, of the
Available Payment Amount for Group I for
such Payment Date.
(b) With respect to the Class II Subaccounts, the
Class R Subaccount and the Class RP Securities,
subject, in each case, to the extent of the
Available Payment Amount for Group II remaining
following prior payments, if any, on such
Payment Date:
(i) first, to the Class P Subaccount, the
Discount Fraction of all principal
received on or in respect of each Group
II Discount Mortgage Loan;
(ii) second, to the Class II Subaccounts
(other than the Class P Subaccount),
Accrued Interest for such Payment Date,
plus any Accrued Interest thereon
remaining unpaid from any previous
Payment Date;
<PAGE> 24
(iii) third, to the Class A Subaccounts, the
Class A Principal Payment Amount, pro
rata according to their respective
Subaccount Principal Balances;
(iv) fourth, to the Class FX Subaccount, the
Class R Subaccount and the Class RP
Securities, the remaining portion, if
any, of the Available Payment Amount for
Group II for such Payment Date, to be
paid pursuant to paragraph (2)(a) hereof;
and
(v) fifth, to the Class RP Securities, the
remaining portion, if any, of the
Available Payment Amount for Group II for
such Payment Date.
(c) On each Payment Date, the Trustee shall withdraw from the Collection
Account the Available Payment Amount with respect to each Series of
Certificates for such Payment Date and shall pay, from the amount so
withdrawn, to the extent of such Available Payment Amounts, the
Security Payment Amount to the Securityholders (other than the Holders
of the Class RP Securities), in accordance with written statements
received from the Master Servicer pursuant to Section 4.03 of the
Pooling and Servicing Agreement, by wire transfer in immediately
available funds for the account of, or by check mailed to, each
Securityholder and Class R Securityholder of record on the immediately
preceding Record Date, as specified by each such Securityholder and at
the address of such Holder appearing in the Bond Register.
For any Payment Date, the Available Payment Amounts shall be paid to the
Securityholders of each Class in the order and priority as follows:
(1) all interest deemed paid on each Subaccount on each Payment Date shall
be paid as interest as follows:
(i) (A) interest deemed paid on the Class FXA and Class FXS
Subaccounts shall be paid to the Corresponding Classes in an
amount equal to the Accrued Interest for such Classes with
respect to such Payment Date, plus any Accrued Interest thereon
remaining unpaid from any previous Payment Date, with any
interest shortfall on such Payment Date being allocated pro rata
among all such Classes of Securities based on their respective
Accrued Interest for such Payment Date; and (B) interest deemed
paid on the Class A, Class S and Class R Subaccounts shall be
paid to the Corresponding Classes, in an amount equal to the
Accrued Interest for such Classes with respect to such Payment
Date, plus any Accrued Interest thereon remaining unpaid from
any previous Payment Date, with any interest shortfall on such
Payment Date
<PAGE> 25
being allocated pro rata among all such Classes of Securities
based on their respective Accrued Interest;
(ii) interest deemed paid on the Class B Subaccounts shall be paid
to the Class B Securities in the manner set forth in paragraph
(3) below;
(2) All principal deemed paid on, and Realized Losses allocated to, each
Subaccount (other than the Class B Subaccounts) on each Payment Date
shall be paid on such Payment Date as principal to the Corresponding
Classes; and
(3) All principal and interest deemed paid on the Class B Subaccounts on
each Payment Date shall be paid with respect to the Class B Securities
as follows:
(i) first, to the Class B-1 Securities, Accrued Interest for such
Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date;
(ii) second, to the Class B-1 Securities, the pro rata share of the
Subordinate Principal Payment Amount (based upon such Class's
Security Principal Balance as a percentage of the Security
Principal Balance of all of the Class B Securities);
(iii) third, to the Class B-2 Securities, Accrued Interest for such
Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date;
(iv) fourth, to the Class B-2 Securities, the pro rata share of the
Subordinate Principal Payment Amount (based upon such Class's
Security Principal Balance as a percentage of the Security
Principal Balance of all of the Class B Securities);
(v) fifth, to the Class B-3 Securities, Accrued Interest for such
Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date;
(vi) sixth, to the Class B-3 Securities, the pro rata share of the
Subordinate Principal Payment Amount (based upon such Class's
Security Principal Balance as a percentage of the Security
Principal Balance of all of the Class B Securities);
(vii) seventh, to the Class B-4 Securities, Accrued Interest for
such Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date;
<PAGE> 26
(viii) eighth, to the Class B-4 Securities, the pro rata share of the
Subordinate Principal Payment Amount (based upon such Class's
Security Principal Balance as a percentage of the Security
Principal Balance of all of the Class B Securities);
(ix) ninth, to the Class B-5 Securities, Accrued Interest for such
Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date;
(x) tenth, to the Class B-5 Securities, the pro rata share of the
Subordinate Principal Payment Amount (based upon such Class's
Security Principal Balance as a percentage of the Security
Principal Balance of all of the Class B Securities);
(xi) eleventh, to the Class B-6 Securities, Accrued Interest for
such Payment Date, plus any Accrued Interest thereon remaining
unpaid from any previous Payment Date; and
(xii) twelfth, to the Class B-6 Securities, the pro rata share of
the Subordinate Principal Payment Amount (based upon such
Class's Security Principal Balance as a percentage of the
Security Principal Balance of all of the Class B Securities).
(3) Notwithstanding the foregoing, on any Payment Date on which the
Subordination Level for any Class of Subordinate Securities is less
than such Subordination Level as of the Cut-off Date, the portion of
the Subordinate Principal Payment Amount otherwise payable to the
Class or Classes of Subordinate Securities subordinate in right of
payment to such Class as set forth above shall instead be paid to the
most senior Class of Subordinate Securities for which the related
Subordination Level is less than such Subordination Level of the
Cut-off Date and to the Class or Classes of Subordinate Securities
senior thereto, on a pro rata basis according to the Security
Principal Balances of such Classes.
(4) Any amounts remaining in the Collection Account on any Payment Date
after all payments required to be made by this Agreement have been
made and any amounts remaining in the Lower REMIC or the Upper REMIC
after payment in full of the Regular Interests therein, and any
administrative expenses associated with the Trust, will be paid as
contingent interest pro rata to the Holders of the Class RP and Class
R Securities, respectively (but will not reduce the Security Principal
Balance thereof).
(d) On each Payment Date the Trustee shall distribute to each
Securityholder of record on the related Record Date either in
immediately available funds (by wire transfer or
<PAGE> 27
otherwise) to the account of such Securityholder at a bank or other
entity having appropriate facilities therefor, if such Securityholder
has so notified the Trustee at least five Business Days prior to the
related Record Date and such Securityholder is the registered owner of
Securities the aggregate initial Security Principal Balance of which
is not less than $1,000,000 (or, with respect to any Class of Strip
Securities, is the registered owner of an initial Notional Amount of
not less than $1,000,000 of such Class), or otherwise by check mailed
to such Securityholder at the address of such Holder appearing in the
Bond Register, such Securityholder's share (based on the aggregate of
the Percentage Interests represented by Securities of the applicable
Class held by such Holder) of the related Security Payment Amount, in
each case to the extent of the related Available Payment Amount and
the other funds available to make such payments as provided herein.
(e) The Trustee shall, upon written request from the Master Servicer,
invest or cause the institution maintaining the Collection Account to
invest the funds in the Collection Account in Permitted Instruments
designated in the name of the Trustee for the benefit of the
Securityholders, which shall mature not later than the Business Day
next preceding the Payment Date next following the date of such
investment (except that (i) any investment in obligations of the
institution with which the Collection Account is maintained may mature
on such Payment Date and (ii) any other investment may mature on such
Payment Date if the Trustee shall agree to advance funds on such
Payment Date to the Collection Account in the amount payable on such
investment on such Payment Date, pending receipt thereof to the extent
necessary to make payments on the Securities) and shall not be sold or
disposed of prior to 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
Issuer shall cause the Master Servicer out of the Master Servicer's
own funds to deposit the amount of any losses incurred in respect of
any such investments in the Collection Account immediately as realized
without right of reimbursement.
(f) Whenever the Trustee expects that the final payment with respect to
any Class of Securities will be made on the next Payment Date, the
Trustee shall, no later than five days after the Determination Date,
mail to each Holder on such date of such Class of Securities a notice
to the effect that:
(1) the Trustee expects that the final payment with respect to such
Class of Securities will be made on such Payment Date but only
upon presentation and surrender of such Securities at the
office of the Trustee therein specified, and
(2) no interest shall accrue on such Securities from and after the
end of the related Interest Accrual Period.
<PAGE> 28
Any funds not paid to any Holder or Holders of Securities of such
Class on such Payment Date because of the failure of such Holder or Holders to
tender their Securities shall, on such date, be set aside and held in trust
uninvested and credited to the account of the appropriate non-tendering Holder
or Holders. If any Securities as to which notice has been given pursuant to
this Section 5(f) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Securityholders instructing such
Securityholders to surrender their Securities for cancellation in order to
receive the final payment with respect thereto. If within six months after the
second notice all such Securities shall not have been surrendered for
cancellation, the Trustee shall take reasonable steps as directed by the
Issuer, or appoint an agent to take reasonable steps, to contact the remaining
non-tendering Securityholders concerning surrender of their Securities. The
costs and expenses of maintaining the funds in trust and of contacting such
Securityholders shall be paid out of the assets remaining in the Trust Estate.
If within nine months after the second notice any such Securities shall not
have been surrendered for cancellation, the Class R and Class RP
Securityholders shall be entitled to all unclaimed funds and other assets which
remain subject hereto. No interest shall accrue or be payable to any
Securityholder on any amount held in trust as a result of such Securityholder's
failure to surrender its Security(s) for final payment thereof in accordance
with this Section 5(f).
(g) On each Payment Date, the Trustee shall pay to each Securityholder of
record on the related Record Date (other than as provided in Section
5(f) respecting the final payment), in the manner set forth in Section
5(b), such Securityholder's share (based on the aggregate of the
Percentage Interests represented by the Securities of the applicable
Class held by such Securityholder) of the amount transferred from the
Excess Proceeds Account to the Collection Account on the related
Collection Account Deposit Date in the following order of priority;
first, to the Class FX and Class II Securities (other than the Class
FXP and Class P Securities) on a pro rata basis, to the extent of and
in proportion to the interest portion of the aggregate amount of all
Realized Losses allocated to the Securities of such Classes on such
Payment Date or any previous Payment Date in accordance with Section 7
and not subsequently recovered through any payment in accordance with
this Section 5(g), and then second, to the Class FX and Class II
Securities (other than the Strip Securities) on a pro rata basis, to
the extent of and in proportion to the principal portion of the
aggregate amount of all Realized Losses allocated to the Securities of
such Classes on such Payment Date or any previous Payment Date in
accordance with Section 7 and not subsequently recovered through any
payment in accordance with Section 5(b), or in accordance with this
Section 5(g), third, to the Holders of the Class B-1 Securities,
fourth, to the Holders of the Class B-2 Securities, fifth, to the
Holders of the Class B-3 Securities, sixth, to the Holders of the
Class B-4 Securities, seventh, to the Holders of the Class B-5
Securities, eighth, to the Holders of the Class B-6 Securities, in
each case to the extent of the aggregate amount of all Realized Losses
allocated to the Security of such Class on such Payment Date or any
previous Payment Date in accordance with Section 7 and not
subsequently recovered through
<PAGE> 29
any payment in accordance with this Section 5(g), and then ninth, the
remainder to the Holders of the Class RP Securities. There shall be
corresponding deemed payments with respect to the Corresponding
Classes of Subaccounts. The payment of any amount in accordance with
this Section 5(g) shall not have the effect of reducing the Security
Principal Balance of any Security (or the Subaccount Principal Balance
of any Subaccount) to which such payment is allocated.
6. Statements to Securityholders.
On each Payment Date, based on the information provided by the Master
Servicer pursuant to Section 4.03 of the Pooling and Servicing Agreement, the
Trustee shall forward or cause to be forwarded by mail to each Holder of a
Security and to the Issuer, the Loan Seller and with a copy to the Master
Servicer a statement as to such payment setting forth:
(a) (i) the amount of such payment to the Securityholders of each Class
applied to reduce the Security Principal Balance thereof, (ii) the
aggregate amount included therein representing Principal Prepayments,
(iii) the Class FXA Prepayment Percentage with respect to the Class
FXA Securities, the Class A Prepayment Percentage with respect to the
Class A Securities, the Class FXA-5 Lockout Prepayment Percentage with
respect to the Class FXA-5 Securities, the Class A-4 Lockout
Prepayment Percentage with respect to the Class A-4 Securities and the
Class B Percentage applicable to such payment and (iv) the aggregate
of the Stated Principal Balances of any Mortgage Loans repurchased
during the related Prepayment Period (on aggregate basis and on a
Mortgage Loan Group-by-Mortgage Loan Group basis);
(b) the amount of such payment to the Securityholders of such Class
allocable to interest;
(c) the amount of related servicing compensation and the amount of
servicing compensation attributable to penalties and fees received by
or on behalf of the Master Servicer and any Sub-Servicers with respect
to such Payment Date and such other customary information as the
Master Servicer deems necessary or desirable and supplies to the
Trustee, or which a Securityholder reasonably requests, to enable
Securityholders to prepare their tax returns;
(d) the amount of Advances (other than Servicing Advance), presented in
the aggregate and the amount of principal and the amount of interest
Advances included in such payment on such Payment Date;
(e) the number and aggregate Stated Principal Balance of the Mortgage
Loans at the close of business on such Payment Date (on an aggregate
basis and on a Mortgage Loan Group-by-Mortgage Loan Group basis);
<PAGE> 30
(f) the Security Principal Balance of a Single Security of such Class, the
aggregate Security Principal Balance of the Class FXA-1 Securities,
Class FXA-2 Securities, Class FXA-3 Securities, Class FXA-4
Securities, Class FXA-5 Securities, Class FXA-6 Securities, Class
FXA-7 Securities, Class A-1 Securities, Class A-3 Securities, Class
A-4 Securities, Class A-5 Securities, Class A-6 Securities, Class A- 7
Securities, Class A-8 Securities, Class A-9 Securities, Class FXP
Securities, Class P Securities, Class B-1 Securities, Class B-2
Securities, Class B-3 Securities, Class B-4 Securities, Class B-5
Securities and Class B-6 Securities, respectively, the Notional
Amounts for the Class FXS Securities, the Class A-2 Securities, and
the Class S Securities, the Class FXA Percentage, the Class A
Percentage, the Class B-1 Percentage, the Class B-2 Percentage, the
Class B-3 Percentage, the Class B-4 Percentage, Class B-5 Percentage
and the Class B-6 Percentage after giving effect to the amounts paid
on such Payment Date separately identifying any reduction thereof due
to Realized Losses other than pursuant to an actual payment of
principal (on an aggregate basis and on a Mortgage Loan
Group-by-Mortgage Loan Group basis);
(g) the number and aggregate Stated Principal Balance of Mortgage Loans
(a) delinquent 31 to 60 days, (b) delinquent 61 to 90 days and (c)
delinquent 91 days or more (on an aggregate basis and on a Mortgage
Loan Group-by-Mortgage Loan Group basis) as of the close of business
on the Determination Date to which such payment relates;
(h) the number and aggregate Stated Principal Balance of Mortgage Loans as
to which foreclosure proceedings have been commenced in each case as
of the related Determination Date and which are (a) delinquent 31 to
60 days, (b) delinquent 61 to 90 days and (c) delinquent 91 days or
more (on an aggregate basis and on a Mortgage Loan Group-by-Mortgage
Loan Group basis) as of the close of business on the Determination
Date to which such payment relates;
(i) the number and aggregate Stated Principal Balance of Mortgage Loans as
to which bankruptcy proceedings have been commenced in each case as of
the related Determination Date and which are (a) delinquent 31 to 60
days, (b) delinquent 61 to 90 days and (c) delinquent 91 days or more
(on an aggregate basis and on a Mortgage Loan Group-by-Mortgage Loan
Group basis) as of the close of business on the Determination Date to
which such payment relates;
(j) with respect to any Mortgage Loan that became a REO Property during
the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the
Payment Date in such month and the date of acquisition thereof;
(k) the book value of any REO Property as of the close of business on the
last Business Day of the calendar month preceding the Payment Date;
<PAGE> 31
(l) the Security Interest Rate in effect for the preceding calendar month
with respect to each Class of Securities (other than the Principal
Only Securities and the Residual Securities);
(m) the remaining aggregate Security Principal Balance of each Class of
Securities, after giving effect to the payment made on such Payment
Date;
(n) the Special Hazard Amount, Fraud Loss Amount and Bankruptcy Amount
remaining available immediately after such Payment Date;
(o) the aggregate Realized Losses incurred since the Cut-off Date (on an
aggregate basis and on a Mortgage Loan Group-by-Mortgage Loan Group
basis); and
(p) the amount of any Excess Proceeds paid to each Class of Securities and
the remaining balance of the Excess Proceeds Account, if any, on such
Payment Date, after giving effect to payments made on such date.
In the case of information furnished pursuant to paragraphs (a)(i), (b)
and (c) above, the amounts shall also be expressed as a dollar amount per
Single Security.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and forward, to each Person who at any time during
the calendar year was a Holder of a Security (other than the Class R or Class
RP Securities) a statement containing the information set forth in paragraphs
(a)(i),(b) and (c) above, aggregated for such calendar year or applicable
portion thereof during which such person was a Securityholder. Such obligation
of the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code and regulations thereunder as from time to time
are in force.
On each Payment Date the Trustee shall prepare and forward, to each Holder
of a Class R or Class RP Security a copy of the reports forwarded to each of
the Securityholders (other than the Class R or Class RP Securityholders) on
such Payment Date and a statement setting forth the amounts actually paid with
respect to the Class R or Class RP Securities on such Payment Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and forward, to each Person who at any time during
the calendar year was a Holder of a Class R or Class RP Security a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R or Class RP Securityholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time are in force.
<PAGE> 32
7. Allocation of Realized Losses.
The amount of each Realized Loss for each Due Period shall be evidenced by
an Officers' Certificate delivered to the Trustee by the Master Servicer
pursuant to the Pooling and Servicing Agreement. Realized Losses shall be
allocated among the various Classes of Securities as determined by the Trustee
in accordance with the following provisions. All Realized Losses in respect of
the Mortgage Loans, other than Excess Special Hazard Losses, Extraordinary
Losses, Excess Bankruptcy Losses or Excess Fraud Losses, shall be allocated
first to the Class B-6 Securities until the Security Principal Balance of the
Class B-6 Securities has been reduced to zero, then, to the Class B-5
Securities until the Security Principal Balance of the Class B-5 Securities has
been reduced to zero, then, to the Class B-4 Securities until the Security
Principal Balance of the Class B-4 Securities has been reduced to zero, then,
to the Class B-3 Securities until the Security Principal Balance of the Class
B-3 Securities has been reduced to zero, then, to the Class B-2 Securities
until the Security Principal Balance of the Class B-2 Securities has been
reduced to zero, then, to the Class B-1 Securities until the Security Principal
Balance of the Class B-1 Securities has been reduced to zero, and, thereafter,
(x) any such Realized Losses on the Group I Mortgage Loans will be allocated,
if any such loss is on a Group I Discount Mortgage Loan, to the Class FXP
Securities in an amount equal to the related Discount Fraction of the principal
portion of such Realized Loss, and the remainder of such Realized Losses and
the entire amount of such Realized Losses on any other Group I Mortgage Loans
to the Classes of Class FXA and Class FXS Securities on a pro-rata basis of the
then outstanding Security Principal Balances thereof in the case of the
principal portion of a Realized Loss or based on the Accrued Interest thereon
in the case of an interest portion of a Realized Loss, and (y) any such
Realized Losses on the Group II Mortgage Loans will be allocated, if any such
loss is on a Group II Discount Mortgage Loan, to the Class P Securities in an
amount equal to the related Discount Fraction of the principal portion of such
Realized Loss, and the remainder of such Realized Losses and the entire amount
of such Realized Losses on any other Group II Mortgage Loans to the Classes of
Class A, Class A-2 and Class S Securities on a pro-rata basis of the then
outstanding Security Principal Balances thereof in the case of the principal
portion of a Realized Loss or based on the Accrued Interest thereon in the case
of an interest portion of a Realized Loss. Any Excess Special Hazard Losses,
Excess Bankruptcy Losses, Excess Fraud Losses and Extraordinary Losses on
Non-Discount Mortgage Loans will be allocated among all Classes of the
Securities (other than the Class FXP and the Class P Securities) pursuant to a
Pro Rata Allocation. The principal portion of such losses on Group I Discount
Mortgage Loans will be allocated to the Class FXP Securities in an amount equal
to the related Discount Fraction thereof and the principal portion of such
losses on Group II Discount Mortgage Loans will be allocated to the Class P
Securities in an amount equal to the related Discount Fraction thereof, and the
remainder of the principal portion of such losses, and the interest portion of
such losses on Discount Mortgage Loans will be allocated among all Classes of
Securities (other than the Class FXP and the Class P Securities) pursuant to a
Pro Rata Allocation. Any Realized Losses allocated to a Class of Securities
that has a Security Principal Balance shall be allocated (i) for Realized
Losses allocable to principal, to reduce the Security Principal Balance thereof
and (ii) for losses allocable to interest, first to reduce unpaid Accrued
Interest and then to reduce the Security Principal Balance thereof. Any
Realized Losses or interest shortfalls allocated to any Class of Securities
shall be allocated to the Subaccounts
<PAGE> 33
bearing the same designation. Any Realized Losses allocated to a Subaccount
that comprises Components shall be allocated between such Components pro rata
based on the Component Principal Balances of such Components. Any Realized Loss
that is allocated to the Class B Securities pursuant to this Section 7 will be
allocated to the Class IB Subaccount if the Realized Loss is attributable to a
Group I Mortgage Loan and to the Class IIB Subaccount if the Realized Loss is
attributable to a Group II Mortgage Loan. Realized Losses for each Due Period
shall be allocated as provided above on the first Payment Date after the end of
such Due Period, immediately after payments on the Securities have been made on
such Payment Date.
8. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements respecting payments to
Securityholders of interest or original issue discount on the Mortgage Loans,
that the Trustee reasonably believes are applicable under the Code. The consent
of Securityholders shall not be required for such withholding. In the event the
Trustee withholds any amount from interest or original issue discount payments
or advances thereof to any Securityholder pursuant to federal withholding
requirements, the Trustee shall, together with its monthly report to such
Securityholders pursuant to Section 6 hereof, indicate such amount withheld.
9. Transfer of Certificates to Trustee; Deposits to Collection Account;
Pledged Accounts.
(a) The Certificates shall have been registered in the name of the Trustee
or its Qualified Nominee by no later than the Closing Date pursuant to
Section 2.12(f) (iii) of the Indenture. The Trustee shall have
confirmed in writing on or prior to the Closing Date that it is
holding such Certificates as Trustee.
(b) The Issuer shall not be required to deposit funds in the Collection
Account on the Closing Date.
10. Requirements for Issuance of Series 1997-NAMC 3 Securities.
Except as otherwise expressly provided immediately below and elsewhere
herein, no additional items shall be required to be delivered to the Trustee
pursuant to Section 2.12(l) of the Indenture in connection with the issuance of
the Series 1997-NAMC 3 Securities:
(a) An executed counterpart of the Pooling and Servicing Agreement.
(b) A certificate of a Vice President of the Issuer, dated as of the
Closing Date, certifying that the representations and warranties made
by the Issuer in Section 2.03 of the Pooling and Servicing Agreement
are true and correct as of the Closing Date.
(c) A certificate of a vice president of the Master Servicer and Loan
Seller, dated as of the Closing Date, confirming that the
representations and warranties made by the
<PAGE> 34
Master Servicer and Loan Seller in Section 2.03 and 2.04,
respectively, of the Pooling and Servicing Agreement are true and
correct as of the Closing Date.
11. Calculations with Respect to Underlying Mortgage Loans.
Calculations with respect to the Mortgage Loans underlying the
Certificates granted as security for the Series 1997-NAMC 3 Securities shall be
made on a Mortgage Loan-by-Mortgage Loan basis to the extent required to
determine the amounts to be paid on the Securities on each Payment Date.
12. Certain Defined Terms.
Capitalized terms used but not defined herein shall, unless the context
otherwise requires, bear the respective meanings ascribed to such terms in the
Pooling and Servicing Agreement. Sections 1.1 and 2.3 of the Indenture provide
that the meaning of certain defined terms used in the Indenture shall, when
applied to the Bonds of a particular Series, be as defined in said Section 1.1
but with such additional provisions as are specified in the related Series
Supplement. With respect to the Securities, the following provisions shall
govern the defined terms set forth below:
"Accrued Interest": With respect to each Payment Date, as to any Security
of any Class (other than the Class FXP Securities and Class P Securities), any
Subaccount (other than the Class FXP Subaccount and the Class P Subaccount),
and any Component of any Subaccount, one month's interest accrued at the
related Security Interest Rate on the Security Principal Balance, Subaccount
Principal Balance, Component Principal Balance, Notional Amount or Subaccount
Notional Amount, as the case may be, immediately prior to such Payment Date for
the related Interest Accrual Period. Accrued Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. In each case
Accrued Interest on any such Class of Securities, Subaccount or Component of a
Subaccount, as the case may be, will be reduced by the amount of (i) Prepayment
Interest Shortfalls, if any, which are not covered by payments by the Master
Servicer pursuant to Section 4.01 of the Pooling and Servicing Agreement with
respect to such Payment Date, (ii) the interest portion (adjusted to the Net
Mortgage Rate) of Realized Losses (including Excess Special Hazard Losses,
Excess Fraud Losses, Excess Bankruptcy Losses and Extraordinary Losses), not
allocated solely to the Subordinate Securities pursuant to Section 7 hereof,
(iii) the interest portion of Advances previously made with respect to a
Mortgage Loan or REO Property which remained unreimbursed following the Cash
Liquidation or REO Disposition of such Mortgage Loan or REO Property that were
made with respect to delinquencies that ultimately constituted Excess Special
Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary
Losses, and (iv) any interest shortfalls due to interest that is not
collectible from the Mortgagor pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or similar legislation or regulations as in
effect from time to time, pro rata in proportion to their respective amounts of
Accrued Interest which would have resulted absent such reductions. In addition
to that portion of the reductions described in the preceding sentence that are
allocated to the Subordinate Securities, Accrued Interest on the Subordinate
Securities will be reduced by the interest portion (adjusted to the Net
Mortgage
<PAGE> 35
Rate) of the portion of Realized Losses that are allocated solely to the
Subordinate Securities as applicable, pursuant to Section 7 hereof and any such
reduction shall be allocated to the Corresponding Classes of Subaccounts.
"Available Payment Amount": With respect to any Payment Date, a given
Series of Certificates and the related Mortgage Loan Group, for purposes of
payments on the Securities, the amount distributed on such Series of
Certificates on the Distribution Date immediately preceding such Payment Date.
Notwithstanding the foregoing, with respect to the Subordinate Securities,
"Available Payment Amount" shall mean, with respect to any Payment Date, the
sum of the amount referred to in the preceding sentence with respect to each
Mortgage Loan Group for such Payment Date, in each case, after any payments
required to made prior to such Classes of Subaccounts on such Payment Date
pursuant to Section 5(b).
"Bankruptcy Amount": As of any date of determination, an amount, equal to
the excess, if any, of (1) $100,000.00 (the initial "Bankruptcy Amount") over
(2) the aggregate amount of Bankruptcy Losses allocated solely to the
Subordinate Securities prior to such date in accordance with Section 7. The
Bankruptcy Amount may be further reduced by the Issuer (including accelerating
the manner in which such coverage is reduced) provided that prior to any such
reduction, the Issuer shall obtain written confirmation from each Rating Agency
that such reduction shall not adversely affect the then-current rating assigned
to the Securities by such Rating Agency and shall provide a copy of such
written confirmation to the Trustee.
"Book-Entry Security": Any Security registered in the name of the
Depository or its nominee. The Securities initially to be Book-Entry Securities
are designated in Section 1(b).
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in California, New York or Illinois (and such other state
or states in which any Collection Account is at the time located) or in the
city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to close.
"Certificates": The Certificates issued pursuant to the Pooling and
Servicing Agreement.
"Class": Collectively, all of the Securities bearing the same designation.
"Class A Liquidation Amount": With respect to a Payment Date, the
aggregate of, for each Group II Mortgage Loan which became a Liquidated Loan
during the Prepayment Period relating to the Distribution Date immediately
preceding such Payment Date, the lesser of (i) the Class A Percentage of the
principal balance of such Mortgage Loan (exclusive of the Discount Fraction
thereof, with respect to any Group II Discount Mortgage Loan) and (ii) the
then-applicable Class A Prepayment Percentage of the Group II Liquidation
Principal with respect to such Mortgage Loan.
"Class A Percentage": With respect to any Payment Date, the lesser of (i)
100% and (ii) a fraction, expressed as a percentage, the numerator of which is
the aggregate Security Principal
<PAGE> 36
Balance of the Class A Securities, immediately prior to such Payment Date and
the denominator of which is the aggregate Stated Principal Balance of all of
the Group II Mortgage Loans (or related REO Properties) (other than the related
Discount Fraction of each Group II Discount Mortgage Loan) as of the second
preceding Due Date.
"Class A Prepayment Percentage": The Class A Prepayment Percentage shall
equal, with respect to any Payment Date, the percentage indicated below:
Payment Date Class A Prepayment Percentage
- ------------ -----------------------------
October 1997 through September 2002 100%
October 2002 through September 2003 Class A Percentage, plus 70% of the
Group II Subordinate Percentage with
respect to such Payment Date
October 2003 through September 2004 Class A Percentage, plus 60% of the
Group II Subordinate Percentage with
respect to such Payment Date
October 2004 through September 2005 Class A Percentage, plus 40% of the
Group II Subordinate Percentage with
respect to such Payment Date
October 2005 through September 2006 Class A Percentage, plus 20% of the
Group II Subordinate Percentage with
respect to such Payment Date
October 2006 and thereafter the Class A Percentage
Any scheduled reduction to the Class A Prepayment Percentage described above
shall not be made as of any Payment Date, unless both (i)(X) the average
outstanding principal balance of the Group II Mortgage Loans delinquent 60 days
or more over the last six months, as a percentage of the Class B Loan Group II
Component Balance, is less than 50% or (Y) the average outstanding principal
balance of the Group II Mortgage Loans delinquent 60 days or more over the last
six months, as a percentage of the aggregate average outstanding principal
balance of all Group II Mortgage Loans over the last six months, does not
exceed 2% and (ii) Realized Losses on the Group II Mortgage Loans to date for
such Payment Date, if occurring during the sixth, seventh, eighth, ninth or
tenth year (or any year thereafter) after the first Payment Date, are less than
30%, 35%, 40%, 45% or 50%, respectively, of the initial Class B Loan Group II
Component Balance. Notwithstanding the above, if on any Payment Date, the Class
FXA Percentage exceeds the initial Class FXA Percentage, then the Class A
Prepayment Percentage for each such Payment Date will equal 100%. Further, upon
the reduction of the Class A Subaccount Principal Balance of all of the Class A
Subaccounts to zero, the Class A Prepayment Percentage shall equal zero.
"Class A Principal Payment Amount": As to any Payment Date, the sum of (i)
the Class A Percentage of the Principal Payment Amount for Group II (exclusive
of the portion thereof
<PAGE> 37
attributable to the Class P Discount Mortgage Loan Principal Payment Amount for
such Payment Date), (ii) the Class A Prepayment Percentage of the Principal
Prepayment Amount for Group II (exclusive of the portion thereof attributable
to the Class P Discount Mortgage Loan Principal Payment Amount for such Payment
Date), and (iii) the Class A Liquidation Amount for such Payment Date.
"Class A Security": Any one of the Class A-1 Securities, Class A-3
Securities, the Class A-4 Securities, the Class A-5 Securities, the Class A-6
Securities, the Class A-7 Securities, the Class A-8 Securities or the Class A-9
Securities.
"Class A Subaccounts": The Class A-1 Subaccount, Class A-3 Subaccount,
Class A-4 Subaccount, Class A-5 Subaccount, Class A-6 Subaccount, Class A-7
Subaccount, Class A-8 Subaccount, or Class A-9 Subaccount.
"Class A-1 Component 1": A Component of the Class A-1 Subaccount having an
initial Component Principal Balance of $12,453,396.00.
"Class A-1 Component 1 Planned Component Principal Balance": With respect
to a Payment Date and Class A-1 Component 1, the amount set forth as the "Class
A-1 Component 1 Planned Component Principal Balance" on Schedule A hereto.
"Class A-1 Component 2": A Component of the Class A-1 Subaccount having an
initial Component Principal Balance of $10,559,953.00.
"Class A-1 Component 2 Planned Component Principal Balance": With respect
to a Payment Date and Class A-1 Component 2, the amount set forth as the "Class
A-1 Component 2 Planned Component Principal Balance" on Schedule B hereto.
"Class A-1 Security": Any one of the Class A-1 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-2 Notional Amount": With respect to any Payment Date, the sum of
(A) the product of (x) 8.9655172414% and (y) the Component Principal Balance of
Class A-1 Component 1, and (B) the product of (x) 8.9655172414% and (y) the
Component Principal Balance of Class A-1 Component 2. The initial Class A-2
Notional Amount shall be $2,063,265.77.
"Class A-2 Security": Any one of the Class A-2 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing
<PAGE> 38
an interest designated as a "regular interest" in the Upper REMIC for purposes
of the REMIC Provisions.
"Class A-2 Subaccount Notional Amount": With respect to any Payment Date,
an amount equal to the Class A-2 Notional Amount with respect to such Payment
Date.
"Class A-3 Security": Any one of the Class A-3 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-4 Lockout Liquidation Amount": With respect to a Payment Date,
the aggregate of, for each Group II Mortgage Loan which became a Liquidated
Loan during the Prepayment Period relating to the Distribution Date immediately
preceding such Payment Date, the lesser of (i) the Class A-4 Lockout Percentage
with respect to such Payment Date of the Stated Principal Balance of such
Mortgage Loan (exclusive of the Discount Fraction thereof, if applicable) as of
the second preceding Due Date and (ii) with respect to such Payment Date, the
Class A-4 Lockout Prepayment Percentage of the Group II Liquidation Principal
with respect to such Mortgage Loan.
"Class A-4 Lockout Percentage": For any Payment Date occurring prior to
the Payment Date occurring in October 2002, 0%, and with respect to any Payment
Date occurring in October 2002 and thereafter, the lesser of (i) 100% and (ii)
the aggregate Security Principal Balances of the Class A-4 Securities
immediately prior to such Payment Date divided by the aggregate Stated
Principal Balances of the Group II Mortgage Loans (less the aggregate Security
Principal Balance of the Class P Securities) as of the second preceding Due
Date.
"Class A-4 Lockout Prepayment Percentage": With respect to a Payment Date,
the product of (a) the Class A-4 Lockout Percentage with respect to such
Payment Date and (b) the Step Down Percentage with respect to such Payment
Date; provided, however, if on any Payment Date the Security Principal Balances
of the Class A Securities, other than the Class A-4 Securities (or the
Subaccount Principal Balances of the Class A Subaccounts, other than the Class
A-4 Subaccount), have been reduced to zero, the Class A-4 Lockout Prepayment
Percentage shall be equal to the Class A Prepayment Percentage for such Payment
Date.
"Class A-4 Lockout Principal Payment Amount": For any Payment Date, the
sum of (i) the Class A-4 Lockout Percentage of the Principal Payment Amount for
Group II with respect to such Payment Date (exclusive of the portion thereof
attributable to the Class P Principal Payment Amount), (ii) with respect to
such Payment Date, the Class A-4 Lockout Prepayment Percentage of the Principal
Prepayment Amount for Group II (exclusive of the portion thereof attributable
to the Class P Discount Mortgage Loan Principal Payment Amount), and (iii) the
Class A-4 Lockout Liquidation Amount with respect to such Payment Date.
<PAGE> 39
"Class A-4 Security": Any one of the Class A-4 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-5 Security": Any one of the Class A-5 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-6 Security": Any one of the Class A-6 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-7 Security": Any one of the Class A-7 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-7 Targeted Principal Balance": With respect to a Payment Date and
the Class A-7 Subaccount, the amount set forth as the "Class A-7 Targeted
Principal Balance" on Schedule C hereto.
"Class A-8 Security": Any one of the Class A-8 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class A-8 Targeted Principal Balance": With respect to a Payment Date and
the Class A-8 Subaccount, the amount set forth as the "Class A-8 Targeted
Principal Balance" on Schedule D hereto.
"Class A-9 Component 1": A Component of the Class A-9 Subaccount having an
initial Component Principal Balance of $1,082,000.00
<PAGE> 40
"Class A-9 Component 1 Accretion Amount": With respect to any Payment Date
through the Class A-9 Component 1 Accretion Termination Date, the Accrued
Interest with respect to Class A-9 Component 1 and such Payment Date.
"Class A-9 Component 1 Accretion Termination Date": The earlier of (i) the
Credit Support Depletion Date and (ii) the Payment Date on which the Subaccount
Principal Balance of the Class A-7 Subaccount is reduced to zero.
"Class A-9 Component 2": A Component of the Class A-9 Subaccount having an
initial Component Principal Balance of $1,606,000.00
"Class A-9 Component 2 Accretion Amount": With respect to any Payment Date
through the Class A-9 Component 2 Accretion Termination Date, the Accrued
Interest with respect to Class A-9 Component 2 and such Payment Date.
"Class A-9 Component 2 Accretion Termination Date": The earlier of (i) the
Credit Support Depletion Date and (ii) the Payment Date on which the Subaccount
Principal Balance of the Class A-8 Subaccount is reduced to zero.
"Class A-9 Security": Any one of the Class A-9 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class B Loan Group I Component Balance": For any Payment Date, the
excess, if any, of (i) the aggregate Stated Principal Balance of the Group I
Mortgage Loans, as of the second preceding Due Date after giving effect to
principal payments scheduled to be received as of such Due Date, whether or not
received, and after giving effect to any Principal Prepayments paid on the
prior Payment Date over (ii) the then outstanding Security Principal Balance of
the Class FX Securities (prior to reflecting principal payments to be made on
such Payment Date).
"Class B Loan Group II Component Balance": For any Payment Date, the
excess, if any, of (i) the aggregate Stated Principal Balance of the Group II
Mortgage Loans, as of the second preceding Due Date after giving effect to
principal payments scheduled to be received as of such Due Date, whether or not
received, and after giving effect to any Principal Prepayments paid on the
prior Payment Date over (ii) the then outstanding aggregate Security Principal
Balance of the Class II Securities (prior to reflecting principal payments to
be made on such Payment Date).
"Class B Percentage": With respect to any Payment Date, the sum of the
Class B-1 Percentage, Class B-2 Percentage, Class B-3 Percentage, Class B-4
Percentage, Class B-5 Percentage and Class B-6 Percentage, each with respect to
such Payment Date.
<PAGE> 41
"Class B Subaccount": The Class IB Subaccount and Class IIB Subaccount.
"Class B-1 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-1 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-1 Security": Any one of the Class B-1 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities with respect to
payments and the allocation of Realized Losses as set forth in Sections 5 and
7, and evidencing an interest designated as a "regular interest" in the Upper
REMIC for purposes of the REMIC Provisions.
"Class B-2 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-2 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-2 Security": Any one of the Class B-2 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities and the Class B-1
Securities with respect to payments and the allocation of Realized Losses as
set forth in Sections 5 and 7, and evidencing an interest designated as a
"regular interest" in the Upper REMIC for purposes of the REMIC Provisions.
"Class B-3 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-3 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-3 Security": Any one of the Class B-3 Securities, executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities, Class B-1 Securities
and Class B-2 Securities with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
<PAGE> 42
"Class B-4 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-4 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-4 Security": Any one of the Class B-4 Securities, executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities, Class B-1
Securities, Class B-2 Securities and Class B-3 Securities with respect to
payments and the allocation of Realized Losses as set forth in Sections 5 and
7, and evidencing an interest designated as a "regular interest" in the Upper
REMIC for purposes of the REMIC Provisions.
"Class B-5 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-5 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-5 Security": Any one of the Class B-5 Securities, executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities, Class B-1
Securities, Class B-2 Securities, Class B-3 Securities and Class B-4 Securities
with respect to payments and the allocation of Realized Losses as set forth in
Sections 5 and 7, and evidencing an interest designated as a "regular interest"
in the Upper REMIC for purposes of the REMIC Provisions.
"Class B-6 Percentage": With respect to any Payment Date, the lesser of
100% and a fraction, expressed as a percentage, the numerator of which is the
Security Principal Balance of the Class B-6 Securities immediately prior to
such Payment Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
(other than the aggregate of the related Discount Fraction of each such Stated
Principal Balance) as of the second preceding Due Date.
"Class B-6 Security": Any one of the Class B-6 Securities, executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B, subordinate to the Senior Securities, Class B-1
Securities, Class B-2 Securities, Class B-3 Securities, Class B-4 Securities
and Class B-5 Securities with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
<PAGE> 43
"Class FX Security": Any one of the Class FXA Securities, the Class FXP
Securities, the Class FXS Securities, the Class R Securities or the Class RP
Securities.
"Class FX Subaccount": Any or all of the Class FXA Subaccounts, the Class
FXP Subaccount, the Class FXS Subaccount and the Class R Subaccount, as
appropriate.
"Class FXA Liquidation Amount": With respect to a Payment Date, the
aggregate of, for each Group I Mortgage Loan which became a Liquidated Loan
during the Prepayment Period relating to the Distribution Date immediately
preceding such Payment Date, the lesser of (i) the Class FXA Percentage of the
principal balance of such Mortgage Loan (exclusive of the Discount Fraction
thereof, with respect to any Group I Discount Mortgage Loan) and (ii) the
then-applicable Class FXA Prepayment Percentage of the Group I Liquidation
Principal with respect to such Mortgage Loan.
"Class FXA Percentage": With respect to any Payment Date, the lesser of
(i) 100% and (ii) a fraction, expressed as a percentage, the numerator of which
is the aggregate Security Principal Balance of the Class FXA and Residual
Securities immediately prior to such Payment Date and the denominator of which
is the aggregate Stated Principal Balance of all of the Group I Mortgage Loans
(or related REO Properties) (other than the related Discount Fraction of each
Group I Discount Mortgage Loan) as of the second preceding Due Date.
"Class FXA Prepayment Percentage": The Class FXA Prepayment Percentage
shall equal, with respect to any Payment Date, the percentage indicated below:
Payment Date Class FXA Prepayment Percentage
- ------------ -------------------------------
October 1997 through September 2002 100%
October 2002 through September 2003 Class FXA Percentage, plus 70% of the
Group I Subordinate Percentage with
respect to such Payment Date
October 2003 through September 2004 Class FXA Percentage, plus 60% of the
Group I Subordinate Percentage with
respect to such Payment Date
October 2004 through September 2005 Class FXA Percentage, plus 40% of the
Group I Subordinate Percentage with
respect to such Payment Date
October 2005 through September 2006 Class FXA Percentage, plus 20% of the
Group I Subordinate Percentage with
respect to such Payment Date
October 2006 and thereafter the Class FXA Percentage
<PAGE> 44
Any scheduled reduction to the Class FXA Prepayment Percentage described above
shall not be made as of any Payment Date unless both (i)(X) the average
outstanding principal balance of the Group I Mortgage Loans delinquent 60 days
or more over the last six months, as a percentage of the Class B Loan Group I
Component Balance, is less than 50% or (Y) the average outstanding principal
balance of the Group I Mortgage Loans delinquent 60 days or more over the last
six months, as a percentage of the aggregate average outstanding principal
balance of all Group I Mortgage Loans over the last six months, does not exceed
2% and (ii) Realized Losses on the Group I Mortgage Loans to date for such
Payment Date, if occurring during the sixth, seventh, eighth, ninth or tenth
year (or any year thereafter) after the first Payment Date, are less than 30%,
35%, 40%, 45% or 50%, respectively, of the initial Class B Loan Group I
Component Balance. Notwithstanding the above, if on any Payment Date, the Class
A Percentage exceeds the initial Class A Percentage, then the Class FXA
Prepayment Percentage for each such Payment Date will equal 100%. Further, upon
the reduction of the aggregate Subaccount Principal Balance of the Class FXA
Subaccounts to zero, the Class FXA Prepayment Percentage will equal 0%.
"Class FXA Principal Payment Amount": As to any Payment Date, the sum of
(i) the Class FXA Percentage of the Principal Payment Amount for Group I
(exclusive of the portion thereof attributable to the Class FXP Discount
Mortgage Loan Principal Payment Amount for such Payment Date), (ii) the Class
FXA Prepayment Percentage of the Principal Prepayment Amount for Group I
(exclusive of the portion thereof attributable to the Class FXP Discount
Mortgage Loan Principal Payment Amount for such Payment Date), and (iii) the
Class FXA Liquidation Amount for such Payment Date.
"Class FXA Security": Any one of the Class FXA-1 Securities, Class FXA-2
Securities, Class FXA-3 Securities, Class FXA-4 Securities, Class FXA-5
Securities, Class FXA-6 Securities, or Class FXA-7 Securities.
"Class FXA Subaccounts": Any or all of the Class FXA-1 Subaccount, Class
FXA-2 Subaccount, Class FXA-3 Subaccount, Class FXA-4 Subaccount, Class FXA-5
Subaccount, Class FXA-6 Subaccount, and Class FXA-7 Subaccount, as appropriate.
"Class FXA-1 Security": Any one of the Class FXA-1 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXA-2 Security": Any one of the Class FXA-2 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
<PAGE> 45
"Class FXA-3 Security": Any one of the Class FXA-3 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXA-4 Security": Any one of the Class FXA-4 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXA-5 Lockout Liquidation Amount": With respect to a Payment Date,
the aggregate of, for each Group I Mortgage Loan which became a Liquidated Loan
during the Prepayment Period relating to the Distribution Date immediately
preceding such Payment Date, the lesser of (i) the Class FXA-5 Lockout
Percentage with respect to such Payment Date of the Stated Principal Balance of
such Mortgage Loan (exclusive of the Discount Fraction thereof, if applicable)
as of the second preceding Due Date and (ii) with respect to such Payment Date,
the Class FXA-5 Lockout Prepayment Percentage of the Group I Liquidation
Principal with respect to such Mortgage Loan.
"Class FXA-5 Lockout Percentage": For any Payment Date, the lesser of (i)
100% and (ii) the aggregate Security Principal Balances of the Class FXA-5
Securities immediately prior to such Payment Date divided by the aggregate
Stated Principal Balances of the Group I Mortgage Loans (less the aggregate
Security Principal Balance of the Class FXP Securities) as of the second
preceding Due Date.
"Class FXA-5 Lockout Prepayment Percentage": With respect to a Payment
Date, the product of (a) the Class FXA-5 Lockout Percentage with respect to
such Payment Date and (b) the Step Down Percentage with respect to such Payment
Date; provided, however, if on any Payment Date the Security Principal Balances
of the Class FXA Securities, other than the Class FXA-5 Securities (or the
Subaccount Principal Balances of the Class FXA Subaccounts, other than the
Class FXA-5 Subaccount), have been reduced to zero, the Class FXA-5 Lockout
Prepayment Percentage shall be equal to the Class FXA Prepayment Percentage for
such Payment Date.
"Class FXA-5 Lockout Principal Payment Amount": For any Payment Date, the
sum of (i) with respect to such Payment Date, the Class FXA-5 Lockout
Percentage of the Principal Payment Amount for Group I (exclusive of the
portion thereof attributable to the Class FXP Discount Mortgage Loan Principal
Payment Amount), (ii) with respect to such Payment Date, the Class FXA-5
Lockout Prepayment Percentage of the Principal Prepayment Amount for Group I
(exclusive of the portion thereof attributable to the Class FXP Discount
Mortgage Loan Principal Payment Amount), and (iii) the Class FXA-5 Lockout
Liquidation Amount with respect to such Payment Date.
<PAGE> 46
"Class FXA-5 Security": Any one of the Class FXA-5 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXA-6 Security": Any one of the Class FXA-6 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXA-7 Security": Any one of the Class FXA-7 Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXP Discount Mortgage Loan Principal Payment Amount": With respect
to any Payment Date, an amount equal to the aggregate for all Group I Discount
Mortgage Loans of the product for each Group I Discount Mortgage Loan of the
applicable Discount Fraction and the sum of (x) scheduled payments of principal
on such Group I Discount Mortgage Loan due on or before the related Due Date in
respect of which no payment has been made on any previous Payment Date and
which were received by the Determination Date, or which have been advanced as
part of an Advance with respect to such Payment Date, and (y) any Principal
Prepayment received in respect of such Group I Discount Mortgage Loan during
the related Prepayment Period.
"Class FXP Security": Any one of the Class FXP Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, evidencing an interest designated as a "regular interest"
in the Upper REMIC for purposes of the REMIC Provisions.
"Class FXS Notional Amount": With respect to any Payment Date shall equal
the product of (x) the aggregate Stated Principal Balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Payment Date, as of the Cut-off Date, of the Group I Premium Mortgage Loans and
(y) a fraction, the numerator of which is the weighted average of the Class FXS
Pool Strip Rates for the Group I Premium Mortgage Loans and the denominator of
which is 7.25%. The initial Class FXS Notional Amount shall be $22,244,414.34.
"Class FXS Pool Strip Rate": With respect to each Non-Discount Mortgage
Loan which is a Group I Mortgage Loan and any Payment Date, the Class FXS Pool
Strip Rate is equal to the then-applicable Net Mortgage Rate thereon minus
7.25% per annum, and with respect to each Group I Discount Mortgage Loan and
any Payment Date, the Class FXS Pool Strip Rate is equal to zero.
<PAGE> 47
"Class FXS Security": Any one of the Class FXS Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class FXS Subaccount Notional Amount": With respect to any Payment Date,
an amount equal to the Class FXS Notional Amount with respect to such Payment
Date.
"Class P Discount Mortgage Loan Principal Payment Amount": With respect to
any Payment Date, an amount equal to the aggregate for all Group II Discount
Mortgage Loans of the product for each Group II Discount Mortgage Loan of the
applicable Discount Fraction and the sum of (x) scheduled payments of principal
on such Group II Discount Mortgage Loan due on or before the related Due Date
in respect of which no payment has been made on any previous Payment Date and
which were received by the Determination Date, or which have been advanced as
part of an Advance with respect to such Payment Date, and (y) the portion of
the Principal Prepayment Amount for Group I received in respect of such Group
II Discount Mortgage Loan during the related Prepayment Period.
"Class P Security": Any one of the Class P Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments and the allocation of
Realized Losses as set forth in Sections 5 and 7, and evidencing an interest
designated as a "regular interest" in the Upper REMIC for purposes of the REMIC
Provisions.
"Class R Security": Any one of the Class R Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B-2 and evidencing an interest designated as a "residual
interest" in the Upper REMIC for purposes of the REMIC Provisions.
"Class RP Security": Any one of the Class RP Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B-2 and evidencing an interest designated as a "residual
interest" in the Lower REMIC for purposes of the REMIC Provisions.
"Class S Notional Amount": With respect to any Payment Date, the product
of (x) the aggregate Stated Principal Balance, as of the second preceding Due
Date after giving effect to payments scheduled to be received as of such Due
Date, whether or not received, or with respect to the initial Payment Date, as
of the Cut-off Date, of the Group II Premium Rate Mortgage Loans and (y) a
fraction, the numerator of which is the weighted average of the Class II Pool
Strip Rates for the Group II Premium Rate Mortgage Loans and the denominator of
which is 7.25%. The initial Class S Notional Amount shall be $[8,500,913.79].
"Class S Security": Any one of the Class S Securities executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit A, senior with respect to payments
<PAGE> 48
and the allocation of Realized Losses as set forth in Sections 5 and 7, and
evidencing an interest designated as a "regular interest" in the Upper REMIC
for purposes of the REMIC Provisions.
"Class S Subaccount Notional Amount": With respect to any Payment Date, an
amount equal to the Class 5 Notional Amount with respect to such Payment Date.
"Class II Security": Any one of the Class A Securities, the Class P
Securities, the Class S Securities or the Class A-2 Securities.
"Class II Subaccount": Any or all of the Class A Subaccounts, the Class P
Subaccount, the Class S Subaccount and the Class A-2 Subaccount, as
appropriate.
"Closing Date": September 30, 1997.
"Collection Account": The Eligible Account established by the Trustee
pursuant to Section 5 hereof into which distributions in respect of the
Certificates shall be deposited.
"Component": Any of the Class A-1 Component 1, Class A-1 Component 2,
Class A-9 Component 1 or Class A-9 Component 2.
"Component Principal Balance": With respect to a Component, on any date of
determination, an amount equal to (i) the initial Component Principal Balance
thereof as set forth in the definition thereof, minus (ii) the sum of (x) the
aggregate of all amounts previously allocated to such Component and applied to
reduce the Component Principal Balance thereof pursuant to Section 5(b) and (y)
the aggregate of all reductions in the Component Principal Balance thereof in
connection with Realized Losses which were previously allocated to such
Component pursuant to Section 7, plus (iii) in the case of Class A-9 Component
1 and Class A-9 Component 2, the Class A-9 Component 1 Accretion Amount and the
Class A-9 Component 2 Accretion Amount, respectively, each with respect to each
applicable Payment Date, which shall be deemed to be added to the respective
Component Principal Balances thereof on each Payment Date (immediately prior to
the time allocations of payments are made pursuant to Section 5(b)) through the
Class A-9 Component 1 Accretion Termination Date and the Class A-9 Component 2
Accretion Terminate Date, respectively.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business related to
this Series 1997-NAMC 3 Supplement shall be administered, which office at the
date of the execution of this Agreement is located at One First National Plaza,
Mail Suite 0126, Chicago, Illinois 60670-0126, Attention: CMCSC IV/North
American 1997-NAMC 3.
"Corresponding Class": With respect to each Class of Subaccount, the one
or more Classes of Securities designated as such in the Preliminary Statement.
<PAGE> 49
"Credit Support Depletion Date": The first Payment Date on which the
Senior Percentage equals 100%.
"Cut-off Date": September 1, 1997.
"Definitive Security": Any definitive, fully registered Security.
"Depository": The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Securities that are to be Book-Entry Securities is Cede & Co.
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 and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
"Depository Participant": A broker, dealer, bank or other financial
institutions or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Discount Fraction": With respect to each Discount Mortgage Loan, the
fraction expressed as a percentage, the numerator of which is 7.25% minus the
Net Mortgage Rate for such Mortgage Loan as of the Cut-off Date and the
denominator of which is 7.25%. The Discount Fraction with respect to each
Discount Mortgage Loan is set forth on Exhibit H attached hereto.
"Discount Mortgage Loan": Any Group I Discount Mortgage Loan or Group II
Discount Mortgage Loan.
"Disqualified Organization": Any of (i) the United States, any State or
political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax, and except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (unless such organization is subject to the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided to the Trustee that the holding of an ownership
interest in a Residual Security by such Person may cause the Trust Estate or
any Person having an ownership interest in any Class of Securities (other than
such Person) to incur liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the transfer of an ownership interest in
the Residual Security to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
<PAGE> 50
"Eligible Account": An account maintained with a federal or state
chartered depository institution (i) the short-term obligations of which are
rated by each of the Rating Agencies in its highest rating at the time of any
deposit therein, or (ii) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the Securityholders
will have a claim with respect to the funds in such account and a perfected
first priority security interest against any collateral (which shall be limited
to Permitted Instruments, each of which shall mature not later than the
Business Day immediately preceding the Payment Date next following the date of
investment in such collateral or the Payment Date if such Permitted Instrument
is an obligation of the institution that maintains the Collection Account)
securing such funds that is superior to claims of any other depositors or
general creditors of the depository institution with which such account is
maintained or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers
acting in its fiduciary capacity or (iv) an account or accounts of a depository
institution acceptable to the Rating Agencies (as evidenced in writing by the
Rating Agencies that use of any such account as the Collection Account will not
have an adverse effect on the then-current ratings assigned to the Classes of
the Securities then rated by the Rating Agencies). Eligible Accounts may bear
interest.
"ERISA Prohibited Bonds": The Class R and Class RP Securities.
"ERISA Restricted Bonds": The Class FXS, Class S, Class A-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Securities.
"Group I": The Mortgage Loans identified as Group I on the Mortgage Loan
Schedule, which are the Mortgage Loans relating to the Series 1997-NAMC 3-A
Certificates. Group I is the Mortgage Loan Group that relates to the Class FX
Securities and the Class FX Subaccounts.
"Group I Discount Mortgage Loan": Any Group I Mortgage Loan having a Net
Mortgage Rate of less than 7.25% per annum as of the Cut-off Date.
"Group I Liquidation Principal": With respect to a Payment Date, the
principal portion of Liquidation Proceeds received with respect to a Group I
Mortgage Loan which became a Liquidated Loan (but not in excess of the
principal balance thereof) during the relating Prepayment Period, exclusive of
the portion thereof attributable to the Class FXP Discount Mortgage Loan
Principal Payment Amount with respect to such Payment Date.
"Group I Mortgage Loan": A Mortgage Loan in Group I.
"Group I Premium Mortgage Loan": Any Group I Mortgage Loan having a Net
Mortgage Rate in excess of 7.25% per annum as of the Cut-off Date.
<PAGE> 51
"Group I Subordinate Percentage": For any Payment Date, the excess of 100%
over the Class FXA Percentage with respect to such Payment Date.
"Group I Subordinate Prepayment Percentage": For any Payment Date, the
excess of 100% over the Class FXA Prepayment Percentage with respect to such
Payment Date.
"Group II": The Mortgage Loans identified as Group II on the Mortgage Loan
Schedule, which are the Mortgage Loans relating to the Series 1997-NAMC 3-B
Certificates. Group II is the Mortgage Loan Group that relates to the Class II
Securities and the Class II Subaccounts.
"Group II Discount Mortgage Loan": Any Group II Mortgage Loan having a Net
Mortgage Rate of less than 7.25% per annum as of the Cut-off Date.
"Group II Liquidation Principal": With respect to a Payment Date, the
principal portion of Liquidation Proceeds received with respect to a Group II
Mortgage Loan which became a Liquidated Loan (but not in excess of the
principal balance thereof) during the relating Prepayment Period, exclusive of
the portion thereof attributable to the Class P Discount Mortgage Loan
Principal Payment Amount with respect to such Payment Date.
"Group II Mortgage Loan": A Mortgage Loan in Group II.
"Group II Premium Mortgage Loan": Any Group II Mortgage Loan having a Net
Mortgage Rate in excess of 7.25% per annum as of the Cut-off Date.
"Group II Subordinate Percentage": For any Payment Date, the excess of
100% over the Class A Percentage with respect to such Payment Date.
"Group II Subordinate Prepayment Percentage": For any Payment Date, the
excess of 100% over the Class A Prepayment Percentage with respect to such
Payment Date.
"Initial Purchaser": Donaldson, Lufkin & Jenrette Securities Corporation.
"Interest Accrual Period": With respect to any Payment Date, the
immediately preceding calendar month.
"Issuer": CMC Securities Corporation IV or its successor in interest.
"Junior Bond Writedown Amount": Zero.
"Liquidation Principal": The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Loan (but
not in excess of the principal balance thereof) during the related Prepayment
Period for any Payment Date, exclusive of the portion thereof attributable to
(i) the Class FXP Discount Mortgage Loan Principal Payment Amount with respect
<PAGE> 52
to such Payment Date, if such Mortgage Loan is a Group I Mortgage Loan or (ii)
the Class P Discount Mortgage Loan Principal Payment Amount, if such Mortgage
Loan is a Group II Mortgage Loan.
"Lower REMIC": The REMIC consisting of the Trust Estate, other than the
Subaccounts.
"Lower REMIC Interests": Any one of the Class of regular interests in the
Lower REMIC described as such in Section 15(a).
"Mortgage Loan": Each of the mortgage loans pooled to form the
Certificates.
"Mortgage Loan Group": Either Group I or Group II.
"Non-Discount Mortgage Loan": Any Mortgage Loan that is not a Discount
Mortgage Loan.
"Non-United States Person": Any Person other than a United States Person.
"Notional Amount": Any of the Class FXS Notional Amount, the Class S
Notional Amount, the Class A-2 Notional Amount, the Class FXS Subaccount
Notional Amount, the Class S Subaccount Notional Amount or the Class A-2
Subaccount Notional Amount.
"Overcollateralized": On any Payment Date (after giving effect to payments
to be made on such date), (i) the Class FX Subaccounts are Overcollateralized
if the aggregate Stated Principal Balance of the Group I Mortgage Loans, less
the applicable Discount Fraction of any Group I Discount Mortgage Loans,
exceeds the aggregate Subaccount Principal Balance of the Class FX Subaccounts,
and (ii) the Class II Subaccounts are Overcollateralized if the aggregate
Stated Principal Balance of the Group II Mortgage Loans, less the applicable
Discount Fraction of any Group II Discount Mortgage Loans, exceeds the
aggregate Subaccount Principal Balance of the Class II Subaccounts.
"Ownership Interest": As to any Security, any ownership or security
interest in such Security, including any interest in such Security as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
"Payment Date": The 25th day of any month, or if such 25th day is not a
Business Day, the Business Day immediately following such 25th day, commencing
on October 27, 1997.
"Payoff Period": With respect to the first Payment Date, the period from
the Cut-Off Date through October 14, 1997, inclusive; and with respect to any
Payment Date thereafter, the period from the 15th day of the prior month
through the 14th day of the month of such Payment Date, inclusive.
<PAGE> 53
"Percentage Interest": (a) With respect to any Security (other than a
Residual Security), the interest in the related Class evidenced by such
Security, which as to each such Security shall be equal to the initial Security
Principal Balance (or Notional Amount, as applicable) thereof divided by the
aggregate initial Security Principal Balance (or Notional Amount, as
applicable) of all of the Securities of the same Class, expressed as a
percentage carried to four decimal places; and (b) with respect to any Residual
Security, the interest in payments to be made with respect to the related Class
evidenced thereby, expressed as a percentage carried to four decimal places.
"Permitted Instruments": Any one or more of the following:
(i) direct obligations of, or obligations, the
timely payment of which, are fully guaranteed
as to principal and interest by, the United
States or any agency or instrumentality
thereof, provided such obligations are backed
by the full faith and credit of the United
States;
(ii) repurchase obligations (the collateral for
which is held by a third party or the Trustee)
with respect to any security described in
clause (i) above, provided that the long-term
unsecured obligations of the party agreeing to
repurchase such obligations are at the time
rated by each Rating Agency in one of its two
highest long-term rating categories;
(iii) securities of deposit, time deposits, demand
deposits and bankers' acceptances of any bank
or trust company incorporated under the laws of
the United States or any state thereof or the
District of Columbia, provided that the
short-term commercial paper of such bank or
trust company at the date of acquisition
thereof has been rated by each Rating Agency in
its highest short-term rating;
(iv) money market funds organized under the
Investment Company Act of 1940 or common trust
funds rated not less than "AAAm" by Standard &
Poor's, not less than "Aaa" by Moody's
Investors Services and not less than "AAA" by
DCR, if rated by DCR;
(v) commercial paper (having original maturities of
not more than nine months) of any corporation
incorporated under the laws of the United
States or any state thereof or the District of
Columbia which on the date of acquisition has
been rated by each Rating Agency in its highest
short-term rating; and
<PAGE> 54
(vi) any other obligation or security acceptable to
the Rating Agencies (as certified by a letter
from each Rating Agency to the Trustee) in
respect of mortgage pass-through securities
rated in one of its two highest rating
categories;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments
with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument where the principal and interest payments with respect to such
instrument provide a yield to maturity exceeding 120% of the yield to maturity
at par of such underlying obligation.
"Permitted Transferee": Any transferee of a Class R or Class RP Security
other than a NonUnited States Person or Disqualified Organization.
"Pooling and Servicing Agreement": The Pooling and Servicing Agreement
dated as of September 1, 1997, among the Issuer, as Seller, the Trustee, as
Trustee, and North American Mortgage Company, as Master Servicer and Loan
Seller, pursuant to which the Certificates were issued.
"Prepayment Assumption": With respect to the Group I Mortgage Loans, 100%
of the "Alternative Prepayment Assumption" as defined in the Prospectus
Supplement, and with respect to the Group II Mortgage Loans, 250% of the "Basic
Prepayment Assumption" as defined in the Prospectus Supplement, used solely for
determining the rate of accrual of original issue discount, market discount and
amortizable premium on the related Securities for federal income tax purposes.
The "Basic Prepayment Assumption" represents an annualized constant assumed
rate of prepayment each month of a pool of mortgage loans relative to its then
outstanding principal balance for the life of such mortgage loans.
"Prepayment Period": As to any Payment Date, with respect to (i) Payoffs,
the Payoff Period, and (ii) Curtailments, the calendar month preceding the
month in which such Payment Date occurs.
"Principal Only Security": Each of the Class FXP Securities and Class P
Securities.
"Principal Payment Amount": For any Payment Date and for any Mortgage Loan
Group, the sum of the scheduled principal payments on the Mortgage Loans in
such Mortgage Loan Group due on the related Due Date.
"Principal Prepayment Amount": For any Payment Date and for any Mortgage
Loan Group, the sum of (i) all Curtailments in respect of the Mortgage Loans in
such Mortgage Loan Group which were received during the related Prepayment
Period, (ii) all Payoffs in respect of the Mortgage Loans in such Mortgage Loan
Group received during the related Prepayment Period, (iii) the principal
portion of repurchase proceeds received with respect to any Mortgage Loan in
such
<PAGE> 55
Mortgage Loan Group which was repurchased as permitted or required by the
Pooling and Servicing Agreement during the calendar month preceding the month
of such Payment Date and (iv) any other unscheduled payments of principal which
were received from the Mortgage Loans in such Mortgage Loan Group during such
preceding calendar month, other than Payoffs, Curtailments or Liquidation
Principal.
"Pro Rata Allocation": The allocation of (i) the principal portion of
losses relating to a Mortgage Loan to all Classes of Securities, other than the
Principal Only Securities, pro rata according to their respective Security
Principal Balances, except if the loss is recognized with respect to a Group I
Discount Mortgage Loan or a Group II Discount Mortgage Loan, the applicable
Discount Fraction of such loss will first be allocated to the related Principal
Only Securities, and (ii) of the interest portion of losses relating to a
Mortgage Loan to all Classes of Securities pro rata according to the amount of
interest accrued on each such Class, other than the Principal Only Securities,
in reduction thereof and then in reduction of their related Security Principal
Balance.
"Prospectus Supplement": The Prospectus Supplement dated September 26,
1997 relating to the Securities.
"Record Date": With respect to each Payment Date, the last Business Day of
the month preceding the month in which such Payment Date occurs.
"Regular Security": Any of the Securities other than the Class RP
Securities or Class R Securities.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.
"Residual Security": Any of the Class R Securities or Class RP Securities.
"Rule 144A": Rule 144A under the Securities Act of 1933, as amended, as in
effect from time to time.
"Security": Any Class FXA-1 Security, Class FXA-2 Security, Class FXA-3
Security, Class FXA-4 Security, Class FXA-5 Security, Class FXA-6 Security,
Class FXA-7 Security, Class FXP Security, Class FXS Security, Class A-1
Security, Class A-2 Security, Class A-3 Security, Class A-4 Security, Class A-5
Security, Class A-6 Security, Class A-7 Security, Class A-8 Security, Class A-9
Security, Class P Security, Class S Security, Class B-1 Security, Class B-2
Security, Class B-3
<PAGE> 56
Security, Class B-4 Security, Class B-5 Security, Class B-6 Security, Class RP
Security or Class R Security.
"Security Account Deposit Date": With respect to any Payment Date, the
Business Day immediately prior thereto.
"Security Interest Rate": With respect to (i) each Class of Securities and
the corresponding Subaccounts (other than the Principal Only Securities and the
corresponding Subaccounts) the per annum rate set forth in the Preliminary
Statement hereto.
"Security Payment Amount": The amounts to be paid to the holders of the
Securities (other than the Class RP Securities) pursuant to Section 5.
"Security Owner": With respect to a Book-Entry Security, the Person who is
the beneficial owner of such Security, as reflected on the books of an indirect
participating brokerage firm for which a Depository Participant acts as agent,
if any, and otherwise on the books of a Depository Participant, if any, and
otherwise on the books of the Depository.
"Security Principal Balance": With respect to each Class FXA-1 Security,
Class FXA-2 Security, Class FXA-3 Security, Class FXA-4 Security, Class FXA-5
Security, Class FXA-6 Security, Class FXA-7 Security, Class FXP Security, Class
A-1 Security, Class A-3 Security, Class A-5 Security, Class A-6 Security, Class
A-7 Security, Class A-8 Security, Class A-9 Security, Class P Security, Class R
Security and Class RP Security, on any date of determination, an amount equal
to (i) the initial Security Principal Balance of such Security, minus (ii) the
sum of (a) the aggregate of all amounts previously paid with respect to such
Security (or any predecessor Security) and applied to reduce the Security
Principal Balance thereof pursuant to Section 5(b), and (b) the aggregate of
all reductions in Security Principal Balance in connection with Realized Losses
which were previously allocated to such Security (or any predecessor Security)
pursuant to Section 7. With respect to each Class B-1 Security, on any date of
determination, an amount equal to (i) the initial Security Principal Balance of
such Class B-1 Security, as specified on the face thereof, minus (ii) the sum
of (a) the aggregate of all amounts previously paid with respect to such
<PAGE> 57
Security (or any predecessor Security) and applied to reduce the Security
Principal Balance thereof pursuant to Section 5(b), and (b) the aggregate of
all reductions in Security Principal Balance in connection with Realized Losses
which were previously allocated to such Security (or any predecessor Security)
pursuant to Section 7; provided that if the Security Principal Balances of the
Class B-2 Securities, Class B-3 Securities, Class B-4, Class B-5 Securities and
Class B-6 Securities have been reduced to zero, the Security Principal Balance
of each Class B-1 Security, at any given time shall thereafter be an amount
equal to (i) the Percentage Interest evidenced by such Security times (ii) the
excess, if any, of (a) the then aggregate Stated Principal Balance of the
Mortgage Loans (or related REO Properties) over (b) the sum of the then
aggregate Security Principal Balance of all of the Senior Securities. With
respect to each Class B-2 Security, on any date of determination, an amount
equal to (i) the initial Security Principal Balance of such Class B-2 Security,
as specified on the face thereof, minus (ii) the sum of (a) the aggregate of
all amounts previously paid with respect to such Security (or any predecessor
Security) and applied to reduce the Security Principal Balance thereof pursuant
to Section 5(b), and (b) the aggregate of all reductions in Security Principal
Balance in connection with Realized Losses which were previously allocated to
such Security (or any predecessor Security) pursuant to Section 7; provided,
that if the Security Principal Balance of the Class B-3 Securities, Class B-4
Securities, Class B-5 Securities and Class B-6 Securities has been reduced to
zero, the Security Principal Balance of each Class B-2 Security at any given
time shall thereafter be an amount equal to (i) the Percentage Interest
evidenced by such Security times (ii) the excess, if any, of (a) the then
aggregate Stated Principal Balance of the Mortgage Loans (or related REO
Properties) over (b) the sum of the then aggregate Security Principal Balance
of all of the Senior Securities and Class B-1 Securities. With respect to each
Class B-3 Security, on any date of determination, an amount equal to (i) the
initial Security Principal Balance of such Class B-3 Security, as specified on
the face thereof, minus (ii) the sum of (a) the aggregate of all amounts
previously paid with respect to such Security (or any predecessor Security) and
applied to reduce the Security Principal Balance thereof pursuant to Section
5(a), and (b) the aggregate of all reductions in Security Principal Balance in
connection with Realized Losses which were previously allocated to such
Security (or any predecessor Security) pursuant to Section 7; provided, that if
the Security Principal Balance of the Class B-4 Securities, Class B-5
Securities and Class B-6 Securities has been reduced to zero, the Security
Principal Balance of each Class B-3 Security at any given time, shall
thereafter be an amount equal to (i) the Percentage Interest evidenced by such
Security times (ii) the excess, if any, of (a) the then aggregate Stated
Principal Balance of the Mortgage Loans (or related REO Properties) over (b)
the sum of the then aggregate Security Principal Balance of all of the Senior
Securities, Class B-1 Securities and Class B-2 Securities. With respect to each
Class B-4 Security, on any date of determination, an amount equal to (i) the
initial Security Principal Balance of such Class B-4 Security, as specified on
the face thereof, minus (ii) the sum of (a) the aggregate of all amounts
previously paid with respect to such Security (or any predecessor Security) and
applied to reduce the Security Principal Balance thereof pursuant to Section
5(a), and (b) the aggregate of all reductions in Security Principal Balance in
connection with Realized Losses which were previously allocated to such
Security (or any predecessor Security) pursuant to Section 7; provided, that if
the Security Principal Balance of the Class B-5 Securities and Class B-6
Securities has been reduced to zero, the Security Principal Balance of each
Class B-4 Security at any given time, shall thereafter be an amount equal to
(i) the Percentage Interest evidenced by such Security times
<PAGE> 58
(ii) the excess, if any, of (a) the then aggregate Stated Principal Balance of
the Mortgage Loans (or related REO Properties) over (b) the sum of the then
aggregate Security Principal Balance of all of the Senior Securities, Class B-1
Securities, Class B-2 Securities, Class B-3 Securities and Class B-4
Securities. With respect to each Class B-6 Security, at any given time, an
amount equal to (i) the Percentage Interest evidenced by such Security times
(ii) the excess, if any, of (a) the then aggregate Stated Principal Balance of
the Mortgage Loans (or related REO Properties) over (b) the then aggregate
Security Principal Balance of all of the Senior Securities, Class B-1
Securities, Class B-2 Securities, Class B-3 Securities, Class B-4 Securities
and the Class B-5 Securities. The Strip Securities have no principal balances
and shall not be entitled to payments of principal.
"Securityholder" or "Holder": The Person in whose name a Security is
registered in the Bond Register, except that, neither a Disqualified
Organization nor a non-United States Person shall be a Holder of a Class RP or
Class R Security for any purposes hereof. The Trustee shall be entitled to rely
upon a certification of the Issuer or the Master Servicer in determining if any
Securities are registered in the name of a respective affiliate. All references
herein to "Holders" or "Securityholders" shall reflect the rights of Security
Owners as they may indirectly exercise such rights through the Depository and
participating members thereof, except as otherwise specified herein; provided,
however, that the Trustee shall be required to recognize as a "Holder" or
"Securityholder" only the Person in whose name a Security is registered in the
Bond Register.
"Senior Percentage": With respect to any Payment Date, the lesser of 100%
and a fraction, expressed as a percentage, the numerator of which is the
aggregate Security Principal Balance of the Senior Securities (other than the
Principal Only Securities) immediately prior to such Payment Date and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (or related REO Properties) (other than the related Discount
Fraction of each Discount Mortgage Loan) immediately prior to such Payment
Date.
"Senior Security": Any of the Class FXS Securities, the Class FXA
Securities, the Class FXP Securities, the Class S Securities, the Class A-2
Securities, the Class A Securities, the Class P Securities, the Class R
Securities or the Class RP Securities.
"Series 1997-NAMC 3 REMIC": Each of the Upper REMIC and the Lower REMIC.
"Series 1997-NAMC 3-A Certificates": The Series 1997-NAMC 3-A
Certificates, issued pursuant to the Pooling and Servicing Agreement.
"Series 1997-NAMC 3-B Certificates": The Series 1997-NAMC 3-B
Certificates, issued pursuant to the Pooling and Servicing Agreement.
"Series of Certificates": The Series 1997-NAMC 3-A Certificates or the
Series 1997-NAMC 3-B Certificates, as applicable.
<PAGE> 59
"Single Security": A Security of any Class evidencing an initial Security
Principal Balance equal to $1,000 or, if applicable, a Notional Amount of
$1.00.
"Stated Principal Balance": With respect to any Mortgage Loan or related
REO Property at any given time, (i) the principal balance of the Mortgage Loan
outstanding as of the Cut-off Date, after application of principal payments due
on or before such date, whether or not received, minus (ii) the sum of (a) the
principal portion of the Monthly Payments due with respect to such Mortgage
Loan or REO Property during each Due Period ending prior to the most recent
Payment Date which were paid or with respect to which an Advance was paid, and
(b) all Principal Prepayments with respect to such Mortgage Loan or REO
Property, and all Insurance Proceeds, Liquidation Proceeds and net income from
a REO Property to the extent applied by the Master Servicer as recoveries of
principal in accordance with Section 3.15 of the Pooling and Servicing
Agreement with respect to such Mortgage Loan or REO Property, which were paid
pursuant to Section 5 on any previous Payment Date, and (c) any Realized Loss
with respect thereto allocated pursuant to Section 7 for any previous Payment
Date.
"Step Down Percentage": For any Payment Date will be the following
percentage:
Payment Date Occurring In Stepdown Percentage
- ------------------------- -------------------
October 1997 through September 2002 0%
October 2002 through September 2003 30%
October 2003 through September 2004 40%
October 2004 through September 2005 60%
October 2005 through September 2006 80%
October 2006 and thereafter 100%
"Strip Security": Each of the Class FXS Securities, Class A-2 Securities
and Class S Securities.
"Subaccount": Each of the subaccounts established solely for purposes of
the REMIC Provisions by the Trustee which have the Security Interest Rates and
initial Subaccount Principal Balances or Subaccount Notional Amounts set forth
in the Preliminary Statement hereto. References herein to one or more "Classes"
of Subaccounts shall refer to the Class designation set forth in the
Preliminary Statement hereto.
"Subaccount Notional Amount": Any of the Class FXS Subaccount Notional
Amount, the Class S Subaccount Notional Amount or the Class A-2 Notional
Amount.
"Subaccount Payment Amount": The amounts deemed paid to the Subaccounts
pursuant to Section 5(b).
<PAGE> 60
"Subaccount Principal Balance": With respect to each Subaccount (other
than the Class FXS Subaccount, the Class A-2 Subaccount and Class S
Subaccount), on any date of determination, an amount equal to (i) the initial
Subaccount Principal Balance as specified in the Preliminary Statement, minus
(ii) the sum of (a) the aggregate of all amounts previously deemed paid with
respect to such Subaccount and applied to reduce the Subaccount Principal
Balance thereof pursuant to Section 5(b) the aggregate of all reductions in
Subaccount Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Subaccount pursuant to
Section 7. The Class FXS Subaccount, the Class A-2 Subaccount and the Class S
Subaccount have no principal balances.
"Subordinate Liquidation Amount": With respect to a Payment Date, the
excess, if any, of the (i) aggregate Liquidation Principal for all Mortgage
Loans which became Liquidated Loans during the related Prepayment Period (other
than any such amounts allocated to the Principal Only Securities), over (ii)
the sum of the Class FXA Liquidation Amount, the Class FXA-5 Lockout
Liquidation Amount, the Class A Liquidation Amount and the Class A-4 Lockout
Liquidation Amount for such Payment Date.
"Subordinate Percentage": In respect of Group I for any Payment Date, the
excess of 100% over the Class FXA Percentage with respect to such Payment Date
and in respect of Group II for any Payment Date, the excess of 100% over the
Class A Percentage with respect to such Payment Date.
"Subordinate Principal Payment Amount": For any Payment Date, the excess
of (A) the sum of (i) the Group I Subordinate Percentage of the Principal
Payment Amount for Group I (exclusive of the portion thereof attributable to
the Class FXP Discount Mortgage Loan Principal Payment Amount), (ii) the Group
II Subordinate Percentage of the Principal Payment Amount for Group II
(exclusive of the portion thereof attributable to the Class P Discount Mortgage
Loan Principal Payment Amount), (iii) the Group I Subordinate Prepayment
Percentage of the Principal Prepayment Amount for Group I (exclusive of the
portion thereof attributable to the Class FXP Discount Mortgage Loan Principal
Payment Amount), (iv) the Group II Subordinate Prepayment Percentage of the
Principal Prepayment Amount for Group II (exclusive of the portion thereof
attributable to the Class P Discount Mortgage Loan Principal Payment Amount)
and (v) the Subordinate Liquidation Amount over (B) the sum of (x) the amounts
required to be paid to the Principal Only Securities pursuant to clause (v) of
Sections 5(b)(1)(a) and 5(b)(1)(c) on such Payment Date, (y) in the event that
the Security Principal Balance of either the Class FX or Class II Securities
has been reduced to zero, principal paid from the Available Payment Amount for
the Mortgage Loan Group related to such Class FX or Class II Securities to the
remaining Class FX or Class II Securities pursuant to Section 5(b)(1)(b)(i) and
(z) the amounts in respect of principal paid from the Available Payment Amount
of the Mortgage Loan Group relating to Overcollateralized Subaccounts pursuant
to Section 5(b)(1)(b)(iii).
"Subordinate Security": Any of the Class B-1 Securities, Class B-2
Securities, Class B-3 Securities, Class B-4 Securities, Class B-5 Securities or
Class B-6 Securities.
<PAGE> 61
"Subordination Level": With respect to a Class of Subordinate Securities,
as of any date, the percentage obtained by dividing the sum of the Security
Principal Balances of all Securities which are subordinate in right of payment
to such Class by the sum of the Security Principal Balances of all of the
Securities as of such date prior to giving effect to payments or allocations of
Realized Losses on such date.
"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Security.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Security.
"Trustee": The First National Bank of Chicago, or its successor in
interest, or any successor trustee appointed as herein provided.
"Undercollateralized": On any Payment Date (after giving effect to
payments to be made on such date), (i) the Class FX Subaccounts are
Undercollateralized if the aggregate Subaccount Principal Balance of the Class
FX Subaccounts exceeds the aggregate Stated Principal Balance of the Group I
Mortgage Loans, less the applicable Discount Fraction of any Group I Discount
Mortgage Loans, and (ii) the Class II Subaccounts are Undercollateralized if
the aggregate Subaccount Principal Balance of the Class II Subaccounts, exceeds
the aggregate Stated Principal Balance of the Group II Mortgage Loans, less the
applicable Discount Fraction of any Group II Discount Mortgage Loans.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, an estate
whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States and
any trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.
"United States": As defined in Section 7701 of the Code or successor
provisions.
"Upper REMIC": The REMIC consisting primarily of the Subaccounts and the
Collection Account (other than amounts in the Collection Account that are
distributable to the Class RP Security); provided that the Class A-1 Subaccount
and the Class A-2 Subaccount shall be treated as one REMIC regular interest.
"Voting Rights": Any voting or consent rights specified under the
Indenture by reference to a specified percentage of the "Aggregate Current
Principal Amount" of the "Outstanding Bonds" of a "Series" (as each such term
is defined in the Indenture). Notwithstanding anything to the contrary in the
Indenture, at all times during which the Securities are outstanding, 96.00% of
all of
<PAGE> 62
the Voting Rights shall be allocated among Holders of the Class FXA-1
Securities, Class FXA-2 Securities, Class FXA-3 Securities, Class FXA-4
Securities, Class FXA-5 Securities, Class FXA-6 Securities, Class FXA-7
Securities, Class FXP Securities, Class A-1 Securities, Class A-3 Securities,
Class A-4 Securities, Class A-5 Securities, Class A-6 Securities, Class A-7
Securities, Class A-8 Securities, Class A-9 Securities, Class P Securities,
Class B-1 Securities, Class B-2 Securities, Class B-3 Securities, Class B-4
Securities, Class B-5 Securities and Class B-6 Securities, in proportion to the
outstanding Security Principal Balances of their respective Securities; 3.00%
of all of the Voting Rights will be allocated among the Holders of the Class
FXS Securities, Class A-2 Securities and Class S Securities pro rata, based
upon their applicable Notional Amounts and 0.50% of all Voting Rights will be
allocated to each of the Class RP Securities and Class R Securities in
proportion to their initial respective Security Principal Balance, in each case
allocated among the Securities of each such Class in accordance with their
respective Percentage Interests.
13. Actions by Trustee as Holder of Certificates.
(a) With the consent of the Holders of Series 1997-NAMC 3 Securities
entitled to at least 66% of the Voting Rights, the Issuer, when
authorized by a Board Resolution, and the Trustee may take any action
that by the terms of the Pooling and Servicing Agreement requires the
consent of the holders of not less than 662/3% of the Fractional
Undivided Interest of the Trust Fund (as defined in the Pooling and
Servicing Agreement evidenced by a Certificate, including but not
limited to: (1) entering into any amendments to the Pooling and
Servicing Agreement; (2) removing or consenting to the removal of, and
appointing or consenting to the appointment of, a successor Master
Servicer; and (3) removing or consenting to the removal of, and
appointing or consenting to the appointment of, the Person acting as
trustee under the Pooling and Servicing Agreement; provided, however,
that no such action shall, without the consent of the Holder of each
Security affected thereby:
(1) reduce the amount of, or delay the timing of, payments received
on its Respective Trust Fund that are required to be paid on
any Certificate or change the repurchase price with respect
thereto, change any place of payment where, or the coin or
currency in which, any Certificate or any interest thereon is
payable, or impair the right to institute suit for the
enforcement of the payment of any installment of interest or
principal due on any Certificate or adversely affect the tax
consequences to any holder of a Certificate;
(2) change the requirement of the consent of the holders of the
Certificate for any such action pursuant to the Pooling and
Servicing Agreement;
(3) modify any of the provisions of this Section, except to
increase any percentage specified herein; or
<PAGE> 63
(4) permit the creation of any lien ranking prior to or on a parity
with the trust created by the Pooling and Servicing Agreement
with respect to any part of any Trust Fund or terminate the
trust created by the Pooling and Servicing Agreement on any
property at any time subject thereto or deprive the Holder of
any Security of the security afforded by any Certificate;
provided, however, that notwithstanding the foregoing provisions of this
Section, Issuer and the Trustee may, without the consent of any Holder of any
Series 1997-NAMC 3 Securities, consent to the release from or termination of
the trust created by the Pooling and Servicing Agreement with respect to any
Mortgage Loan when such action by the Issuer and the Trustee is specifically
authorized by any other provision of the Indenture, this Series 1997-NAMC 3
Supplement or the Pooling and Servicing Agreement.
The Trustee may in its discretion determine whether or not any Series
1997-NAMC 3 Securities would be affected by any proposed action and any such
determination shall be conclusive upon the Holders of all Series 1997-NAMC 3
Securities, whether theretofore or thereafter authenticated and delivered
hereunder. The Trustee shall not be liable for any such determination made in
good faith.
It shall not be necessary for any Act of Securityholders under this
Section to approve the particular form of any written instrument proposed to
effect such action, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any written
instrument proposed to effect such action pursuant to this Section, the Issuer
shall mail to the Holders of the Series 1997- NAMC 3 Securities to which such
action relates a notice setting forth in general terms the substance of such
action. Any failure of the Issuer to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
action.
(b) The Issuer hereby acknowledges and agrees that should the Person
acting as trustee under the Pooling and Servicing Agreement demand
indemnity satisfactory to it as a condition precedent to taking any
action requested by the Trustee, as holder of the Certificates, the
Trustee hereunder shall have no duty or obligation to advance its own
funds in fulfillment of such indemnity, but rather may request such
indemnity from the Issuer or from the Holders of the Series 1997-NAMC
3 Securities. Should the Trustee, in its sole discretion and without
obligation, elect to advance its own funds for such purpose, the
Issuer acknowledges and agrees to reimburse the Trustee, under and
pursuant to Section 6.7 of the Indenture, within 15 days of its
receipt of an invoice therefor, and further agrees to pay interest on
the principal amount of such advance not so paid by such date at the
lesser of (i) the prime rate announced from time to time by the
Trustee, in its commercial banking capacity plus two percent (2%) per
annum, calculated on the basis of a 360-day year and (ii) the Highest
Lawful Rate.
<PAGE> 64
14. [RESERVED]
15. REMIC Administration.
(a) The Trustee shall perform all duties of the Issuer under Section 4.3
of the Indenture. The Trustee shall make elections to treat the Lower
REMIC and Upper REMIC as REMICs under the Code and, if necessary,
under applicable state law. Such elections will be made on Forms 1066
or other appropriate federal tax or information return or any
appropriate state return for the taxable year ending on the last day
of the calendar year in which the Securities are issued. For the
purposes of the REMIC elections in respect of the Trust Estate, the
Class FX Securities, the Class II Securities, and the Class B
Securities shall be designated as the "regular interests" and the
Class R Securities shall be designated as the sole class of "residual
interest" in the Upper REMIC. The Subaccounts shall be designated as
the "regular interests" and the Class RP Securities shall be
designated as the sole class of "residual interest" in the Lower
REMIC, provided that the Class A-1 Subaccount and Class A-2 Subaccount
shall be only one "regular interest" (subject to the foregoing, the
Subaccounts shall be the "Lower REMIC Interests"). The Trustee shall
not permit the creation of any "interests" in the Trust Estate (within
the meaning of Section 860G of the Code) other than the interests
represented by the Lower REMIC Interests and the Securities.
(b) The Closing Date is hereby designated as the "Startup Day" of each of
the Lower REMIC and Upper REMIC within the meaning of Section
860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any right of
reimbursement from the Trust Estate, any and all expenses relating to
any tax audit of the Trust Estate (including, but not limited to, any
professional fees or any administrative or judicial proceedings with
respect thereto that involved the Internal Revenue Service or state
tax authorities), other than the expense of obtaining any tax related
Opinion of Counsel not obtained in connection with such an audit and
other than taxes, in either case except as specified in the Pooling
and Servicing Agreement. The holder of the largest Percentage Interest
of the Class R Securities shall be the tax matters person of the Upper
REMIC and the holder of the largest Percentage Interest of the Class
RP Securities shall be the tax matters person of the Lower REMIC, in
each case in the manner provided under Treasury Regulations Section
1.860F-4(d) and Temporary Treasury Regulations Section
301.6231(a)(7)-1T and the Trustee is hereby irrevocably designated and
shall serve as attorney-in-fact and agent for any such Persons that
are tax matters persons. The Trustee, as designated by the tax matters
persons, shall (i) act on behalf of the Upper REMIC and Lower REMIC in
relation to any tax matter or controversy involving either the Upper
REMIC or the Lower REMIC and (ii) represent the Upper REMIC and Lower
REMIC in any
<PAGE> 65
administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority with respect thereto. To
the extent authorized under the Code and the regulations promulgated
thereunder, each Holder of a Class R and a Class RP Security hereby
irrevocably appoints and authorizes the Trustee to be its
attorney-in-fact for purposes of signing any Tax Returns required to
be filed on behalf of the related REMIC.
(d) The Trustee shall prepare or cause to be prepared, sign and file all
of the Tax Returns in respect of each Series 1997-NAMC 3 REMIC, other
than Tax Returns required to be filed by the Master Servicer pursuant
to Section 4.05 of the Pooling and Servicing Agreement. The expenses
of preparing and filing such returns shall be borne by the Trustee
without any right of reimbursement therefor. The Trustee shall cause
the first federal income tax return of each Series 1997-NAMC 3 REMIC
to include the information required by Treasury Regulation Section
1.860D-1(d)(2) and Treasury Regulation Section 1.860F-4(b)(2).
(e) The Trustee shall perform on behalf of the Trust Estate all reporting
and other tax compliance duties that are the responsibility of the
Trust Estate under the Code, REMIC Provisions or other compliance
guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the
REMIC Provisions or other such compliance guidance, the Trustee shall
provide (i) to any Transferor of a Class R or a Class RP Security such
information as is necessary for the application of any tax relating to
the transfer of a Class R or a Class RP Security to any Person who is
not a Permitted Transferee, (ii) to Securityholders such information
or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and
market discount or premium (using the Prepayment Assumption) and (iii)
to the Internal Revenue Service the name, title, address and telephone
number of the person who will serve as the representative of the Trust
Estate. In addition, the Master Servicer shall provide or cause to be
provided to the Trustee, within ten (10) days after the Closing Date,
all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Securities, including, without limitation, the price, yield,
prepayment assumption and projected cash flow of the Securities.
(f) The Trustee shall take such action and shall cause the Trust Estate
created hereunder to take such action as shall be necessary to create
or maintain the status of each Series 1997-NAMC 3 REMIC as REMICs
under the REMIC Provisions. The Trustee shall not take any action,
cause either the Upper REMIC or the Lower REMIC to take any action or
fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the either the Upper REMIC or the Lower REMIC
as a REMIC or (ii) result in the imposition of a tax upon the Trust
Estate (including but
<PAGE> 66
not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC
set forth in Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless the Trustee has received an Opinion of
Counsel (at the expense of the party seeking to take such action but
in no event shall such Opinion of Counsel be an expense of the
Trustee) to the effect that the contemplated action will not, with
respect to either the Upper REMIC or the Lower REMIC created
hereunder, endanger such status or result in the imposition of such a
tax. The Issuer shall cause the Master Servicer not to take or fail to
take any action (whether or not authorized hereunder) as to which the
Trustee has advised it in writing that it has received an Opinion of
Counsel (which such Opinion of Counsel shall not be an expense of the
Trustee) to the effect that an Adverse REMIC Event could occur with
respect to such action. At all times as may be required by the Code,
the Trustee will take no action, nor permit any such action, that it
knows will cause substantially all of the assets of the Trust Estate
to not consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
either the Upper REMIC or the Lower REMIC created hereunder as defined
in Section 860F(a)(2) of the Code, on "net income from foreclosure
property" of either the Upper REMIC or the Lower REMIC as defined in
Section 860G(c) of the Code, on any contributions to either the Upper
REMIC or the Lower REMIC after the Startup Day therefor pursuant to
Section 860G(d) of the Code, or any other tax is imposed by the Code
or any applicable provisions of state or local tax laws, such tax
shall be charged (i) to the Trustee pursuant to Section 17 hereof, if
such tax arises out of or results from a breach by the Trustee of any
of its obligations hereunder, (ii) to the Master Servicer pursuant to
Section 10.03 of the Pooling and Servicing Agreement, if such tax
arises out of or results from a breach by the Master Servicer of any
of its obligations under the Pooling and Servicing Agreement, or
otherwise (iii) against amounts on deposit in the Security Account and
shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing April 15,
1998, the Trustee shall deliver to the Master Servicer and each Rating
Agency a certificate from a Responsible Officer of the Trustee stating
the Trustee's compliance with this Section 15.
(i) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to the Trust Estate on a calendar year and on an
accrual basis.
(j) The Trustee shall not permit the acquisition of any assets by either
the Upper REMIC or the Lower REMIC unless it shall have received an
Opinion of Counsel (which such Opinion of Counsel shall not be an
expense of the Trustee) to the effect that the inclusion of such
assets in either the Upper REMIC or the Lower REMIC will not
<PAGE> 67
cause either the Upper REMIC or the Lower REMIC to fail to qualify as
a REMIC at any time that any Securities are outstanding or subject
either the Upper REMIC or the Lower REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local
law or ordinances.
(k) The Trustee shall not enter into any arrangement by which either the
Upper REMIC or the Lower REMIC will receive a fee or other
compensation for services nor permit either of such REMICs to receive
any income from assets other than "qualified mortgages" as defined in
Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, the "latest possible maturity date" by which the
Subaccount Principal Balances of each Class of Lower REMIC Interests
and the Security Principal Balances of each Class of Securities (other
than the Class R and Class RP Securities) would be reduced to zero is
the Payment Date immediately following the Distribution Date in
October 2027, which is the Distribution Date immediately following the
latest scheduled maturity of any Mortgage Loan.
16. Prohibited Transactions and Activities.
The Trustee shall not sell, dispose of or substitute for or permit the
selling, disposal of or substitution for any of the Mortgage Loans, except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Estate, (iii) the
optional termination of the Trust Estate pursuant to Section 14 of this
Agreement or (iv) a repurchase of Mortgage Loans by the Loan Seller pursuant to
the provisions of the Pooling and Servicing Agreement, nor will the Trustee
acquire or permit to be acquired any assets for the Trust Estate, nor sell or
dispose of or permit to be sold or disposed of any investments in the Custodial
Account, the Excess Proceeds Account, the Certificate Account or the Collection
Account for gain, nor accept any contributions to the Trust Estate after the
Closing Date, nor permit any modifications of a material term of a Mortgage
Loan that is not in default or with respect to which default is reasonably
foreseeable, unless it has received an Opinion of Counsel (at the expense of
the party seeking to cause such sale, disposition, substitution, acquisition,
or modification but in no event shall such Opinion of Counsel be an expense of
the Trustee) that such sale, disposition, substitution, acquisition,
contribution or modification will not (a) affect adversely the status of either
the Upper REMIC or the Lower REMIC as a REMIC or (b) cause either the Upper
REMIC or the Lower REMIC to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.
<PAGE> 68
17. Trustee Indemnification
The Trustee agrees to indemnify the Trust Estate, the Issuer, the Loan
Seller and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Estate, the Issuer or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in Section 16 hereof.
18. Information Regarding Mortgage Loans.
The Issuer will cause the Master Servicer, pursuant to the Pooling and
Servicing Agreement, to provide the Trustee with certain information regarding
the Mortgage Loans underlying the Certificates. The Trustee shall not be
required to recompute, verify or recalculate the information supplied to it by
the Master Servicer and may conclusively rely and shall be protected in relying
on the accuracy of all such information in performing its duties and
responsibilities hereunder.
19. Supplements, Modifications and Ratifications of Indenture.
(a) The Trustee will be required to mail, in each year when required by
the TIA, to all Securityholders a brief report relating to its
eligibility and qualifications to continue as the Trustee under the
Indenture, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the
Issuer to it in the Trustee's commercial capacity, the property and
funds physically held by the Trustee as such, any release or
substitution of property subject to the lien of the Indenture which
has not been previously reported, any additional Series of Securities
not previously reported and any action taken by the Trustee which
materially affects the Securities and which has not been previously
reported.
(b) Any references in the Indenture to "the Trust Estate securing a Series
as a REMIC" are hereby deemed to refer to each Series 1997-NAMC 3
REMIC as a REMIC.
(c) References to "Residual Interest Holders" in the Indenture are hereby
deemed to refer to the Holders of the Class R Securities with respect
to the Upper REMIC and Class RP Securities with respect to the Lower
REMIC.
(d) For purposes of clause (y) of the first paragraph of Section 4.1 of
the Indenture, the final distribution of assets in each Series
1997-NAMC 3 REMIC after all Securities have received all required
principal and interest payments shall be made to the Class R
Securities with respect to the Upper REMIC and the Class RP Securities
with respect to the Lower REMIC.
(e) For purposes of Section 5. 8 of the Indenture, Clause Second (b),
interest shall be paid to the twenty-fifth day before the date fixed
for payment in Section 5.8 of the Indenture in the case of all Classes
of Securities.
<PAGE> 69
(f) For purposes of Section 5.8 of the Indenture, Clause Fifth, subclause
(ii), the remaining assets included in each Series 1997-NAMC 3 REMIC
shall be paid to the Class R Securities with respect to the Upper
REMIC and the Class RP Securities with respect to the Lower REMIC.
(g) For purposes of Section 8.2(d) of the Indenture, assets released from
the Indenture pursuant to such Section and payable to the Residual
Interest shall be paid to the Class R Securities with respect to the
Upper REMIC and the Class RP Securities with respect to the Lower
REMIC.
(h) The Issuer shall have no right to substitute Eligible Substitute
Certificates pursuant to Section 8.11 of the Indenture.
(i) Section 2.15(b) of the Indenture shall not apply to transfers of Class
B-4, B-5 or B-6 Securities.
(j) Section 8.9 of the Indenture shall not apply with respect to the
Securities.
(k) For purposes of the Securities, references in the Indenture to the
"Imputed Principal Balance" of a Bond shall, notwithstanding the
definition of such term in the Indenture, be deemed to be references
to the Security Principal Balance of the applicable Security.
(l) The Indenture, as modified and supplemented by this Series Supplement
with respect to the Securities (but which modification and supplement
shall not apply to any other series of securities unless otherwise
specified in the related series supplement) is in all respects
ratified and confirmed, and the Indenture as so modified and
supplemented by this Series Supplement shall be read, taken and
construed as one and the same instrument.
20. Consent to Investment of Funds with the Trustee.
Any Securityholder who holds a Security in the capacity of a fiduciary of
a Plan, and, therefore, subject to the fiduciary responsibility provisions of
ERISA shall, by virtue of its acceptance and holding of such Security, shall be
deemed to have instructed the Trustee to invest, in accordance with the
Indenture, funds on deposit in the Collection Account in an interest bearing
demand account with the Trustee in its commercial capacity or in a common or
collective trust account maintained by the Trustee in its trust capacity or any
other Eligible Investment selected by the Issuer and be deemed to have
represented and warranted to the Trustee that the Plan with respect to which
such Securityholder is a fiduciary has expressly authorized such fiduciary so
to instruct the Trustee.
<PAGE> 70
21. Redemption.
In the event that on an Optional Termination Date the Master Servicer or
the Issuer exercises its right to purchase the Mortgage Loans to Section 9.01
of the Pooling and Servicing Agreement, on the immediately following Payment
Date the Trustee shall apply the Repurchase Price in effecting a full
redemption of the Securities.
22. Counterparts.
This Series 1997-NAMC 3 Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
23. GOVERNING LAW.
AS PROVIDED IN SECTION 11.13 OF THE INDENTURE, THIS SERIES SUPPLEMENT AND
EACH SERIES 1997-NAMC 3 SECURITY ISSUED HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
24. Notices.
(a) All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or
by telecopy or mailed by registered mail, postage prepaid, to (a) in
the case of the Issuer, 2711 North Haskell Avenue, Suite 1000, Dallas,
Texas 75204, Attention: Wade Walker, Telecopy No. (214) 874-2599,
Confirmation No. (214) 874-2501, and (b) in the case of the Trustee,
The First National Bank of Chicago, One First National Plaza, Suite
0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services, or such other address or telecopy number as may hereafter be
furnished by any of the parties hereto, in writing, to the other
parties hereto. Unless otherwise specified herein, any notice required
or permitted to be mailed to a Securityholder shall be given by
registered mail, postage prepaid, at the address of such holder as
shown. Any notice so mailed within the time prescribed herein shall be
conclusively presumed to have been duly given, whether or not the
Securityholder receives such notice.
(b) The Trustee shall as soon as practicable notify the Rating Agencies in
writing of the following circumstances:
<PAGE> 71
(1) any amendment to the Indenture or this supplement pursuant to
Section 9.1 or 9.2 of the Indenture, in which case the Trustee
shall accompany such notice with a copy of the executed
supplemental indenture effecting such amendment;
(2) the occurrence of an Event of Default and the action, if any,
taken as a consequence thereof;
(3) the resignation or removal of the Trustee and the appointment of
any successor Trustee;
(4) the final Payment Date on the Securities; and
(5) each Payment Date Statement.
The Issuer shall, as soon as practicable, notify the Rating Agencies of the
appointment of any successor Trustee pursuant to Section 6.10 of the Indenture
in the event that the resigning or removed Trustee is unable so to do. All
notices to the Rating Agencies under this Section 26 shall be deemed to have
been duly given if mailed by registered mail, postage prepaid, or express
courier service, to (a) in the case of S&P, Standard & Poor's Ratings Group, 25
Broadway, New York, New York 10004, Attention: Residential Mortgage Department
and (b) in the case of DCR, 55 East Monroe Street, 38th Floor, Chicago,
Illinois 60603, Attention: RMBS Monitoring. Failure to give any notice as
required by this clause (b) of Section 30 shall not constitute a breach hereof
by any party hereto.
<PAGE> 72
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Series
1997-NAMC 3 Supplement to be duly executed by their respective officers
thereunto duly authorized and the seal duly attested in the case of the Issuer
to be hereunto affixed all as of the day and year first above written.
CMC SECURITIES CORPORATION IV
By:
---------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
Attest:
-----------------------
Name:
-------------------------
Title: Assistant Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
SERIES 1997-NAMC 3 SUPPLEMENT - Signature Page
<PAGE> 73
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the ___ day of September, 1997, before me personally came Wade Walker,
to me known, who, being by me duly sworn, did depose and say that he resides at
Dallas, Texas; that he is the Vice President of CMC SECURITIES CORPORATION IV,
the corporation that executed the above instrument as Issuer; and that he
signed his name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------------
Notary Public
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the ____ day of ___________, 1997, before me personally came
_________________ to me known, who, being by me duly sworn did depose and say
that he resides at __________ ___________________________________; that he is a
_______________________ of THE FIRST NATIONAL BANK OF CHICAGO, the national
banking association described in and that executed the above instrument as
Trustee; and that he signed his name thereto by order of the Board of Directors
of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------------
Notary Public
SERIES 1997-NAMC 3 SUPPLEMENT - Signature Page
<PAGE> 1
- -------------------------------------------------------------------------------
CMC SECURITIES CORPORATION IV,
Seller,
NORTH AMERICAN MORTGAGE COMPANY,
Master Servicer/Loan Seller,
and
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1997
------------------------------
Mortgage Pass-Through Certificates
Series 1997-NAMC 3
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS...........................................................................................1
Section 1.01. Defined Terms.............................................................................1
ARTICLE II - CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES ....................................................19
Section 2.01. Conveyance of Mortgage Loans.............................................................19
Section 2.02. Acceptance of any Trust Fund by the Trustee..............................................22
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Seller...............................................23
Section 2.04. Representations and Warranties of the Loan Seller........................................25
Section 2.05. Issuance of Certificates.................................................................36
ARTICLE III - ADMINISTRATION AND SERVICING OF THE TRUST FUND.....................................................36
Section 3.01. Master Servicer to Act as Master Servicer................................................36
Section 3.02. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers............................................................37
Section 3.03. Successor Sub-Servicers..................................................................38
Section 3.04. Liability of the Master Servicer.........................................................38
Section 3.05. No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders............................................38
Section 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee...................................................................39
Section 3.07. Collection of Certain Mortgage Loan Payments.............................................39
Section 3.08. Sub-Servicing Accounts...................................................................39
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts...........................................................40
Section 3.10. Custodial Account........................................................................40
Section 3.11. Permitted Withdrawals From the Custodial Account.........................................41
Section 3.12. Permitted Instruments....................................................................42
Section 3.13. Maintenance of Primary Hazard Insurance..................................................43
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements................................44
Section 3.15. Realization Upon Defaulted Mortgage Loans................................................45
Section 3.16. Trustee to Cooperate; Release of Mortgage Files..........................................45
Section 3.17. Servicing Compensation...................................................................47
Section 3.18. Maintenance of Certain Servicing Policies................................................47
Section 3.19. Annual Statement as to Compliance........................................................47
Section 3.20. Annual Independent Public Accountants' Servicing Statement...............................48
Section 3.21. Access to Certain Documentation..........................................................48
Section 3.22. Title, Conservation and Disposition of REO Property......................................49
Section 3.23. Additional Obligations of the Master Servicer............................................51
Section 3.24. Excess Proceeds Account..................................................................51
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Section 3.25. Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder................................................................52
Section 3.26. Special Servicing........................................................................53
Section 3.27. Duties with respect to REMICs............................................................53
ARTICLE IV - PAYMENTS TO CERTIFICATEHOLDERS......................................................................54
Section 4.01. Certificate Account......................................................................54
Section 4.02. Statements to Certificateholders.........................................................58
Section 4.03. Reports; Advances by the Master Servicer.................................................59
Section 4.04. Information Reports to be Filed by the Master Servicer...................................61
Section 4.05. Compliance with Withholding Requirements.................................................61
Section 4.06. Reporting of Realized Losses.............................................................61
ARTICLE V - THE CERTIFICATES.....................................................................................61
Section 5.01. The Certificates.........................................................................61
Section 5.02. Registration of Transfer and Exchange of Certificates....................................62
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates........................................63
Section 5.04. Persons Deemed Owners....................................................................64
ARTICLE VI - LIABILITY...........................................................................................64
Section 6.01. Liability of the Seller, the Loan Seller and the Master Servicer.........................64
Section 6.02. Merger; Consolidation or Conversion of the Seller
or the Master Servicer.......................................................64
Section 6.03. Limitation on Liability of the Seller, the Master Servicer and Others....................65
Section 6.04. Limitation on Resignation of the Master Servicer.........................................65
ARTICLE VII - MASTER SERVICER DEFAULT............................................................................66
Section 7.01. Events of Default........................................................................66
Section 7.02. Trustee to Act; Appointment of Successor.................................................68
Section 7.03. Notification to Certificateholders.........................................................
Section 7.04. Waiver of Events of Default..............................................................69
ARTICLE VIII - CONCERNING THE TRUSTEE............................................................................69
Section 8.01. Duties of Trustee........................................................................69
Section 8.02. Certain Matters Affecting the Trustee....................................................70
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans....................................71
Section 8.04. Trustee May Own Certificates.............................................................72
Section 8.05. Master Servicer to Pay Trustee's Fees....................................................72
Section 8.06. Eligibility Requirements for Trustee.....................................................73
Section 8.07. Resignation and Removal of the Trustee...................................................73
Section 8.08. Successor Trustee........................................................................74
Section 8.09. Merger or Consolidation of Trustee.......................................................74
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Section 8.10. Appointment of Co-Trustee or Separate Trustee............................................75
ARTICLE IX - TERMINATION.........................................................................................76
Section 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans.........................76
Section 9.02. Additional Termination Requirements......................................................77
ARTICLE X - [RESERVED]...........................................................................................78
ARTICLE XI - MISCELLANEOUS PROVISIONS............................................................................78
Section 11.01. Amendment...............................................................................78
Section 11.03. Limitation on Rights of Certificateholders..............................................80
Section 11.04. Governing Law...........................................................................81
Section 11.05. Notices.................................................................................81
Section 11.06. Severability of Provisions..............................................................81
Section 11.07. Successors and Assigns; Third Party Beneficiary.........................................81
Section 11.08. Article and Section Headings............................................................81
Section 11.09. Notice to Rating Agencies and Certificateholder.........................................82
</TABLE>
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EXHIBIT A - FORM OF CERTIFICATE
EXHIBIT B - FORM OF TRUSTEE INITIAL CERTIFICATION
EXHIBIT C - FORM OF TRUSTEE FINAL CERTIFICATION
EXHIBIT D-1 - FORM OF REQUEST FOR RELEASE
EXHIBIT D-2 - FORM OF REQUEST FOR RELEASE FOR MORTGAGE LOANS
PAID IN FULL
EXHIBIT E - FORM OF PURCHASER LETTER
EXHIBIT F - MORTGAGE LOAN SCHEDULE
EXHIBIT G - LOAN DATA REQUIREMENTS - MONTHLY DATA
EXHIBIT H - FORM OF SPECIAL SERVICING AND COLLATERAL FUND
AGREEMENT
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<PAGE> 6
This Pooling and Servicing Agreement, dated and effective as of
September 1, 1997, among CMC Securities Corporation IV, as Seller (together
with its successors and assigns, the "Seller"), North American Mortgage
Company, as Master Servicer (in such capacity, the "Master Servicer"), and as
Loan Seller (in such capacity, the "Loan Seller") and The First National Bank
of Chicago, as Trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Seller intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple Series
(as defined herein), each of which shall evidence the entire beneficial
ownership interest in Loan Group (as defined herein) consisting of Mortgage
Loans (as defined herein).
I DEFINITIONS
1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in
this Article.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan, and which are in accordance with FNMA servicing practices
and procedures, for MBS pool mortgages, as defined in the FNMA Guides including
future updates.
"Advance": As to any Mortgage Loan, any Servicing Advance or any
advance made by the Master Servicer on any Distribution Date pursuant to
Section 4.03.
"Advance Reimbursement Amount": For any Distribution Date, the amount
of reimbursement owed to the Master Servicer for any Advances previously made
with respect to any Mortgage Loan or REO Property which remain unreimbursed in
whole or in part following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property, but excluding any such Advances that were made
with respect to delinquencies that ultimately constituted Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses, or Extraordinary Losses.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof.
"Anniversary": Each anniversary of September 1, 1997.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage.
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"Assignment and Assumption Agreements": The Assignment and Assumption
Agreements made pursuant to the Loan Sale Agreement (i) between DLJ Mortgage
Capital, Inc. and Capstead Capital Corporation, and (ii) between Capstead
Capital Corporation and the Seller
"Available Distribution Amount": With respect to any Distribution Date
and each Loan Group, for purposes of distributions on the related Series of
Certificates, an amount equal to (a) the sum of (i) the balance on deposit in
the Custodial Account relating to such Loan Group as of the close of business
on the related Determination Date and (ii) the aggregate amount of (x) any
Advances (other than Servicing Advances) made with respect to such Loan Group,
(y) all required transfers pursuant to Section 3.22, which relate to such Loan
Group and (z) all amounts required to be paid by the Master Servicer with
respect to such Loan Group pursuant to Sections 3.13 and 3.23 by deposits into
the Certificate Account on the immediately preceding Certificate Account
Deposit Date, reduced by (b) the sum, as of the close of business on the
related Determination Date, of (i) Monthly Payments with respect to such Loan
Group collected but due during a Due Period subsequent to the Due Period
relating to such Distribution Date, (ii) all interest or other income earned on
deposits relating to such Loan Group in the Custodial Account, (iii) any other
amounts reimbursable or payable to the Master Servicer or any Sub-Servicer
pursuant to Section 3.11, which relate to such Loan Group with respect to such
Distribution Date and (iv) any unscheduled payments with respect to such Loan
Group, including Insurance Proceeds, Liquidation Proceeds, Principal
Prepayments, REO Proceeds and the proceeds of Mortgage Loan purchases made
pursuant to Sections 2.02, 2.04 or 3.22, in each case received after the
Prepayment Period relating to such Distribution Date.
"Bankruptcy Amount": As of any date of determination, an amount, equal
to the excess if any, of (1) $100,000.00 (the initial "Bankruptcy Amount") over
(2) the aggregate amount of Bankruptcy Losses allocated solely to the
Subordinate Securities prior to such date in accordance with Section 7 of the
Series Supplement.
"Bankruptcy Code": The Bankruptcy Code of 1978, as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in California, New York or Illinois (and such other
state or states in which a Custodial Account or a Certificate Account is at the
time located) or in the city in which the Corporate Trust Office of the Trustee
is located are authorized or obligated by law or executive order to close.
"Cash Liquidation": As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Disposition occurred, the final receipt by or
on behalf of the Master Servicer of all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
"Certificate": Each of the Certificates executed by the Seller and
authenticated by the Trustee evidencing a beneficial interest in the Trust Fund
for the Series indicated on such Certificate.
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<PAGE> 8
"Certificate Account": The trust account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "The First
National Bank of Chicago, in trust for registered holders of Mortgage
Pass-Through Certificates, Series 1997-NAMC 3", and which account or accounts
must each be an Eligible Account.
"Certificate Account Deposit Date": With respect to any Distribution
Date, the Business Day immediately prior thereto.
"Certificate Distribution Amount": With respect to each Series, the
amounts to be distributed to the holders of the Certificates of such Series
pursuant to Section 4.01(c)(1) and (c)(2).
"Certificate Register": The register maintained pursuant to Section
5.02.
"Certificate Registrar": The Person appointed by the Trustee to be its
agents with respect to certain Certificate administration matters; provided,
however, that any such appointment will not relieve the Trustee from its
obligation to perform its duties hereunder.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Seller or the Master Servicer or any affiliate
thereof shall be deemed not to be outstanding and the Fractional Undivided
Interest represented by such Certificate shall not be taken into account in
determining whether the requisite percentage of Fractional Undivided Interests
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 11.01. The Trustee shall be entitled to rely upon a
certification of the Seller or the Master Servicer in determining if any
Certificates are registered in the name of a respective affiliate.
"Closing Date": September 30, 1997.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Value": The appraised value of a Mortgaged Property based
upon the lesser of (i) the appraisal (as reviewed and approved by the Loan
Seller) made at the time of the origination of the related Mortgage Loan, or
(ii) the sales price of such Mortgaged Property at such time of origination.
With respect to a Mortgage Loan the proceeds of which were used to refinance an
existing mortgage loan, the appraised (as reviewed and approved by the Loan
Seller) value of the Mortgaged Property based upon the appraisal (as reviewed
and approved by the Loan Seller) obtained at the time of refinancing.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business related to
this Agreement shall be administered, which office at the date of the execution
of this Agreement is located at One First National Plaza, Mail Suite 0126,
Chicago, Illinois 60670-0126, Attention: CMCSC IV/North American 1997-NAMC 3.
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"Curtailment": Any payment of principal on a Mortgage Loan, made by or
on behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid
Monthly Payment or a Payoff, which is applied to reduce the stated Principal
Balance of the Mortgage Loan including the principal portion of repurchase
proceeds received with respect to any Mortgage Loan which was repurchased by
the Loan Seller pursuant to its repurchase obligation in Sections 2.02 and 2.04
hereof, Insurance Proceeds, and any other unscheduled payments of principal,
other than Payoffs or Liquidation Principal, which were received during the
preceding calendar month.
"Custodial Account": The custodial account or accounts created and
maintained pursuant to Section 3.10 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.10 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
"Cut-off Date": September 1, 1997.
"DCR": Duff & Phelps Credit Rating Co. or its successor in interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under the Mortgage Loan, which
valuation results from a proceeding initiated by the Mortgagor under the
Bankruptcy Code.
"Determination Date": The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the
month of the related Distribution Date.
"Distribution Date": The second Business Day prior to the 25th day of
each month, commencing in October, 1997.
"Due Date": The first day of the month of the related Distribution
Date.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.
"Eligible Account": An account maintained with a federal or state
chartered depository institution (i) the short-term obligations of which are
rated by each of the Rating Agencies in its highest rating at the time of any
deposit therein, or (ii) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the
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<PAGE> 10
Certificateholders of the applicable Series will have a claim with respect to
the funds in such account and a perfected first priority security interest
against any collateral (which shall be limited to Permitted Instruments, each
of which shall mature not later than the Business Day immediately preceding the
Distribution Date next following the date of investment in such collateral or
the Distribution Date if such Permitted Instrument is an obligation of the
institution that maintains the applicable Certificate Account or Custodial
Account) securing such funds that is superior to claims of any other depositors
or general creditors of the depository institution with which such account is
maintained or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers
acting in its fiduciary capacity or (iv) an account or accounts of a depository
institution acceptable to the Rating Agencies (as evidenced in writing by the
Rating Agencies that use of any such account as a Custodial Account, an Excess
Proceeds Account or a Certificate Account will not have an adverse effect on
the then-current ratings assigned to the Securities then rated by the Rating
Agencies). Eligible Accounts may bear interest.
"Event of Default": One or more of the events described in Section
7.01.
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.
"Excess Proceeds": With respect to each Mortgage Loan as to which an
REO Disposition has occurred, the proceeds that are specified as being "Excess
Proceeds" in Section 3.22.
"Excess Proceeds Account": The separate account or accounts created
and maintained pursuant to Section 3.24, which shall be entitled "The First
National Bank of Chicago, in trust for registered holders of Mortgage
Pass-Through Certificates, Series 1997-NAMC 3, Excess Proceeds Account," and
which account or accounts shall be an Eligible Account.
"Excess Special Hazard Loss": Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
"Extraordinary Events": Any of the following conditions with respect
to a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses which are of a type that would be covered by
the fidelity bond and the errors and omissions
insurance policy required to be maintained pursuant to
Section 3.18, but are in excess of the coverage
maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled,
or remote or be in whole or in part caused by,
contributed to or
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<PAGE> 11
aggravated by a peril covered by the definition of
the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending
against an actual, impending or expected attack
(1) by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or
air forces; or
(2) by military, naval or air forces; or
(3) by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental
authority in hindering, combating or defending against
such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by
order of any government or public authority; or risks
of contraband or illegal transportation or trade.
"Extraordinary Losses": Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.
"FDIC": Federal Deposit Insurance Corporation or any successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor.
"FNMA": Federal National Mortgage Association or any successor.
"FNMA Guides": The FNMA Sellers' Guide and the FNMA Servicers' Guide
and all amendments or additions thereto.
"Fractional Undivided Interest": With respect to any Certificate of a
Series, the fractional undivided interest in any Trust Fund of such Series as
evidenced by such Certificate.
"Fraud Loss Amount": With respect to each Series and any date of
determination after the Cut-off Date an amount equal to: (i) prior to the first
Anniversary, an amount equal to 2.00% of the aggregate outstanding principal
balance of all of the Mortgage Loans in the Loan Group for such Series as of
the Cut-off Date minus the aggregate amount of Fraud Losses incurred on such
Mortgage Loans since the Cut-off Date, and (ii) from and including the first
Anniversary to but not including the fifth Anniversary, an amount equal to the
lesser of (a) the Fraud Loss Amount as of the most recent Anniversary and (b)
1.00% of the aggregate outstanding principal balance of all of
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such Mortgage Loans, as of the most recent Anniversary. On and after the fifth
Anniversary the Fraud Loss Amount with respect to the Mortgage Loans for each
Series shall be zero.
"Fraud Losses": Realized Losses on Mortgage Loans as to which there
was fraud in the origination of such Mortgage Loan.
"Funding Date": With respect to each Mortgage Loan, the date on which
funds were advanced by or on behalf of the Loan Seller and interest began to
accrue thereunder.
"Initial Certificate Principal Balance": With respect to each Series,
the Certificate Principal Balance of such Series as of the Cut-off Date as set
forth in the Preliminary Statement hereto.
"Indenture": The Indenture dated as of September 1, 1997 by and
between CMC Securities Corporation IV, as Issuer, and The First National Bank
of Chicago, as Indenture Trustee.
"Insurance Policy": With respect to any Mortgage Loan, any insurance
policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
"Insurance Proceeds": Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Hazard Insurance Policy, any title insurance policy or
any other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account.
"Interest Accrual Period": With respect to a Distribution Date in a
given calendar month, the immediately preceding calendar month.
"Late Collections": With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
"Liquidated Loan": A Mortgage Loan as to which the Master Servicer has
determined in accordance with its Accepted Servicing Practices that all amounts
which it expects to recover from or on account of such Mortgage Loan, whether
from Insurance Proceeds, Liquidation Proceeds, or otherwise have been
recovered.
"Liquidation Principal": The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Loan (but
not in excess of the principal balance thereof) during the related Prepayment
Period for any Distribution Date.
"Liquidation Proceeds": Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation
or in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than amounts received in
respect of any REO Property.
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"Loan Group": With respect to each Series, the pool of Mortgage Loans
assigned to such Series as specified in the applicable Mortgage Loan Schedule.
The Loan Group with respect to Series 1997-NAMC 3-A shall be the Mortgage Loans
identified as Group 1 on the Mortgage Loan Schedule attached hereto as Exhibit
F, and the Loan Group with respect to Series 1997-NAMC 3-B shall be the
Mortgage Loans identified as Group 2 on such Mortgage Loan Schedule.
"Loan Sale Agreement": The Seller's Warranties and Servicing Agreement
dated as of September 1, 1997 between DLJ Mortgage Capital, Inc. and the Loan
Seller.
"Loan Seller": North American Mortgage Company, and its successors and
assigns.
"Loan-to-Value Ratio": With respect to any Mortgage Loan and as of any
date, the fraction, expressed as a percentage, the numerator of which is the
current principal balance of such Mortgage Loan at the date of determination
and the denominator of which is the Collateral Value of the related Mortgaged
Property.
"Lower REMIC": As defined in the Series Supplement.
"Master Servicer": North American Mortgage Company or any successor
master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by a Mortgagor under the related Mortgage Note as originally executed
(after adjustment, if any, for Principal Prepayments and for Deficient
Valuations occurring prior to such Due Date, and after any adjustment by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period).
"Mortgage": The mortgage, deed of trust or any other instrument
securing the Mortgage Loan.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan.
"Mortgage Loan": Each of the mortgage loans, transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03 and from time to time
held in the Trust Fund for a Series, the Mortgage Loans originally so
transferred, assigned and held being identified in the applicable Mortgage Loan
Schedule. As used herein, the term "Mortgage Loan" includes the related
Mortgage Note and Mortgage.
"Mortgage Loan Schedule": As of any date of determination and with
respect to each Series, the schedule of Mortgage Loans included in the Trust
Fund for such Series. The initial Mortgage Loan Schedules are attached hereto
as Exhibit F (and, for purposes of the Trustee's review of the Mortgage Files
pursuant to Section 2.02, such Mortgage Loan Schedules shall be in
computerreadable form as delivered to the Trustee). The Mortgage Loan Schedules
shall set forth the following information with respect to each Mortgage Loan
included in the related Loan Group:
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(i) the loan number and name of the Mortgagor;
(ii) the street address, city, state and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate set forth in the related Mortgage
Note;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Cut-off
Date;
(ix) the scheduled principal balance as of the Cut-off
Date;
(x) the unpaid actual principal balance as of the Cut-off
Date;
(xi) the occupancy status;
(xii) the purpose of the Mortgage Loan;
(xiii) the Collateral Value of the Mortgaged Property;
(xiv) the original term to maturity;
(xv) whether or not the Mortgage Loan provides for a
Principal Prepayment penalty;
(xvi) the paid-through date of the Mortgage Loan; and
(xvii) the number of units in the Mortgaged Property.
Each Mortgage Loan Schedule shall also set forth the total of the
amounts described under clause (ix) or (x) above for all of the Mortgage Loans
in the related Loan Group. Each Mortgage Loan Schedule may be in the form of
more than one schedule, collectively setting forth all of the information
required.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
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"Mortgage Rate": With respect to any Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying
real property (or leasehold estate of the Mortgagor, the term of which is equal
to or longer than the term of the Mortgage) securing repayment of a Mortgage
Note, consisting of a single parcel of real estate considered to be real estate
under the laws of the State in which such real property is located, which may
include condominium units and planned unit developments, improved by a
residential dwelling.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate as in effect from time to time minus the
Servicing Fee Rate.
"Nonrecoverable Advance": Any Advance previously made or proposed to
be made in respect of a Mortgage Loan which, in the good faith judgment of the
Master Servicer, will not or, in the case of a proposed Advance, would not be
ultimately recoverable from related Late Collections, Insurance Proceeds,
Liquidation Proceeds, REO Proceeds or amounts reimbursable to the Master
Servicer pursuant to Section 4.03(b). The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Seller and the Trustee.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, vice president or
assistant vice president and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Loan
Seller, or of the Sub-Servicer and delivered to the Seller and Trustee.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
for the Seller or the Master Servicer, reasonably acceptable to the Trustee;
except that any opinion of counsel relating to (a) the qualification of any
account required to be maintained pursuant to this Agreement as an Eligible
Account, (b) qualification of either the Upper REMIC or the Lower REMIC as a
REMIC, (c) compliance with the REMIC Provisions or (d) resignation of the
Master Servicer pursuant to Section 6.04 must be an opinion of counsel who (i)
is in fact independent of the Seller and the Master Servicer, (ii) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or in an affiliate of either and (iii) is
not connected with the Seller or the Master Servicer as an officer, employee,
director or person performing similar functions.
"Optional Termination Date": Any Distribution Date on which the
aggregate outstanding Stated Principal Balance of the Mortgage Loans is equal
to or less than 5 percent of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cutoff Date.
"OTS": Office of Thrift Supervision or any successor.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in full, Cash Liquidation or REO
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<PAGE> 16
Disposition and which was not purchased prior to such Due Date pursuant to
Sections 2.02, 2.04 or 3.22.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to each Series and a Distribution
Date, the weighted average of the Net Mortgage Rates on the Mortgage Loans
included in the Loan Group relative to such Series on the related Due Date.
"Payoff": Any payment of principal on a Mortgage Loan equal to the
entire outstanding Principal Balance of such Mortgage Loan made by the
Mortgagor or through the application of Liquidation Proceeds, if received in
advance of the last scheduled Due Date for such Mortgage Loan together with
interest received thereon which interest, if such payment is made by the
Mortgagor, shall equal to accrued unpaid interest on the Mortgage Loan to the
date of such payment-in-full.
"Payoff Period": With respect to the first Distribution Date, the
period from the Cut-Off Date through October 14, 1997, inclusive; and with
respect to any Distribution Date thereafter, the period from the 15th day of
the prior month through the 14th day of the month of such Distribution Date,
inclusive.
"Permitted Encumbrances": With respect to any Mortgaged Property, any
of the following: (1) the lien of non-delinquent current real property taxes
and assessments not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record
as of the date of recording which are acceptable to mortgage lending
institutions generally and either (A) which are referred to or otherwise
considered in the appraisal made for the originator of the Mortgage Loan, or
(B) which do not adversely affect the appraised value of the Mortgaged Property
as set forth in such appraisal, and (3) 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 the Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property.
"Permitted Instruments": Any one or more of the following:
(i) direct obligations of, or obligations, the timely
payment of which, are fully guaranteed as to principal
and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United
States;
(ii) repurchase obligations (the collateral for which is
held by a third party or the Trustee) with respect to
any security described in clause (i) above, provided
that the long-term
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unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by
each Rating Agency in one of its two highest long-term
rating categories;
(iii) Certificates of deposit, time deposits, demand
deposits and bankers' acceptances of any bank or trust
company incorporated under the laws of the United
States or any state thereof or the District of
Columbia, provided that the short- term commercial
paper of such bank or trust company at the date of
acquisition thereof has been rated by each Rating
Agency in its highest short-term rating;
(iv) money market funds organized under the Investment
Company Act of 1940 or common trust fund rated not
less than "AAAm" by Standard & Poor's, not less than
"Aaa" by Moody's Investors Service, Inc. and not less
than "AAA" by DCR, if rated by DCR;
(v) commercial paper (having original maturities of not
more than nine months) of any corporation incorporated
under the laws of the United States or any state
thereof or the District of Columbia which on the date
of acquisition has been rated by each Rating Agency in
its highest short-term rating; and
(vi) any other obligation or security acceptable to the
Rating Agencies (as certified by a letter from each
Rating Agency to the Trustee) in respect of mortgage
pass-through certificates rated in one of its two
highest rating categories;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments
with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument where the principal and interest payments with respect to such
instrument provide a yield to maturity exceeding 120% of the yield to maturity
at par of such underlying obligation.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Mortgage Loan on its
scheduled Due Date and held in the related Custodial Account until the
Certificate Account Deposit Date.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Curtailment or a Payoff
during the related Prepayment Period, an amount equal to the amount of interest
that would have accrued at the applicable Net Mortgage Rate on the principal
balance of such Mortgage Loan immediately prior to such prepayment (or in the
case of a Curtailment on the amount of such prepayment) during the period
commencing on the date of prepayment, or in the case of a Payoff in full the
date as of which the prepayment is applied, and ending on the last day of the
month of prepayment.
"Prepayment Period": With respect to a Distribution Date, with respect
to (i) Payoffs, the Payoff Period and (ii) Curtailments, the calendar month
preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard insurance
policy required to be maintained pursuant to the first or the second paragraph
of Section 3.13.
"Primary Mortgage Insurance Policy": Each primary policy of mortgage
insurance represented to be in effect pursuant to Section 2.04(b)(A)(xxxi), or
any replacement policy therefor obtained by the Master Servicer pursuant to
Section 3.25.
"Principal Prepayment": Any payment of principal on a Mortgage Loan
which constitutes a Payoff or a Curtailment.
"Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02 or 2.04 or that the Master
Servicer is entitled to repurchase pursuant to Section 3.22, an amount equal to
the sum of (i) 100% of the Stated Principal Balance thereof, plus (ii) unpaid
accrued interest (or REO Imputed Interest) at the applicable Net Mortgage Rate
on the Stated Principal Balance thereof outstanding during each Due Period that
such interest was not paid or advanced, from the date through which interest
was last paid by the Mortgagor or advanced and distributed to
Certificateholders together with unpaid Servicing Fees from the date through
which interest was last paid by the Mortgagor, in each case to the first day of
the month in which such Purchase Price is to be distributed, plus (iii) the
aggregate of all Advances made in respect of such Mortgage Loan (or REO
Property) that were not previously reimbursed.
"Qualified Mortgage Insurer": A mortgage guaranty insurance company
qualified under the laws of the state in which the related Mortgaged Property
is located to transact a mortgage guaranty insurance business therein and to
write the insurance provided by primary mortgage insurance policies and
approved as an insurer by FNMA or FHLMC and whose obligations have a rating by
each Rating Agency not lower than the rating of the Certificates.
"Rating Agency": Standard & Poor's and DCR, however, if such agencies
and their successors are no longer in existence, "Rating Agency" shall be such
nationally recognized statistical rating agency, or other comparable Person,
designated by the Seller, notice of which designation
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shall be given to the Trustee and Master Servicer. References herein to the two
highest long term debt rating categories of a Rating Agency shall mean "AA" or
better in the case of Standard & Poor's and DCR and references herein to the
highest short-term debt rating of a Rating Agency shall mean "A-1" in the case
of Standard & Poor's and "D-1" in the case of DCR, and in the case of any other
Rating Agency such references shall mean the equivalent rating categories
without regard to any plus or minus.
"Realized Loss": With respect to each Mortgage Loan or REO Property as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
as of the date of Cash Liquidation or REO Disposition, plus (ii) interest (and
REO Imputed Interest, if any) at the Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders up to the last
day of the month in which the Cash Liquidation or REO Disposition occurred on
the Stated Principal Balance of such Mortgage Loan outstanding during each Due
Period that such interest was not paid or advanced, minus (iii) the proceeds,
if any, received during the month in which such Cash Liquidation or REO
Disposition occurred, to the extent applied as recoveries of interest at the
Net Mortgage Rate and to principal of the Mortgage Loan, net of the portion
thereof reimbursable to the Master Servicer or any Sub-Servicer with respect to
related Advances not previously reimbursed. With respect to each Mortgage Loan
which has become the subject of a Deficient Valuation, the difference between
the principal balance of the Mortgage Loan outstanding immediately prior to
such Deficient Valuation and the principal balance of the Mortgage Loan as
reduced by the Deficient Valuation. With respect to each Mortgage Loan which
has become the subject of a Debt Service Reduction, the amount of such Debt
Service Reduction.
"Record Date": With respect to a Distribution Date, the last Business
Day of the month immediately preceding the month of the such Distribution Date.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Loss": The failure of the Upper REMIC or Lower REMIC or any
portion thereof to qualify or to continue to qualify as a REMIC or the
imposition of a tax under the REMIC Provisions on any income of the Upper REMIC
or Lower REMIC.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed, temporary and final regulations and published rulings, notices
and announcements promulgated thereunder, as the foregoing may be in effect
from time to time.
"Remittance Report": A report prepared by the Master Servicer
providing the information set forth in Section 4.03.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code, which income,
subject to the terms and conditions of that Section of the Code in its present
form, does not include:
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(i) except as provided in Section 856(d)(4) or (6) of the
Code, any amount received or accrued, directly or indirectly, with
respect to such REO Property, if the determination of such amount
depends in whole or in part on the income or profits derived by any
Person from such property (unless such amount is a fixed percentage or
percentages of receipts or sales and otherwise constitutes Rents from
Real Property);
(ii) any amount received or accrued, directly or indirectly,
from any Person if any Trust Fund owns directly or indirectly
(including by attribution) a 10 percent or greater interest in such
Person determined in accordance with Sections 856(d)(2)(B) and (d)(5)
of the Code;
(iii) any amount received or accrued, directly or indirectly,
with respect to such REO Property if any Person Directly Operates such
REO Property, other than by providing services that are not considered
to be rendered to the occupants of such REO Property within the
meaning of Treasury Regulation Section 1.512(b)-1(c)(5);
(iv) any amount charged for services that are not customarily
furnished in connection with the rental of property to tenants in
buildings of a similar class in the same geographic market as such REO
Property (whether or not such charges are separately stated); and
(v) rent attributable to personal property unless such
personal property is leased under, or in connection with, the lease of
such REO Property and, for any taxable year of any Trust Fund, such
rent is no greater than 15 percent of the total rent received or
accrued under, or in connection with, the lease.
"REO Acquisition": The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.15.
"REO Disposition": The final receipt by or on behalf of the Master
Servicer of all Insurance Proceeds, Liquidation Proceeds, REO Proceeds and
other payments and recoveries (including proceeds of a final sale) which the
Master Servicer expects to be finally recoverable from the sale or other
disposition of the REO Property.
"REO Imputed Interest": As to any REO Property, for any period, an
amount equivalent to interest (at the Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
(as such balance is reduced pursuant to Section 3.15 by any income from the REO
Property treated as a recovery of principal).
"REO Proceeds": Proceeds, net of directly related expenses, received
in respect of any REO Property (including, without limitation, proceeds from
the rental of the related Mortgaged Property and of any REO Disposition), which
proceeds are required to be deposited into the Custodial Account as and when
received.
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"REO Property": A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Repurchase Price": An amount at least equal to the aggregate Security
Principal Balance of the Securities plus accrued interest on the Securities
through the end of the month preceding the month in which the Optional
Termination Date occurs.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibits D-1 or D-2 attached hereto.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, any assistant Vice President, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer, any assistant trust officer, the
controller and any assistant controller 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 of
and familiarity with the particular subject.
"Rule 144A": Rule 144A under the Securities Act of 1933, as amended,
as in effect from time to time.
"Securities": As defined in the Series Supplement.
"Security Principal Balance": As defined in the Series Supplement.
"Seller": CMC Securities Corporation IV, a Delaware corporation, or
its successor in interest.
Series: A Series of Certificates (which may consist of a single
Certificate) evidencing a beneficial interest in the Trust Fund for such
Series. The Series is indicated on the face of a Certificate. The Series that
are the subject of this Agreement are Series 1997-NAMC 3-A and Series 1997-NAMC
3-B.
"Series Supplement": The Series 1997-NAMC 3 Supplement dated as of
September 1, 1997, by and between CMC Securities Corporation IV, as Issuer (in
such capacity, the "Issuer"), and The First National Bank of Chicago, as
Indenture Trustee, which Series Supplement supplements the Indenture.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost
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of (i) the preservation, restoration and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under the second paragraph of Section 3.01, Section 3.09 and
Section 3.25.
"Servicing Fee": As to each Mortgage Loan, an amount, payable out of
any payment of interest on the Mortgage Loan, equal to interest at the
applicable Servicing Fee Rate on the Stated Principal Balance of such Mortgage
Loan for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Principal
Prepayment in full made by the Mortgagor, interest for the number of days
covered by such payment of interest computed on the basis of a 360 day year
consisting of twelve, 30 day months).
"Servicing Fee Rate": With respect to each Mortgage Loan, the per
annum rate of [0.26]%.
"Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans,
whose name appears on a list of servicing officers furnished to the Trustee by
the Master Servicer, as such list may from time to time be amended.
"Servicing Transfer": The transfer of servicing responsibilities to a
successor Master Servicer pursuant to Section 7.01 of this Agreement.
"Single Certificate": A Certificate of any Series evidencing an
initial Certificate Principal Balance equal to $1,000.
"Special Hazard Amount": On each anniversary of the Cut-off Date, the
Special Hazard Amount will be reduced, but not increased, to an amount equal to
the lesser of (1) the greatest of (a) the aggregate principal balance of the
Mortgage Loans located in the single California zip code area containing the
largest aggregate Stated Principal Balance of the Mortgage Loans, (b) 1% of the
aggregate Stated Principal Balance of the Mortgage Loans and (c) twice the
Stated Principal Balance of the largest single Mortgage Loan, in each case
calculated as of the Due Date in the immediately preceding month and (2) the
Special Hazard Amount as of the Cut-off Date (being the amount under (1) above
calculated as of the Cut-off Date) as reduced by the Special Hazard Losses
allocated to the Certificates since the Cut-off Date.
"Special Hazard Loss": Any Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, but not including (i) any loss of
a type covered by a hazard insurance policy or a flood insurance policy
required to be maintained in respect to such Mortgaged Property pursuant to
Section 3.13 to the extent of the amount of such loss covered thereby, or (ii)
any Extraordinary Loss.
"Special Servicing Agreement": The special servicing and collateral
fund agreement substantially in the form of Exhibit H hereto entered into by
the Master Servicer in accordance with Section 3.26.
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"Standard & Poor's": Standard & Poor's Ratings Group, a division of
The McGraw-Hill Companies, Inc. or its successor in interest.
"Startup Day": The day designated as such pursuant to Article X
hereof.
"Stated Principal Balance": With respect to any Mortgage Loan or
related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut-off Date, after application of
principal payments due on or before such date, whether or not received, minus
(ii) the sum of (a) the principal portion of the Monthly Payments due with
respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Distribution Date which were distributed or with
respect to which an Advance was distributed, and (b) all Principal Prepayments
with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and net income from a REO Property to the extent applied
by the Master Servicer as recoveries of principal in accordance with Section
3.15 with respect to such Mortgage Loan or REO Property, which were distributed
pursuant to Section 4.01 on any previous Distribution Date, and (c) any
Realized Loss with respect thereto allocated pursuant to Section 7 of the
Series Supplement for any previous Distribution Date.
"Sub-Servicer": Any Person with which the Master Servicer has entered
into a SubServicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02; provided, however, that the term
"Sub-Servicer" shall not include any agent on behalf of the Master Servicer
solely with respect to tax collections and provided further that
notwithstanding the employment of any such agent, nothing herein shall relieve
the Master Servicer from its obligations and liabilities to the
Certificateholders and the Trustee for servicing and administering the Mortgage
Loans.
"Sub-Servicer Remittance Date": The 18th day of each month, or if such
day is not a Business Day, the immediately preceding Business Day.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and a SubServicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trust": The trust established pursuant to the terms of this
Agreement.
"Trust Fund": With respect to a Series, the pool of assets subject
hereto in which the Certificates of such Series represent a beneficial
interest, constituting the primary trust created
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hereby and to be administered hereunder with respect to such Series, consisting
of: (i) the Mortgage Loans in the related Loan Group (exclusive of payments of
principal and interest due on or before the Cut-off Date, if any) as from time
to time are subject to this Agreement and all payments under and proceeds of
such Mortgage Loans (exclusive of any prepayment fees and late payment charges
received on such Mortgage Loans), together with all documents included in the
related Mortgage File, subject to Section 2.01; (ii) such funds or assets as
from time to time are deposited in the Custodial Account, the Excess Proceeds
Account or the Certificate Account, each with respect to such Series; (iii) any
REO Property relating to a defaulted Mortgage Loan in the related Loan Group;
and (iv) the Primary Hazard Insurance Policies, if any, and all other Insurance
Policies with respect to the Mortgage Loans in the related Loan Group. The
Trust Fund relating to Series 1997-3-A shall be a Trust Fund that includes the
Mortgage Loans identified as Group 1 on Exhibit F hereto, and the Trust Fund
relating to Series 1997-3-B shall be a Trust Fund that includes the Mortgage
Loans identified as Group 2 on Exhibit F hereto. Reference to holders of
Certificates evidencing Fractional Undivided Interests aggregating not less
than a certain percentage of the Trust Fund of a particular Series means
holders of Certificates the aggregate Fractional Undivided Interests of such
Series of which, as indicated on the face thereof, is not less than such
percentage.
"Trustee": The First National Bank of Chicago, or its successor in
interest, or any successor trustee appointed as herein provided.
"Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.
"United States": As defined in Section 7701 of the Code or successor
provisions.
"Upper REMIC": As defined in the Series Supplement.
II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01 Conveyance of Mortgage Loans.
With respect to each Series, the Seller, as of the Closing Date, and
concurrently with the execution and delivery hereof, does hereby assign,
transfer, sell, set over and otherwise convey to the Trustee for the benefit of
the Certificateholders, without recourse, all the right, title and interest of
the Seller in and to the Loan Group related to such Series (exclusive of any
prepayment fees and late payment charges received thereon) and all other assets
included or to be included in any Trust Fund for each such Series. Such
assignment includes all principal and interest received by the Master Servicer
on or with respect to the applicable Mortgage Loans (other than payment of
principal and interest due on or before the Cut-off Date).
In connection with such transfer and assignment, the Seller shall
deliver (or cause to be delivered) to, and deposit (or cause to be deposited)
with the Trustee on or before the Closing Date, the following documents or
instruments:
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(i) the original Mortgage Note endorsed "Pay to the order
of The First National Bank of Chicago, as trustee,
without recourse," and signed in the name of the Loan
Seller by an authorized officer, with all intervening
endorsements showing a complete chain of title from
the originator to the Loan Seller. If the Mortgage
Loan was acquired by the Loan Seller in a merger, the
endorsement must be by "[Loan Seller], successor by
merger to the [name of predecessor]". If the Mortgage
Loan was acquired or originated by the Loan Seller
while doing business under another name, the
endorsement must be by "[Loan Seller] formerly known
as [previous name]";
(ii) the original Mortgage with evidence of recording
thereon, or a copy thereof certified by the public
recording office in which such Mortgage has been
recorded or, if the original Mortgage has not been
returned from the applicable public recording office,
a true certified copy, certified by the Loan Seller,
of the original Mortgage together with a certification
of the Loan Seller certifying that the original
Mortgage has been delivered for recording in the
appropriate public recording office of the
jurisdiction in which the Mortgaged Property is
located;
(iii) a duly executed original Assignment of the Mortgage
in recordable form to "The First National Bank of
Chicago, as trustee for the holders of CMC Securities
Corporation IV, Mortgage Pass-Through Certificates,"
Series 1997-NAMC 3;
(iv) originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public
recording office in which such Assignments of Mortgage
have been recorded showing a complete chain of title
from the originator to the Loan Seller, with evidence
of recording thereon, or a copy thereof certified by
the public recording office in which such Assignment
of Mortgage has
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been recorded or, if the original Assignment of
Mortgage has not been returned from the applicable
public recording office, a true certified copy,
certified by the Loan Seller, of the original
Assignment of Mortgage together with a certification
certifying that the original Assignment of Mortgage
has been delivered for recording in the appropriate
public recording office of the jurisdiction in which
the Mortgaged Property is located;
(v) the original policy of title insurance, including
riders and endorsements thereto, or a certified copy
of such policy certified by the Loan Seller, or if the
policy has not yet been issued, a written commitment
or interim binder or preliminary report of title
issued by the title insurance or escrow company;
(vi) originals, or copies thereof certified by the public
recording office in which such documents have been
recorded, of each assumption, extension, modification,
written assurance or substitution agreements, if
applicable, or if the original of such document has
not been returned from the applicable public recording
office, a true certified copy, certified by the Loan
Seller, of such original document together with
certificate of Loan Seller certifying the original of
such document has been delivered for recording in the
appropriate recording office of the jurisdiction in
which the Mortgaged Property is located;
(vii) if the Mortgage Note or Mortgage or any other
material document or instrument relating to the
Mortgage Loan has been signed by a person on behalf of
the Mortgagor, the original power of attorney or other
instrument or a certified copy of such certified by
the Loan Seller, that authorized and empowered such
person to sign bearing evidence that such instrument
has been recorded, if so required in the appropriate
jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of
such
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<PAGE> 27
instrument, together with a certificate of receipt
from the recording office, certifying that such copy
represents a true and complete copy of the original
and that such original has been or is currently
submitted to be recorded in the appropriate
governmental recording office of the jurisdiction
where the Mortgaged Property is located), or if the
original power of attorney or other such instrument
has not been returned from the applicable public
recording office, a true certified copy, certified
by the Loan Seller, of the original power of
attorney or other instrument together with a
certification certifying that the original power of
attorney or other instrument has been delivered for
recording in the appropriate public recording office
of the jurisdiction in which the Mortgaged Property
is located; and
(viii) evidence of the original or certified to be true
copy, certified by the Loan Seller, of the Primary
Mortgage Insurance Policy, if required.
If the Seller cannot deliver the original recorded Mortgage Loan
Documents or the original policy of title insurance, including riders and
endorsements thereto, on the Closing Date, the Loan Seller will, promptly upon
receipt of notice thereof and in any case not later than 180 days from the
Closing Date, deliver such original documents, including original recorded
documents, to the Trustee (unless the Loan Seller is delayed in making such
delivery by reason of the fact that such documents shall not have been returned
by the appropriate recording office). If delivery is not completed within 180
days solely due to delays in making such delivery by reason of the fact that
such documents shall not have been returned by the appropriate recording
office, the Loan Seller is required to deliver such documents to the Trustee
within such time period as specified in an officer's certificate of the Loan
Seller. In the event that documents have not been received by the date
specified in such officer's certificate of the Loan Seller, a subsequent
officer's certificate is required to be delivered by the Loan Seller by such
date specified in the prior officer's certificate of the Loan Seller, stating a
revised date for receipt of documentation. The procedure shall be repeated
until the documents have been received and delivered. The Loan Seller shall
continue to use its best efforts to effect delivery within 270 days of the
Closing Date. Upon receipt of any such document from the Loan Seller, the
Seller shall promptly deliver such document to the Trustee.
The Loan Seller shall pay all initial recording fee for the
Assignments and any other fees in connection with the transfer of all original
documents to the Trustee. The Loan Seller shall prepare, in recordable form,
all Assignments necessary to assign the Mortgage Loans to the Trustee on behalf
of the Trust, and as promptly as practicable after the Closing Date, the Loan
Seller shall cause to be delivered to the appropriate public office for
recordation in the real property records the Assignment
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referred to in clause (iii) and to the extent necessary in clause (iv) of this
Section 2.01. While such Assignment to be recorded is being recorded, the
Trustee shall retain a photocopy of such Assignment. If any Assignment is lost
or returned unrecorded to the Trustee because of any defect therein, the Loan
Seller shall prepare a substitute Assignment or cure such defect, as the case
may be, and the Trustee shall cause such Assignment to be recorded in
accordance with this paragraph. If any Assignment is lost or returned
unrecorded because of any Trustee error, the Trustee shall cause such
Assignment to be recorded in accordance with this paragraph at its expense.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee are and shall be held by the Master Servicer in trust
for the benefit of the Trustee on behalf of the Certificateholders.
Except as may otherwise expressly be provided herein, neither the
Seller, the Loan Seller, the Master Servicer nor the Trustee shall (and the
Master Servicer shall ensure that no Sub-Servicer shall) assign, sell, dispose
of or transfer any interest in any Trust Fund or any portion thereof, or permit
any Trust Fund or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans in each Loan
Group by the Seller to the Trustee as provided in this Section be, and be
construed as, a sale of the Mortgage Loans by the Seller to the Trustee for the
benefit of the Certificateholders of the related Series. It is, further, not
intended that such conveyance be deemed a pledge of the Mortgage Loans by the
Seller to the Trustee to secure a debt or other obligation of the Seller.
However, in the event that any Mortgage Loans are held to be property of the
Seller, or if for any reason this Agreement is held or deemed to create a
security interest in any Mortgage Loans, then it is intended that, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyance
provided for in this Section shall be deemed to be a grant by the Seller to the
Trustee, for the benefit of the Certificateholders of the related Series, of a
security interest in all of the Seller's right (including the power to convey
title thereto), title and interest, whether now owned or hereafter acquired, in
and to (A) such Mortgage Loans, including the related Mortgage Notes, the
related Mortgages, any related insurance policies and all other documents in
the related Mortgage Files, (B) all amounts payable to the holders of such
Mortgage Loans in accordance with the terms thereof and (C) all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts from
time to time held or invested in the related Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or
other property; (c) the possession by the Trustee or its agent of the related
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" or possession by a purchaser or a person designated by
such secured party, for purposes of perfecting the security interest pursuant
to the New York Uniform Commercial Code and the Uniform Commercial Code of any
other applicable jurisdiction (including, without limitation, Sections 9-305,
8-313 or 8-321 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee for the purpose of perfecting such security interest
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under applicable law. The Seller and the Trustee shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in any
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority, in favor of the Trustee for the
Certificateholders of the related Series, under applicable law and will be
maintained as such throughout the term of the Agreement.
2.02 Acceptance of any Trust Fund by the Trustee.
The Trustee acknowledges receipt (subject to any exceptions noted in
the Initial Certification described below) of the documents referred to in
Section 2.01 above and all other assets included in each Trust Fund and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets included in each Trust Fund (to the extent delivered or
assigned to the Trustee), in trust for the exclusive use and benefit of all
present and future Certificateholders of the related Series.
The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File relating to a Mortgage Loan in the related Loan Group
on or before the Closing Date to ascertain that all documents required to be
delivered to it are in its possession, and the Trustee agrees to execute and
deliver to the Seller, the Loan Seller and the Master Servicer on the Closing
Date an Initial Certification in the form annexed hereto as Exhibit B to the
effect that, as to each Mortgage Loan listed in the applicable related Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
this Agreement with respect to such Mortgage Loan are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i) - (vi), (xiv)
and (xv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. Neither the Trustee nor the Master
Servicer shall be under any duty to determine whether any Mortgage File should
include any of the documents specified in clause (vi) of Section 2.01. Neither
the Trustee nor the Master Servicer shall be under any duty or obligation to
inspect, review or examine said documents, instruments, securities or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded or that they
are other than what they purport to be on their face.
Within 90 days of the Closing Date the Trustee shall deliver to the
Seller, the Loan Seller and the Master Servicer Final Certifications in the
form annexed hereto as Exhibit C evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and preparing the
certifications referred to above the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect (but only after giving effect to any time period set forth in
Section 2.01), the Trustee shall promptly notify the Loan Seller, the Master
Servicer and the Seller. The Trustee shall promptly notify the Seller of such
defect and request that the Loan Seller cure any such defect within 60 days
from the date on which the Loan Seller was notified of such defect, and if the
Loan Seller does not cure such defect in all material respects during such
period, the Trustee shall request that the Loan Seller purchase such Mortgage
Loan from the Trust Fund on
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behalf of the Certificateholders of the applicable Series at the Purchase Price
within 90 days after the date on which the Loan Seller was notified of such
defect. It is understood and agreed that the obligation of the Loan Seller to
cure a material defect in, or purchase any Mortgage Loan as to which a material
defect in a constituent document exists shall constitute the sole remedy
respecting such defect available to Certificateholders of the applicable Series
or the Trustee on behalf of such Certificateholders. The Purchase Price for the
purchased Mortgage Loan shall be deposited or caused to be deposited upon
receipt by the Master Servicer in the Custodial Account with respect to the
applicable Series and, upon receipt by the Trustee of written notification of
such deposit signed by a Servicing Officer, the Trustee shall release or cause
to be released to the Loan Seller (or its designee) the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Loan Seller (or its designee) shall require
as necessary to vest in the Loan Seller (or its designee) ownership of any
Mortgage Loan released pursuant hereto and at such time the Trustee shall have
no further responsibility with respect to the related Mortgage File.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to and
covenants with the Seller, the Loan Seller and the Trustee for the
benefit of Certificateholders that:
(i) The Master Servicer is, and throughout the term hereof
shall remain, a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware (except as otherwise permitted
pursuant to Section 6.02), the Master Servicer is, and
shall remain, in compliance with the laws of each
state in which any Mortgaged Property is located to
the extent necessary to perform its obligations under
this Agreement, and the Master Servicer is, and shall
remain, approved to sell mortgage loans to and service
mortgage loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the
Master Servicer, and the performance and compliance
with the terms of this Agreement by the Master
Servicer, will not violate the Master Servicer's
charter or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach
of, any material agreement or other instrument to
which it is a party or which is applicable to it or
any of its assets;
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<PAGE> 31
(iii) The Master Servicer has the full power and authority
to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this
Agreement, and has duly executed and delivered this
Agreement;
(iv) This Agreement, assuming due authorization, execution
and delivery by the Seller and the Trustee,
constitutes a valid, legal and binding obligation of
the Master Servicer, enforceable against the Master
Servicer in accordance with the terms hereof, subject
to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting
the enforcement of creditors' rights generally, and
(B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding
in equity or at law;
(v) The Master Servicer is not in violation of, and its
execution and delivery of this Agreement and its
performance and compliance with the terms of this
Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any
order, regulation or demand of any federal, state or
local governmental or regulatory authority, which
violation is likely to affect materially and adversely
either the ability of the Master Servicer to perform
its obligations under this Agreement or the financial
condition of the Master Servicer;
(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master
Servicer which would prohibit its entering into this
Agreement or performing its obligations under this
Agreement or is likely to affect materially and
adversely either the ability of the Master Servicer to
perform its obligations under this Agreement or the
financial condition of the Master Servicer;
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(vii) The Master Servicer will comply in all material
respects in the performance of this Agreement with all
reasonable rules and requirements of each insurer
under each Insurance Policy necessary to maintain
coverage thereunder;
(viii) The execution of this Agreement and the performance
of the Master Servicer's obligations hereunder do not
require any license, consent or approval of any state
or federal court, agency, regulatory authority or
other governmental body having jurisdiction over the
Master Servicer, other than such as have been
obtained; and
(ix) No written information, certificate of an officer,
statement furnished in writing or report delivered to
the Seller, any affiliate of the Seller or the Trustee
by the Master Servicer will, to the knowledge of the
Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to
make the information, certificate, statement or report
not misleading.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Seller, the
Loan Seller, the Trustee and the Certificateholders. Upon discovery by the
Seller, the Trustee, the Loan Seller or the Master Servicer of a breach of any
of the foregoing representations, warranties and covenants that materially and
adversely affects the interests of the Seller or the Trustee, the party
discovering such breach shall give prompt written notice to the other parties.
(b) The Seller hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of
Certificateholders of each Series that as of the Closing
Date, assuming that (i) the representation of the Loan
Seller set forth in Section 2.04(b)(xiii) hereof and (ii)
the representations and warranties made by DLJ Mortgage
Capital, Inc. and Capstead Capital Corporation pursuant to
the respective Assignment and Assumption Agreements are
both true and correct, then immediately prior to the
assignment of the Mortgage Loans in the related Loan Group
to the Trustee, the Seller had good and marketable title
to, and was the sole owner of, each Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest
(other than rights to servicing and related compensation)
and such
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assignment validly transfers ownership of the Mortgage
Loans to the Trustee free and clear of any pledge, lien,
encumbrance or security interest. It is understood and
agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the
respective Mortgage Files to the Trustee.
Upon discovery by either the Seller, the Master Servicer, the Loan
Seller or the Trustee of a breach of any representation or warranty set forth
in this Section 2.03 which materially and adversely affects the interests of
the applicable Certificateholders in any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties.
2.04. Representations and Warranties of the Loan Seller.
(a) The Loan Seller hereby represents and warrants to and
covenants with the Seller, the Master Servicer and the
Trustee for the benefit of Certificateholders that:
(i) The Loan Seller is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware;
(ii) The execution and delivery of this
Agreement by the Loan Seller, and the
performance and compliance with the terms
of this Agreement by the Loan Seller, will
not violate the Loan Seller's charter or
bylaws or constitute a default (or an event
which, with notice or lapse of time, or
both, would constitute a default) under, or
result in the breach of, any material
agreement or other instrument to which it
is a party or which is applicable to it or
any of its assets;
(iii) The Loan Seller has the full power and
authority to enter into and consummate all
transactions contemplated by this
Agreement, has duly authorized the
execution, delivery and performance of this
Agreement, and has duly executed and
delivered this Agreement;
(iv) This Agreement, assuming due authorization,
execution and delivery by the Seller and
the Trustee, constitutes a valid, legal and
binding obligation of the Loan Seller,
enforceable against the Loan Seller in
accordance with the
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terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the
enforcement of creditors' rights generally,
and (B) general principles of equity,
regardless of whether such enforcement is
considered in a proceeding in equity or at
law;
(v) The Loan Seller is not in violation of, and
its execution and delivery of this
Agreement and its performance and
compliance with the terms of this Agreement
will not constitute a violation of, any
law, any order or decree of any court or
arbiter, or any order, regulation or demand
of any federal, state or local governmental
or regulatory authority, which violation is
likely to affect materially and adversely
either the ability of the Loan Seller to
perform its obligations under this
Agreement or the financial condition of the
Loan Seller;
(vi) No litigation is pending or, to the best of
the Loan Seller's knowledge, threatened
against the Loan Seller which would
prohibit its entering into this Agreement
or performing its obligations under this
Agreement or is likely to affect materially
and adversely either the ability of the
Loan Seller to perform its obligations
under this Agreement or the financial
condition of the Loan Seller;
(vii) The execution of this Agreement and the
performance of the Loan Seller's
obligations hereunder do not require any
license, consent or approval of any state
or federal court, agency, regulatory
authority or other governmental body having
jurisdiction over the Loan Seller, other
than such as have been obtained; and
(viii) No information, certificate of an officer,
statement furnished in writing or report
delivered to the Seller, any affiliate of
the Seller or the Trustee by the Loan
Seller will, to the knowledge of the Loan
Seller, contain
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<PAGE> 35
any untrue statement of a material fact or
omit a material fact necessary to make the
information, certificate, statement or
report not misleading.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.04(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Seller, the
Trustee, the Master Servicer and the Certificateholders. Upon discovery by the
Seller, the Trustee, the Loan Seller or the Master Servicer of a breach of any
of the foregoing representations, warranties and covenants that materially and
adversely affects the interests of the Seller, the Master Servicer or the
Trustee, the party discovering such breach shall give prompt written notice to
the other parties.
(b) The Loan Seller hereby represents and warrants to
and covenants with the Seller, the Master Servicer
and the Trustee for the benefit of the
Certificateholders of each Series that:
(A) with respect to each Mortgage Loan in the related Loan Group,
as of the Closing Date or as of such date specifically
provided herein:
(i) The consummation of the transactions
contemplated by this Agreement is in the
ordinary course of business of the Loan
Seller, and the transfer, assignment and
conveyance of the related Mortgage Note and
the Mortgage by the Loan Seller pursuant to
the Loan Sale Agreement were not subject to
bulk transfer or any similar statutory
provisions in effect in any applicable
jurisdiction;
(ii) The Loan Seller used no selection
procedures (other than those set forth on
the applicable Mortgage Loan Schedule) that
identified the Mortgage Loan as being less
desirable or valuable than other comparable
mortgage loans in the Loan Seller's
portfolio;
(iii) The information set forth in the applicable
Mortgage Loan Schedule is true, complete
and correct;
(iv) All payments due prior to the Cut-off Date
for such Mortgage Loan have been made as of
the Closing Date, the Mortgage Loan is not
delinquent in payment more than 30 days and
has
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not been dishonored; the Loan Seller has
not advanced funds for payments of
principal or interest, or induced,
solicited or knowingly received any advance
of funds for payments of principal or
interest from a party other than the owner
of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the
payment of any amount required by the
Mortgage Loan for payments of principal or
interest; there has been no more than one
delinquency during the preceding
twelve-month period and such delinquency
did not last more than 30 days;
(v) There are no material defaults in complying
with the terms of the Mortgage, and all
taxes, governmental assessments, insurance
premiums, water, sewer and municipal
charges, leasehold payments or ground rents
which previously became due and owing have
been paid, or escrow funds have been
established in an amount sufficient to pay
for every such escrowed item which remains
unpaid and which has been assessed but is
not yet due and payable;
(vi) The terms of the Mortgage Note and the
Mortgage have not been impaired, waived,
altered or modified in any respect, except
by written instruments which have been
recorded to the extent any such recordation
is required by law, or, necessary to
protect the interest of the Trust and the
related Certificateholders. No instrument
of waiver, alteration or modification has
been executed, and no Mortgagor has been
released, in whole or in part, from the
terms thereof except in connection with an
assumption agreement and which assumption
agreement is part of the Mortgage File and
the terms of which are reflected in the
applicable Mortgage Loan Schedule; the
substance of any such waiver, alteration or
modification has been approved by the
issuer of any related Primary Mortgage
Insurance Policy and title insurance
policy, to the extent required by the
related policies;
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<PAGE> 37
(vii) The Mortgage Note and the Mortgage are not
subject to any right of rescission,
set-off, counterclaim or defense,
including, without limitation, the defense
of usury, nor will the operation of any of
the terms of the Mortgage Note or the
Mortgage, or the exercise of any right
thereunder, render the Mortgage Note or
Mortgage unenforceable, in whole or in
part, or subject to any right of
rescission, set-off, counterclaim or
defense, including the defense of usury,
and no such right of rescission, set-off,
counterclaim or defense has been asserted
with respect thereto, other than any other
state laws providing "security first"
election of remedies, one action, and
anti-deficiency requirements; and to the
best of Loan Seller's knowledge, the
Mortgagor was not a debtor in any state or
federal bankruptcy or insolvency proceeding
at the time the Mortgage Loan was
originated;
(viii) All buildings or other customarily insured
improvements upon the Mortgaged Property
are insured by an insurer acceptable under
the FNMA Guides, against loss by fire,
hazards of extended coverage and such other
hazards as are provided for in the FNMA
Guides or by FHLMC, as well as all
additional requirements set forth in
Section 3.13 hereof. All such standard
hazard policies are in full force and
effect and on the date of origination
contained a standard mortgagee clause
naming the Loan Seller and its successors
in interest and assigns as loss payee and
such clause is still in effect and all
premiums due thereon have been paid. If
required by the Flood Disaster Protection
Act of 1973, as amended, the Mortgage Loan
is covered by a flood insurance policy
meeting the requirements of the current
guidelines of the Federal Insurance
Administration which policy conforms to
FNMA and FHLMC requirements. Such policy
was issued by an insurer acceptable under
FNMA or FHLMC guidelines. The Mortgage
obligates the Mortgagor thereunder to
maintain all such insurance at the
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<PAGE> 38
Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes
the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor
from the Mortgagor;
(ix) Any and all requirements of any federal,
state or local law including, without
limitation, usury, truth-in-lending, real
estate settlement procedures, consumer
credit protection, equal credit opportunity
or disclosure laws applicable to the
Mortgage Loan have been complied with;
(x) The Mortgage has not been satisfied,
canceled or subordinated, in whole or in
part, or rescinded, and the Mortgaged
Property has not been released from the
lien of the Mortgage, in whole or in part
nor has any instrument been executed that
would effect any such release,
cancellation, subordination or rescission.
Neither the Loan Seller nor any servicer
has waived the performance by the Mortgagor
of any action, if the Mortgagor's failure
to perform such action would cause the
Mortgage Loan to be in default, nor has the
Loan Seller nor any servicer waived any
default resulting from any action or
inaction by the Mortgagor;
(xi) The Mortgage is a valid, subsisting,
enforceable and perfected first lien on the
Mortgaged Property, including all buildings
on the Mortgaged Property and all
installations and mechanical, electrical,
plumbing, heating and air conditioning
systems affixed to such buildings, and all
additions, alterations and replacements
made at any time with respect to the
foregoing securing the Mortgage Note's
original principal balance. Such lien is
free and clear of all adverse claims, liens
and encumbrances having priority over the
first lien of the Mortgage, subject only to
Permitted Encumbrances. Any security
agreement,
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<PAGE> 39
chattel mortgage or equivalent document
related to and delivered in connection with
the Mortgage Loan establishes and creates a
valid, subsisting, enforceable and
perfected first lien and first priority
security interest on the property described
therein, and the Loan Seller had the full
right to sell and assign the same to the
Seller;
(xii) The Mortgage Note and the related Mortgage
are original and genuine and each is the
legal, valid and binding obligation of the
maker thereof, enforceable in all respects
in accordance with its terms subject to
bankruptcy, insolvency and other laws of
general application affecting the rights of
creditors. The Loan Seller has taken all
action necessary to transfer such rights of
enforceability to the Seller and the Trust.
All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter
into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage.
The Mortgage Note and the Mortgage have
been duly and properly executed by such
parties. No fraud, error, omission,
misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan
has taken place on the part of Loan Seller
or the Mortgagor or, to the best of the
Loan Seller's knowledge, any other party
involved in the origination of the Mortgage
Loan. The proceeds of the Mortgage Loan
have been fully disbursed and there is no
requirement for future advances thereunder,
and any and all requirements as to
completion of any on-site or off-site
improvements and as to disbursements of any
escrow funds therefor have been complied
with. All costs, fees and expenses incurred
in making or closing the Mortgage Loan and
the recording of the Mortgage were paid or
are in the process of being paid, and the
Mortgagor is not entitled to any refund of
any amounts paid or due under the Mortgage
Note or Mortgage;
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<PAGE> 40
(xiii) Immediately prior to the sale of the
Mortgage Loans pursuant to the Loan Sale
Agreement, the Loan Seller was the sole
owner of record and holder of the Mortgage
Loan and the indebtedness evidenced by the
Mortgage Note, and the Mortgage Loan,
including the Mortgage Note and the
Mortgage, were not subject to an assignment
or pledge, and the Loan Seller had good and
marketable title to and was the sole owner
thereof and had full right to transfer and
sell the Mortgage Loan to the Seller free
and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest
and had the full right and authority
subject to no interest or participation of,
or agreement with, any other party, to sell
and assign the Mortgage Loan pursuant to
the Loan Sale Agreement and such assignment
under the Loan Sale Agreement validly
transferred ownership of the Mortgage Loans
to the Seller free and clear of any
encumbrance, equity, participation
interest, lien, pledge, charge, claim or
security interest (other than Escrow Funds
due to overages, if any, to the extent
currently maintained in escrow accounts by
the Loan Seller). The Loan Seller has no
obligation or right to repurchase the
Mortgage Loan or substitute another
Mortgage Loan, except as provided in this
Agreement;
(xiv) Each Mortgage Loan is covered by an ALTA
lender's title insurance policy or other
generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC,
issued by a title insurer acceptable to
FNMA or FHLMC and qualified to do business
in the jurisdiction where the Mortgaged
Property is located, insuring (subject to
any Permitted Encumbrances) the Loan
Seller, its successors and assigns, as to
the first priority lien of the Mortgage in
the original principal amount of the
Mortgage Loan. Such lender's title
insurance policy affirmatively insures
ingress and egress and against encroachment
by or upon the Mortgaged Property or any
interest
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<PAGE> 41
therein. Where required by state law or
regulation, the Mortgagor has been given
the opportunity to choose the carrier of
the required mortgage title insurance. The
Loan Seller, its successors and assigns,
are the sole insureds of such lender's
title insurance policy, such title
insurance policy has been duly and validly
endorsed to the Trustee or the assignment
to the Trustee of the Loan Seller's
interest therein does not require the
consent of or notification to the insurer
and such lender's title insurance policy is
in full force and effect and will be in
full force and effect upon the consummation
of the transactions contemplated by this
Agreement. No claims have been made under
such lender's title insurance policy, and
no prior holder of the related Mortgage,
including the Loan Seller, has done, by act
or omission, anything which would impair
the coverage of such lender's title
insurance policy;
(xv) There is no default, breach, violation or
event of acceleration existing under the
Mortgage or the related Mortgage Note and
no event which, with the passage of time or
with notice and the expiration of any grace
or cure period, would constitute a default,
breach, violation or event permitting
acceleration; and neither the Loan Seller
nor any prior mortgagee has waived any
default, breach, violation or event
permitting acceleration;
(xvi) There are no mechanics', or similar liens
or claims which have been filed for work,
labor or material (and no rights are
outstanding that under law could give rise
to such liens) affecting the related
Mortgaged Property which are or may be
liens prior to or equal to the lien of the
related Mortgage;
(xvii) All improvements subject to the Mortgage
which were considered in determining the
appraised value of the Mortgaged Property
lie wholly within the boundaries and
building restriction lines of the Mortgaged
Property
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<PAGE> 42
(and wholly within the project with respect
to a condominium unit) and no improvements
on adjoining properties encroach upon the
Mortgaged Property except those which are
insured against by the title insurance
policy referred to in clause (xiv) above
and all improvements on the property comply
with all applicable zoning and subdivision
laws and ordinances; as of the date of
origination of the Mortgage Loan the
Mortgage Property was, and to the best of
the Loan Seller's knowledge as of the
Closing Date the Mortgage Property is,
lawfully occupied under applicable law;
(xviii) The Mortgage Loan was originated by or for
the Loan Seller. The Mortgage Loan complies
with all the terms, conditions and
requirements of the Loan Seller's
underwriting standards in effect at the
time of origination of such Mortgage Loan.
The Mortgage Notes and Mortgages (exclusive
of any riders) are on forms acceptable to
FNMA or FHLMC. The Loan Seller is currently
selling loans to FNMA and/or FHLMC which
are the same document forms as the Mortgage
Notes and Mortgages (inclusive of any
riders); the Mortgage Loan bears interest
at a fixed rate as set forth in the
applicable Mortgage Loan Schedule, and
Monthly Payments under the Mortgage Note
are due and payable on the first day of
each month. The Mortgage contains the usual
and enforceable provisions (subject to any
applicable state, federal or local laws) of
the originator at the time of origination
for the acceleration of the payment of the
unpaid principal amount of the Mortgage
Loan if the related Mortgaged Property is
sold without the prior consent of the
mortgagee thereunder;
(xix) The Mortgaged Property is not subject to
any material damage by waste, fire,
earthquake, windstorm, flood or other
casualty and is in good repair. At
origination of the Mortgage Loan there was,
and there currently is, no proceeding
pending for the total or partial
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<PAGE> 43
condemnation of the Mortgaged Property.
There have not been any condemnation
proceedings with respect to the Mortgaged
Property and, to the best of Loan Seller's
knowledge, there are no such proceedings
scheduled to commence at a future date;
(xx) The related Mortgage contains customary and
enforceable provisions such as to render
the rights and remedies of the holder
thereof adequate for the realization
against the Mortgaged Property of the
benefits of the security provided thereby,
including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's
sale, and (2) otherwise by judicial
foreclosure. There is no homestead or other
exemption available to the Mortgagor which
would interfere with the right to sell the
Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(xxi) If the Mortgage constitutes a deed of
trust, a trustee, authorized and duly
qualified if required under applicable law
to act as such, has been properly
designated and currently so serves and is
named in the Mortgage, and no fees or
expenses are or will become payable by the
Trust or any other Person to the trustee
under the deed of trust, except in
connection with a trustee's sale or
attempted sale after default by the
Mortgagor;
(xxii) The Mortgage File contains an appraisal of
the related Mortgaged Property signed prior
to the final approval of the mortgage loan
application by the appraiser, approved by
the Loan Seller, who, to the best of Loan
Seller's knowledge, had no interest, direct
or indirect, in the Mortgaged Property or
in any loan made on the security thereof,
and whose compensation is not affected by
the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both
satisfy the requirements of FNMA or FHLMC
and Title XI of FIRREA and the regulations
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<PAGE> 44
promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(xxiii) All parties which have had any interest in
the Mortgage, whether as mortgagee,
assignee, pledgee or otherwise, are (or,
during the period in which they held and
disposed of such interest, were) (A) in
compliance with any and all applicable
licensing requirements of the laws of the
state wherein the Mortgaged Property is
located, and (B) (1) organized under the
laws of such state, or (2) qualified to do
business in such state, or (3) federal
savings and loan associations or national
banks or a Federal Home Loan Bank or
savings bank having principal offices in
such state, or (4) not doing business in
such state;
(xxiv) The related Mortgage Note is not and has
not been secured by any collateral except
the lien of the corresponding Mortgage and
the security interest of any applicable
security agreement or chattel mortgage
referred to above and such collateral does
not serve as security for any other
obligation;
(xxv) The Mortgagor has received all disclosure
materials required by applicable law with
respect to the making of such mortgage
loans;
(xxvi) The Mortgage Loan does not contain
"graduated payment" or "buy down" features;
(xxvii) The Mortgagor is not in bankruptcy and, to
the best of the Loan Seller's knowledge,
the Mortgagor is not insolvent; to the best
of the Loan Seller's knowledge there exist
no circumstances or conditions with respect
to the Mortgage, the Mortgaged Property,
the Mortgagor or the Mortgagor's credit
standing that could reasonably be expected
to cause investors to regard the Mortgage
Loan as an unacceptable investment, cause
the Mortgage Loan to become delinquent, or
materially adversely affect the value or
marketability of the Mortgage Loan;
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(xxviii) The Mortgage Loan is a fixed rate mortgage
loan. The Mortgage Loan has an original
term to maturity of not more than thirty
(30) years, with interest payable in
arrears on the first day of each month. The
Mortgage Note requires a monthly payment
which is sufficient to fully amortize the
original principal balance over the
original term thereof and to pay interest
at the related Mortgage Interest Rate. The
Mortgage Loan does not contain terms or
provisions which would result in negative
amortization.
(xxix) The origination and servicing practices
used by the Loan Seller, with respect to
the Mortgage Note and Mortgage have been
legal and in accordance with applicable
laws and regulations, and in all material
respects proper and prudent in the mortgage
origination and servicing business. With
respect to escrow deposits and payments
that the Loan Seller is entitled to
collect, all such payments are in the
possession of, or under the control of, the
Loan Seller, and there exist no
deficiencies in connection therewith for
which customary arrangements for repayment
thereof have not been made. All escrow
payments have been collected in full
compliance with state and federal law and
the provisions of the related Mortgage Note
and Mortgage. If the Mortgage Loan is the
subject of an escrow, escrow of funds is
not prohibited by applicable law. No escrow
deposits or other charges or payments due
under the Mortgage Note have been
capitalized under any Mortgage or the
related Mortgage Note;
(xxx) The Mortgage Loan did not have a
Loan-to-Value Ratio at origination greater
than 95%;
(xxxi) In the event the Mortgage Loan has an LTV
greater than 80%, the excess of the
principal
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balance of the Mortgage Loan over 80% of
the Collateral Value is and will be insured
as to payment defaults by a Primary
Mortgage Insurance Policy issued by a
Qualified Mortgage Insurer. All provisions
of such Primary Mortgage Insurance Policy
have been and are being complied with, such
policy is in full force and effect, and all
premiums due thereunder have been paid. No
action, inaction, or event has occurred and
no state of facts exists that has, or will
result in the exclusion from, denial of, or
defense to coverage. Subject to the
mortgagor's right to cancel under any
applicable federal or state law, any
Mortgage Loan subject to a Primary Mortgage
Insurance Policy obligates the Mortgagor
thereunder to maintain the Primary Mortgage
Insurance Policy and to pay all premiums
and charges in connection therewith. The
Mortgage Interest Rate for the Mortgage
Loan as set forth on the applicable
Mortgage Loan Schedule is net of any such
insurance premium;
(xxxii) The assignment of Mortgage is in recordable
form and is acceptable for recording under
the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxiii) If the Mortgage Loan is not secured by an
interest in a leasehold estate, the
Mortgaged Property is located in the state
identified in the applicable Mortgage Loan
Schedule and consists of a single parcel of
real property with a detached single family
residence erected thereon, or a townhouse,
or a two-to four-family dwelling, or an
individual condominium unit in a
condominium project, or an individual unit
in a planned unit development or a de
minimis planned unit development, provided,
however, that no residence or dwelling is a
single parcel of real property with a
cooperative housing corporation
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erected thereon, or a mobile home. To the
best of the Loan Seller's knowledge, as of
the date of origination, no portion of the
Mortgaged Property was used for commercial
purposes, and to the best of the Loan
Seller's knowledge, since the date of
origination, no portion of the Mortgaged
Property is used for commercial purposes;
(xxxiv) Principal payments on the Mortgage Loan
commenced no more than sixty (60) days
after the funds were disbursed in
connection with the Mortgage Loan. The
Mortgage Note is payable on the first day
of each month in equal monthly installments
of principal and interest, with interest
calculated and payable in arrears,
sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an
original term of not more than thirty (30)
years from commencement of amortization;
(xxxv) As of the date of origination of the
Mortgage Loan, the Mortgaged Property was
lawfully occupied under applicable law, and
all inspections, licenses and certificates
required to be made or issued with respect
to all occupied portions of the Mortgaged
Property and, with respect to the use and
occupancy of the same, including but not
limited to certificates of occupancy and
fire underwriting certificates, have been
made or obtained from the appropriate
authorities;
(xxxvi) If the Mortgaged Property is a condominium
unit or a planned unit development (other
than a de minimis planned unit development)
such condominium or planned unit
development project meets FNMA or FHLMC
eligibility requirements, or is located in
a condominium or planned
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unit development project which has received
project approval from FNMA or FHLMC;
(xxxvii) There is no pending action or proceeding
directly involving the Mortgaged Property
in which compliance with any environmental
law, rule or regulation is an issue; to the
best of Loan Seller's knowledge, there is
no violation of any environmental law, rule
or regulation with respect to the Mortgaged
Property;
(xxxviii) The Mortgagor has not notified the Loan
Seller, and the Loan Seller has no
knowledge of any relief requested or
allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act of
1940;
(xxxix) The Mortgage Loan was not made in
connection with the construction or
rehabilitation of a Mortgaged Property;
(xl) The Mortgage Loan has been serviced in
compliance with those mortgage servicing
practices (including collection procedures)
of prudent mortgage banking institutions
which service mortgage loans of the same
type as such Mortgage Loan, and which are
in accordance with FNMA servicing practices
and procedures, for MBS pool mortgages, as
defined in the FNMA Guides including future
updates;
(xli) The Mortgage Loan was originated by a
mortgagee approved by the Secretary of
Housing and Urban Development pursuant to
sections 203 and 211 of the National
Housing Act, a savings and loan
association, a savings bank, a commercial
bank, credit union, insurance company or
similar institution
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<PAGE> 49
which is supervised and examined by a
federal or state authority;
(xlii) With respect to any ground lease to which
the Mortgaged Property may be subject: (i)
the Mortgagor is the owner of a valid and
subsisting leasehold interest under such
ground lease; (ii) such ground lease is in
full force and effect, unmodified and not
supplemented by any writing or otherwise;
(iii) all rent, additional rent and other
charges reserved therein have been fully
paid to the extent payable as of the
Closing Date; (iv) the Mortgagor enjoys the
quiet and peaceful possession of the
leasehold estate, subject to any sublease;
(v) the Mortgagor is not in default under
any of the terms of such ground lease, and
there are no circumstances which, with the
passage of time or the giving of notice, or
both, would result in a default under such
ground lease; (vi) the lessor under such
ground lease is not in default under any of
the terms or provisions of such ground
lease on the part of the lessor to be
observed or performed; (vii) the lessor
under such ground lease has satisfied any
repair or construction obligations due as
of the Closing Date pursuant to the terms
of such ground lease; and (viii) the
execution, delivery and performance of the
Mortgage do not require the consent (other
than those consents which have been
obtained and are in full force and effect)
under, and will not contravene any
provision of or cause a default under, such
ground lease;
(xliii) The Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of
the Code (without regard to Treasury
Regulations ss. 1.860G-2(f) or any similar
rule that provides that a defective
obligation is a qualified mortgage for a
temporary period);
(xliv) If the Mortgage Loan is secured by a
long-term residential lease, (1) the lessor
under the lease holds a fee simple interest
in the land;
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(2) the terms of such lease expressly
permit the mortgaging of the leasehold
estate, the assignment of the lease without
the lessor's consent and the acquisition by
the holder of the Mortgage of the rights of
the lessee upon foreclosure or assignment
in lieu of foreclosure or provide the
holder of the Mortgage with substantially
similar protections; (3) the terms of such
lease do not (a) allow the termination
thereof upon the lessee's default without
the holder of the Mortgage being entitled
to receive written notice of, and
opportunity to cure, such default, (b)
allow the termination of the lease in the
event of damage or destruction as long as
the Mortgage is in existence, (c) prohibit
the holder of the Mortgage from being
insured (or receiving proceeds of
insurance) under the hazard insurance
policy or policies relating to the
Mortgaged Property or (d) permit any
increase in rent by the lessor other than
pre-established increases set forth in the
lease; (4) the original term of such lease
is not less than 15 years; (5) the term of
such lease does not terminate earlier than
five years after the maturity date of the
Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in
which the use of leasehold estates in
transferring ownership in residential
properties is a widely accepted practice;
(B) with respect to the Mortgage Loans in the aggregate:
(i) Approximately 20% (by aggregate outstanding principal
balance of the Mortgage Loans as of the Cut-off Date) of the Mortgage
Loans are insured under Primary Mortgage Insurance Policies; and
(ii) No more than 1% of the Mortgaged Properties (by
outstanding principal balance of the related Mortgage Loans as of the
Cut-off Date) are secured by leasehold interests.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 are the only representations and warranties of
the Loan Seller made with respect to the Mortgage Loans that are enforceable by
the Trustee for the Certificateholders. Upon the discovery by the Seller, the
Master Servicer, the Loan Seller or the Trustee of a breach of any of the
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representations and warranties made in this Section 2.04(b) which materially
and adversely affects the interests of the Certificateholders of the applicable
Series in such Mortgage Loan and/or if the breach is one that, had it been
discovered before the Closing Date, would have prevented the Mortgage Loan from
being a "qualified mortgage" within the meaning of the REMIC Provisions, the
party discovering such breach shall give prompt written notice to the other
parties. The Loan Seller shall, within 90 days from the earlier of the date
that (x) the Seller, the Master Servicer or the Trustee notified the Loan
Seller of such breach, or (y) the Loan Seller discovered such breach, either
(i) cure such breach in all material respects or (ii) purchase such Mortgage
Loan from the applicable Trust Fund at the Purchase Price and in the manner set
forth in Section 2.02. Except as expressly set forth herein none of the
Trustee, the Seller or the Master Servicer (in its capacity as Master Servicer)
is under any obligation to discover any breach of the above mentioned
representations and warranties. It is understood and agreed that the obligation
of the Loan Seller to cure such breach or purchase such Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to the applicable Certificateholders or
the Trustee on behalf of such Certificateholders.
2.05. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it together with the assignment to it
of all other assets included in any Trust Fund for each Series, receipt of
which is hereby acknowledged. Concurrently with such delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Seller executed
by an officer of the Seller has executed and caused to be authenticated and
delivered to, or upon the order of, the Seller the Certificates of each Series
in authorized denominations, each of which evidences ownership of the entire
Trust Fund with respect to such Series.
III ADMINISTRATION AND SERVICING OF THE TRUST FUND
3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in
accordance with this Agreement, the related Mortgage Notes and Mortgages and
Accepted Servicing Practices, and shall have full power and authority, acting
alone and/or through Sub-Servicers as provided in Section 3.02, to do or cause
to be done any and all things in connection with such servicing and
administration that it may deem necessary or desirable and consistent with
Accepted Servicing Practices and the terms of this Agreement. Without limiting
the generality of the foregoing, the Master Servicer in its own name or in the
name of a Sub-Servicer is hereby authorized and empowered by the Trustee when
the Master Servicer believes it appropriate in its best judgment, to (i)
execute and deliver, on behalf of the applicable 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 Mortgage Loans and the Mortgaged
Properties, (ii) institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and (iii) hold
or cause to be held title to such properties, on behalf of the Trustee and the
applicable Certificateholders. The Master Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and
shall provide to the
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Mortgagors any reports required to be provided to them thereby. Subject to
Section 3.16, the Trustee shall execute based on the written request of the
Master Servicer and furnish to the Master Servicer and any Sub-Servicer any
special or limited powers of attorney and other documents necessary or
appropriate to enable the Master Servicer and any Sub-Servicer to carry out
their servicing and administrative duties hereunder. The Trustee shall not be
liable for any action taken by the Master Servicer or any Sub-Servicer pursuant
to the application of such special or limited powers of attorney.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further
as provided in Section 3.11. No costs incurred by the Master Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on the
Mortgaged Properties shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause either the Lower REMIC or
the Upper REMIC to fail to qualify as a REMIC under the Code or the imposition
of any tax on "prohibited transactions" or "contributions" after the Startup
Day under the REMIC Provisions.
The relationship of the Master Servicer (and of any successor to the
Master 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 venture, partner or agent.
3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements with Sub-Servicers for the servicing and
administration of the Mortgage Loans and for the
performance of any and all other activities of the
Master Servicer hereunder. Each Sub-Servicer shall
be either (i) an institution the accounts of which
are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing
mortgage loans, and in either case shall be
authorized to transact business in the state or
states in which the related Mortgaged Properties it
is to service are situated, if and to the extent
required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder
and under the Sub-Servicing Agreement, and in either
case shall be a FHLMC or FNMA approved mortgage
servicer. Any Subservicing Agreement entered into by
the Master Servicer shall include the provision that
such Subservicing Agreement may be
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immediately terminated without cause and without any
termination fee by any successor Master Servicer
hereunder. In addition, each SubServicing Agreement
must impose on the Sub-Servicer requirements
conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans
consistent with the terms of this Agreement. With
the consent of the Trustee, which consent shall not
be unreasonably withheld, the Master Servicer and
the Sub-Servicers may enter into Sub-Servicing
Agreements and make amendments to the Sub-Servicing
Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that
any such amendments or different forms shall be
consistent with and not violate the provisions of
this Agreement, and that no such amendment or
different form shall be made or entered into which
could be reasonably expected to be materially
adverse to the interests of the Certificateholders
of a Series, without the consent of the Holders of
Certificates of such Series evidencing Fractional
Undivided Interests aggregating not less than
662/3%.
(b) As part of its servicing activities hereunder, the
Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related
Sub-Servicing Agreement, including, without
limitation, any obligation to make advances in
respect of delinquent payments as required by a
Sub-Servicing Agreement. Such enforcement,
including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements
and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good
faith business judgment, would require were it the
owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at
its own expense, but shall be reimbursed therefor
only (i) from a general recovery resulting from such
enforcement only to the extent, if any, that such
recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is
directed.
3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a SubServicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02. Each Sub-
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Servicing Agreement, if any, shall include the provision that such agreement
may be immediately terminated by any successor Master Servicer without cause
and without payment of any fee or penalty in the event that the Master Servicer
shall, for any reason, no longer be the Master Servicer (including by reason of
an Event of Default).
3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Sub-Servicing Agreements or arrangements or by virtue of indemnification
from the Sub-Servicer and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans. For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when the Sub-Servicer has
received such payments. The Master Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Master Servicer by
such Sub-Servicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
3.05. No Contractual Relationship Between Sub-Servicers and Trustee or
Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such and not as an originator shall be deemed
to be between the Sub-Servicer and the Master Servicer alone, and the Trustee
and Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer except as set forth in Section 3.06.
3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of an Event of Default) hereunder, the
Trustee, its designee or the successor Master Servicer for the Trustee shall
thereupon assume all of the rights and obligations of the Master Servicer under
each Sub-Servicing Agreement that the Master Servicer may have entered into,
unless the Trustee is then permitted and elects to terminate any Sub-Servicing
Agreement in accordance with its terms. Subject to Section 3.03, the Trustee,
its designee or the successor Master Servicer for the Trustee shall be deemed
to have assumed all of the Master Servicer's interest therein and to have
replaced the Master Servicer as a party to each Sub-Servicing Agreement to the
same extent as if the Sub-Servicing Agreements had been assigned to the
assuming party, except that the Master Servicer shall not thereby be relieved
of any liability or obligations under the Sub-Servicing Agreements, and the
Master Servicer shall continue to be entitled to any rights or benefits which
arose prior to its termination as master servicer.
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The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall use reasonable efforts to collect all
payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement, Accepted Servicing Practices, and the terms and provisions of any
related Primary Mortgage Insurance Policy or any other related Insurance
Policy, follow such collection procedures as it follows with respect to
mortgage loans comparable to the Mortgage Loans and held for its own account.
The Master Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note, Primary Hazard Insurance Policy or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that it is prohibited by applicable law from enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any prepayment charge, assumption fee, late payment charge
or other charge in connection with a Mortgage Loan, and (ii) arrange a
schedule, running for no more than 180 days after the Due Date for payment of
any installment on any Mortgage Note, for the liquidation of delinquent items.
The Master Servicer shall be responsible for preparing and distributing all
information statements relating to payments on the Mortgage Loans, in
accordance with all applicable federal and state tax laws and regulations.
3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a SubServicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Certificateholders. The Sub-Servicer will be required to deposit into the
Sub-Servicing Account on a daily basis, but in no event later than the first
Business Day after receipt of all proceeds of the Mortgage Loans received by
the Sub-Servicer, less its servicing compensation and any unreimbursed expenses
and advances, to the extent permitted by the Sub-Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer all funds held in the Sub-Servicing Account with respect to any
Mortgage Loan as of the Sub-Servicer Remittance Date, after deducting from such
remittance an amount equal to the servicing compensation and unreimbursed
expenses and advances to which it is then entitled pursuant to the related
SubServicing Agreement, to the extent not previously paid to or retained by it.
In addition, on each SubServicer Remittance Date the Sub-Servicer will be
required to remit to the Master Servicer any amounts required to be advanced
pursuant to the related Sub-Servicing Agreement. The Sub-Servicer will also be
required to remit to the Master Servicer, within one Business Day of receipt,
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the proceeds of any Principal Prepayment made by the Mortgagor and any
Insurance Proceeds or Liquidation Proceeds.
3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
The Master Servicer and the Sub-Servicers shall establish and maintain
one or more accounts (the "Servicing Accounts"), and shall deposit and retain
therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy and Primary Mortgage Insurance Policy premiums, and comparable items for
the account of the Mortgagors, to the extent that the Master Servicer
customarily escrows for such amounts. Withdrawals of amounts so collected from
a Servicing Account may be made only to (i) effect payment of taxes,
assessments, Primary Hazard Insurance Policy and Primary Mortgage Insurance
Policy premiums and comparable items; (ii) reimburse the Master Servicer (or a
SubServicer to the extent provided in the related Sub-Servicing Agreement) out
of related collections for any payments made pursuant to Sections 3.01 (with
respect to taxes and assessments), 3.13 (with respect to Primary Hazard
Insurance Policies) and 3.25 (with respect to Primary Mortgage Insurance only);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
clear and terminate the Servicing Account at the termination of this Agreement
pursuant to Section 9.01 or (v) to withdraw any amounts deposited therein that
were not required to be so deposited. As part of its servicing duties, the
Master Servicer or Sub-Servicers shall, if and to the extent required by law,
pay to the Mortgagors interest on funds in Servicing Accounts from its or their
own funds, without any reimbursement therefor.
3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one
or more accounts as the Custodial Account in which
the Master Servicer shall deposit or cause to be
deposited on a daily basis, or as and when received
from the Sub-Servicers, the following payments and
collections received or made by or on behalf of it
subsequent to the Cut-off Date, or received by it
prior to the Cut-off Date but allocable to a period
subsequent thereto (other than in respect of
principal and interest on the Mortgage Loans due on
or before the Cut-off Date):
(i) all payments on account of
principal, including Principal
Prepayments, on the Mortgage
Loans;
(ii) all payments on account of
interest on the Mortgage Loans,
exclusive of any portion thereof
representing interest in excess of
the related Net Mortgage Rate;
(iii) all Insurance Proceeds (other than
proceeds that represent
reimbursement of costs and
expenses incurred by the Master
Servicer
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in connection with presenting
claims under the related Insurance
Policies), Liquidation Proceeds
and REO Proceeds;
(iv) all proceeds of any Mortgage Loan
or REO Property repurchased or
purchased in accordance with
Sections 2.02, 2.04, 3.22 or 9.01;
and
(v) any amounts required to be
deposited pursuant to Section 3.12
or 3.13.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive. In the event the Master Servicer shall deposit in the Custodial
Account any amount not required to be deposited therein, it may withdraw such
amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account shall be maintained as a segregated
account, separate and apart from trust funds created for mortgage pass-through
certificates of other series, and the other accounts of the Master Servicer.
(b) Funds in the Custodial Account may be invested in
Permitted Instruments in accordance with the
provisions set forth in Section 3.12. The Master
Servicer shall give notice to the Trustee and the
Seller of the location of the Custodial Account
after any change thereof.
3.11. Permitted Withdrawals From the Custodial Account.
The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant
to Section 3.10 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the
Certificate Account in the amounts
and in the manner provided for in
Section 4.01;
(ii) to pay to itself, the Seller, the
Loan Seller or any other
appropriate person, as the case
may be, with respect to each
Mortgage Loan that has previously
been purchased or repurchased
pursuant to Sections 2.02, 2.04 or
9.01 all amounts received thereon
and not yet distributed as of the
date of purchase or repurchase;
(iii) to reimburse itself or any
Sub-Servicer for Advances not
previously reimbursed, the
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Master Servicer's or any
Sub-Servicer's right to
reimbursement pursuant to
this clause (iii) being limited to
amounts received which represent
Late Collections (net of the
related Servicing Fees) of Monthly
Payments on Mortgage Loans or REO
Property with respect to which
such Advances were made and as
further provided in Section 3.15;
(iv) to reimburse itself, the Trustee
or the Seller for expenses
incurred by or reimbursable to the
Master Servicer, the Trustee or
the Seller pursuant to Sections
3.22 or 6.03 except as otherwise
provided in such Sections;
(v) to reimburse itself or any
Sub-Servicer for costs and
expenses incurred by or
reimbursable to it relating to the
prosecution of any claims pursuant
to Sections 3.13 or 3.25 that are
in excess of the amounts so
recovered;
(vi) to reimburse itself or any
Sub-Servicer for unpaid Servicing
Fees and unreimbursed Servicing
Advances, the Master Servicer's or
any Sub-Servicer's right to
reimbursement pursuant to this
clause (vi) with respect to any
Mortgage Loan being limited to
late recoveries of the payments
for which such advances were made
pursuant to Section 3.01 or
Section 3.09 and any other related
Late Collections;
(vii) to pay itself as servicing
compensation (in addition to the
Servicing Fee), on or after each
Distribution Date, any interest or
investment income earned on funds
deposited in the Custodial Account
for the period ending on such
Distribution Date, subject to
Section 8.05 and 3.23;
(viii) to reimburse itself or any
Sub-Servicer for any Advance
previously made which the Master
Servicer has determined to be a
Nonrecoverable Advance, provided
that such Advance was made with
respect to a
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delinquency that ultimately
constituted an Excess Special
Hazard Loss, Excess Fraud Loss,
Excess Bankruptcy Loss or
Extraordinary Loss; and
(ix) to clear and terminate the
Custodial Account at the
termination of this Agreement
pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting
records on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to such clauses
(ii), (iii), (iv), (v), (vi), and (viii).
3.12. Permitted Instruments.
Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Instruments, each of which shall mature not later than the Business Day
immediately preceding the Certificate Account Deposit Date next following the
date of such investment (except that if such Permitted Instrument is an
obligation of the institution that maintains such account, then such Permitted
Instrument shall mature not later than such Certificate Account Deposit Date)
and shall not be sold or disposed of prior to its maturity. All income and gain
realized from any such investment as well as any interest earned on deposits in
the Custodial Account shall be for the benefit of the Master Servicer, subject
to Section 3.23. The Master Servicer shall deposit in the Custodial Account
(with respect to investments made hereunder of funds held therein) an amount
equal to the amount of any loss incurred in respect of any such investment
immediately upon realization of such loss without right of reimbursement.
3.13. Maintenance of Primary Hazard Insurance.
The Master Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance with extended coverage on the related Mortgaged
Property in an amount equal to the replacement value of the improvements, as
determined by the insurance company, on such Mortgaged Property. The Master
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Pursuant to Section 3.10, any amounts collected by
the Master Servicer under any such policies (other than amounts to be applied
to the restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.11. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to Certificateholders, be added to
the amount owing under the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage 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. Whenever the improvements securing a
Mortgage Loan are located in a
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federally designated special flood hazard area, the Master Servicer shall cause
flood insurance (to the extent available) to be maintained in respect thereof.
Such flood insurance shall be in an amount equal to the lesser of (i) the
replacement value of the improvements, which are part of such Mortgaged
Property on a replacement cost basis and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, 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 two sentences of this Section 3.13 and there shall
have been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer
shall be made on the Certificate Account Deposit Date next preceding the
Distribution Date which occurs in the month following the month in which
payments under any such policy would have been deposited in the Custodial
Account. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy.
3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accelerate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any
such rights if it reasonably believes that it is prohibited by law from doing
so or such exercise would result in the loss of insurance coverage under any
related Insurance Policy. If the Master Servicer is unable to enforce such
"due-on-sale" clause (as provided in the previous sentence) or if no
"due-on-sale" clause is applicable, the Master Servicer or the SubServicer will
enter into an assumption and modification agreement with the Person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon;
provided, however, that the Master Servicer shall not enter into any assumption
and modification agreement if the coverage provided under the Primary Mortgage
Insurance Policy, if any, would be impaired by doing so. The Master Servicer is
also authorized, with the approval of the insurer under any related Primary
Mortgage Insurance Policy, to enter into a substitution of liability agreement
with such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as the Mortgagor and becomes liable
under the Mortgage Note. Any fee collected by or on behalf of the Master
Servicer for entering into an assumption or substitution of liability agreement
will be retained by or on behalf of the Master Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the Mortgage Rate, the amount of
the
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Monthly Payment, and any other term affecting the amount or timing of payment
on the Mortgage Loan) may be changed. The Master Servicer shall not enter into
any substitution or assumption if such substitution or assumption shall (i)
both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or Treasury regulations
promulgated thereunder) and cause either the Upper REMIC or the Lower REMIC to
fail to qualify as a REMIC under the REMIC Provisions or (ii) cause the
imposition of any tax on "prohibited transactions" or "contributions" after the
Startup Day under the REMIC Provisions. The Master Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed
by forwarding to the Trustee the original copy of such substitution or
assumption agreement, which copy shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph 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 Mortgage Loan by operation of law or any assumption that the Master Servicer
may be restricted by law from preventing, for any reason whatsoever, or if the
exercise of such right would impair or threaten to impair any recovery under
any applicable Insurance Policy. For purposes of this Section 3.14, the term
"assumption" is deemed to also include a sale of a Mortgaged Property that is
not accompanied by an assumption or substitution of liability agreement.
3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts, consistent with
the terms of the related Mortgage, the Mortgage Note and Accepted Servicing
Practices, to foreclose upon or otherwise comparably convert (which may include
an REO Acquisition) the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07, and which are not released from the applicable Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use
reasonable efforts to realize upon such defaulted Mortgage Loans in such manner
as will maximize the receipt of principal and interest by Certificateholders,
taking into account, among other things, the timing of foreclosure proceedings.
The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master
Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to the applicable Certificateholders after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by
the Master Servicer through Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Section 3.11. The Master
Servicer shall be responsible for all other costs and expenses incurred by it
in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related property, as contemplated in Section
3.11.
The proceeds of any Cash Liquidation or REO Disposition, as well as
any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Master Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11(vi)
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or 3.22; second, to accrued and unpaid interest on the Mortgage Loan or REO
Imputed Interest, at the Mortgage Rate, to the last day of the month in which
the Cash Liquidation or REO Disposition occurred, or to the Due Date prior to
the Distribution Date on which such amounts are to be distributed if not in
connection with a Cash Liquidation or REO Disposition; and third, as a recovery
of principal of the Mortgage Loan. If the amount of the recovery so allocated
to interest is less than a full recovery thereof, that amount will be allocated
as follows: first, to unpaid Servicing Fees; and second, to interest at the Net
Mortgage Rate. The portion of the recovery so allocated to unpaid Servicing
Fees shall be reimbursed to the Master Servicer or any Sub-Servicer pursuant to
Section 3.11(vi). The portions of the recovery so allocated to interest at the
Net Mortgage Rate and to principal of the Mortgage Loan shall be applied as
follows: first, to reimburse the Master Servicer or any Sub-Servicer for any
related unreimbursed Advances in accordance with Section 3.11(iii) or 3.22, and
second, for distribution in accordance with the provisions of Section 4.01(b),
subject to Section 3.22 with respect to certain recoveries from an REO
Disposition constituting Excess Proceeds.
3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Master Servicer
will immediately notify the Trustee by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Custodial Account
pursuant to Section 3.10 have been so deposited) of a Servicing Officer and
shall request delivery to it of the Mortgage File in the form of the Request
for Release attached hereto as Exhibit D-2. Upon receipt of such certification
and request, the Trustee shall promptly release the related Mortgage File to
the Master Servicer. Subject to the receipt by the Master Servicer of the
proceeds of such payment in full and the payment of all related fees and
expenses, the Master Servicer shall arrange for the release to the Mortgagor of
the original canceled Mortgage Note. All other documents in the Mortgage File
shall be retained by the Master Servicer to the extent required by applicable
law. No expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be chargeable to the Custodial Account, the Excess
Proceeds Account or the Certificate Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loan, the Trustee shall, upon request
of the Master Servicer and delivery to the Trustee of a Request for Release in
the form attached hereto as Exhibit D-1, release the related Mortgage File to
the Master Servicer, and the Trustee shall execute such documents as the Master
Servicer shall prepare and request as being necessary to the prosecution of any
such proceedings. Such Request for Release shall obligate the Master Servicer
to return each document previously requested from the Mortgage File to the
Trustee when the need therefor by the Master Servicer no longer exists, unless
the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Custodial Account or the Mortgage
File or such document has been delivered to an attorney, or to a public trustee
or other public official as required by law, for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property either judicially or non-judicially, and the Master Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of
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a certification of a Servicing Officer in the form of the Request for Release
attached hereto as Exhibit D-1, stating that such Mortgage Loan was liquidated
and that all amounts received or to be received in connection with such
liquidation which are required to be deposited into the Custodial Account have
been or will be so deposited, or that such Mortgage Loan has become an REO
Property, a copy of such Request for Release shall be released by the Trustee
to the Master Servicer.
Upon written request of a Servicing Officer, the Trustee shall execute
and deliver to the Master Servicer any court pleadings, requests for trustee's
sale or other documents prepared by the Master Servicer that are necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Each such request that such pleadings or
documents be executed by the Trustee shall include a certification as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain, from amounts representing payments or recoveries
of interest, the Servicing Fee with respect to each Mortgage Loan (less any
portion of such amounts retained by any Sub-Servicer). In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of related Late
Collections to the extent permitted in Section 3.11.
The Master Servicer also shall be entitled pursuant to Section 3.11 to
receive from the Custodial Account as additional servicing compensation
interest or other income earned on deposits therein, subject to Section 3.23,
all ancillary fees, including but not limited to any assumption fees,
reconveyance fees, prepayment fees and late fees, but only to the extent such
fees are collected by the Master Servicer and are in excess of any other
amounts due and payable with respect to the related Mortgage Loan. The Master
Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder (including payment of the premiums for
any blanket policy insuring against hazard losses pursuant to Section 3.13,
servicing compensation of the Sub-Servicer to the extent not retained by it and
the fees and expenses of the Trustee), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.11. The
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Master Servicer's responsibilities and
obligations under this Agreement.
3.18. Maintenance of Certain Servicing Policies.
During the term of its service as Master Servicer, the Master Servicer
shall maintain in force (i) a policy or policies of insurance covering errors
and omissions in the performance of its obligations as 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 FNMA or FHLMC for persons performing servicing for mortgage
loans purchased by such corporation. The Master Servicer shall prepare and
present, on behalf of itself, the Trustee
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and Certificateholders, claims under any such errors and omissions policy or
policies or fidelity bond in a timely fashion in accordance with the terms of
such policy or bond, and upon the filing of any claim on any policy or bond
described in this Section, the Master Servicer shall promptly notify the
Trustee of any such claims and the Trustee shall notify each Rating Agency of
such claim.
3.19. Annual Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the Seller on or
before April 30th of each year, beginning with April 30, 1998, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Master Servicer during the preceding fiscal year and of its
performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Master Servicer has fulfilled all of its 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
officers and the nature and status thereof.
3.20. Annual Independent Public Accountants' Servicing Statement.
On or before April 30th of each year, beginning with April 30, 1998,
the Master Servicer at its expense shall furnish to the Seller, the Trustee and
the Loan Seller (i) an opinion by a firm of independent certified public
accountants on the financial position of the Master Servicer at the end of its
fiscal year and the results of operations and changes in financial position of
the Master Servicer for such year then ended on the basis of an examination
conducted in accordance with generally accepted auditing standards, and (ii) if
the Master Servicer is then servicing any Mortgage Loans, a statement from such
independent certified public accountants to the effect that based on an
examination of certain specified documents and records relating to the
servicing of the Master Servicer's mortgage loan portfolio conducted
substantially in compliance with the audit program for mortgages serviced for
FNMA and FHLMC, the United States Department of Housing and Urban Development
Mortgage Audit Standards, or the Uniform Single Attestation Program for
Mortgage Bankers (the "Applicable Accounting Standards"), such firm is of the
opinion that such servicing has been conducted in compliance with the
Applicable Accounting Standards except for (a) such exceptions as such firm
shall believe to be immaterial and (b) such other exceptions as shall be set
forth in such statement. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by Sub-Servicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the audit
program for mortgages serviced for FHLMC (rendered within one year of such
statement) of independent public accountants with respect to the related
Sub-Servicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.
3.21. Access to Certain Documentation.
(a) The Master Servicer shall provide to the OTS, the
FDIC and other federal banking regulatory agencies,
and their respective examiners, access to the
documentation regarding the Mortgage Loans required
by applicable regulations of the OTS, the FDIC and
such other
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agencies. Such access shall be afforded without
charge, but only upon reasonable and prior written
request and during normal business hours at the
offices of the Master Servicer designated by it.
Nothing in this Section shall derogate from the
obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in
this Section as a result of such obligation shall
not constitute a breach of this section.
(b) The Master Servicer shall afford the Seller and the
Trustee, upon reasonable notice, during normal
business hours access to all records maintained by
the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the
Master Servicer responsible for such obligations.
Upon request, the Master Servicer shall furnish the
Seller and the Trustee with its most recent
financial statements and such other information as
the Master Servicer possesses regarding its
business, affairs, property and condition, financial
or otherwise to the extent related to the servicing
of the Mortgage Loans. The Seller may, but is not
obligated to, enforce the obligations of the Master
Servicer hereunder and may, but is not obligated to,
perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer
hereunder or exercise the rights of the Master
Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance
by the Seller or its designee. The Seller shall not
have any responsibility or liability for any action
or failure to act by the Master Servicer and is not
obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
3.22. Title, Conservation and Disposition of REO Property.
This Section shall apply only to REO Properties acquired for the
account of any Trust Fund, and shall not apply to any REO Property relating to
a Mortgage Loan which was purchased or repurchased from any Trust Fund pursuant
to any provision hereof. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the Trustee, or to
its nominee, on behalf of the Certificateholders of the applicable Series. The
Master Servicer, on behalf of the applicable Trust Fund, shall either sell any
REO Property on or before December 31 of the third calendar year following the
calendar year in which such Trust Fund acquires ownership of such REO Property
for purposes of Section 860G(a)(8) of the Code or, at the expense of such Trust
Fund, request, more than 60 days before the day on which the three-year grace
period would otherwise expire, an extension of the three-year grace period,
unless the Master Servicer has delivered to the Trustee an Opinion of Counsel
addressed to the Trustee and the Master Servicer, to the effect that the
holding by such Trust Fund of such REO Property subsequent to such three year
period will not result in the imposition of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause the Lower REMIC or
the Upper REMIC to fail to qualify as a REMIC under the REMIC Provisions or
comparable provisions of the laws of the any State at any time that any
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Certificates are outstanding. The Master Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders of the
applicable Series solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) or result in
the receipt by the Lower REMIC or the Upper REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code
or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions. Pursuant to its efforts to sell such REO Property,
the Master Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is
located and in a manner consistent with Accepted Servicing Practices and may,
incident to its conservation and protection of the interests of the
Certificateholders of the applicable Series, rent the same, or any part
thereof, as the Master Servicer deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO Property.
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and
apart from its own funds and general assets. The Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the Custodial Account all
revenues received with respect to the REO Properties, net of any directly
related expenses incurred and funds withheld therefrom that are necessary for
the proper operation, management and maintenance of the REO Property.
If as of the date of acquisition of title to any REO Property there
remain outstanding unreimbursed Servicing Advances with respect to such REO
Property or any outstanding Advances allocated thereto the Master Servicer,
upon an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well
as any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15.
The REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall
determine; provided that, subject to the first paragraph of this Section, the
Master Servicer shall ensure that any action taken with respect to the sale of
an REO Property does not jeopardize the maximum benefits available under any
related Primary Mortgage Insurance Policy.
The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in
the Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided that any such net proceeds which are in excess of the
applicable outstanding principal balance plus all unpaid REO Imputed Interest
thereon through the last day of the month in which the REO Disposition occurred
and any related Servicing Advances which remain outstanding ("Excess Proceeds")
shall be deposited into the Excess Proceeds Account in accordance with the
provisions of Section 3.24(a).
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Notwithstanding the foregoing provisions of this Section 3.22, with
respect to any Mortgage Loan as to which the Master Servicer has received
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the Mortgaged Property, the Master Servicer shall not, on behalf
of the Trustee, either (i) obtain title to the related Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless and until either (A) the
Master Servicer has, at least 30 days prior to taking such action, obtained and
delivered to the Seller and the Trustee an environmental audit report prepared
by a Person who regularly conducts environmental audits using customary
industry standards and (B) the Master Servicer deems that such action is in the
best economic interest of the applicable Trust Fund. In the event that the
Master Servicer determines not to foreclose or comparably convert any Mortgaged
Property pursuant to the immediately preceding sentence, then the Master
Servicer shall take such action as it deems to be in the best economic interest
of such Trust Fund (other than proceeding against the Mortgaged Property) and
is hereby authorized at such time as it deems appropriate to release such
Mortgaged Property from the lien of the related Mortgage.
The cost of the environmental audit report contemplated by this
Section 3.22 shall be advanced by the Master Servicer as an expense of the
applicable Trust Fund, and the Master Servicer shall be reimbursed therefor
from the Custodial Account as provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders of the
applicable Series to receive any amount in the Custodial Account.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the applicable Trust Fund to take such actions as
are necessary to bring any such Mortgaged Property in compliance with
applicable environmental laws, or to take such action with respect to the
containment, clean-up or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, then the Master Servicer shall take such action as it deems
to be in the best economic interest of the applicable Trust Fund. The cost of
any such compliance, containment, clean-up or remediation shall be advanced by
the Master Servicer as an expense of the applicable Trust Fund, and the Master
Servicer shall be entitled to be reimbursed therefor from the Custodial Account
as provided in Section 3.11, any such right of reimbursement being prior to the
rights of the Certificateholders of the applicable Series to receive any amount
in the Custodial Account.
The Master Servicer shall have the option to purchase from the
applicable Trust Fund any Mortgage Loan that is 90 days or more delinquent
(i.e., any Mortgage Loan on which the related Mortgagor has failed to make four
or more consecutive Monthly Payments) and that the Master Servicer determines
in good faith will otherwise become subject to foreclosure proceedings (such
determination to be evidenced by an Officers' Certificate of the Master
Servicer delivered to the Trustee prior to purchase) for an amount equal to the
Purchase Price. The Purchase Price for any Mortgage Loan purchased pursuant to
this Section 3.22 shall be deposited in the Custodial Account, and upon receipt
of written certification from the Master Servicer of such deposit, the Trustee
shall release or cause to be released to the Master Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer shall furnish
and as shall be necessary to vest in the Master Servicer title to any Mortgage
Loan released pursuant to this Section 3.22.
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3.23. Additional Obligations of the Master Servicer.
On each Certificate Account Deposit Date, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account from its own
funds and without any right of reimbursement therefor, a total amount equal to
the aggregate of the Prepayment Interest Shortfalls for such Distribution Date;
provided that the Master Servicer's obligations under this Section on any
Distribution Date shall not be more than the total amount of its servicing
compensation payable in such month.
3.24. Excess Proceeds Account.
(a) The Trustee shall establish and maintain one or more
accounts (collectively, the "Excess Proceeds
Account") in which the Master Servicer shall, on
behalf of each Trust Fund, deposit or cause to be
deposited on a daily basis, or as and when received
from the Sub-Servicers, the Excess Proceeds, if any,
with respect to each Mortgage Loan as to which an
REO Disposition occurs. The Excess Proceeds Account
shall be maintained as a segregated account,
separate and apart from trust funds created for
mortgage pass-through certificates of other series,
from funds of investors, from funds or other assets
of the Trustee, and from the other accounts of the
Trustee.
(b) On or before 2:00 P.M. (Pacific Standard Time) on
each Certificate Account Deposit Date, the Trustee
shall withdraw or cause to be withdrawn the entire
amount on deposit in the Excess Proceeds Account and
shall deposit or cause to be deposited such amount
in the Certificate Account, by wire transfer of
immediately available funds.
(c) [RESERVED]
(d) The Excess Proceeds Account shall be an Eligible
Account in accordance with the definition of "Excess
Proceeds Account" in Section 1.01. The Trustee
shall, upon written request from the Master
Servicer, invest or cause the institution
maintaining the Excess Proceeds Account to invest
the funds in the Excess Proceeds Account in one or
more Permitted Instruments designated in the name of
the Trustee for the benefit of the
Certificateholders, each of which Permitted
Instruments shall be held to maturity, unless
payable on demand, and shall mature, unless payable
on demand, not later than the Business Day
immediately preceding the Certificate Account
Deposit Date next following the date of such
investment (except that if such Permitted Instrument
is an obligation of the institution with which the
Excess
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Proceeds Account is maintained, then such Permitted
Instrument shall mature not later than such
Certificate Account Deposit Date). All income and
gain realized from any such investment as well as
any interest earned on deposits in the Excess
Proceeds Account shall be for the benefit of the
Certificateholders and shall be held in the Excess
Proceeds Account (or in Permitted Instruments in
which the funds in the Excess Proceeds Account are
invested) until transferred from the Excess Proceeds
Account to the Certificate Account in accordance
with Section 3.24(b) or (c). The amount of any loss
incurred in respect of any such investment shall be
borne by the Certificateholders without any right of
reimbursement.
(e) As part of each Determination Date Report delivered
to the Trustee in accordance with Section 4.03(a),
the Master Servicer shall provide information with
respect to the amount, if any, of Excess Proceeds
deposited in the Excess Proceeds Account in respect
of each Mortgage Loan as to which an REO Disposition
occurred during the related Prepayment Period.
(f) The Trustee shall promptly provide notice to the
Seller and the Master Servicer of the initial
location of the Excess Proceeds Account and shall
promptly provide notice to the Seller and the Master
Servicer of the location of the Excess Proceeds
Account after any change in location of the Excess
Proceeds Account.
3.25. Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder.
The Master Servicer shall not take any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Master Servicer, would have been covered
thereunder. The Master Servicer shall use reasonable efforts to keep in force
and effect each such Primary Mortgage Insurance Policy applicable to a Mortgage
Loan for so long as the related Mortgagor is obligated to maintain such Primary
Mortgage Insurance Policy under the terms of the related Mortgage Loan or until
the Loan-to-Value Ratio of the related Mortgage Loan has been reduced to less
than 80%, whichever is earlier. The Master Servicer shall not cancel or refuse
to renew any such Primary Mortgage Insurance Policy applicable to a Mortgage
Loan that is in effect at the Closing Date and is required to be kept in force
hereunder unless a replacement Primary Mortgage Insurance Policy for such
canceled or non-renewed policy is obtained from and maintained with a Qualified
Mortgage Insurer. In connection with any assumption or modification agreement
entered into or to be entered into pursuant to Section 3.14, the Master
Servicer shall promptly notify the insurer under the related Primary Mortgage
Insurance Policy, if any, of such assumption or modification in accordance with
the terms of such policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under the Primary
Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Loan Seller shall obtain a replacement Primary Mortgage Insurance Policy as
provided above. Any amounts advanced by the Master Servicer to maintain Primary
Mortgage Insurance shall be recoverable by the Master Servicer pursuant to
Section 3.11 out of Liquidation Proceeds, Insurance Proceeds or otherwise.
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The Master Servicer shall present, on behalf of the Trustee and
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, take such reasonable action as shall be necessary
to permit recovery under any Primary Mortgage Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.10, any amounts collected by
the Master Servicer under any Primary Mortgage Insurance Policies shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.11.
3.26. Special Servicing.
The Master Servicer may, in its sole and absolute discretion, enter
into a Special Servicing Agreement with an unaffiliated holder of 100%
Percentage Interest of a Class B Security to be substantially in the form of
Exhibit H hereto, or subject to each Rating Agency's acknowledgment that the
ratings of the Securities in effect immediately prior to the entering into of
such agreement would not be qualified, downgraded or withdrawn and the
Securities would not be placed on credit review status (except for possible
upgrading) as a result of such agreement. Any such agreement may contain
provisions whereby such holder may instruct the Master Servicer to commence or
delay foreclosure proceedings with respect to delinquent Mortgage Loans and
will contain provisions for the disposition of cash by the holder that would be
available for distribution to Certificateholders if Liquidation Proceeds are
less than they otherwise may have been had the Master Servicer acted in
accordance with its normal procedures.
3.27. Duties with respect to REMICs.
(a) [RESERVED]
(b) The Master Servicer shall assist the Trustee in
taking, to the extent reasonably requested to do so,
such action as shall be necessary to create or
maintain the status of the Upper REMIC and the Lower
REMIC as REMICs under the REMIC Provisions.
(c) For the purposes of this Paragraph (c), "Adverse
REMIC Event" shall mean any action or failure to act
which could (i) endanger the status of either the
Upper REMIC or the Lower REMIC as a REMIC or (ii)
result in the imposition of a tax upon any Trust
Fund (including but not limited to the tax on
prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions
to a REMIC set forth in Section 860G(d) of the
Code). Prior to taking any action with respect to
any Trust Fund or its assets, or causing either the
Upper REMIC or the Lower REMIC to take any action
which is not expressly permitted under the terms of
this Agreement or the Series Supplement, the Master
Servicer will consult with the Trustee or its
designee, in writing, with respect to whether such
action could cause an Adverse REMIC Event to occur
with respect to either the Upper REMIC or the Lower
REMIC , and the Master Servicer shall not take any
such action or cause either the Upper REMIC or the
Lower REMIC to take any such action as to which the
Trustee has advised
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it in writing that an Adverse REMIC Event could
occur. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be
borne by the party seeking to take the action not
permitted by this Agreement (but in no event shall
such cost be an expense of the Trustee).
(d) The Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to
any Trust Fund on a calendar year and on an accrual
basis.
(e) The Master Servicer shall not permit the acquisition
of any assets by either the Upper REMIC or the Lower
REMIC unless it shall have received an Opinion of
Counsel (which such Opinion of Counsel shall not be
an expense of the Trustee) to the effect that the
inclusion of such assets in either the Upper REMIC
or the Lower REMIC will not cause either the Upper
REMIC or the Lower REMIC to fail to qualify as a
REMIC at any time that any Certificates are
outstanding or subject either the Upper REMIC or the
Lower REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and
local law or ordinances.
(f) The Master Servicer shall not enter into any
arrangement by which either the Upper REMIC or the
Lower REMIC will receive a fee or other compensation
for services nor permit either of such REMICs to
receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(g) The Master Servicer agrees to indemnify any Trust
Fund, the Seller, the Loan Seller and the Trustee
for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed
on or incurred by any Trust Fund, the Seller or the
Trustee, as a result of a breach of the Master
Servicer's covenants set forth in this Section 3.27
or in Article III with respect to compliance with
the REMIC Provisions, including without limitation,
any penalties arising from the Trustee's execution
of Tax Returns prepared by the Master Servicer that
contain errors or omissions.
IV PAYMENTS TO CERTIFICATEHOLDERS
4.01. Certificate Account.
(a) The Trustee shall establish and maintain a
Certificate Account in which the Master Servicer
shall cause to be deposited on behalf of the Trustee
on or before 12:00 P.M. (Pacific Standard Time) on
each
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Certificate Account Deposit Date by wire transfer of
immediately available funds an amount equal to the
sum of (i) any Advance (other than a Servicing
Advance) for the immediately succeeding Distribution
Date, (ii) any amount required to be deposited in
the Certificate Account pursuant to Sections 3.13,
3.22, 3.23 or 3.24 and (iii) all other amounts
constituting the aggregate Available Distribution
Amount with respect to each Series for the
immediately succeeding Distribution Date.
(b) On each Distribution Date, the Trustee shall, unless
otherwise specified below, distribute an amount
equal to the Available Distribution Amount in
respect of each Series to the Certificateholders of
such Series from the Certificate Account with
respect to each Series.
With respect to each Series, the foregoing distributions shall be made
to each Certificateholder of record as of the immediately preceding Record Date
(except as provided in Section 9.2 of this Agreement with respect to
termination and final payment) by wire transfer of federal funds to an account
specified in writing by such Certificateholder or such other method agreed to
between the Trustee and such Certificateholder, based on such
Certificateholder's pro rata share (based on the aggregate Fractional Undivided
Interest represented by the Certificates of the respective Series held by such
holder on the Record Date) of the foregoing amounts.
(c) [RESERVED].
(d) On each Distribution Date the Trustee shall
distribute (i) to the Master Servicer, prior to any
distributions on the Certificates of the applicable
Series, out of the Available Distribution Amount for
such Distribution Date and such Series, any Advance
Reimbursement Amount for such Distribution Date with
respect to the Mortgage Loans in the related Loan
Group, to the extent not previously reimbursed to
the Master Servicer through withdrawals from the
Custodial Account, and (ii) to each
Certificateholder of record on the related Record
Date (other than as provided in Section 9.01
respecting the final distribution) either in
immediately available funds (by wire transfer or
otherwise) to the account of such Certificateholder
at a bank or other entity having appropriate
facilities therefor, if such Certificateholder has
so notified the Trustee at least five Business Days
prior to the related Record Date, or otherwise by
check mailed to such Certificateholder at the
address of such Holder appearing in the Certificate
Register, such Certificateholder's share (based on
the aggregate of the Fractional Undivided Interest
represented by Certificates of the applicable Series
held by such Holder) of the Certificate Distribution
Amounts with respect to such Series, in each case to
the extent of the related Available Distribution
Amount.
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(e) The Trustee shall, upon written request from the
Master Servicer, invest or cause the institution
maintaining the Certificate Account to invest the
funds in the Certificate Account in Permitted
Instruments designated in the name of the Trustee
for the benefit of the Certificateholders, which
shall mature not later than the Business Day next
preceding the Distribution Date next following the
date of such investment (except that (i) any
investment in obligations of the institution with
which the Certificate Account is maintained may
mature on such Distribution Date and (ii) any other
investment may mature on such Distribution Date if
the Trustee shall agree to advance funds on such
Distribution Date to the Certificate Account in the
amount payable on such investment on such
Distribution Date, pending receipt thereof to the
extent necessary to make distributions on the
Certificates) and shall not be sold or disposed of
prior to 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 without right of
reimbursement.
(f) Except as otherwise provided in Section 9.01,
whenever the Trustee expects that the final
distribution with respect to any Series of
Certificates will be made on the next Distribution
Date, the Trustee shall, no later than five days
after the Determination Date, mail to each Holder on
such date of such Series of Certificates a notice to
the effect that:
(i) the Trustee expects that the final
distribution with respect to such
Series will be made on such
Distribution Date but only upon
presentation and surrender of such
Certificates at the office of the
Trustee therein specified, and
(ii) no interest shall accrue on such
Certificates from and after the
end of the related Interest
Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of
such Series on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust uninvested and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has
been given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
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Certificateholders instructing such Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall take reasonable steps as directed by the Seller, or appoint an agent to
take reasonable steps, to contact the remaining non-tendering
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in any Trust Fund.
If within nine months after the second notice any such Certificates shall not
have been surrendered for cancellation, the Seller shall be entitled to all
unclaimed funds and other assets which remain subject hereto. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(f).
4.02. Statements to Certificateholders.
With respect to each Series, on each Distribution Date, the Trustee
shall forward or cause to be forwarded by mail to each Holder of a Certificate
of such Series and to the Seller, the Loan Seller and the Master Servicer a
statement as to such distribution with respect to such Series setting forth:
(i) the amount of such distribution
allocable to principal, separately
identifying the amounts referred
to in paragraphs (1), (3), (5),
(7), (9), and (11) of Section
4.01(b) above included in such
distribution;
(ii) the amount of such distribution
allocable to interest, separately
identifying the amounts referred
to in paragraphs (2), (4), (6),
(8), (10) and (11) of Section
4.01(b) above included in such
distribution;
(iii) the amount of Realized Losses,
with the respective amounts of
Deficient Valuations, Excess Fraud
Losses, Excess Special Hazard
Losses and Extraordinary Losses
set forth separately, and Debt
Service Reductions on the Mortgage
Loans incurred on the Mortgage
Loans in the respective Loan Group
since the immediately preceding
Distribution Date;
(iv) the aggregate amount of Prepayment
Interest Shortfalls incurred on
the Mortgage Loans in the
respective Loan Group since the
immediately preceding Distribution
Date;
(v) the principal balances of the
Mortgage Loans in the respective
Loan Group at the opening of
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business on the first day of the
month of distribution after (A)
giving effect to payments on the
Mortgage Loans due on the Due Date
and distributed either as
collections or advances and (B)
reducing such balances by the
amount of Realized Losses
attributable to the Mortgage Loans
in such Loan Group since the
immediately preceding Distribution
Date;
(vi) the aggregate scheduled principal
balance, as of the related
Distribution Date, of the Mortgage
Loans in the respective Loan
Group;
(vii) the amount, if any, by which the
aggregate amount remitted from the
Certificate Account exceeds the
aggregate remittances referred to
in clauses (i) and (ii) above;
(viii) the aggregate cumulative amount of
Realized Losses, with the
respective amounts of Deficient
Valuations, Excess Fraud Losses,
Excess Special Hazard Losses and
Extraordinary Losses set forth
separately from all other causes
of Realized Losses, Debt Service
Reductions and Prepayment Interest
Shortfalls on the Mortgage Loans
in the related Loan Group; and
The Trustee shall have no liability or responsibility to any
Certificateholder for the accuracy or completeness of the information provided
by the Master Servicer under Section 4.03. The parties hereto acknowledge that
in the event that The First National Bank of Chicago in its capacity as
Indenture Trustee for the holders of collateralized mortgage obligations issued
by the Issuer, or a qualified nominee thereof, is the sole Certificateholder,
then the Trustee may elect not to deliver a written statement to any
Certificateholder pursuant to Section 4.03. The Trustee shall forward to the
Master Servicer a copy of each written statement, if any, delivered to any
Certificateholder.
(ix) Within sixty (60) calendar days
after the end of each calendar
year, the Trustee shall furnish to
each Person who at any time during
the calendar year was a
Certificateholder a statement
containing the information set
forth in subclauses (i) and (ii)
above aggregated for such calendar
year or applicable portion
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thereof during which such person
was a Certificateholder. Such
obligation shall be deemed to have
been satisfied to the extent that
substantially comparable
information shall be provided by
the Trustee pursuant to any
requirements of the Code, as from
time to time in force. Upon
request, the Master Servicer
agrees to provide information to
the Trustee as necessary to meet
such requirements of the Code.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare and forward, to each Person who at any time
during the calendar year was a Holder of a Certificate a statement containing
the information set forth in subclauses (i)-(iii) above, aggregated for such
calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code and
regulations thereunder as from time to time are in force.
4.03. Reports; Advances by the Master Servicer.
(a) On the second Business Day following each
Determination Date, the Master Servicer shall
deliver to the Trustee a report, prepared as of the
close of business on the Determination Date (the
"Determination Date Report"), in the form of an
electromagnetic tape or disk. The Determination Date
Report and any written information supplemental
thereto shall include such information with respect
to the Mortgage Loans that is reasonably available
to the Master Servicer and that is required by the
Trustee for purposes of making the calculations
referred to in the following paragraph, as set forth
in Exhibit G hereto and the information necessary to
enable the Trustee to prepare the statements
referred to in Section 6 of the Series Supplement
and in Section 4.02 of this Agreement. Not later
than 10:00 A.M. (Pacific Standard Time) on the
Business Day preceding each Certificate Account
Deposit Date, the Trustee shall furnish by telecopy
to the Master Servicer a statement (the information
in such statement to be made available to
Certificateholders or the Seller by the Master
Servicer on request) setting forth (i) the Available
Distribution Amount (in the aggregate and on a
Series-by-Series basis) and (ii) the amounts
required to be withdrawn from the Custodial Account
and deposited into the Certificate Account on the
immediately succeeding Certificate Account Deposit
Date pursuant to Section 4.01(a). The Trustee shall
have no obligation to recompute, recalculate or
verify any information provided to it by the Master
Servicer. The determination by the Trustee of such
amounts shall, in the absence of
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obvious error, be presumptively deemed to be correct
for all purposes hereunder.
(b) Prior to the close of business on the Business Day
preceding each Certificate Account Deposit Date, the
Trustee shall notify the Master Servicer of the
amount of Advances (other than Servicing Advances)
required to be made for the related Distribution
Date, which shall be in an aggregate amount equal to
the aggregate amount of Monthly Payments, (with each
interest portion thereof adjusted to the Net
Mortgage Rate) less the amount of any related Debt
Service Reductions or reductions in the amount of
interest collectable from the Mortgagor pursuant to
the Soldiers' and Sailors' Civil Relief Act of 1940,
on the Outstanding Mortgage Loans as of the related
Due Date, which Monthly Payments were delinquent as
of the close of business as of the related
Determination Date; no Advance shall be made if it
would be a Nonrecoverable Advance. On or before
12:00 P.M. (Pacific Standard Time) on each
Certificate Account Deposit Date, the Master
Servicer shall either (i) deposit in the Certificate
Account from its own funds, or funds received
therefor from the SubServicers, an amount equal to
the Advances to be made by the Master Servicer in
respect of the related Distribution Date, (ii)
withdraw from amounts on deposit in the Custodial
Account and deposit in the Certificate Account all
or a portion of the amounts held for future
distribution in discharge of any such Advance, or
(iii) make advances in the form of any combination
of (i) and (ii) aggregating the amount of such
Advance. Any portion of the amounts held for future
distribution so used shall be replaced by the Master
Servicer by deposit in the Certificate Account on or
before 11:00 A.M. (Pacific Standard Time) on any
future Certificate Account Deposit Date to the
extent that funds attributable to the Mortgage Loans
that are available in the Custodial Account for
deposit in the Certificate Account on such
Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made
on the following Distribution Date. The amount of
any reimbursement in respect of outstanding Advances
on any Distribution Date shall be allocated to
specific Monthly Payments due but delinquent for
previous Due Periods, which allocation shall be
made, to the extent practicable, to Monthly Payments
which have been delinquent for the longest period of
time. Such allocations shall be conclusive for
purposes of reimbursement to the Master Servicer
from recoveries on related Mortgage Loans pursuant
to Section 3.11. The determination by the Master
Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would
constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer
delivered to the Loan Seller and the Trustee. The
Trustee shall deposit all funds it receives pursuant
to this Section 4.03 into the Certificate Account.
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(c) In the event that the Master Servicer determines as
of the Business Day preceding any Certificate
Account Deposit Date that it will be unable to
deposit in the Certificate Account an amount equal
to the Advance required to be made for the
immediately succeeding Distribution Date in the
amount determined by the Trustee pursuant to
paragraph (b) above, it shall give notice in the
form of an Officers' Certificate to the Trustee of
its inability to advance (such notice may be given
by telecopy), not later than 11:00 A.M. (Pacific
Standard Time), on such Business Day, specifying the
portion of such amount that it will be unable to
deposit. Not later than 2:30 P.M. (Pacific Standard
Time), on the Certificate Account Deposit Date,
unless by such time the Master Servicer shall have
directly or indirectly deposited in the Certificate
Account the entire amount of the Advances required
to be made for the related Distribution Date,
pursuant to Section 7.01, the Trustee shall (a)
terminate all of the rights and obligations of the
Master Servicer under this Agreement in accordance
with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder,
including the obligation to deposit in the
Certificate Account an amount equal to the Advance
for the immediately succeeding Distribution Date;
provided, however, that the Trustee's obligation to
advance such amounts shall be as of the related
Distribution Date.
4.04. Information Reports to be Filed by the Master Servicer.
The Master Servicer or Sub-Servicers shall file information reports
with respect to the receipt of mortgage interest received in a trade or
business, reports of foreclosures and abandonments of any Mortgaged Property
and cancellation of indebtedness income with respect to any Mortgaged Property
as required by Sections 6050H, 6050J and 6050P of the Code, respectively, and
promptly deliver upon such filing to the Trustee an Officers' Certificate
stating that such reports have been filed. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by such
Sections 6050H, 6050J and 6050P of the Code.
4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage
Loans, that the Trustee reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding. In
the event the Trustee withholds any amount from interest or original issue
discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trustee shall, together with its monthly
report to such Certificateholders pursuant to Section 4.02 hereof, indicate
such amount withheld.
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4.06. Reporting of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses (in the aggregate and on a Loan Group by
Loan Group basis), if any, that resulted from any Cash Liquidation, Debt
Service Reduction, Deficient Valuation or REO Disposition that occurred during
the related Prepayment Period. The amount of each Realized Loss shall be
evidenced by an Officer's Certificate by the Master Servicer delivered to the
Trustee.
V THE CERTIFICATES
5.01. The Certificates.
The Certificates shall be substantially in the form set forth in
Exhibit A and shall be executed and delivered by the Seller to the Trustee for
authentication and redelivery to or upon the order of the Seller upon receipt
by the Trustee of the documents specified in Section 2.01. The Certificates
shall be issued in denominations of 100/100th Fractional Undivided Interest and
shall be executed by manual or facsimile signature on behalf of the Seller by
its President or one of its Vice Presidents, or one of its Authorized Officers
(as appointed pursuant to the Bylaws of the Seller), under its seal imprinted
thereon and attested by the manual or facsimile signature of its Secretary or
one of its Assistant Secretaries. Certificates bearing the manual or facsimile
signature of individuals who were at any time the proper officers of the Seller
shall bind the Seller, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication 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 there appears on such Certificate a certificate
of authentication substantially in the form set forth in Exhibit A executed by
the Trustee by manual signature of an authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. The Trustee's signature shall be for authentication purposes and
neither the Trustee nor any Person signing on its behalf shall have any
liability on the respective Certificate (other than the certificate of
authentication thereon). All Certificates shall be dated the date of their
authentication.
5.02. Registration of Transfer and Exchange of Certificates.
The Trustee, or such other Person as it shall designate in writing,
shall be the Certificate Registrar, who shall cause to be kept at the office or
agency to be maintained by the Certificate Registrar a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the
Certificate Registrar shall provide for the registration of each Series of
Certificates and of transfers and exchanges of all such Certificates as herein
provided. The Trustee, whose principal corporate trust office is located at the
Corporate Trust Office, is hereby initially appointed Certificate Registrar for
the purpose of registering each Series of Certificates and transfers and
exchanges of all such Certificates as herein provided.
No transfer of a Certificate or Certificates shall be made unless such
transfer is made pursuant to an effective registration statement under the
Certificates Act of 1933, as amended, (the "Act") or is exempt from the
registration requirements under the Act. In the event that a transfer is
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to be made in reliance upon an exemption from the Act, the Certificate
Registrar may require, in order to assure compliance with the Act, that the
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee each certify to the Certificate Registrar in writing the
facts surrounding such transfer. In the event that such certification of facts
does not on its face establish the availability of an exemption under Section
4(5) or a comparable provision of the Act, the Certificate Registrar may
require an Opinion of Counsel satisfactory to it that such transfer may be made
pursuant to an exemption from the Act, which Opinion of Counsel shall not be an
expense of the Master Servicer or the Trustee. Neither the Master Servicer nor
the Trustee is obligated to register any of the Certificates under the Act or
any other federal or state securities law.
It is a condition to the transfer of any Certificate that the
transferee certify in writing to the Seller and the Certificate Registrar that
such transferee (i) is not an employee benefit plan, trust or account,
including an individual retirement account, that is subject to the Employee
Retirement Income Security Act of 1974, as amended, or that is described in
Section 4975(e)(1) of the Federal Tax Laws (any such plan, trust or account
being referred to as a "Plan") and (ii) has not acquired and will not acquire
such Certificate with plan assets, within the meaning of 29 CFR 2510.3-101, of
a Plan.
A form of the letter from the purchaser of any Certificate, containing
the representations described in the preceding two paragraphs, is in the form
of a Purchaser Letter attached hereto as Exhibit E.
Subject to the preceding three paragraphs, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purpose pursuant to this Section 5.02
and upon satisfaction of all requirements for transfer, the Seller shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Series and of a like aggregate Fractional Undivided Interest.
At the option of the Certificateholders, Certificates may, upon
satisfaction of the requirement for exchange, be exchanged for other
Certificates of such Series of authorized denominations of the same aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Seller shall execute, and the Trustee shall
authenticate and deliver, the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall (if so required by the Seller or the Trustee or
the Certificate Registrar) (a) be duly endorsed by, or be accompanied by a
written instrument of transfer in form acceptable to transfer agents registered
with the Securities and Exchange Commission and the Seller, the Trustee and the
Certificate Registrar, and (b) be duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any transfer or exchange of any
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of any Certificates.
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All Certificates surrendered for transfer and exchange shall be held
by the Certificate Registrar for a period of three years after termination of
this Agreement, and thereafter may be destroyed, in which event a destruction
certificate shall be delivered to the Trustee.
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Certificate Registrar and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate and of the ownership thereof, and (ii) there is delivered to the
Trustee 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 receipt
by the Seller or the Trustee of written notice that such Certificate has been
acquired by a bona fide purchaser, the Seller shall execute and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Series, tenor and Fractional Undivided Interest. Upon the issuance of any new
Certificate under this Section, the Certificate Registrar 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 Certificate Registrar and of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
Trust Fund relating to the particular Series for which such replacement
Certificate was issued, as if originally issued, whether or not the Certificate
believed to be lost, stolen or destroyed shall be found at any time.
5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration or
transfer, the Seller, the Trustee, the Certificate Registrar and any agent of
the Seller, the Trustee or the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01(b) and for all
other purposes whatsoever, and neither the Seller, the Trustee, the Certificate
Registrar nor any agent of the Seller, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary.
VI LIABILITY
6.01. Liability of the Seller, the Loan Seller and the Master
Servicer.
The Seller, the Loan Seller and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Seller, the Loan Seller and the
Master Servicer herein.
6.02. Merger; Consolidation or Conversion of the Seller or the Master
Servicer.
Except in connection with a merger or consolidation permitted by this
Section 6.02, the Seller, the Loan Seller and the Master Servicer (except as
contemplated in the announcement dated June 23, 1997 regarding the acquisition
of the Master Servicer by Dime Bancorp, Inc by means of a stock for stock
exchange) each will keep in full effect its existence, rights and franchises as
a
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corporation under the laws of the state of its incorporation, and each will
obtain and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
Any Person into which the Seller, the Loan Seller or the Master
Servicer may be merged, consolidated or converted, or any corporation resulting
from any merger or consolidation to which the Seller, the Loan Seller or the
Master Servicer shall be a party, or any Person succeeding to the business of
the Seller, the Loan Seller or the Master Servicer shall be the successor of
the Seller, the Loan Seller or the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Any Person into which the Seller, Loan Seller or Master Servicer may
be merged, consolidated or converted, or any corporation resulting from any
merger or consolidation to which the Seller, Loan Seller or Master Servicer
shall be a party, as the case may be, or any Person succeeding to the business
of the Seller, Loan Seller or Master Servicer (including by a transfer of
servicing portfolio or operations by the Loan Seller or Master Servicer), shall
be the successor of the Seller, Loan Seller or Master Servicer hereunder, as
the case may be, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Loan Seller or Master Servicer must meet the criteria set forth in Section
7.02 for a successor Master Servicer and shall be qualified to sell mortgage
loans to and service mortgage loans for FNMA or FHLMC.
6.03. Limitation on Liability of the Seller, the Master Servicer and
Others.
Neither the Seller, the Master Servicer nor any of the directors,
officers, employees or agents of the Seller or the Master Servicer shall be
under any liability to any Trust Fund or the related Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Seller or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Seller,
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 or by reason of reckless disregard of
obligations and duties hereunder. The Seller, the Master Servicer and any
director, officer, employee or agent of the Seller or the Master Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Seller, the Master Servicer and any director, officer, employee or agent of the
Seller or the Master Servicer shall be indemnified and held harmless by any
Trust Fund against any loss, liability or expense
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incurred in connection with any legal action relating to this Agreement or the
Certificates INCLUDING ANY LOSS, LIABILITY OR EXPENSE CAUSED BY ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, other than any loss, liability or expense related to
Master Servicer's servicing obligations with respect to any specific mortgage
loan or mortgage loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or related to the Master
Servicer's obligations under Section 3.01, or 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 Seller nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its respective duties under this Agreement
and which in its opinion may involve it in any expense or liability; provided,
however, that the Seller or the Master Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any action or liability related to the Master Servicer's obligations under
Section 3.01) shall be expenses, costs and liabilities of the applicable Trust
Fund, and the Seller and the Master Servicer shall be entitled to be reimbursed
therefor from the Certificate Account as provided in Section 3.11, any such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Certificate Account.
6.04. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not, in and of itself, result in a withdrawal
or downgrading of the Certificates or (b) upon determination that its duties
hereunder are no longer permissible under applicable law and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
VII MASTER SERVICER DEFAULT
7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than an Advance)
required to be made under the terms of the Certificates of a Series or this
Agreement which continues unremedied for a period of five days after the date
upon which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Seller or the Loan Seller
(with a copy to the Trustee) or the Trustee, or to the Master Servicer, the
Seller and the Trustee by the Holders of Certificates of such Series evidencing
Fractional Undivided Interests aggregating not less than 25% of the applicable
Trust Fund; or
(ii) any failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in the Certificates or in this Agreement
(including any breach of the Master Servicer's representations and warranties
pursuant to Section 2.03(a) which materially and adversely affects
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the interests of the Certificateholders of a Series) which continues unremedied
for a period of 30 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 Seller or the Loan Seller (with a copy to the Trustee) or the Trustee,
or to the Master Servicer, the Seller and the Trustee by the Holders of
Certificates of the affected Series evidencing Fractional Undivided Interests
aggregating not less than 25% of the Trust Fund for the affected Series; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future federal
or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Master Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Master Servicer or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant to Section
4.03(b) and shall fail to deposit in the Certificate Account on any Certificate
Account Deposit Date by the time required therein an amount equal to any
required Advance in accordance with the procedures set forth in Section
4.03(b).
If an Event of Default described in clauses (i) - (v) of this Section
shall occur with respect to a Series (each event described in clauses (iii) -
(v) of this Section to be deemed to occur with respect to each Series if such
event occurs), then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Seller or the Trustee may, and at the
direction of the Holders of Certificates of such Series evidencing Fractional
Undivided Interests aggregating not less than 51%, the Trustee shall, by notice
to the Master Servicer (and to the Seller and the Loan Seller if given by the
Trustee or to the Trustee and the Loan Seller if given by the Seller terminate
all of the rights and obligations of the Master Servicer (but not as Loan
Seller in the event they are the same Person) under this Agreement and in and
to the applicable Trust Fund, other than its rights as a Certificateholder
hereunder. If an Event of Default described in clause (vi) hereof shall occur,
the Trustee shall, by notice to the Master Servicer, the Seller and the Loan
Seller, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the applicable Trust Fund, other than its
rights as a Certificateholder hereunder. On or after the receipt by the Master
Servicer of such notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Certificates (other than as a
holder thereof) or the Mortgage Loans or otherwise, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the
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Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its appointed agent for administration by it of all
cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial Account, the Excess Proceeds
Account or the Certificate Account or thereafter be received with respect to
the Mortgage Loans. The Trustee shall not be deemed to have breached any
obligation hereunder as a result of a failure to make or delay in making any
distribution as and when required hereunder caused by the failure of the Master
Servicer to remit any amounts received on it or to deliver any documents held
by it with respect to the Mortgage Loans. For purposes of this Section 7.01,
the Trustee shall not be deemed to have knowledge of an Event of Default unless
a Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless notice of any
event which is in fact such an Event of Default is received by the Trustee and
such notice references the Certificates, the applicable Trust Fund or this
Agreement.
Notwithstanding any termination of the activities of North American
Mortgage Company ("NAMC") in its capacity as Master Servicer hereunder, NAMC
shall be entitled to receive, out of any Late Collection of a Monthly Payment
on a Mortgage Loan which was due prior to the notice terminating NAMC's rights
and obligations as Master Servicer hereunder and received after such notice,
that portion to which NAMC would have been entitled pursuant to Sections
3.11(ii), (iii), (iv), (v) and (viii) as well as its Servicing Fee in respect
thereof, and any other amounts payable to NAMC hereunder the entitlement to
which arose prior to the termination of its activities hereunder.
7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee or its appointed agent 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 thereafter to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses pursuant to
Sections 3.12 and 4.01(e)) by the terms and provisions hereof; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 4.03
shall not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account and the Certificate Account if the Master Servicer had
continued to act hereunder. Notwithstanding the above, the Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act (exclusive of
the obligations set forth in Section 4.03) or if the Holders of Certificates of
a Series evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund for a Series so request in writing to the Trustee,
appoint, or petition a court of competent jurisdiction to appoint, any mortgage
loan servicing institution (acceptable to the Rating Agencies) having a net
worth of not
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less than $10,000,000 (or other amount acceptable to the Rating Agencies) 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,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as it
and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Master Servicer hereunder. The Loan
Seller, the Seller, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Any successor, including the Trustee, to the Master Servicer shall
maintain in force during its term as master servicer hereunder policies and
fidelity bonds to the same extent as the Master Servicer is so required
pursuant to Section 3.18.
7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a
successor to the Master Servicer, the Trustee shall
give prompt notice thereof to Certificateholders.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all
Holders of Certificates notice of each such Event of
Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
7.04. Waiver of Events of Default.
The Holders of Certificates of each Series evidencing Fractional
Undivided Interests aggregating not less than 662/3% affected by a default or
Event of Default hereunder, may waive such default or Event of Default;
provided, however, that (a) a default or Event of Default under clause (i) of
Section 7.01 may be waived only by all of the Holders of Certificates affected
by such default or Event of Default and (b) no waiver pursuant to this Section
7.04 shall affect the Holders of Certificates in the manner set forth in the
third paragraph of Section 11.01 or have a material adverse affect on any
non-consenting Certificateholder. Upon any such waiver of a default or Event of
Default as provided above, such default or Event of Default shall cease to
exist and shall be deemed to have been remedied for every purpose hereunder. No
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon except to the extent expressly so
waived.
VIII CONCERNING THE TRUSTEE
8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such
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duties as are specifically set forth in this Agreement. If an Event of Default
occurs and is continuing, 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 unless it is acting as Master
Servicer, in which case it shall use the degree of care and skill as is
required of the Master Servicer under this Agreement. Any permissive right of
the Trustee enumerated in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall request that the presenting Person have the instrument corrected.
The Trustee shall sign on behalf of each Trust Fund any tax return
that the Trustee is required to sign pursuant to applicable federal, state or
local tax laws.
The Trustee covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of either the Lower REMIC or
the Upper REMIC as a REMIC under the REMIC Provisions and to prevent the
imposition of any federal, state or local income, prohibited transaction,
contribution or other tax on any Trust Fund to the extent that maintaining such
status and avoiding such taxes are reasonably within the control of the Trustee
and are reasonably within the scope of its duties under this Agreement.
The Trustee shall cooperate to the extent practicable, with the Seller
in the preparation of any information, for the Holder of any Certificate, which
the Seller in its sole discretion deems necessary and appropriate for purposes
of satisfying applicable information reporting requirements under Rule 144A or
otherwise.
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, and after the
curing or waiver 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 personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
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(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it with respect to a Series in
good faith in accordance with the direction of Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25%
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.
8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon
any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement,
instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or
document reasonably believed by it to be genuine and
to have been signed or presented by the proper party
or parties;
(b) The Trustee may consult with counsel and on the
advice of such counsel 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 accordance
therewith;
(c) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this
Agreement or to make any investigation of matters
arising hereunder 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; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not
been cured or waived), 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;
(d) The Trustee shall not be personally 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;
(e) Prior to the occurrence of an Event of Default with
respect to a Series hereunder and after the curing
or waiver of all Events of Default which may have
occurred, the Trustee shall not, with respect to
such
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Series, be bound to make any investigation into the
facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing
to do so by Holders of Certificates of such Series
evidencing Fractional Undivided Interests
aggregating not less than 25% of the applicable
Trust Fund; provided, however, that if the payment
within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or
liability as a condition to taking any such action.
The reasonable expense of every such reasonable
examination shall be paid by the Master Servicer or,
if paid by the Trustee, shall be repaid by the
Master Servicer upon demand; and
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either
directly or by or through agents, affiliates,
custodians or attorneys; provided that the Trustee
shall remain directly liable with respect to the
execution of such trusts or powers and the
performance of such duties without regard to the
presence of such agents or attorneys.
8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates, other than the
signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Seller or the Master
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the Certificate of Authentication. The Trustee shall not
be accountable for the use or application by the Seller or 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 Loan Seller in respect of the
Mortgage Loans or deposited in or withdrawn from the Custodial Account, the
Excess Proceeds Account or the Certificate Account or any other account by or
on behalf of the Seller or the Master Servicer, other than any funds on deposit
with the Trustee held by or on behalf of the Trustee in accordance with Section
3.10.
8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
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8.05. Master Servicer to Pay Trustee's Fees.
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 the powers and duties hereunder or of the Trustee. Except
as otherwise provided in this Agreement, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by any Trust Fund and
held harmless against any claim, loss, liability or expense incurred in
connection with any Event of Default, any breach of this Agreement, any claim
or legal action, including any pending or threatened claim or legal action
relating to the acceptance or administration of its trusts hereunder or the
Certificates, other than any claim, loss, liability or expense incurred in
connection with a breach constituting willful misfeasance, bad faith or
negligence of the Trustee in the performance of its duties hereunder or by
reason of reckless disregard of its obligations and duties hereunder. The
provisions of this Section 8.05 shall survive the resignation or removal of the
Trustee and the termination of this Agreement.
The Master Servicer shall indemnify, defend, and hold harmless the
Trustee, its directors, employees, officers, and agents, from and against all
losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
contained, except to the extent that such loss, claim, damage, or liability:
(a) shall be due to the willful misfeasance, bad faith, or negligence of the
Trustee, its directors, employees, officers, and agents, or (b) shall be one as
to which any Trust Fund is required to indemnify the Trustee. Indemnification
under this Section shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive the termination of this Agreement and
of the Master Servicer for actions or inactions by the Master Servicer when it
acted as such.
8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, 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. In addition, the Trustee shall at all times be
acceptable to each Rating Agency rating the Securities. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation
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, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07. The corporation or national banking association serving as
Trustee may have normal banking and trust relationships with the Seller and its
affiliates, Loan Seller and its affiliates or the Master Servicer and its
affiliates; provided, however, that such corporation cannot be an affiliate of
the Master Servicer other than the Trustee in its role as successor to the
Master Servicer.
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8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving notice thereof to the Seller, the Master Servicer and
to all Certificateholders; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee who
meets the eligibility requirements of Section 8.06 by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Seller. If no successor
trustee shall have been so appointed and have accepted appointment within 60
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; provided, however, that the resigning Trustee shall not resign and be
discharged from the trusts hereby created until such time as the Rating Agency
rating the Certificates approves the successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged 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, or if
the rating of the long-term debt obligations of the Trustee is not acceptable
to a Rating Agency, then the Master Servicer may remove the Trustee and appoint
a successor trustee who meets the eligibility requirements of Section 8.06 by
written instrument, in duplicate, which instrument shall be delivered to the
Trustee so removed and to the successor trustee. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Seller.
The Holders of Certificates of each Series evidencing Fractional
Undivided Interests aggregating not less than 51% of the Trust Fund for each
such Series may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders and the Master Servicer
by the Seller.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
The costs and expenses incurred in connection with the resignation or
removal of the Trustee shall be paid by the Trustee.
8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Master Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
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become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements held by it hereunder, and
the Master Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the Master Servicer fails to mail such notice
within ten 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.
8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 8.06, 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.
8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of any Trust Fund or property securing the same may at the time be located, the
Seller 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 such Trust Fund,
and to vest in such Person or Persons, in such capacity, such title to such
Trust Fund, or any part thereof, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Seller
and the Trustee may consider necessary or desirable. If the Seller 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 8.06 hereunder and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 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, except to the extent that under any law of any jurisdiction in which
any particular act or acts
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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 any Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the 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 VIII. 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.
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.
IX TERMINATION
9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
Subject to Section 9.02, the respective obligations and
responsibilities of the Seller, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer or the Issuer of
all Mortgage Loans and each REO Property in respect thereof remaining in each
Trust Fund at a price at the Repurchase Price; and (ii) the final payment or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in each Trust Fund (or the disposition of all REO Property in
respect thereof); 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. In the case
of any repurchase by the Master Servicer pursuant to clause (i), the Master
Servicer shall include in such repurchase price the amount of any Advances that
will be reimbursed to the Master Servicer pursuant to Section 3.11(iii) and the
Master Servicer shall exercise reasonable efforts to cooperate fully with the
Trustee in effecting such repurchase and the transfer of the Mortgage Loans and
related Mortgage Files and related records to the Master Servicer.
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The right of the Master Servicer or the Issuer to repurchase all
Mortgage Loans pursuant to (i) above shall be conditioned upon the aggregate
Stated Principal Balance of such Mortgage Loans at the time of any such
repurchase aggregating an amount equal to or less than 5% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date and may be
exercised (a) by the Master Servicer on an Optional Termination Date on giving
to the Trustee and the Issuer not less the 5 Business Days' prior written
notice of the exercise of such option and (b) in the event that the Master
Servicer does not give such notice with respect to any Optional Termination
Date, by the Issuer on such Optional Termination Date on giving not less than 2
Business Days' prior written notice to the Trustee and the Master Servicer. If
such right is exercised, the Master Servicer or the Issuer, as applicable, upon
such repurchase shall provide to the Trustee, the certification required by
Section 3.16.
Notice of any termination, specifying the 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 Master Servicer or the Issuer, as applicable, by letter to the Trustee and
the Certificateholders mailed (a) in the event such notice is given in
connection with the Master Servicer's election to repurchase, not earlier than
the 15th day and not later than the 25th day of the month next preceding the
month of such final distribution or (b) otherwise during the month of such
final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at
the office of the Certificate Registrar therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Certificate
Registrar therein specified. In the event such notice is given in connection
with the Master Servicer's election to repurchase, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account on the Business
Day immediately preceding the Distribution Date specified in such notice an
amount equal to the above-described repurchase price payable out of its own
funds. Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to the Certificateholders the
amount otherwise distributable on such Distribution Date. Upon certification to
the Trustee by a Servicing Officer, following such final deposit, the Trustee
shall promptly release the Mortgage Files as directed by the Master Servicer
for the remaining Mortgage Loans, and the Trustee shall execute all
assignments, endorsements and other instruments required by the Master Servicer
as being necessary to effectuate such transfer.
In the event that all of the Certificateholders of a Series shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned notice, the Trustee shall give a second notice
to the remaining Certificateholders instructing such Certificateholders to
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within six months after the second notice
all of the Certificates shall not have been surrendered for cancellation, the
Trustee shall take reasonable steps as directed by the Seller, or appoint an
agent to take reasonable steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject hereto. If, within nine
months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Seller shall be entitled to all unclaimed
funds and other assets of the applicable Trust Fund, respectively, which remain
subject hereto.
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In addition and without prejudice to the foregoing, the respective
obligations of the Seller, the Master Servicer, the Loan Seller and the Trustee
created hereby may be terminated in respect of one or more Series of
Certificates on any date occurring after maturity of the Securities and the
release of the Certificates from any pledge securing the Securities.
Termination in the foregoing circumstances shall be effected upon receipt by
the Trustee of written notice from 100% of the Certificateholders of the
related Series of Certificate or Certificates requiring termination of this
Agreement in respect of such Series of Certificate or Certificates and
requesting the transfer of any Trust Fund to them in the manner specified in
such notice.
9.02. Additional Termination Requirements.
In the event the Master Servicer repurchases the Mortgage Loans as
provided in Section 9.01, the Lower REMIC and, in turn, the Upper REMIC shall
be terminated in accordance with the following additional requirements, unless
the Master Servicer, at its own expense, obtains for the Trustee an Opinion of
Counsel to the effect that the failure to comply with the requirements of this
Section 9.02 will not (i) result in the imposition of taxes on the net income
derived from "prohibited transactions" of either the Lower REMIC or the Upper
REMIC, as defined in Section 860F of the Code or (ii) cause either the Lower
REMIC or Upper REMIC to fail to qualify as a REMIC under the REMIC Provisions
at any time that any Certificates are outstanding:
(a) The Trustee shall establish a 90-day liquidation
period for the REMICs and specify the first day of
such period in a statement attached to the final Tax
Returns of the REMICs pursuant to Treasury
Regulation Section 1.860F-1. The Trustee shall
satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion
of Counsel obtained at the expense of the Master
Servicer; and
(b) During such 90-day liquidation period, and at or
prior to the time of making of the final payment on
the Certificates, the Trustee shall sell all of the
non-cash assets of the Lower REMIC and the Upper
REMIC for cash.
X [RESERVED]
XI MISCELLANEOUS PROVISIONS
11.01. Amendment.
This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Loan Seller and the Trustee without notice to or the
consent of any of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provisions herein which may be defective or
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inconsistent with any other provisions herein, (iii) to amend this Agreement in
any respect subject to the provisions below, (iv) to modify, eliminate, or add
to any of its provisions to such extent as shall be necessary or appropriate to
maintain the qualifications of the Upper REMIC and the Lower REMIC as REMICs
under the Code at all times that any Certificates are outstanding, or (v) if
such amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, otherwise is reasonably
necessary to comply with any requirements imposed by the Code or any successor
or amendatory statute or any temporary or final regulation, revenue ruling,
revenue procedure or other written official announcement or interpretation
relating to federal income tax laws or any proposed such action which, if made
effective, would apply retroactively to any Trust Fund at least from the
effective date of such amendment; provided that such action (except any
amendment described in (iv) above) shall not, as evidenced by an Opinion of
Counsel (provided by the Person requesting such amendment) delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment).
This Agreement may also be amended with respect to a Series from time
to time by the Seller, the Master Servicer, the Loan Seller and the Trustee
with the consent of the Holders of Certificates of such Series evidencing
Fractional Undivided Interests aggregating not less than 662/3% for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Series of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Series evidencing Fractional Undivided Interests equal
to 100% of the Trust Fund relating to such Series, or (iii) reduce the
aforesaid percentage of Certificates of a Series the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates then outstanding. Notwithstanding any other provision of
this Agreement, for purposes of the giving or withholding of consents pursuant
to this Section 11.01, Certificates registered in the name of the Loan Seller
or the Master Servicer or any affiliate thereof shall be taken into account
when calculating Fractional Undivided Interests with respect to matters
described in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Securities pursuant to the REMIC Provisions or cause either
the Lower REMIC or the Upper REMIC to fail to qualify as a REMIC at any time
that any of the Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a statement describing the amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the
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authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel (provided by the Person
requesting such amendment) to the effect that such amendment is authorized or
permitted by this Agreement. The cost of an Opinion of Counsel delivered
pursuant to this Section 11.01 shall be an expense of the party requesting such
amendment, but in any case shall not be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, 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
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at the expense of the Seller on direction by the Trustee,
but only upon direction accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
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.
11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or any Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of any
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder of a Series shall have any right to vote (except
as expressly provided for herein) or in any manner otherwise control the
operation and management of any 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 party by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a notice of an Event of Default, or
of a default by the Loan Seller or the Trustee in the performance of any
obligation hereunder, and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of
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Certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of such Series 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 is understood and intended, and 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 of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance
with the laws of the State of New York without reference to any choice of law
doctrine (but with reference to Section 5- 1401 of the New York General
Obligations Law, which by its terms is applicable to this Agreement) the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws.
11.05. Notices.
All demands, notices and direction hereunder shall be in writing and
shall be deemed effective upon receipt when delivered to (a) in the case of the
Seller, 2711 N. Haskell Avenue, Suite 1000, Dallas, Texas 75204, Attention:
Wade Walker, or such other address as may hereafter be furnished to the Trustee
and the Master Servicer in writing by the Seller, (b) in the case of the
Trustee, to the Corporate Trust Office, Attention: CMCSC IV/NAMC 1997-3 or such
other address as may hereafter be furnished to the Master Servicer and the
Seller in writing by the Trustee, (c) in the case of the Master Servicer, North
American Mortgage Company, 3883 Airway Drive, AU 750A, Santa Rosa, California,
95403, Attention: Lynn Pelletier, or such other address as may hereafter be
furnished to the Seller and the Trustee in writing and (d) in the case of the
Loan Seller, North American Mortgage Company, 3883 Airway Drive, AU 750A, Santa
Rosa, California, 95403, Attention: Marilyn Hardin, or such other address as
may hereafter be furnished to the Trustee, the Master Servicer and the Seller
in writing. 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. 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.
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
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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.
11.07. Successors and Assigns; Third Party Beneficiary.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Trustee and the
Certificateholders.
11.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
11.09. Notice to Rating Agencies and Certificateholder.
The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency referred to below with respect to each of the following of
which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured;
3. The resignation or termination of the Master
Servicer or the Trustee;
4. The repurchase of Mortgage Loans pursuant to Section
2.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custodial Account,
the Excess Proceeds Account or the Certificate
Account.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Certificateholders described in
Section 4.02; and
2. Each annual independent public accountants'
servicing report described in Section 3.20.
Any such notice pursuant to this Section 11.09 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) in the
case of Standard & Poor's, 25 Broadway, New York, New York 10007, Attention:
Surveillance Department, and (ii) in the case of DCR, 55 E. Monroe Street, 38th
-94-
<PAGE> 100
Floor, Chicago, Illinois 60603, Attention: MBS Monitoring, or, in each case,
such other address as such Rating Agency may designate in writing to the
parties thereto.
-95-
<PAGE> 101
IN WITNESS WHEREOF, the Seller, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.
CMC SECURITIES CORPORATION IV,
as Seller
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
NORTH AMERICAN MORTGAGE COMPANY,
as Master Servicer and as Loan Seller
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Pooling and Servicing Agreement - Signature Page
<PAGE> 102
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the ____ day of ___________, 1997 before me, a notary public in and
for said State, personally appeared _____________________________, known to me
to be an Officer of CMC Securities IV, one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SONOMA )
On the ______ day of ___________, 1997 before me, a notary public in
and for said State, personally appeared Marilyn Hardin, known to me to be a
Senior Vice President of North American Mortgage Company, one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
<PAGE> 103
STATE OF TEXAS )
) ss.:
CITY OF DALLAS )
On the _____ day of ____________, 1997 before me, a notary public in
and for said State, personally appeared Richard C. Tarnas, known to me to be a
Vice President of The First National Bank of Chicago, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
<PAGE> 104
EXHIBIT A-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1997-NAMC 3-A
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Trustee
referred to below by
CMC SECURITIES CORPORATION IV
serviced by
NORTH AMERICAN MORTGAGE COMPANY
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation IV,
North American Mortgage Company,
Capstead Mortgage Corporation or the Trustee)
No. 1 100/100th Undivided Interest
This certifies that The First National Bank of Chicago, is the
registered owner of a 100/100th Fractional Undivided Interest in a pool of
conventional single-family mortgage loans (the "Mortgage Loans") assigned to
the series referred to above (the "Series") of Certificates (the "Loan Group")
and transferred to the Trustee referred to below by CMC Securities Corporation
IV ("CMCSC IV"), and serviced by North American Mortgage Company, as Master
Servicer. The Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1997 (the "Agreement") among CMCSC IV, North
American Mortgage Company as Master Servicer and Loan Seller (the "Master
Servicer" or "Loan Seller") and The First National Bank of Chicago, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereinbelow. Mortgage Loans identified as Group I Mortgage Loans on
the Mortgage Loan Schedule attached as Exhibit F to the Pooling and Servicing
Agreement, having an aggregate principal amount of $149,306,493.81 as of
September 1, 1997 (the "Cut-off Date"), after deducting all payments due on or
before the Cut-off Date, were transferred and assigned to the Loan Group for
this Series. 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. Capitalized terms not defined herein shall have the meanings
set forth in the Agreement.
A-1-1
<PAGE> 105
Pursuant to the Agreement, the Trustee will distribute on the Business
Day prior to the 25th day of the month (each, a "Distribution Date"),
commencing in October, 1997, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month next preceding the month of such distribution (the "Record Date"), such
Person's pro rata share (based on the aggregate Fractional Undivided Interest
evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1997-NAMC 3-A Certificates pursuant to
Section 4.01(b) of the Agreement. For the purposes hereof, amounts received in
connection with the liquidation of defaulted Mortgage Loans in the Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the Loan
Group.
Distributions on this Certificate will be made by the Trustee by wire
transfer in immediately available funds for the account of the Person entitled
thereto as specified by such Person in accordance with the terms of the
Agreement or by such other method as shall be acceptable to both the Trustee
and such Person. Notwithstanding the above, the final distribution on this
Certificate will be made 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
of New York, State of New York.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the Fractional Undivided Interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC IV, the Master Servicer, or the Trustee and are not insured or guaranteed
by the Government National Mortgage Association or any other governmental
agency. The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans in the Loan Group, all as more
specifically set forth hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the Master Servicer of certain expenses incurred, by them in connection with
the Mortgage Loans in the Loan Group.
The Agreement permits, with respect to this Series and 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 of this Series under the Agreement at any time by CMCSC IV,
the Master Servicer and the Trustee with the consent of the holders of
Certificates of this Series evidencing Fractional Undivided Interests
aggregating not less than 66% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall be conclusive
and
A-1-2
<PAGE> 106
binding on such holder and upon all future holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange therefore 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 of this Series.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Certificate Registrar, which initially is The First
National Bank of Chicago, as Certificate Trustee, upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Certificate Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the holder hereof or such holder as attorney duly authorized in
writing, and thereupon one or more new Certificates of this Series of
authorized denominations 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. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates in this Series are exchangeable for new
Certificates of this Series of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust Fund, as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMCSC IV, 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 this Certificate is registered as the owner
hereof for all purposes, and neither CMCSC IV, the Master Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund shall
terminate upon (i) the later of the maturity or other liquidation (including
repurchase by the Loan Seller) of the last Mortgage Loan in the Loan Group or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan in the Loan Group, and (ii) the payment to
Certificateholders of this Series of all amounts held on their behalf and
required to be paid to them pursuant to the Agreement. The Master Servicer or
CMCSC IV may effect early retirement of the Certificates of this Series by
exercising its right under the Agreement to repurchase all the Mortgage Loans
in the Loan Group and the related Trust Property in the event that the
aggregate outstanding principal balance of the Mortgage Loans in the Loan Group
is less than five percent (5%) of the adjusted aggregate principal balance of
the Mortgage Loans in the Loan Group at the Cut-off Date.
The Trustee's signature shall be for authentication purposes only and
neither the Trustee nor any person signing on its behalf shall have liability
on this Certificate (other than for the certificate of authentication).
A-1-3
<PAGE> 107
IN WITNESS WHEREOF, CMCSC IV has caused this Certificate to be duly
executed under its official seal.
CMC SECURITIES CORPORATION IV
By:
------------------------------
Name:
-------------------------
Title:
------------------------
[Seal]
Attest
- -----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Dated: September 30, 1997
A-1-4
<PAGE> 108
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
a Fractional Undivided Interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a Fractional Undivided Interest equal to
_____________________________________________________________, to the above
named assignee and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated: ___________________
-------------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
- ------------------ -------------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange)
The assignee should include the following for the information of the
Trustee:
Distributions shall be made by wire transfer in immediately available
funds to _________________________ for the account of account number
________________________, or, if mailed by check, to ________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________
_______________________________________________________________________________.
This information is provided by _____________________________ the
assignee named above, or _____________________________________ as its agent.
A-1-5
<PAGE> 109
EXHIBIT A-2
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1997-NAMC 3-B
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Trustee
referred to below by
CMC SECURITIES CORPORATION IV
serviced by
NORTH AMERICAN MORTGAGE COMPANY
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation IV,
North American Mortgage Company,
Capstead Mortgage Corporation or the Trustee)
No. 1 100/100th Undivided Interest
This certifies that The First National Bank of Chicago, is the
registered owner of a 100/100th Fractional Undivided Interest in a pool of
conventional single-family mortgage loans (the "Mortgage Loans") assigned to
the series referred to above (the "Series") of Certificates (the "Loan Group")
and transferred to the Trustee referred to below by CMC Securities Corporation
IV ("CMCSC IV"), and serviced by North American Mortgage Company, as Master
Servicer. The Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1997 (the "Agreement") among CMCSC IV, North
American Mortgage Company as Master Servicer and Loan Seller (the "Master
Servicer" or "Loan Seller") and The First National Bank of Chicago, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereinbelow. Mortgage Loans identified as Group 2 Mortgage Loans on
the Mortgage Loan Schedule attached as Exhibit F to the Pooling and Servicing
Agreement, having an aggregate principal amount of $131,985,226.85 as of
September 1, 1997 (the "Cut-off Date"), after deducting all payments due on or
before the Cut-off Date, were transferred and assigned to the Loan Group for
this Series. 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. Capitalized terms not defined herein shall have the meanings
set forth in the Agreement.
A-2-1
<PAGE> 110
Pursuant to the Agreement, the Trustee will distribute on the Business
Day prior to the 25th day of the month (each, a "Distribution Date"),
commencing in October, 1997, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month next preceding the month of such distribution (the "Record Date"), such
Person's pro rata share (based on the aggregate Fractional Undivided Interest
evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1997-NAMC 3-B Certificates pursuant to
Section 4.01(b) of the Agreement. For the purposes hereof, amounts received in
connection with the liquidation of defaulted Mortgage Loans in the Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the Loan
Group.
Distributions on this Certificate will be made by the Trustee by wire
transfer in immediately available funds for the account of the Person entitled
thereto as specified by such Person in accordance with the terms of the
Agreement or by such other method as shall be acceptable to both the Trustee
and such Person. Notwithstanding the above, the final distribution on this
Certificate will be made 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
of New York, State of New York.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the Fractional Undivided Interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC IV, the Master Servicer, or the Trustee and are not insured or guaranteed
by the Government National Mortgage Association or any other governmental
agency. The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans in the Loan Group, all as more
specifically set forth hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the Master Servicer of certain expenses incurred, by them in connection with
the Mortgage Loans in the Loan Group.
The Agreement permits, with respect to this Series and 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 of this Series under the Agreement at any time by CMCSC IV,
the Master Servicer and the Trustee with the consent of the holders of
Certificates of this Series evidencing Fractional Undivided Interests
aggregating not less than 66% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall be conclusive
and
A-2-2
<PAGE> 111
binding on such holder and upon all future holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange therefore 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 of this Series.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Certificate Registrar, which initially is The First
National Bank of Chicago, as Certificate Trustee, upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Certificate Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the holder hereof or such holder as attorney duly authorized in
writing, and thereupon one or more new Certificates of this Series of
authorized denominations 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. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates in this Series are exchangeable for new
Certificates of this Series of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust Fund, as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMCSC IV, 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 this Certificate is registered as the owner
hereof for all purposes, and neither CMCSC IV, the Master Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund shall
terminate upon (i) the later of the maturity or other liquidation (including
repurchase by the Loan Seller) of the last Mortgage Loan in the Loan Group or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan in the Loan Group, and (ii) the payment to
Certificateholders of this Series of all amounts held on their behalf and
required to be paid to them pursuant to the Agreement. The Master Servicer or
CMCSC IV may effect early retirement of the Certificates of this Series by
exercising its right under the Agreement to repurchase all the Mortgage Loans
in the Loan Group and the related Trust Property in the event that the
aggregate outstanding principal balance of the Mortgage Loans in the Loan Group
is less than five percent (5%) of the adjusted aggregate principal balance of
the Mortgage Loans in the Loan Group at the Cutoff Date.
The Trustee's signature shall be for authentication purposes only and
neither the Trustee nor any person signing on its behalf shall have liability
on this Certificate (other than for the certificate of authentication).
A-2-3
<PAGE> 112
IN WITNESS WHEREOF, CMCSC IV has caused this Certificate to be duly
executed under its official seal.
CMC SECURITIES CORPORATION IV
By:
------------------------------
Name:
-------------------------
Title:
------------------------
[Seal]
Attest
- -----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Dated: September 30, 1997
A-2-4
<PAGE> 113
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
_____________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
a Fractional Undivided Interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a Fractional Undivided Interest equal to
____________________________________________
_____________________________________________, to the above named assignee and
deliver such Certificate to the following address:
Dated: ___________________
-----------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
- ------------------ -----------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange)
The assignee should include the following for the information of the
Trustee:
Distributions shall be made by wire transfer in immediately available
funds to ______________________________________________________ for the account
of account number __________________________________________, or, if mailed by
check, to __________________________________________. Applicable statements
should be mailed to ______________________________________________________
_________________________________________________________________________.
This information is provided by _____________________________ the
assignee named above, or _____________________________________ as its agent.
A-2-5
<PAGE> 114
EXHIBIT B
FORM OF TRUSTEE INITIAL CERTIFICATION
[DATE]
CMC Securities Corporation IV
2711 N. Haskell Avenue, Suite 1000
Dallas, Texas 75204
North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1997, among CMC Securities
Corporation IV, as Seller, North American Mortgage Company, as Loan
Seller and Master Servicer, and The First National Bank of Chicago, as
Trustee, Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and
3-B
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in each Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File and the applicable Mortgage Loan Schedule and has determined
that, except as noted on the Schedule of Exceptions attached hereto: (i) all
documents required to be included in the Mortgage File are in its possession,
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan, and (iii) based on examination by it, and
only as to such documents, the information set forth in items (i)-(vi), (xiv)
and (xv) of the definition or description of "Mortgage Loan Schedule" is
correct.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Trustee makes no representations
as to and shall not be responsible to verify: (i) the validity, legality,
sufficiency, enforceability, due authorization, recordability, or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness, or suitability of any such Mortgage Loan, or (iii)
the existence of any assumption, modification, written assurance or
substitution agreement with respect to any Mortgage File if no such documents
appear in the Mortgage File delivered to the Trustee.
A-2-6
<PAGE> 115
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
A-2-7
<PAGE> 116
EXHIBIT C
FORM OF TRUSTEE FINAL CERTIFICATION
[DATE]
CMC Securities Corporation IV
2711 N. Haskell Avenue, Suite 1000
Dallas, Texas 75204
North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1997, among CMC Securities
Corporation IV, as Seller, North American Mortgage Company, as Loan
Seller and Master Servicer, and The First National Bank of Chicago, as
Trustee, Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and
3-B
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has received the
documents set forth in Section 2.01.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representation that any
documents specified in clause (vi) of Section 2.01 should be included in any
Mortgage File. The Trustee makes no representations as to and shall not be
responsible to verify: (i) the validity, legality, sufficiency, enforceability,
due authorization, recordability, or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness,
or suitability of any such Mortgage Loan, or (iii) the existence of any
assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Trustee.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
C-1
<PAGE> 117
EXHIBIT D-1
FORM OF REQUEST FOR RELEASE
[For Trustee]
Loan Information
Name of Mortgagor: __________________________________
Master Servicer __________________________________
Loan No.: __________________________________
Trustee
Name: __________________________________
Address: __________________________________
__________________________________
Trustee
Mortgage File No.: __________________________________
Request for Requesting Documents (check one):
1._____ Mortgage Loan Liquidated.
(The Master Servicer hereby certifies that all
proceeds of foreclosure, insurance or other
liquidation have been finally received and deposited
into the Custodial Account to the extent required
pursuant to the Pooling and Servicing Agreement.)
2._____ Mortgage Loan in Foreclosure.
3._____ Mortgage Loan Repurchased Pursuant to Section 9.01 of the
Pooling and Servicing Agreement.
4._____ Mortgage Loan Repurchased Pursuant to Article 11 of the
Pooling and Servicing Agreement. (The Master Servicer hereby
certifies that the repurchase price has been deposited into
the Custodial Account pursuant to the Pooling and Servicing
Agreement.)
5._____ Other (explain)_____________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
D-1-1
<PAGE> 118
The undersigned Master Servicer hereby acknowledges that it has
received from The First National Bank of Chicago, as Trustee for the Holders of
Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and 3-B, the documents
referred to below (the "Documents"). All capitalized terms not otherwise
defined in this Request for Release shall have the meanings given them in the
Pooling and Servicing Agreement, dated as of September 1, 1997 (the "Pooling
and Servicing Agreement"), among CMC Securities Corporation IV, North American
Mortgage Company, and the Trustee.
( ) Promissory Note dated __________,19__, in the original principal sum
of $__________, made by _______________, payable to, or endorsed to
the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.__________ in
the County Recorder's Office of the County of ______________, State of
____________ in book/reel/docket ____________ of official records at
page/image __________.
( ) Deed of Trust recorded on _______________ as instrument no. __________
in the County Recorder's Office of the County of __________, State of
___________ in book/reel/docket ___________ of official records at
page/image __________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________ as instrument no. ____________ in the County Recorder's
Office of the County of __________, State of _________ in
book/reel/docket ___________ of official records at page/image
__________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ___________________
( ) ___________________
( ) ___________________
( ) ___________________
The undersigned Master Servicer hereby acknowledges and agrees as follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Master Servicer assert or seek to assert any claims or rights of setoff to or
against the Documents or any proceeds thereof.
D-1-2
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(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no Ion-per exists, unless the Mortgage Loan relating to the Documents
has been liquidated and the proceeds thereof have been remitted to the
Custodial Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be earmarked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession , custody or control.
NORTH AMERICAN MORTGAGE COMPANY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:______, 19__
D-1-3
<PAGE> 120
EXHIBIT D-2
FORM OF REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH SECURITIES
SERIES 1997-NAMC 3-A and 3-B
__________________________ HEREBY CERTIFIES THAT HE/SHE IS AN OFFICER OF THE
MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER SIGNATURE,
AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:__________________ BORROWER'S NAME:__________________
COUNTY: ______________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE CUSTODIAL ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:____________________ ___________________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
D-2-1
<PAGE> 121
EXHIBIT E
[Purchaser Letterhead]
[Date]
[Issuer]
[Certificate Registrar]
and
[Seller #1]
Ladies and Gentlemen:
In connection with the purchase by [Purchaser] from [Seller #1] of
approximately $________________ aggregate principal amount of Pass-Through
Certificates, Capstead Inc. CMO Pass-Through Program, Series 1997-NAMC 3-___
through 1997-NAMC 3-___ ("the Certificates"), administered by Capstead Mortgage
Corporation, we hereby represent and covenant to you the following:
(a) [Purchaser] is acquiring the Certificates for itself and not
for any other persons or entity.
(b) [Purchaser] is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933 and is experienced in
making investments in securities comparable to the
Certificates.
(c) [Purchaser] has been furnished with all information regarding
the Certificates which it has requested from [Seller #1] or
[Issuer].
(d) [Purchaser] has not offered or sold any of the Certificates
to, solicited offers to buy any Certificates from, or
otherwise approached or negotiated with respect to the
Certificates with, any prospective purchaser, or taken any
other action which would result in a violation of Section 5
of the Securities Act of 1933 or any applicable state
securities laws.
(e) [Purchaser] is acquiring the Certificates for investment
purposes and not with a view to resale.
(f) [Purchaser] will not transfer, sell, pledge, encumber or
otherwise dispose of the Certificates in any manner which
would result in a violation of Section 5 of the Securities
Act of 1933 or any applicable state securities laws.
E-1
<PAGE> 122
(g) [Purchaser] (i) is not an employee benefit plan, trust or
account, including an individual retirement account, that is
subject to the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended, (any such
plan, trust or account being referred to as a "Plan") and
(ii) has not acquired and is not acquiring the Certificates
with plan assets, within the meaning of 29 CFR 2510.3-101, of
a Plan.
Very truly yours,
[Purchaser]
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
E-2
<PAGE> 123
EXHIBIT F
MORTGAGE LOAN SCHEDULE
INTENTIONALLY OMITTED
F-1
<PAGE> 124
EXHIBIT G
LOAN DATA REQUIREMENTS - MONTHLY DATA
CMC Securities Corporation IV, 1997-NAMC 3-A and 3-B
<TABLE>
<CAPTION>
Field Description
- ----- -----------
<S> <C>
DEALID Deal Name (Character)
GROUP Group Number (1 or 2) (Numeric)
LOAN Loan Number (Numeric)
BEG_SCHED Stated Principal Balance as of the Beginning of the Due Period (Numeric)
END_SCHED Stated Principal Balance as of the End of the Due Period (Numeric)
PMT Monthly Payment for the related Due Period (Numeric)
SCHED_I Interest portion of the Monthly Payment for the related Due Period (Numeric)
SCHED_P Principal portion of the Monthly Payment for the related Due Period (Numeric)
ADVANC_I Interest portion of the Advance for the related Due Period determined as of the
Determination Date (Numeric)
ADVANC_P Principal portion of the Advance for the related Due Period determined as of
the Determination Date (Numeric)
RATE Interest Rate used to calculate the Accrued Interest payable in the related Due
Period (Numeric)
PREPAY Prepayments received during the related Prepayment Period (Numeric)
CURTAIL Curtailments received during the related Prepayment Period (Numeric)
PREP_DAT Prepayment/Curtailment Date during the related Prepayment Period
(19910528) (Character)
PPIS Prepayment Interest Shortfall (Excess as negative number) (Numeric)
NEXT PAYMENT Next Payment Due Date as of the Determination Date (19910528) (Character)
DUE DATE
</TABLE>
G-1
<PAGE> 125
<TABLE>
<CAPTION>
<S> <C>
DEL Delinquency Code (for following status: 31-60 days, 61-90 days, 91+ days)
as of the related Determination Date (Numeric)
STATUS Status Code (for following status: foreclosure, bankruptcy, REO) as of the
related Determination Date (Numeric)
BOOK Book Value of REO as of the end of the related Prepayment Period (Numeric)
</TABLE>
G-2
<PAGE> 126
EXHIBIT H
[FORM OF SPECIAL SERVICING AGREEMENT]
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of __________________, between North American
Mortgage Company (the "Company") and ___________ (the "Purchaser").
PRELIMINARY STATEMENT
_____________ is the holder of the entire interest in the CMC
Securities Corporation IV Collateralized Mortgage Obligations Series 1997-3,
Class _____ (the "Class B Securities"). The Class B Securities were issued
pursuant to a Series Supplement dated as of September 1, 1997 among CMC
Securities Corporation IV, as Issuer (the "Issuer") and The First National Bank
of Chicago, as Trustee.
Collateral for the Class B Securities is provided by CMC Securities
Corporation Pass-Through Certificates 1997-NAMC 3 issued pursuant to a Pooling
and Servicing Agreement dated as of September 1, 1997 among the Issuer, as the
Seller, the Company, as Master Servicer and Loan Seller, and The First National
Bank of Chicago, as Trustee.
_______________ intends to resell all of the Class B Securities
directly to the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company will engage in certain special servicing procedures relating to
foreclosures for the benefit of the Purchaser, and that the Purchaser will
deposit funds in a collateral fund to cover any losses attributable to such
procedures as well as all advances and costs in connection therewith, as set
forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree that the following provisions shall become effective and shall
be binding on and enforceable by the Company and the Purchaser:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
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 are required or
authorized by law or executive order to be closed.
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Collateral Fund: The Fund established and maintained pursuant to
Section 3.01 hereof.
Collateral Fund Permitted Investments: Either (i) obligations of, or
obligations fully guaranteed as to principal and interest by, the United
States, or any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, (ii) a money market
fund rated in the highest rating category by a nationally recognized rating
agency selected by the Company, (iii) cash, (iv) mortgage pass-through
certificates issued or guaranteed by Government National Mortgage Association,
FNMA or FHLMC, (v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date), the issuer of which may be an affiliate of the Company, having
at the time of such investment the highest short-term ratings by Standard and
Poor's ("S&P") or Duff & Phelps Credit Rating Co. ("DCR"), and together with
S&P, (the "Rating Agencies") or (vi) demand and time deposits in, certificates
of deposit of, any depository institution or trust company (which may be an
affiliate of the Company) incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state banking authorities, so long as the time of such
investment either (x) the long-term debt obligations of such depository
institution or trust company have a rating of at least AA by the Rating
Agencies, (y) the certificate of deposit or other unsecured short-term debt
obligations of such depository institution or trust company have a short term
rating of at least A-1 or equivalent by the Rating Agencies or (z) the
depository institution or trust company is one that is acceptable to any of the
Rating Agencies and, for each of the preceding clauses (i), (iv), (v) and (vi),
the maturity thereof shall be not later than the earlier to occur of (A) 30
days from the date of the related investment and (B) the next succeeding
Distribution Date as defined in the related Pooling and Servicing Agreement.
Commencement of Foreclosure: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service or process necessary to commence an action to foreclose,
or (ii) in the case of a deed of trust, posting, the publishing, filing or
delivery of a notice of sale, but not including in either case (x) any notice
of default, notice of intent to foreclose or sell or any other action
prerequisite to the actions specified in (i) or (ii) above, (y) the acceptance
of a deedin-lieu of foreclosure (whether in connection with a sale of the
related property or otherwise) or (z) initiation and completion of a short
pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the
related Mortgaged Property obtained by the Purchaser at its own expense from an
independent appraiser (which shall not be an affiliate of the Purchaser)
acceptable to the Company as nearly contemporaneously as practicable to the
time of the Purchaser's election, prepared based on the Company's customary
requirements for such appraisals.
Election to Delay Foreclosure: Any election by the Purchaser to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
Election to Foreclose: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
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<PAGE> 128
Monthly Advances: Principal and interest advances and servicing
advances including costs and expenses of foreclosure.
Required Collateral Fund Balance: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be
deposited in the Collateral Fund pursuant to Section 2.02(d) (after adjustment
for all withdrawals and deposits pursuant to Section 2.02(e)) and Section
2.03(b) (after adjustment for all withdrawals and deposits pursuant to Section
2.02(e)) and Section 3.02 to be reduced by all withdrawals therefrom pursuant
to Section 2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices
(a) In connection with the performance of its duties under
the Pooling and Servicing Agreement relating to the realization upon defaulted
Mortgage Loans, the Company as Master Servicer shall provide to the Purchaser
the following notices and reports:
(i) Within five Business Days after each Distribution Date
(or included in or with the monthly statements to Securityholders
pursuant to the Pooling and Servicing Agreement), the
[Company][Trustee], shall provide to the Purchaser a report, using the
same methodology and calculations in its standard servicing reports,
indicating for the Trust the number of Mortgage Loans that are (A)
thirty days, (B) sixty days, (C) ninety days or more delinquent or (D)
in foreclosure, and indicating for each such Mortgage Loan the loan
number and outstanding principal balance.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan, the Company shall provide the
Purchaser with a notice (sent by telecopier) of such proposed and
imminent foreclosure, stating the loan number and the aggregate amount
owing under the Mortgage Loan. Such notice may be provided to the
Purchaser in the form of a copy of a referral letter from such
Servicer to an attorney requesting the institution of foreclosure.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond
to reasonable inquiries, by phone or in writing by facsimile, electronic, or
overnight mail transmission, by the Purchaser in connection with any Mortgage
Loan identified in a report under subsection (a) (i) (B), (a) (i) (C), (a) (i)
(D), or (a) (ii) which has been given to the Purchaser; provided, that (1) the
related Servicer shall only be required to provide information that is readily
accessible to its servicing personnel and is non-confidential and
H-3
<PAGE> 129
(2) the related Servicer shall respond within five Business Days orally or in
writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide
to the Purchaser such information as the Purchaser may reasonably request
provided, however, that such information is consistent with normal reporting
practices, concerning each Mortgage Loan that is at least ninety days
delinquent and each Mortgage Loan which has become real estate owned, through
the final liquidation thereof; provided, that the Company shall only be
required to provide information that is readily accessible to its servicing
personnel and is non-confidential provided, however, that the Purchaser will
reimburse the Company for any out of pocket expenses.
Section 2.02. Purchaser's Election to Delay Foreclosure Proceedings
(a) The Purchaser shall be deemed to direct the Company that
in the event that the Company does not receive written notice of the
Purchaser's election pursuant to subsection (b) below within 24 hours
(exclusive of any intervening non-Business Days) of transmission of the notice
provided by the Company under Section 2.01(a)(ii) subject to extension as set
forth in Section 2.02(b), it may proceed with the Commencement of Foreclosure
in respect of such Mortgage Loan in accordance with its normal foreclosure
policies without further notice to the Purchaser. Any foreclosure that has been
initiated may be discontinued (i) without notice to the Purchaser if the
Mortgage Loan has been brought current or if a refinancing or prepayment occurs
with respect to the Mortgage Loan (including by means of a short payoff
approved by the Company) or (ii) if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case, the Company may
complete such forbearance agreement unless instructed otherwise by the
Purchaser within two Business Days notification.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Purchaser, the
Purchaser may elect to instruct the Company to delay the Commencement of
Foreclosure until such time as the Purchaser determines that the Company may
proceed with the Commencement of Foreclosure. Such election must be evidenced
by written notice received within 24 hours (exclusive of any intervening
non-Business Days) of transmission of the notice provided by the Company under
Section 2.01(a)(ii). Such 24 hour period shall be extended for no longer than
an additional four Business Days after the receipt of the information if the
Purchaser requests additional information related to such foreclosure;
provided, however, that the Purchaser will have at least one Business day to
respond to any requested additional information. Any such additional
information shall (i) be provided only to the extent it is not confidential in
nature and (ii) be obtainable by the Company from existing reports,
certificates or statements or otherwise be readily accessible to its servicing
personnel. The Purchaser agrees that it has no right to deal with the mortgagor
during such period. However, if such servicing activities include acceptance of
a deed-in-lieu of foreclosure or short payoff, the Purchaser will be notified
and given two Business Days to respond.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Purchaser shall obtain
a Current Appraisal as soon as practicable, but in no event more than 15
business days thereafter, and shall provide the Company with a copy of such
Current Appraisal.
H-4
<PAGE> 130
(d) Within two Business Days of making any Election to Delay
Foreclosure, the Purchaser shall remit by wire transfer to the Company, for
deposit in the Collateral Fund, an amount, as calculated by the Company, equal
to the sum of (i) 125% of the greater of the unpaid principal balance of the
Mortgage Loan and the value shown in the Current Appraisal referred to in
subsection (c) above (or, if such Current Appraisal has not yet been obtained,
the Company's estimate thereof, in which case the required deposit under this
subsection shall be adjusted upon obtaining such Current Appraisal), and (ii)
three months' interest on the Mortgage Loan at the applicable Mortgage Interest
Rate. If any Election to Delay Foreclosure extends for a period in excess of
three months (such excess period being referred to herein as the "Excess
Period"), within two Business Days the Purchaser shall remit by wire transfer
in advance to the Company for deposit in the Collateral Fund the amount of each
additional month's interest, as calculated by the Company, equal to interest on
the Mortgage Loan at the applicable Mortgage Interest Rate for the Excess
Period. The terms of this Agreement will no longer apply to the servicing of
any Mortgage Loan upon the failure of the Purchaser to deposit any of the above
amounts relating to the Mortgage Loan within two Business Days of the Election
to Delay Foreclosure or within two Business Days of the commencement of the
Excess Period subject to Section 3.01.
(e) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company may withdraw
from the Collateral Fund from time to time amounts necessary to reimburse the
related Servicer for all related Monthly Advances and Liquidation Expenses
thereafter made by such Servicer in accordance with the Pooling and Servicing
Agreement. To the extent that the amount of any such Liquidation Expenses is
determined by the Company based on estimated costs, and the actual costs are
subsequently determined to be higher, the Company may withdraw the additional
amount from the Collateral Fund. In the event that the Mortgage Loan is brought
current by the mortgagor and the foreclosure action is discontinued, the
amounts so withdrawn from the Collateral Fund shall be redeposited therein and
to the extent that reimbursement therefor from amounts paid by the mortgagor is
not prohibited pursuant to the Pooling and Servicing Agreement as of the date
hereof, applicable law or the related mortgage note. Except as provided in the
preceding sentence, amounts withdrawn from the Collateral Fund to cover Monthly
Advances and Liquidation Expenses shall not be redeposited therein or otherwise
reimbursed to the Purchaser. If and when any such Mortgage Loan is brought
current by the mortgagor, all amounts remaining in the Collateral Fund in
respect of such Mortgage Loan (after adjustment for all permitted withdrawals
and deposits pursuant to this subsection) shall be released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Master Servicer shall
continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when the Purchaser shall notify the Company that it believes
that it is appropriate to do so, the Master Servicer may proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not brought
current by the mortgagor by the time the loan becomes 6 months delinquent, the
Purchaser's election shall no longer be effective and at the Purchaser's
option, either (i) the Purchaser shall purchaser the Mortgage Loan from the
Trust at a purchase price equal to the fair market value as shown on the
Current Appraisal, to be paid by (x) applying any balance in the Collateral
Fund to such purchase price, and (y) to the extent of any deficiency, by wire
transfer if immediately available funds from the Purchaser to the Company for
deposit in the related Asset Proceeds Account; or (ii) the Master Servicer may
proceed with the Commencement of Foreclosure.
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(g) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Delay Foreclosure
and as to which the Master Servicer proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Company shall
calculate the amount, if any, by which the value shown on the Current Appraisal
obtained under subsection (c) exceeds the actual sales price obtained for the
related Mortgaged Property (net of Liquidation Expenses and accrued interest
related to the extended foreclosure period), and the Company shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust and in its capacity as Master Servicer shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling and Servicing
Agreement. After making such withdrawal, all amounts remaining the Collateral
Fund in respect of such Mortgage Loan (after adjustment for all permitted
withdrawals and deposits pursuant to this Agreement) shall be released to the
Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure Proceedings
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Purchaser may elect to instruct the
Company to proceed with the Commencement of Foreclosure as soon as practicable.
Such election must be evidenced by written notice received by the Company by
5:00 p.m., [New York City] time, on the third Business Day following the
delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclosure, the Purchaser shall remit to the Company, for deposit in the
Collateral Fund, an amount, as calculated by the Company, equal to 125% of the
current unpaid principal balance of the Mortgage Loan and three months interest
on the Mortgage Loan at the applicable Mortgage Interest Rate. If any when any
such Mortgage Loan is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
permitted withdrawals and deposits pursuant to this Agreement) shall be
released to the Purchaser and to the extent that reimbursement therefor from
amounts paid by the mortgagor is not prohibited pursuant to the Pooling and
Servicing Agreement as of the date hereof, applicable law or the related
mortgage note. The terms of this Agreement will no longer apply to the
servicing of any Mortgage Loan upon the failure of the Purchaser to deposit the
above amounts relating to the Mortgage Loan within two Business days of the
Election to Foreclose subject to Section 3.01.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Foreclose, the Master Servicer shall continue
to service the Mortgage Loan in accordance with its customary procedures (other
than Commencement of Foreclosure as provided herein). In connection therewith,
the Company shall have the same rights to make withdrawals for Monthly Advances
and Liquidation Expenses from the Collateral Fund as are provided under Section
2.02(e), and the Company shall make reimbursements thereto the limited extent
provided under such subsection in accordance with its customary procedures. The
Company shall not be required to proceed with the Commencement of Foreclosure
if (i) the same is stayed as a result of the mortgagor's bankruptcy or is
otherwise barred by applicable law, or to the extent that all legal conditions
precedent thereto have not yet been complied with, or (ii) the Company believes
there is a breach of representations or warranties by the Company or the Loan
Seller, which may result in a repurchase or substitution of such Mortgage Loan,
or (iii) the Company reasonably believes the Mortgaged
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<PAGE> 132
Property may be contaminated with or affected by hazardous wastes or hazardous
substances (and, without limiting the Master Servicer's right not to proceed
with the Commencement of Foreclosure, the Company supplies the Purchaser with
information supporting such belief). Any foreclosure that has been initiated
may be discontinued (x) without notice to the Purchaser if the Mortgage Loan
has been brought current or if a refinancing or prepayment occurs with respect
to the Mortgage Loan (including by means of a short payoff approved by the
Purchaser) or (y) with notice to the Purchaser if the Master Servicer has
reached the terms of a forbearance agreement unless instructed otherwise by the
Purchaser within two Business Days of such notification. Any such information
shall be based upon a decision that such forbearance agreement is not in
conformity with reasonable servicing practices.
(d) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Foreclose and as to
which the Master Servicer proceeded with the Commencement of Foreclosure in
accordance with subsection (c) above, the Company shall calculate the amount,
if any, by which the unpaid principal balance of the Mortgage Loan at the time
of liquidation (plus all unreimbursed interest and servicing advances and
Liquidation Expenses in connection therewith other than those paid from the
Collateral Fund) exceeds the actual sales price obtained for the related
Mortgaged Property, and the Company shall withdraw the amount of such excess
from the Collateral Fund, shall remit the same to the Trust and in its capacity
as Master Servicer shall apply such amount as additional Liquidation Proceeds
pursuant to the Pooling and Servicing Agreement. After making such withdrawal,
all amounts remaining in the Collateral Fund (after adjustment for all
withdrawals and deposits pursuant to subsection (c) of such Mortgage Loan shall
be released to the Purchaser.
Section 2.04. Termination
(a) With respect to all Mortgage Loans included in the Trust,
the Purchaser's right to make any Election of Delay Foreclosure or any Election
to Foreclose and the Company's obligations under Section 2.01 shall terminate
(i) at such time as the Security Principal Balance of the Class B Securities
has been reduced to zero, (ii) if the greater of (x) [43]% (or such lower or
higher percentage that represents the Master Servicer's actual historical loss
experience with respect to the Mortgage Loan in the related pool as determined
by the Company) of the aggregate principal balance of all Mortgage Loans that
are in foreclosure or are more than 90 days delinquent on a contractual basis
and REO properties or (y) the aggregate amount that the Company estimates
through the normal servicing practices of the related Servicer will be required
to be withdrawn from the Collateral Fund with respect to Mortgage Loans as to
which the Purchaser has made an Election to Delay Foreclosure or an Election to
Foreclosure, exceeds (z) the then-current principal balance of the Class B
Securities, (iii) upon any transfer by the Purchaser of any interest (other
than the minority interest therein, but only if the transferee provides written
acknowledgment to the Company of the Purchaser's right hereunder and that such
transferee will have no rights hereunder) in the Class B Securities (whether or
not such transferee is registered under the Pooling and Servicing Agreement),
including any such transfer in connection with a termination of the Trust or
(iv) any breach of the terms of this Agreement by the Purchaser.
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(b) Except as set forth in 2.04(a), this Agreement and the
respective rights, obligations and responsibilities of the Purchaser and the
Company hereunder shall terminate upon the later to occur of (i) the final
liquidation of the last Mortgage Loan as to which the Purchaser made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided herein and (ii) ten
Business Days' notice. The Purchaser's right to make an election pursuant to
Section 2.02 or Section 2.03 hereof with respect to a particular Mortgage Loan
shall terminate if the Purchaser fails to make any deposit required pursuant to
Section 2.02(d) or 2.03(b) or if the Purchaser fails to make any other deposit
to the Collateral Fund pursuant to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund
Upon receipt from the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article II, the Company shall
establish and maintain with the Trustee as a segregated account on its books
and records an account (the "Collateral Fund"), entitled "North American
Mortgage Company, as Master Servicer, for the benefit of registered holders of
Financial Asset Securitization, Inc., Mortgage Participation Securities, Series
1997-NAMC 3." Amounts held in the Collateral Fund shall continue to be the
property of the Purchaser, subject to the first priority interest granted
hereunder for the benefit of the Securityholders, until withdrawn from the
Collateral Fund pursuant to Section 2.02 or 2.03 hereof. The Collateral Fund
shall be an "outside reserve fund" within the meaning of the REMIC Provisions,
beneficially owned by the Purchaser for federal income tax purposes. All
income, gain, deduction or loss with respect to the Collateral Fund shall be
that of the Purchaser. All distributions from the Trust Fund to the Collateral
Fund shall be treated as distributed to the Purchaser as the beneficial owner
thereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund (after adjustment for all deposits and permitted withdrawals
pursuant to this Agreement) together with any investment earnings thereon. In
the event the Purchaser has made any Election to Delay Foreclosure or any
Election to Foreclose, prior to any distribution to the Purchaser of all
amounts remaining in the Collateral Fund, funds in the Collateral Fund shall be
applied consistent with the terms of this Agreement.
Section 3.02. Collateral Fund Permitted Investments
The Company shall, at the written direction of the Purchaser, invest
the funds in the Collateral Fund in Collateral Fund Permitted Investments. Such
direction shall not be changed more frequently than quarterly. In the absence
of any direction, the Company shall select such investments in accordance with
the definition of Collateral Fund Permitted Investments in its discretion.
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All income and gain realized from any investments as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be deposited by the Purchaser in the
Collateral Fund promptly upon realization. The Company shall periodically (but
not more frequently than monthly) distribute to the Purchaser upon request an
amount of cash, to the extent cash is available therefore in the Collateral
Fund, equal to the amount by which the balance of the Collateral Fund, after
giving effect to all other distributions to be made from the Collateral Fund on
such date, exceeds the Required Collateral Fund Balance. Any amounts so
distributed shall be released from the lien and security interest of this
Agreement.
Section 3.03. Grant of Security Interest
The Purchaser hereby grants to the Company for the benefit of the
Securityholders under the Pooling and Servicing Agreement a security interest
in and lien on all of the Purchaser's right, title and interest, whether now
owned or hereafter acquired, in and to: (1) the Collateral Fund, (2) all
amounts deposited in the Collateral Fund and Collateral Fund Permitted
Investments in which such amounts are invested (and the distributions and
proceeds of such investments) and (3) all cash and non-cash proceeds of any of
the foregoing, including proceeds of the voluntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on the security interest in the
Collateral for the benefit of the Securityholders. The Purchaser shall take all
actions requested by the Company as may be reasonably necessary to perfect the
security interest created under this Agreement in the Collateral and cause it
to be prior to all other security interests and liens, including the execution
and delivery to the Company for filing of appropriate financing statements in
accordance with applicable law. The Company shall file appropriate continuation
statements, or appoint an agent on its behalf to file such statements, in
accordance with applicable law.
Section 3.04. Collateral Shortfalls
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company is
then entitled to make hereunder, the Purchaser shall be obligated to pay such
amounts to the Company immediately upon demand. Such obligation shall
constitute a general corporate obligation of the Purchaser. The failure to pay
such amounts within two business Days of such demand (except for amounts to
cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and 2.03(b)),
shall cause an immediate termination of the Purchaser's right to make any
Election to Delay Foreclosure or Election to Foreclose and the Company's
obligations under this Agreement with respect to all Mortgage Loans to which
such insufficiencies relate, without the necessity of any further notice or
demand on the part of the Company.
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ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment
This Agreement may be amended from time and time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.
Section 4.02. Counterparts
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 4.03. 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 4.04. Notices
All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
North American Mortgage Company
3883 Airway Drive
Santa Rosa, CA 95403
Attention:
Phone:
Fax:
(b) in the case of the Purchaser,
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Attention:_____________________________
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Section 4.05. Severability of Provisions
If any one or more of the covenants, agreements, provision or terms of
this Agreement shall be for any reason whatsoever, including regulatory, held
invalid, then such covenants, agreements, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 4.06. Successors and Assigns
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Securityholders;
provided, however, that the rights under this Agreement cannot be assigned by
the Purchaser without the consent of the Company.
Section 4.07. Article and Section Headings
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Confidentiality
The Purchaser agrees that all information supplied by or on behalf of
the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to hold
such information confidential and not to disclose such information.
Each party hereto agrees that neither it, nor any officer, director,
employee, affiliate or independent contractor acting at such party's direction
will disclose the terms of Section 4.09 of this Agreement to any person or
entity other than such party's legal counsel except pursuant to a final,
non-appealable order of court, the pendency of such order the other party will
have received notice of at least five business days prior to the date thereof,
or pursuant to the other party's prior express written consent.
Section 4.09. Indemnification
The Purchaser agrees to indemnify and hold harmless the Company, The
Issuer and each person who controls the Company or the Issuer, and each of
their respective officers, directors, affiliates and agents acting at the
Company's or the Issuer's direction (the "Indemnified Parties") against any and
all losses, claims, damages or liabilities to which they may be subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, actions taken by, or actions not
taken by, the Company or the Issuer, or on their behalf, in accordance with the
provisions of this Agreement and (i) which actions conflict with the Company's
or the Issuer's obligations under the Pooling and Servicing Agreement, or (ii)
give rise to securities law liability under federal or state securities laws
with respect to the Securities. The Purchaser hereby agrees to reimburse the
Indemnified Parties for the reasonable legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim damage,
liability or action. The indemnification obligations of the Purchaser hereunder
shall survive the termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
North American Mortgage Company
By:
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Name:
--------------------------------
Title:
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By:
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Name:
--------------------------------
Title:
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