- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported): September 29, 1998
CWMBS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of September 1, 1998, providing for the
issuance of the CWMBS, INC., Residential Asset
Securitization Trust 1998-A12 Mortgage Pass-Through
Certificates, Series 1998-L).
CWMBS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-53861 95-4449516
- ----------------------------- ------------- ----------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4500 Park Granada
Calabasas, California 91302
- ----------------------------- ---------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 304-5591
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<PAGE>
Item 5. Other Events.
On September 29, 1998, CWMBS, Inc. (the "Company") entered into a
Pooling and Servicing Agreement dated as of September 1, 1998 (the "Pooling
and Servicing Agreement"), by and among the Company, as depositor, IndyMac,
Inc. ("IndyMac"), as seller and as master servicer, and The Bank of New York,
as trustee (the "Trustee"), providing for the issuance of the Company's
Mortgage Pass-Through Certificates, Series 1998-L (the "Certificates"). The
Pooling and Servicing Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not applicable.
Not applicable.
Exhibits:
99.1. Pooling and Servicing Agreement, dated as of September 1, 1998,
by and among the Company, IndyMac and the Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CWMBS, INC.
By: /s/ Celia Coulter
------------------
Celia Coulter
Vice President
Dated: November 5, 1999
<PAGE>
Exhibit Index
Exhibit Page
99.1. Pooling and Servicing Agreement, dated as of
September 1, 1998, by and among, the Company,
IndyMac and the Trustee 5
<PAGE>
EXHIBIT 99.1
EXECUTION COPY
CWMBS, INC.,
Depositor
INDYMAC, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1998
--------------------------------------
RESIDENTIAL ASSET SECURITIZATION TRUST 1998-A12
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-L
<PAGE>
TABLE OF CONTENTS
-----------------
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.....................1
Section 2.02. Acceptance by the Trustee of the Mortgage Loans..4
Section 2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer...................5
Section 2.04. Representations and Warranties of the Depositor
as to the Mortgage Loans........................7
Section 2.05. Delivery of Opinion of Counsel in Connection
with Substitutions and Repurchases...............8
Section 2.06. Execution and Delivery of Certificates...........8
Section 2.07. REMIC Matters....................................8
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans. ......1
Section 3.02. Subservicing; Enforcement of the Obligations
of Servicers.....................................2
Section 3.03. Successor Servicers..............................2
Section 3.04. Liability of the Master Servicer.................3
Section 3.05. No Contractual Relationship Between Servicers
and the Trustee..................................3
Section 3.06. Rights of the Depositor and the Trustee in
Respect of the Master Servicer...................3
Section 3.07. Trustee to Act as Master Servicer................4
Section 3.08. Collection of Mortgage Loan Payments; Servicing
Accounts; Collection Account; Certificate
Account; Distribution Account, Class A-6
Reserve Fund.....................................4
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts..................................8
Section 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans.....................8
Section 3.11. Permitted Withdrawals from the Certificate
Account, the Class A-6 Reserve Fund and the
Distribution Account.............................9
Section 3.12. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies......................11
Section 3.13. Enforcement of Due-On-Sale Clauses;
Assumption Agreements...........................12
Section 3.14. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans............14
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.17
Section 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee......18
Section 3.17. Servicing Compensation..........................18
Section 3.18. Annual Statement as to Compliance...............19
Section 3.19. Annual Independent Public Accountants'
Servicing Statement; Financial Statements.......19
Section 3.20. Errors and Omissions Insurance; Fidelity Bonds..20
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.........................................1
Section 4.02. Priorities of Distribution.......................1
Section 4.03. Reserved.........................................6
Section 4.04. Policy Matters...................................6
Section 4.05. Allocation of Realized Losses....................9
Section 4.06. Monthly Statements to Certificateholders........10
Section 4.07. Determination of Pass-Through Rates for COFI
Certificates....................................12
Section 4.08. Determination of Pass-Through Rates for
LIBOR Certificates..............................13
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.................................1
Section 5.02. Certificate Register; Registration of Transfer
and Exchange of Certificates.....................1
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.....................................6
Section 5.04. Persons Deemed Owners............................6
Section 5.05. Access to List of Certificateholders'
Names and Addresses..............................6
Section 5.06. Maintenance of Office or Agency..................7
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer..................................1
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicer..................................1
Section 6.03. Limitation on Liability of the Depositor, the
Seller, the Master Servicer and Others...........1
Section 6.04. Limitation on Resignation of the Master Servicer.2
ARTICLE VII
DEFAULT
Section 7.01. Events of Default................................1
Section 7.02. Trustee to Act; Appointment of Successor.........2
Section 7.03. Notification to Certificateholders...............3
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of the Trustee............................1
Section 8.02. Certain Matters Affecting the Trustee............2
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans............................................3
Section 8.04. Trustee May Own Certificates.....................3
Section 8.05. Trustee's Fees and Expenses......................3
Section 8.06. Eligibility Requirements for the Trustee.........4
Section 8.07. Resignation and Removal of the Trustee...........4
Section 8.08. Successor Trustee................................5
Section 8.09. Merger or Consolidation of the Trustee...........5
Section 8.10. Appointment of Co-Trustee or Separate Trustee....5
Section 8.11. Tax Matters......................................7
Section 8.12. Periodic Filings.................................9
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation or Purchase of
all Mortgage Loans...............................1
Section 9.02. Final Distribution on the Certificates...........1
Section 9.03. Additional Termination Requirements..............2
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment........................................1
Section 10.02. Recordation of Agreement; Counterparts...........2
Section 10.03. Governing Law....................................2
Section 10.04. Intention of Parties.............................3
Section 10.05. Notices..........................................3
Section 10.06. Severability of Provisions.......................4
Section 10.07. Assignment.......................................4
Section 10.08. Limitation on Rights of Certificateholders.......4
Section 10.09. Inspection and Audit Rights......................5
Section 10.10. Certificates Nonassessable and Fully Paid........5
SCHEDULES
Schedule I: Mortgage Loan Schedule.......................S-I-1
Schedule II: Representations and Warranties of the
Seller/Master Servicer......................S-II-1
Schedule III: Representations and Warranties as to the
Mortgage Loans.............................S-III-1
Schedule IV: [Reserved]..................................S-IV-1
EXHIBITS
Exhibit A: Form of Senior Certificate.....................A-1
Exhibit B: Form of Subordinated Certificate...............B-1
Exhibit C: Form of Residual Certificate...................C-1
Exhibit D: Form of Notional Amount Certificate............D-1
Exhibit E: Form of Reverse of Certificates................E-1
Exhibit F: Form of Policy.................................F-1
Exhibit G: Form of Initial Certification of Trustee.......G-1
Exhibit H: Form of Final Certification of Trustee.........H-1
Exhibit I: Form of Transfer Affidavit.....................I-1
Exhibit J: Form of Transferor Certificate.................J-1
Exhibit K: Form of Investment Letter (Non-Rule 144A)......K-1
Exhibit L Form of Rule 144A Letter.......................L-1
Exhibit M: Form of Request for Release (for Trustee)......M-1
Exhibit N: Form of Request for Release (Mortgage Loan
Paid in Full, Repurchased and Released)........N-1
Exhibit O: Form of Rule 144A Letter.......................O-1
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of September 1,
1998, among CWMBS, INC., a Delaware corporation, as depositor (the "Depositor"),
INDYMAC, INC. ("IndyMac"), a Delaware corporation, as seller (in such capacity,
the "Seller") and as master servicer (in such capacity, the "Master Servicer"),
and THE BANK OF NEW YORK, a banking corporation organized under the laws of the
State of New York, as trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust Fund for
federal income tax purposes will consist of two REMICs. The Subsidiary REMIC
will consist of all of the assets constituting the Trust Fund and will be
evidenced by the Subsidiary REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC) and the SR Interest as the single "residual interest" in the Subsidiary
REMIC. The Trustee will hold the Subsidiary REMIC Regular Interests. The Master
REMIC will consist of the Subsidiary REMIC Regular Interests and will be
evidenced by the Regular Certificates (which will represent the "regular
interests" in the Master REMIC) and the MR Interest as the single "residual
interest" in the Master REMIC. The Class A-R Certificates will represent
beneficial ownership of the SR Interest and the MR Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.
The following table sets forth characteristics of the
Certificates, together with the minimum denominations and integral multiples in
excess thereof in which such Classes shall be issuable (except that one
Certificate of each Class of Certificates may be issued in a different amount
and, in addition, one Residual Certificate representing the Tax Matters Person
Certificate may be issued in a different amount):
<PAGE>
<TABLE>
<CAPTION>
- ------------------------- ------------------------ --------------------- --------------------- =====================
Integral
Class Multiples
Certificate Pass-Through Minimum in Excess
Balance Rate Denomination of Minimum
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
<S> <C> <C> <C> <C>
Class A-1 $94,109,000.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-2 $111,150,400.00 6.55% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-3 $17,783,600.00 8.00% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-4 $7,000,000.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-5 $152,360,000.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-6 $10,000,000.00 6.20% $1,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-7 (1) 0.50% $25,000(2) $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-8 $19,222,000.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-9 $100,000,000.00 6.50% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-10 $20,000,000.00 8.00% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-11 $21,000,000.00 6.70% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-12 $21,000,000.00 6.80% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-13 $79,500,000.00 6.65% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-14 $18,758,800.00 8.00% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-15 $31,000,000.00 6.25% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-16 $24,602,200.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class PO $228,233.00 (3) $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class X (1) (4) $25,000(2) $1,000(2)
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class A-R $100.00 6.75% $100 N/A
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-1 $31,244,500.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-2 $13,446,900.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-3 $7,119,000.00 6.75% $25,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-4 $5,141,500.00 6.75% $100,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-5 $2,372,900.00 6.75% $100,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
- ------------------------- ------------------------ --------------------- --------------------- =====================
Class B-6 $3,955,061.48 6.75% $100,000 $1,000
- ------------------------- ------------------------ --------------------- --------------------- =====================
</TABLE>
- ---------------
(1) The Class A-7 Certificates and the Class X Certificates will be
Notional Amount Certificates, will have no principal balance and will
bear interest on their respective Notional Amounts (initially,
$10,000,000 and $776,190,072, respectively).
(2) The minimum denomination is based on the Notional Amount.
(3) The Class PO Certificates will be Principal Only Certificates and will
not bear interest.
(4) The Pass-Through Rate for the Class X Certificates for any
Distribution Date will be equal to the excess of (a) the weighted
average of the Adjusted Net Mortgage Rates of the Non-Discount
Mortgage Loans over (b) 6.75% per annum. The Pass-Through Rate for the
Class X Certificates for the first Distribution Date is approximately
0.974%.
Principal of and interest on the Subsidiary REMIC Regular Interests and
the SR Interest shall be allocated to the Corresponding Classes of Certificates
in the manner set forth in the following table:
<TABLE>
<CAPTION>
Corresponding Class of Certificates(1)
Subsidiary REMIC Initial Principal Allocation Allocation
Interest Balance Interest Rate of Principal of Interest
-------- ------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1 $94,109,000 6.75% A-1 A-1
2 $111,150,400 6.75% A-2 A-2
3 $17,783,600 6.75% A-3 A-3
4 $7,000,000 6.75% A-4 A-4
5 $52,360,000 6.75% A-5 A-5
6 $10,000,000 6.75% A-6 A-6, A-7
7 $19,222,000 6.75% A-8 A-8
8 $100,000,000 6.75% A-9 A-9
9 $20,000,000 6.75% A-10 A-10
10 $21,000,000 (3) A-11 A-11
11 $21,000,000 (3) A-12 A-12
12 $79,500,000 6.75% A-13 A-13
13 $18,758,800 6.75% A-14 A-14
14 $31,000,000 6.75% A-15 A-15
15 $24,602,200 6.75% A-16 A-16
16 $228,233 (4) PO N/A
17 (5) (6) N/A X
18 $100 6.75% A-R(7) A-R(7)
19 $31,244,500 6.75% B-1 B-1
20 $13,446,900 6.75% B-2 B-2
21 $7,119,000 6.75% B-3 B-3
22 $5,141,500 6.75% B-4 B-4
23 $7,372,900 6.75% B-5 B-5
24 $3,955,061 6.75% B-6 B-6
SR (8) (8) MR(7) MR(7)
</TABLE>
- ----------------------
(1) The amount of principal and interest allocable from a Subsidiary REMIC
Regular Interest to its Corresponding Class of Certificates on any
Distribution Date shall be 100%.
(2) Interest at a rate of 0.50% on Subsidiary REMIC Regular Interest 1 at a
rate of 0.20% on Subsidiary REMIC Regular Interest 2 will be allocated
to the Class A-3 Certificates; interest at a rate of 6.25% on
Subsidiary REMIC Regular Interest 1 will be allocated to the Class A-1
Certificates and at a rate of 6.55% on the Subsidiary REMIC Regular
Interest 2 will be allocated to the Class A-2 Certificates.
(3) The Interest Rate for Subsidiary REMIC Interests 10 and 11 for any
Distribution Date will be equal to the Pass-Through Rate applicable to
the Class A-11 and Class A-12 Certificates, respectively, with respect
to such Distribution Date.
(4) Subsidiary REMIC Regular Interest 16 will be a principal only
Subsidiary REMIC Regular Interest and will not bear interest.
(5) The Notional Amount of Subsidiary REMIC Interest 17 with respect to any
Distribution Date will be equal to the Notional Amount of the Class X
Certificates with respect to such Distribution Date.
(6) The Interest Rate for Subsidiary REMIC Interest 17 for any Distribution
Date will be equal to the Pass-Through Rate applicable to the Class X
Certificates with respect to such Distribution Date.
(7) The beneficial ownership of the MR Interest and the SR Interest is
represented by the Class A-R Certificates.
(8) The SR Interest will have no principal balance and will not bear
interest.
<PAGE>
Set forth below are designations of Classes of Certificates to the
categories used herein:
<TABLE>
<CAPTION>
<S> <C>
Accretion Directed
Certificates ................................... None.
Accrual Certificates................................. None.
Book-Entry Certificates.............................. All Classes of Certificates other than the Physical
Certificates.
COFI Certificates.................................... None.
Component Certificates............................... None.
Components........................................... For purposes of calculating distributions of
principal and/or interest, the Component
Certificates, if any, will be comprised of multiple
payment components having the designations, Initial
Component Balances or Notional Amounts and
Pass-Through Rates set forth below:
Initial
Component
Designation Notional Amount Pass-Through Rate
N/A N/A N/A
Delay Certificates................................... All interest-bearing Classes of Certificates other
than the Non-Delay Certificates, if any.
ERISA-Restricted
Certificates.................................... Class PO, Class X Certificates, Residual
Certificates and Subordinated Certificates.
Floating Rate Certificates........................... None.
Inverse Floating Rate
Certificates.................................... None.
LIBOR Certificates................................... None.
Non-Delay Certificates............................... None.
Notional Amount Certificates......................... Class A-7 and Class X Certificates.
Offered Certificates................................. All Classes of Certificates other than the Private
Certificates.
Physical Certificates................................ Class A-R Certificates and Private Certificates.
Planned Principal Classes............................ None.
Primary Planned Principal
Classes......................................... None.
Principal Only Certificates.......................... Class PO Certificates.
Private Certificates................................. Class B-4, Class B-5 and Class B-6 Certificates.
Rating Agencies...................................... S&P and Duff & Phelps.
Regular Certificates................................. All Classes of Certificates other than the Class
A-R Certificates.
Residual Certificates................................ Class A-R Certificates.
Scheduled Principal Classes.......................... None.
Secondary Planned
Principal Classes............................... None.
Senior Certificates.................................. Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10, Class A-11, Class A-12, Class A-13,
Class A-14, Class A-15, Class A-16, Class PO, Class
X and Class A-R Certificates.
Subordinated Certificates............................ Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates.
Targeted Principal Classes........................... None.
</TABLE>
With respect to any of the foregoing designations as to which
the corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts. Defined terms
and provisions herein relating to statistical rating agencies not designated
above as Rating Agencies shall be of no force or effect.
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Accretion Directed Certificates: As specified in the
Preliminary Statement.
Accrual Amount: Not applicable.
Accrual Certificates: As specified in the Preliminary
Statement.
Accrual Termination Date: Not applicable.
Adjusted Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the sum of the Master
Servicing Fee Rate and the related Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at
any time, the per annum rate equal to the Mortgage Rate less the related Expense
Rate. For purposes of determining whether any Substitute Mortgage Loan is a
Discount Mortgage Loan or a Non-Discount Mortgage Loan and for purposes of
calculating the applicable PO Percentage and applicable Non-PO Percentage, each
Substitute Mortgage Loan shall be deemed to have an Adjusted Net Mortgage Rate
equal to the Adjusted Net Mortgage Rate of the Deleted Mortgage Loan for which
it is substituted.
Advance: The payment required to be made by the Master
Servicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such payment being equal to the aggregate of payments of principal
and interest (net of the Master Servicing Fee and the applicable Servicing Fee
and net of any net income in the case of any REO Property) on the Mortgage Loans
that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all
amendments or supplements hereto.
Allocable Share: As to any Distribution Date and any Mortgage
Loan (i) with respect to the Class X Certificates, (a) the ratio that (x) the
excess, if any, of the Adjusted Net Mortgage Rate with respect to such Mortgage
Loan over the Required Coupon bears to (y) such Adjusted Net Mortgage Rate or
(b) if the Adjusted Net Mortgage Rate with respect to such Mortgage Loan does
not exceed the Required Coupon, zero, (ii) with respect to the Class PO
Certificates, zero and (iii) with respect to each other Class of Certificates
the product of (a) the lesser of (I) the ratio that the Required Coupon bears to
such Adjusted Net Mortgage Rate and (II) one, multiplied by (b) the ratio that
the amount calculated with respect to such Distribution Date for such Class
pursuant to clause (i) of the definition of Class Optimal Interest Distribution
Amount (without giving effect to any reduction of such amount pursuant to
Section 4.02(d)) bears to the amount calculated with respect to such
Distribution Date for each Class of Certificates pursuant to clause (i) of the
definition of Class Optimal Interest Distribution Amount (without giving effect
to any reduction of such amount pursuant to Section 4.02(d)).
Amount Available for Senior Principal: As to any Distribution
Date Available Funds for such Distribution Date, reduced by the aggregate amount
distributable (or allocable to the Accrual Amount, if applicable) on such
Distribution Date in respect of interest on the Senior Certificates pursuant to
Section 4.02(a)(ii).
Amount Held for Future Distribution: As to any Distribution
Date and Mortgage Loans, the aggregate amount held in the Certificate Account at
the close of business on the related Determination Date on account of (i)
Principal Prepayments and Liquidation Proceeds received in the month of such
Distribution Date and (ii) all Scheduled Payments due after the related Due
Date.
Applicable Credit Support Percentage: As defined in
Section 4.02(e).
Appraised Value: With respect to any Mortgage Loan, the
Appraised Value of the related Mortgaged Property shall be: (i) with respect to
a Mortgage Loan other than a Refinancing Mortgage Loan, the lesser of (a) the
value of the Mortgaged Property based upon the appraisal made at the time of the
origination of such Mortgage Loan and (b) the sales price of the Mortgaged
Property at the time of the origination of such Mortgage Loan; (ii) with respect
to a Refinancing Mortgage Loan, the value of the Mortgaged Property based upon
the appraisal made at the time of the origination of such Refinancing Mortgage
Loan.
Available Funds: As to any Distribution Date and the Mortgage
Loans, the sum of (a) the aggregate amount held in the Certificate Account at
the close of business on the related Determination Date in respect of such
Mortgage Loans net of the related Amount Held for Future Distribution and net of
amounts permitted to be withdrawn from the Certificate Account pursuant to
clauses (i) - (viii), inclusive, of Section 3.11(a) in respect of such Mortgage
Loans and amounts permitted to be withdrawn from the Distribution Account
pursuant to clauses (i) - (iii), inclusive, of Section 3.11(b) in respect of
such Mortgage Loans, (b) the amount of the related Advance, (c) in connection
with Defective Mortgage Loans, as applicable, the aggregate of the Purchase
Prices and Substitution Adjustment Amounts deposited on the related Distribution
Account Deposit Date in respect of Mortgage Loans and (d) any amount deposited
on the related Distribution Account Deposit Date pursuant to Section 3.12 in
respect of Mortgage Loans.
Bankruptcy Code: The United States Bankruptcy Reform Act of
1978, as amended.
Bankruptcy Coverage Termination Date: The point in time at
which the Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction; provided, however, that a
Bankruptcy Loss shall not be deemed a Bankruptcy Loss hereunder so long as the
Master Servicer has notified the Trustee in writing that the Master Servicer is
diligently pursuing any remedies that may exist in connection with the related
Mortgage Loan and either (A) the related Mortgage Loan is not in default with
regard to payments due thereunder or (B) delinquent payments of principal and
interest under the related Mortgage Loan and any related escrow payments in
respect of such Mortgage Loan are being advanced on a current basis by the
Master Servicer, in either case without giving effect to any Debt Service
Reduction or Deficient Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date,
the Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to
the Certificates since the Cut-off Date and (ii) any permissible reductions in
the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will not result in a
downgrading of the then current ratings assigned to the Classes of Certificates
rated by it, without regard to the Class A-6 Policy.
Blanket Mortgage: The mortgage or mortgages encumbering the
Cooperative Property.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in the City of New York, New York,
or the State of California or the city in which the Corporate Trust Office of
the Trustee is located are authorized or obligated by law or executive order to
be closed.
Certificate: Any one of the Certificates executed by the
Trustee in substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account or Accounts
created and maintained by the Master Servicer pursuant to Section 3.08(e) with a
depository institution in the name of the Master Servicer for the benefit of the
Trustee on behalf of Certificateholders and designated "IndyMac, Inc. in trust
for the registered holders of CWMBS, Inc. Mortgage Pass-Through Certificates
Series 1998-L".
Certificate Balance: With respect to any Certificate at any
date, the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof (A)
minus the sum of (i) all distributions of principal previously made with respect
thereto and (ii) all Realized Losses allocated thereto and, in the case of any
Subordinated Certificates, all other reductions in Certificate Balance
previously allocated thereto pursuant to Section 4.05 and (B) in the case of any
Class of Accrual Certificates, increased by the Accrual Amount added to the
Class Certificate Balance of such Class prior to such date. Exclusively for the
purpose of determining any subrogation rights of MBIA arising under Section 4.04
hereof, "Certificate Balance" of the Class A-6 Certificates shall not be reduced
by the amount of any payments made by MBIA in respect of principal on such
Certificates under the Class A-6 Policy, except to the extent such payment shall
have been reimbursed to MBIA pursuant to the provisions of this Agreement.
Certificate Owner: With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to
Section 5.02.
Certificateholder or Holder: The person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Depositor or any affiliate of the Depositor shall
be deemed not to be Outstanding and the Percentage Interest evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect such consent has been obtained;
provided, however, that if any such Person (including the Depositor) owns 100%
of the Percentage Interests evidenced by a Class of Certificates, such
Certificates shall be deemed to be Outstanding for purposes of any provision
hereof that requires the consent of the Holders of Certificates of a particular
Class as a condition to the taking of any action hereunder.
Class: All Certificates bearing the same class designation as
set forth in the Preliminary Statement.
Class A-6 Net Interest Shortfall: As to any Distribution Date,
the amount of the reduction of the Class Optimal Interest Distribution Amount
for the Class A-6 Certificates for such Distribution Date pursuant to Section
4.02(d), other than any Relief Act Reduction allocated to such Class pursuant to
such Section on such Distribution Date.
Class A-6 Policy: The irrevocable Certificate Guaranty
Insurance Policy, No. 27607, including any endorsements thereto, issued by MBIA
with respect to the Class A-6 Certificates, in the form attached hereto as
Exhibit O.
Class A-6 Policy Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 4.04(c) in the
name of the Trustee for the benefit of the Holders of the Class A-6 Certificates
and designated "The Bank of New York in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1998-L, Class A-6". Funds in the
Class A-6 Policy Payments Account shall be held in trust for the Holders of the
Class A-6 Certificates for the uses and purposes set forth in this Agreement.
Class A-6 Reserve Fund: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.08(g) with a depository
institution in the name of the Trustee for the benefit of the Certificateholders
specified in Section 3.08(g) and designated "The Bank of New York Class A-6
Reserve Fund in trust for registered holders of CWMBS, Inc. Mortgage
Pass-Through Certificates, Series 1998-L, Class A-6". The Class A-6 Reserve Fund
will not be a part of the Trust Fund and, for all federal income tax purposes,
will be beneficially owned by Lehman Brothers Inc.
Class A-6 Rounding Account: The separate Eligible Account
established and maintained by the Trustee pursuant to Section 4.03(e) in the
name of the Trustee for the benefit of the Holders of the Class A-6 Certificates
and designated "The Bank of New York in trust for registered holders of CWMBS,
Inc. Mortgage Pass-Through Certificates, Series 1998-L, Class A-6". Funds in the
Class A-6 Rounding Account shall be held in trust for the Holders of the Class
A-6 Certificates for the uses and purposes set forth in this Agreement. The
Class A-6 Rounding Account will not be a part of the Trust Fund and, for all
federal income tax purposes, will be beneficially owned by Lehman Brothers Inc.
Class A-6 Rounding Amount: With respect to any Distribution
Date, the amount, if any, required to be withdrawn from the Class A-6 Rounding
Account pursuant to Section 4.03(e).
Class Certificate Balance: With respect to any Class and as to
any date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and
Class, the amount by which the amount described in clause (i) of the definition
of Class Optimal Interest Distribution Amount for such Class exceeds the amount
of interest actually distributed on such Class on such Distribution Date
pursuant to such clause (i).
Class Optimal Interest Distribution Amount: With respect to
any Distribution Date and interest-bearing Class, the sum of (i) one month's
interest accrued during the related Interest Accrual Period at the Pass-Through
Rate for such Class, on the related Class Certificate Balance or Notional
Amount, as applicable, subject to reduction pursuant to Section 4.02(d), and
(ii) any Class Unpaid Interest Amounts for such Class.
Class PO Deferred Amount: As to any Distribution Date, the
aggregate of the applicable PO Percentage of each related Realized Loss, other
than any related Excess Loss, to be allocated to the related Class PO
Certificates on such Distribution Date on or prior to the Senior Credit Support
Depletion Date or previously allocated to such Class PO Certificates and not yet
paid to the Holders of such of Class PO Certificates.
Class Subordination Percentage: With respect to any
Distribution Date and each Class of Subordinated Certificates, the fraction
(expressed as a percentage) the numerator of which is the Class Certificate
Balance of such Class of Subordinated Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate of the Class
Certificate Balances of all Classes of Certificates immediately prior to such
Distribution Date.
Class Unpaid Interest Amounts: As to any Distribution Date and
Class of interest-bearing Certificates, the amount by which the aggregate Class
Interest Shortfalls for such Class on prior Distribution Dates exceeds the
amount distributed on such Class on prior Distribution Dates pursuant to clause
(ii) of the definition of Class Optimal Interest Distribution Amount.
Closing Date: September 29, 1998.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
COFI: The Monthly Weighted Average Cost of Funds Index for the
Eleventh District Savings Institutions published by the Federal Home Loan Bank
of San Francisco.
COFI Certificates: As specified in the Preliminary Statement.
Collection Account: The Eligible Account or Accounts
established and maintained by the Master Servicer in accordance with Section
3.08(c).
Component: As specified in the Preliminary Statement.
Component Balance: With respect to any Component and any
Distribution Date, the Initial Component Balance thereof on the Closing Date,
less all amounts applied in reduction of the principal balance of such Component
and Realized Losses allocated thereto on previous Distribution Dates.
Component Certificates: As specified in the Preliminary
Statement.
Cooperative Corporation: The entity that holds title (fee or
an acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
Component Notional Amount: Not applicable.
Cooperative Loan: Any Mortgage Loan secured by Cooperative
Shares and a Proprietary Lease.
Cooperative Property: The real property and improvements owned
by the Cooperative Corporation, including the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative
Corporation.
Cooperative Unit: A single family dwelling located in a
Cooperative Property.
Corporate Trust Office: The designated office of the Trustee
in the State of New York at which at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at 101 Barclay Street,
12E, New York, New York 10286 (Attn: Mortgage-Backed Securities Group, CWMBS,
Inc. Series 1998-L), facsimile no. (212) 815-4135 and which is the address to
which notices to and correspondence with the Trustee should be directed.
Corresponding Classes of Certificates: With respect to each
Subsidiary REMIC Regular Interest, any Class of Certificates or Components
appearing opposite such Subsidiary REMIC Regular Interest in the Preliminary
Statement.
Cut-off Date: September 1, 1998.
Cut-off Date Pool Principal Balance: $790,994,194.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated Principal Balance thereof as of the close of business on the Cut-off
Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
Debt Service Reduction Mortgage Loan: Any Mortgage Loan that
became the subject of a Debt Service Reduction.
Deceased Holder: With respect to a Holder of a Class A-6
Certificate, as defined in Section 4.03(b).
Defective Mortgage Loan: Any Mortgage Loan which is required
to be repurchased pursuant to Section 2.02 or 2.03.
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, or
any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a
Physical Certificate and any Certificate issued in lieu of a Book-Entry
Certificate pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03(c).
Delinquent: A Mortgage Loan is "Delinquent" if any regularly
scheduled monthly payment due thereon is not made by the close of business on
the day such monthly payment is due. A Mortgage Loan is "30 days Delinquent" if
such monthly payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
monthly payment was due. The determination of whether a Mortgage Loan is "60
days Delinquent", "90 days Delinquent", etc. shall be made in like manner.
Denomination: With respect to each Certificate, the amount set
forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or the "Initial Notional Amount of this Certificate" or, if neither
of the foregoing, the Percentage Interest appearing on the face thereof.
Depositor: CWMBS, Inc., a Delaware corporation, or its
successor in interest.
Depository: The initial Depository shall be The Depository
Trust Company, the nominee of which is CEDE & Co., as the registered Holder of
the Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.
Depository Participant: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: As to any Distribution Date, the 18th day
of each month or if such 18th day is not a Business Day the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is
less than two Business Days prior to the related Distribution Date, then the
Determination Date shall be the next Business Day preceding the 18th day of such
month.
Discount Mortgage Loan: Any Mortgage Loan with an Adjusted Net
Mortgage Rate that is less than the Required Coupon.
Distribution Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.08(f) in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York in trust for registered holders of CWMBS, Inc. Mortgage Pass-Through
Certificates, Series 1998-L". Funds in the Distribution Account shall be held in
trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution
Date, 12:30 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each calendar month after
the initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in October 1998.
Due Date: With respect to any Distribution Date, the first day
of the month in which the related Distribution Date occurs.
Duff & Phelps: Duff & Phelps Credit Rating Company, or any
successor thereto. If Duff & Phelps is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for notices
to Duff & Phelps shall be Duff & Phelps Credit Rating Company, 55 E. Monroe
Street, 38th Floor, Chicago, Illinois 60603, Attention: MBS Monitoring, or such
other address as Duff & Phelps may hereafter furnish to the Depositor and the
Master Servicer.
Eligible Account: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company, but only if Moody's is
not a Rating Agency) have the highest short-term ratings of each Rating Agency
at the time any amounts are held on deposit therein, or (ii) an account or
accounts in a depository institution or trust company in which such accounts are
insured by the FDIC or the SAIF (to the limits established by the FDIC or the
SAIF) and the uninsured deposits in which accounts are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each
Rating Agency, the Certificateholders have a claim with respect to the funds in
such account or a perfected first priority security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution or trust company in which such account is maintained, or
(iii) a trust account or accounts maintained with the trust department of a
federal or state chartered depository institution or trust company, acting in
its fiduciary capacity or (iv) any other account acceptable to each Rating
Agency. Eligible Accounts may bear interest, and may include, if otherwise
qualified under this definition, accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established
and maintained pursuant to Section 3.09(a).
Event of Default: As defined in Section 7.01.
Excess Loss: The amount of any (i) Fraud Loss realized after
the Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized
after the Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss
realized after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan,
the amount, if any, by which the sum of any Liquidation Proceeds of such
Mortgage Loan received in the calendar month in which such Mortgage Loan became
a Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3.11(a)(iii), exceeds (i) the unpaid principal balance of
such Liquidated Mortgage Loan as of the Due Date in the month in which such
Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced (and not reimbursed) to Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
Expense Fees: As to each Mortgage Loan, the sum of the related
Servicing Fee, Master Servicing Fee, and Trustee Fee.
Expense Rate: As to each Mortgage Loan, the sum of the related
Servicing Fee Rate, Master Servicing Fee Rate and Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
Fiscal Agent: As defined in the Class A-6 Policy.
Fitch: Fitch IBCA, Inc., or any successor thereto. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to Fitch shall be Fitch IBCA, Inc., One
State Street Plaza, New York, New York 10004, Attention: Residential Mortgage
Surveillance Group, or such other address as Fitch may hereafter furnish to the
Depositor and the Master Servicer.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud
Loss has occurred.
Fraud Losses: Realized Losses on Mortgage Loans as to which a
loss is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a loss
by reason of the denial of coverage under any related Primary Insurance Policy
because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: As of the Closing Date,
$15,819,884 subject to reduction from time to time, by the amount of Fraud
Losses allocated to the Certificates. On each anniversary of the Cut-off Date,
the Fraud Loss Coverage Amount will be reduced as follows: (a) on the first,
second, third and fourth anniversaries of the Cut-off Date, to an amount equal
to the lesser of (i) 1% of the then current Pool Principal Balance and (ii) the
excess of the Fraud Loss Coverage Amount as of the preceding anniversary of the
Cut-off Date (or, in the case of the first such anniversary, as of the Cut-off
Date) over the cumulative amount of Fraud Losses allocated to the Certificates
since such preceding anniversary or the Cut-off Date, as the case may be, and
(b) on the fifth anniversary of the Cut-off Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at
which the Fraud Loss Coverage Amount is reduced to zero.
Index: With respect to any Interest Accrual Period for the
COFI Certificates, the then applicable index used by the Trustee pursuant to
Section 4.07 to determine the applicable Pass-Through Rate for such Interest
Accrual Period for the COFI Certificates.
Indirect Participant: A broker, dealer, bank or other
financial institution or other Person that clears through or maintains a
custodial relationship with a Depository Participant.
Individual Class A-6 Certificate: Any Class A-6 Certificate
with a $1,000 Certificate Balance.
Initial Bankruptcy Loss Coverage Amount: $243,821.
Initial Component Balance: As specified in the Preliminary
Statement.
Initial LIBOR Rate: Not applicable.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect, including any replacement policy or policies for any
Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to
any Insurance Policy, in each case other than any amount included in such
Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Insured Payment: With respect to any Distribution Date, (i)
the excess, if any, of Required Distributions over the amount of funds available
to make distributions on the Class A-6 Certificates pursuant to Section 4.02(a)
and 4.02(g) and (ii) any amount previously distributed on a Class A-6
Certificate that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Interest Accrual Period: With respect to each Class of Delay
Certificates, corresponding Subsidiary REMIC Regular Interest and any
Distribution Date, the calendar month prior to the month of such Distribution
Date. With respect to any Non-Delay Certificates, corresponding Subsidiary REMIC
Regular Interest and any Distribution Date, the one month period commencing on
the 25th day of the month preceding the month in which such Distribution Date
occurs and ending on the 24th day of the month in which such Distribution Date
occurs.
Interest Determination Date: With respect to (a) any Interest
Accrual Period for any LIBOR Certificates and (b) any Interest Accrual Period
for the COFI Certificates for which the applicable Index is LIBOR, the second
Business Day prior to the first day of such Interest Accrual Period.
Interest Distribution Amount: With respect to any Distribution
Date and the Class A-6 Certificates, the related Class Optimal Interest
Distribution Amount, prior to reduction pursuant to Section 4.02(d) as provided
in clause (i) of the definition thereof.
Interest Rate: With respect to each Subsidiary REMIC Interest,
the applicable rate set forth or calculated in the manner described in the
Preliminary Statement.
Last Scheduled Distribution Date: The Distribution Date in the
month immediately following the month of the latest scheduled maturity date for
any of the Mortgage Loans.
Latest Possible Maturity Date: The Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan having
the latest scheduled maturity date as of the Cut-off Date.
LIBOR: The London interbank offered rate for one-month United
States dollar deposits calculated in the manner described in Section 4.08.
LIBOR Certificates: As specified in the Preliminary
Statement.
Liquidated Mortgage Loan: With respect to any Distribution
Date, a defaulted Mortgage Loan (including any REO Property) which was
liquidated in the calendar month preceding the month of such Distribution Date
and as to which the Master Servicer has certified (in accordance with this
Agreement) that it has received all amounts it expects to receive in connection
with the liquidation of such Mortgage Loan including the final disposition of an
REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Master Servicing Fees, Servicing
Advances and Advances.
Living Holders: Holders of the Class A-6 Certificates, other
than Deceased Holders.
Loan-to-Value Ratio: With respect to any Mortgage Loan and as
to any date of determination, the fraction (expressed as a percentage) the
numerator of which is the principal balance of the related Mortgage Loan at such
date of determination and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Lost Mortgage Note: Any Mortgage Note the original of which
was permanently lost or destroyed and has not been replaced.
Maintenance: With respect to any Cooperative Unit, the rent
paid by the Mortgagor to the Cooperative Corporation pursuant to the Proprietary
Lease.
Majority in Interest: As to any Class of Regular Certificates,
the Holders of Certificates of such Class evidencing, in the aggregate, at least
51% of the Percentage Interests evidenced by all Certificates of such Class.
Master REMIC: As described in the Preliminary Statement.
Master Servicer: IndyMac, Inc., a Delaware corporation, and
its successors and assigns, in its capacity as master servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date,
12:30 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Master Servicing Fee: As to each Mortgage Loan and any
Distribution Date, an amount equal to one month's interest at the related Master
Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan or, in
the event of any payment of interest which accompanies a Principal Prepayment in
Full, interest at the Master Servicing Fee Rate on the Stated Principal Balance
of such Mortgage Loan for the period covered by such payment of interest,
subject to reduction as provided in Section 3.17.
Master Servicing Fee Rate: With respect to each Mortgage Loan,
0.125% per annum.
MBIA: MBIA Insurance Corporation, a subsidiary of MBIA Inc.,
organized and created under the laws of the State of New York, or any successor
thereto.
MBIA Contact Person: The officer designated by the Master
Servicer to provide information to MBIA pursuant to Section 4.04(i).
MBIA Default: As defined in Section 4.04(l).
MBIA Premium: With respect to any Distribution Date, an amount
equal to 1/12th of the product of (a) the Class Certificate Balance of the Class
A-6 Certificates as of such Distribution Date (prior to giving effect to any
distributions thereon on such Distribution Date) and (b) the Premium Percentage,
as defined in the Commitment to Issue an Insurance Policy dated September 25,
1998, between MBIA and Lehman Brothers Inc.
Modified Mortgage Loan: Any Mortgage Loan which the Master
Servicer has modified pursuant to Section 3.14(c).
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 4.06.
Moody's: Moody's Investors Service, Inc., or any successor
thereto. If Moody's is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b) the address for notices to Moody's
shall be Moody's Investors Service, Inc., 99 Church Street, New York, New York
10007, Attention: Residential Pass-Through Monitoring, or such other address as
Moody's may hereafter furnish to the Depositor or the Master Servicer.
Mortgage: The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof as from time to time
are held as a part of the Trust Fund (including any REO Property), the mortgage
loans so held being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the addition of
Substitute Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to
the provisions of this Agreement) transferred to the Trustee as part of the
Trust Fund and from time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the
Mortgaged Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off
Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling
at the time of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling
is either (a) a detached single family dwelling, (b) a dwelling in a
PUD, (c) a condominium unit, (d) a two- to four-unit residential
property, or (e) a Cooperative Unit;
(xi) the Mortgage Rate;
(xii) the Servicing Fee Rate and the Master Servicing
Fee Rate;
(xiii) the purpose for the Mortgage Loan; and
(xiv) the type of documentation program pursuant to which
the Mortgage Loan was originated.
Such schedule shall also set forth the total of the amounts described under (v)
above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note from time to time.
Mortgaged Property: The underlying property securing a
Mortgage Loan, which, with respect to a Cooperative Loan, is the related
Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor(s) on a Mortgage Note.
MR Interest: The sole class of "residual interest" in the
Master REMIC.
Net Prepayment Interest Shortfalls: As to any Distribution
Date, the amount by which the aggregate of Prepayment Interest Shortfalls during
the related Prepayment Period exceeds an amount equal to the aggregate Master
Servicing Fee for such Distribution Date before reduction of the Master
Servicing Fee in respect of such Prepayment Interest Shortfalls.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-Discount Mortgage Loan: Any Mortgage Loan with an Adjusted
Net Mortgage Rate that is greater than or equal to the Required Coupon.
Non-PO Formula Principal Amount: As to any Distribution Date,
the sum of the applicable Non-PO Percentage of (a) all monthly payments of
principal due on each Mortgage Loan on the related Distribution Date, (b) the
principal portion of the purchase price of each Mortgage Loan that was
repurchased by the Seller pursuant to this Agreement as of such Distribution
Date, (c) the Substitution Adjustment Amount in connection with any Deleted
Mortgage Loan received with respect to such Distribution Date, (d) any Insurance
Proceeds or Liquidation Proceeds allocable to recoveries of principal of
Mortgage Loans that are not yet Liquidated Mortgage Loans received during the
calendar month preceding the month of such Distribution Date, (e) with respect
to each Mortgage Loan that became a Liquidated Mortgage Loan during the calendar
month preceding the month of such Distribution Date, the amount of Liquidation
Proceeds allocable to principal received with respect to such Mortgage Loan, and
(f) all partial and full Principal Prepayments received during the related
Prepayment Period.
Non-PO Percentage: As to any Discount Mortgage Loan, a
fraction (expressed as a percentage) the numerator of which is the Adjusted Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is the
Required Coupon. As to any Non-Discount Mortgage Loan, 100%.
Nonrecoverable Advance: Any portion of an Advance or Servicer
Advance previously made or proposed to be made by the Master Servicer or the
related Servicer, as the case may be, that, in the good faith judgment of the
Master Servicer or such Servicer, will not be ultimately recoverable by the
Master Servicer from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Notice of Final Distribution: The notice to be provided
pursuant to Section 9.02 to the effect that final distribution on any of the
Certificates shall be made only upon presentation and surrender thereof.
Notional Amount: With respect to the Class X Certificates and
any Distribution Date, the aggregate of the Stated Principal Balances of the
Non-Discount Mortgage Loans as of the Due Date in the month preceding the month
of such Distribution Date. With respect to the Class A-7 Certificates and any
Distribution Date, the Class Certificate Balance of the Class A-6 Certificates.
Notional Amount Certificates: As specified in the Preliminary
Statement.
Offered Certificates: As specified in the Preliminary
Statement.
Officer's Certificate: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master Servicer, or (ii) if provided for in
this Agreement, signed by a Servicing Officer, as the case may be, and delivered
to the Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, including in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect to
the interpretation or application of the REMIC Provisions, such counsel must (i)
in fact be independent of the Depositor and the Master Servicer, (ii) not have
any direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Optional Termination: The termination of the trust created
hereunder in connection with the purchase of the Mortgage Loans pursuant to
Section 9.01(a).
Original Applicable Credit Support Percentage: With respect to
each of the following Classes of Subordinated Certificates, the corresponding
percentage described below, as of the Closing Date:
Class B-1 8.00%
Class B-2 4.05%
Class B-3 2.35%
Class B-4 1.45%
Class B-5 0.80%
Class B-6 0.50%
Original Mortgage Loan: The Mortgage Loan refinanced in
connection with the origination of a Refinancing Mortgage Loan.
Original Subordinated Principal Balance: The aggregate of the
Class Certificate Balances of the Subordinated Certificates as of the Closing
Date.
OTS: The Office of Thrift Supervision.
Outside Reference Date: As to any Interest Accrual Period for
the COFI Certificates, the close of business on the tenth day thereof.
Outstanding: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan
with a Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any
ownership 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.
Pass-Through Rate: For any interest-bearing Class of
Certificates, the per annum rate set forth or calculated in the manner described
in the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage
interest evidenced thereby in distributions required to be made on the related
Class, such percentage interest being set forth on the face thereof or equal to
the percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided that such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency, without
regard to the Class A-6 Policy;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency, without regard to the Class A-6
Policy;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company,
but only if Moody's is not a Rating Agency) are then rated one of the
two highest long-term and the highest short-term ratings of each Rating
Agency for such securities, or such lower ratings as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency, without regard to the Class A-6
Policy;
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating
Agencies at the time of the issuance of such agreements, as evidenced
by a signed writing delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (iv) above;
(viii) units of a taxable money-market portfolio having the
highest rating assigned by each Rating Agency (except (i) if Fitch or
Duff & Phelps is a Rating Agency and has not rated the portfolio, the
highest rating assigned by Moody's and (ii) if S&P is a Rating Agency,
"AAAm-G" by S&P) and restricted to obligations issued or guaranteed by
the United States of America or entities whose obligations are backed
by the full faith and credit of the United States of America and
repurchase agreements collateralized by such obligations; and
(ix) such other investments bearing interest or sold at a
discount acceptable to each Rating Agency as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency, without regard to the Class A-6
Policy;
provided that no such instrument shall be a Permitted Investment if such
instrument evidences the right to receive interest only payments with respect to
the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in section 860E(c)(1) of
the Code) with respect to any Residual Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) a
Person that is not 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 whose
income from sources without the United States is includible in gross income for
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
4224, and (vi) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause either REMIC hereunder to fail to qualify
as a REMIC at any time that the Certificates are outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
Person: Any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary
Statement.
Planned Balance: Not applicable.
Planned Principal Classes: As specified in the Preliminary
Statement.
PO Formula Principal Amount: As to any Distribution Date and
Class of Class PO Certificates, the sum of the applicable PO Percentage of (a)
the principal portion of each Scheduled Payment (without giving effect, prior to
the Bankruptcy Coverage Termination Date, to any reductions thereof caused by
any Debt Service Reductions or Deficient Valuations) due on each Mortgage Loan
on the related Due Date, (b) the Stated Principal Balance of each Mortgage Loan
that was repurchased by the Seller or the Master Servicer pursuant to this
Agreement as of such Distribution Date, (c) the Substitution Adjustment Amount
in connection with any Deleted Mortgage Loan received with respect to such
Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable
to recoveries of principal of Mortgage Loans that are not yet Liquidated
Mortgage Loans received during the calendar month preceding the month of such
Distribution Date, (e) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the amount of Liquidation Proceeds allocable to principal
received with respect to such Mortgage Loan during the calendar month preceding
the month of such Distribution Date with respect to such Mortgage Loan and (f)
all partial and full Principal Prepayments on Mortgage Loans received during the
related Prepayment Period; provided, however, that if a Bankruptcy Loss that is
an Excess Loss is sustained with respect to a Discount Mortgage Loan that is not
a Liquidated Mortgage Loan, the PO Formula Principal Amount will be reduced on
the related Distribution Date by the applicable PO Percentage of the principal
portion of such Bankruptcy Loss.
Pool Stated Principal Balance: As to any Distribution Date,
the aggregate of the Stated Principal Balances of the Mortgage Loans which were
Outstanding Mortgage Loans on the Due Date in the month preceding the month of
such Distribution Date.
PO Percentage: As to any Discount Mortgage Loan, a fraction
(expressed as a percentage) the numerator of which is the excess of the Required
Coupon over the Adjusted Net Mortgage Rate of such Discount Mortgage Loan and
the denominator of which is the Required Coupon. As to any Non-Discount Mortgage
Loan, 0%.
Prepayment Interest Shortfall: As to any Distribution Date,
Mortgage Loan and Principal Prepayment, the amount, if any, by which one month's
interest at the related Mortgage Rate (net of the related Master Servicing Fee)
on such Principal Prepayment exceeds the amount of interest paid in connection
with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the calendar
month preceding the month of such Distribution Date.
Prepayment Shift Percentage: As to any Distribution Date
occurring during the five years beginning on the first Distribution Date, 0%.
Thereafter, the Prepayment Shift Percentage for any Distribution Date occurring
on or after the fifth anniversary of the first Distribution Date will be as
follows: for any Distribution Date in the first year thereafter, 30%; for any
Distribution Date in the second year thereafter, 40%; for any Distribution Date
in the third year thereafter, 60%; for any Distribution Date in the fourth year
thereafter, 80%; and for any Distribution Date thereafter, 100%.
Primary Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.
Principal Only Certificates: As specified in the Preliminary
Statement.
Principal Prepayment: Any payment of principal on a Mortgage
Loan (including the Purchase Price of any Modified Mortgage Loan purchased
pursuant to Section 3.14(c)) that is received in advance of its scheduled Due
Date and is not accompanied by an amount representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Master Servicer in
accordance with the terms of the related Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by
a Mortgagor or made pursuant to Section 3.14(c) of the entire principal balance
of a Mortgage Loan.
Priority Amount: As to any Distribution Date, the amount equal
to the sum of (i) the product of (A) Scheduled Principal Distribution Amounts,
(B) the Shift Percentage and (C) the Priority Percentage, each as of such
Distribution Date and (ii) the product of (A) Unscheduled Principal Distribution
Amounts, (B) the Prepayment Shift Percentage and (C) the Priority Percentage,
each as of such Distribution Date.
Priority Percentage: As of any Distribution Date, a fraction,
the numerator of which is equal to the sum of the Class Certificate Balances of
the Class A-13, Class A-14, Class A-15 Certificates on such Distribution Date
and $94,200,000 and the denominator of which is equal to the aggregate Class
Certificate Balances of all Classes of Certificates (other than the Class PO
Certificates) on such Distribution Date.
Private Certificates: As specified in the Preliminary
Statement.
Pro Rata Share: As to any Distribution Date, the Subordinated
Principal Distribution Amount and any Class of Subordinated Certificates, the
portion of the Subordinated Principal Distribution Amount allocable to such
Class, equal to the product of the Subordinated Principal Distribution Amount on
such Distribution Date and a fraction, the numerator of which is the related
Class Certificate Balance thereof and the denominator of which is the aggregate
of the Class Certificate Balances of the Subordinated Certificates.
Proprietary Lease: With respect to any Cooperative Unit, a
lease or occupancy agreement between a Cooperative Corporation and a holder of
related Cooperative Shares.
Prospectus Supplement: The Prospectus Supplement dated
September 25, 1998 relating to the Offered Certificates.
PUD: Planned Unit Development.
Purchase Price: With respect to any Modified Mortgage Loan or
any Mortgage Loan required to be purchased by the Seller pursuant to Section
2.02 or 2.03 or purchased at the option of the Master Servicer pursuant to
Section 3.14(b), an amount equal to the sum of (i) 100% of the unpaid principal
balance of the Mortgage Loan on the date of such purchase, and (ii) accrued
interest thereon at the applicable Mortgage Rate (or at the applicable Adjusted
Mortgage Rate if (x) the purchaser is the Master Servicer or (y) if the
purchaser is the Seller and the Seller is the Master Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders;
provided, however, that if such Mortgage Loan is a Modified Mortgage Loan, the
interest component of the Purchase Price shall be computed (i) on the basis of
the applicable Adjusted Mortgage Rate before giving effect to the related
modification and (ii) from the date to which interest was last paid to the date
on which such Modified Mortgage Loan is assigned to the Master Servicer pursuant
to Section 3.14(c).
Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
FNMA- or FHLMC-approved mortgage insurer or having a claims paying ability
rating of at least "AA" or equivalent rating by a nationally recognized
statistical rating organization. Any replacement insurer with respect to a
Mortgage Loan must have at least as high a claims paying ability rating as the
insurer it replaces had on the Closing Date.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If either such organization or a successor is no longer
in existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designated by the
Depositor, notice of which designation shall be given to the Trustee. References
herein to a given rating or rating category of a Rating Agency shall mean such
rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan,
an amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the Due Date in the month in which Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation occurred,
to the extent applied as recoveries of interest at the Adjusted Net Mortgage
Rate and to principal of the Liquidated Mortgage Loan. With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, 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 and any
Distribution Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
Recognition Agreement: With respect to any Cooperative Loan,
an agreement between the Cooperative Corporation and the originator of such
Mortgage Loan which establishes the rights of such originator in the Cooperative
Property.
Record Date: With respect to any Distribution Date, the close
of business on the last Business Day of the month preceding the month in which
such applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.08.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificates: As specified in the Preliminary
Statement.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Relief Act Reductions: With respect to any Distribution Date
and any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended calendar month as a
result of the application of the Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final
regulation, revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law
relating to 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 regulations promulgated thereunder, as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Request for Release: The Request for Release submitted by the
Master Servicer to the Trustee, substantially in the form of Exhibits M and N,
as appropriate.
Required Coupon: 6.75% per annum.
Required Distributions: With respect to any Distribution Date,
the sum without duplication of (i) the Interest Distribution Amount for the
Class A-6 Certificates for such Distribution Date minus any Relief Act
Reductions allocated to the Class A-6 Certificates and (ii) the amount of any
Realized Loss, including any Excess Loss, allocated to the Class A-6
Certificates on such Distribution Date.
Required Insurance Policy: With respect to any Mortgage Loan,
any insurance policy that is required to be maintained from time to time under
this Agreement.
Residual Certificates: As specified in the Preliminary
Statement.
Responsible Officer: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Restricted Classes: As defined in Section 4.02(e).
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
S&P: Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies. If S&P is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for notices
to S&P shall be Standard & Poor's Ratings Group, 26 Broadway, 15th Floor, New
York, New York 10004, Attention: Mortgage Surveillance Monitoring, or such other
address as S&P may hereafter furnish to the Depositor and the Master Servicer.
Scheduled Balances: Not applicable.
Scheduled Classes: As specified in the Preliminary Statement.
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of
the monthly payment due on such Mortgage Loan.
Scheduled Principal Distribution Amount: As to any
Distribution Date, an amount equal to the sum of all amounts described in
clauses (a) through (d) of the definition of Non-PO Formula Principal Amount for
such Distribution Date; provided, however, that if a Bankruptcy Loss that is an
Excess Loss is sustained with respect to a Mortgage Loan that is not a
Liquidated Mortgage Loan, the Scheduled Principal Distribution Amounts will be
reduced on the related Distribution Date by the applicable Non-PO Percentage of
the principal portion of such Bankruptcy Loss.
Securities Act: The Securities Act of 1933, as amended.
Security Agreement: With respect to any Cooperative Loan, the
agreement between the owner of the related Cooperative Shares and the originator
of the related Mortgage Note, which defines the terms of the security interest
in such Cooperative Shares and the related Proprietary Lease.
Seller: IndyMac, Inc., a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
Seller/Servicer Guide: The Seller/Servicer Guide for IndyMac,
Inc.'s mortgage loan purchase and conduit servicing program and all amendments
and supplements thereto.
Senior Certificates: As specified in the Preliminary
Statement.
Senior Credit Support Depletion Date: The date on which the
Class Certificate Balance of each Class of Subordinated Certificates has been
reduced to zero.
Senior Depletion Date: The Distribution Date on which the
Class Certificate Balance of the Senior Certificates has been reduced to zero.
Senior Percentage: As to any Distribution Date, the percentage
equivalent of a fraction the numerator of which is the aggregate of the Class
Certificate Balances of the Senior Certificates (other than the Class PO
Certificates) as of such date and the denominator of which is the aggregate of
the Class Certificate Balances of all Classes of Certificates (other than the
Class PO Certificates) as of such date.
Senior Prepayment Percentage: As to any Distribution Date
during the five years beginning on the first Distribution Date, 100%. The Senior
Prepayment Percentage for any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date will, except as provided herein, be
as follows: for any Distribution Date in the first year thereafter, the Senior
Percentage plus 70% of the Subordinated Percentage for such Distribution Date;
for any Distribution Date in the second year thereafter, the Senior Percentage
plus 60% of the Subordinated Percentage for such Distribution Date; for any
Distribution Date in the third year thereafter, the Senior Percentage plus 40%
of the Subordinated Percentage for such Distribution Date; for any Distribution
Date in the fourth year thereafter, the Senior Percentage plus 20% of the
Subordinated Percentage for such Distribution Date; and for any Distribution
Date thereafter, the Senior Percentage for such Distribution Date (unless on any
of the foregoing Distribution Dates the Senior Percentage exceeds the initial
Senior Percentage, in which case such Senior Prepayment Percentage for such
Distribution Date will once again equal 100%). Notwithstanding the foregoing, no
decrease in the Senior Prepayment Percentage will occur if, as of the first
Distribution Date as to which any such decrease applies more than an average of
2% of the dollar amount of all monthly payments on the Mortgage Loans in the
Mortgage Pool, due in each of the preceding twelve months were delinquent 60
days or more (including for this purpose any such Mortgage Loans in foreclosure
and Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust Fund) or (ii) cumulative Realized Losses with respect to
the Mortgage Loans in the Mortgage Pool, exceed (a) with respect to the
Distribution Date on the fifth anniversary of the first Distribution Date, 30%
of the Original Subordinated Principal Balance, (b) with respect to the
Distribution Date on the sixth anniversary of the first Distribution Date, 35%
of the Original Subordinated Principal Balance, (c) with respect to the
Distribution Date on the seventh anniversary of the first Distribution Date, 40%
of the Original Subordinated Principal Balance, (d) with respect to the
Distribution Date on the eighth anniversary of the first Distribution Date, 45%
of the Original Subordinated Principal Balance and (e) with respect to the
Distribution Date on the ninth anniversary of the first Distribution Date, 50%
of the Original Subordinated Principal Balance.
Senior Principal Distribution Amount: As to any Distribution
Date, the sum of (i) the Senior Percentage of the applicable Non-PO Percentage
of all amounts described in clauses (a) through (d) of the definition of "Non-PO
Formula Principal Amount" for such Distribution Date, (ii) with respect to each
Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month
preceding the month of such Distribution Date, the lesser of (x) the Senior
Percentage of the applicable Non-PO Percentage of the Stated Principal Balance
of such Mortgage Loan and (y) either (A) the Senior Prepayment Percentage, or
(B) if an Excess Loss was sustained with respect to such Liquidated Mortgage
Loan during such prior calendar month, the Senior Percentage, of the applicable
Non-PO Percentage of the amount of the Liquidation Proceeds allocable to
principal received with respect to such Mortgage Loan, and (iii) the Senior
Prepayment Percentage of the applicable Non-PO Percentage of the amounts
described in clause (f) of the definition of "Non-PO Formula Principal Amount"
for such Distribution Date.
Servicer: Any person with which the Master Servicer has
entered into a Servicing Agreement for the servicing of all or a portion of the
Mortgage Loans pursuant to Section 3.02.
Servicer Advance: The meaning ascribed to such term in Section
3.08(d).
Servicing Account: The separate Eligible Account or Accounts
created and maintained pursuant to Section 3.08(b).
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations, including, but not limited to, the cost
of (i) (a) the preservation, restoration and protection of a Mortgaged Property,
(b) expenses reimbursable to the Master Servicer pursuant to Section 3.14 and
any enforcement or judicial proceedings, including foreclosures, (c) the
management and liquidation of any REO Property and (d) compliance with the
obligations under Section 3.12; and (ii) reasonable compensation to the Master
Servicer or its affiliates for acting as broker in connection with the sale of
foreclosed Mortgaged Properties and for performing certain default management
and other similar services (including, but not limited to, appraisal services)
in connection with the servicing of defaulted Mortgage Loans; provided, however,
that for purposes of this clause (ii), only costs and expenses incurred in
connection with the performance of activities generally considered to be outside
the scope of customary servicing or master servicing duties shall be treated as
Servicing Advances.
Servicing Agreement: The Seller/Servicer Contract as
contemplated by the Seller/Servicer Guide between the Master Servicer and any
Servicer relating to servicing and/or administration of certain Mortgage Loans
as provided in Section 3.02.
Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the applicable Servicing Fee
Rate on the Stated Principal Balance of such Mortgage Loan.
Servicing Fee Rate: With respect to any Mortgage Loan, the per
annum rate set forth in the Mortgage Loan Schedule for such Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant to
this Agreement, as such list may from time to time be amended.
Servicing Standard: That degree of skill and care exercised by
the Master Servicer with respect to mortgage loans comparable to the Mortgage
Loans serviced by the Master Servicer for itself or others.
Shift Percentage: As of any Distribution Date occurring during
the five years beginning on the first Distribution Date, 0% and for each
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, 100%.
Special Hazard Coverage Termination Date: The point in time at
which the Special Hazard Loss Coverage Amount is reduced to zero.
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 with respect to such Mortgaged Property pursuant to Section
3.10 to the extent of the amount of such loss covered thereby, or (ii) any loss
caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of
the Trustee, the Master Servicer or any of their agents or employees
(without regard to any portion of the loss not covered by any errors
and omissions policy);
(c) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues and then
only for the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled or
uncontrolled, and whether such loss be direct or indirect, proximate or
remote or be in whole or in part caused by, contributed to or
aggravated by a peril covered by the definition of the term "Special
Hazard Loss";
(e) hostile or warlike action in time of peace and 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;
(f) any weapon of war employing nuclear fission, fusion or
other radioactive force, whether in time of peace or war; or
(g) 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.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $7,909,942. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the principal balances of the Mortgage Loans, (ii) twice the
principal balance of the largest Mortgage Loan and (iii) the aggregate of the
principal balances of all Mortgage Loans secured by Mortgaged Properties located
in the single California postal zip code area having the highest aggregate
principal balance of any such zip code area and (b) the Special Hazard Loss
Coverage Amount as of the Closing Date less the amount, if any, of Special
Hazard Losses allocated to the Certificates since the Closing Date. All
principal balances for the purpose of this definition will be calculated as of
the first day of the calendar month preceding the month of such Distribution
Date after giving effect to Scheduled Payments on the Mortgage Loans then due,
whether or not paid.
Special Hazard Mortgage Loan: A Liquidated Mortgage Loan as to
which a Special Hazard Loss has occurred.
SR Interest: The sole class of "residual interest" in the
Subsidiary REMIC.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Mortgage Loan and Due
Date, the unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period) after giving effect to any previous partial Principal
Prepayments and Liquidation Proceeds allocable to principal (other than with
respect to any Liquidated Mortgage Loan) and to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by the related
Mortgagor.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Percentage: As to any Distribution, 100% minus
the Senior Percentage for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution,
100% minus the Senior Prepayment Percentage for such Distribution Date.
Subordinated Principal Distribution Amount: With respect to
any Distribution Date, (A) the sum of (i) the Subordinated Percentage of the
applicable Non-PO Percentage of all amounts described in clauses (a) through (d)
of the definition of "Non-PO Formula Principal Amount", with respect to such
Mortgage Loans for such Distribution Date, (ii) with respect to each such
Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month
preceding the month of such Distribution Date, the Liquidation Proceeds
allocable to principal received with respect to such Mortgage Loan after
application of such amounts pursuant to clause (ii) of the related definition of
Senior Principal Distribution Amount and (iii) the Subordinated Prepayment
Percentage of the applicable Non-PO Percentage of amounts described in clause
(f) of the definition of "Non-PO Formula Principal Amount" for such Distribution
Date, reduced by (B) the amount of any payments in respect of Class PO Deferred
Amounts to the Class PO Certificates on such Distribution Date. Any such payment
in respect of Class PO Deferred Amounts will be deducted first from the amounts
described in clauses (i) and (ii) above and then from clause (iii) above.
Subservicer: Any Person to which the Master Servicer has
contracted for the servicing of all or a portion of the Mortgage Loans pursuant
to Section 3.02.
Subsidiary REMIC: With respect to each Subsidiary REMIC
Interest, the applicable rate set forth or calculated in the manner described in
the Preliminary Statement.
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC
Regular Interests or the SR Interest.
Subsidiary REMIC Regular Interest: Any one of the "regular
interests" in the Subsidiary REMIC described in the Preliminary Statement.
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit M,
(i) have a Stated Principal Balance, after deduction of the principal portion of
the Scheduled Payment due in the month of substitution, not in excess of, and
not more than 10% less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) be accruing interest (net of the related Servicing Fee) at a
rate no lower than and not more than 1% per annum higher than, that of the
Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio no higher than that of
the Deleted Mortgage Loan; (iv) have a remaining term to maturity no greater
than (and not more than one year less than that of) the Deleted Mortgage Loan;
(v) not be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative
Loan and (vi) comply with each representation and warranty set forth in Section
2.03.
Substitution Adjustment Amount: The meaning ascribed to such
term pursuant to Section 2.03.
Targeted Balance: Not applicable.
Targeted Principal Classes: As specified in the Preliminary
Statement.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury regulation ss. 301.6231(a)(7)-1T. Initially, the Tax Matters
Person shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with
a Denomination of $0.05.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Residual Certificate.
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received on
or with respect thereto after the Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or before the Cut-off Date; (ii) the
Certificate Account and the Distribution Account and all amounts deposited
therein pursuant to the applicable provisions of this Agreement; (iii) property
that secured a Mortgage Loan and has been acquired by foreclosure, deed-in-lieu
of foreclosure or otherwise; and (iv) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing.
Trustee: The Bank of New York and its successors and, if a
successor trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per
annum rate agreed upon in writing on or prior to the Closing Date by the Trustee
and the Depositor.
Unscheduled Principal Distribution Amount: As to any
Distribution Date, an amount equal to the sum of (i) with respect to each
Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month
preceding the month of such Distribution Date, the Non-PO Percentage of the
Liquidation Proceeds allocable to principal received with respect to such
Mortgage Loan and (ii) the applicable Non-PO Percentage of the amount described
in clause (f) of the definition of "Non-PO Formula Principal Amount" for such
Distribution Date.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates, if any (such Voting Rights to be allocated among
the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount Certificates) shall
be allocated among Holders of the remaining Classes of Certificates in
proportion to the Certificate Balances of their respective Certificates on such
date.
Withdrawal Date: The 18th day of each month, or if such day is
not a Business Day, the next preceding Business Day.
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Seller, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Depositor, without recourse, all the right, title and interest of the Seller in
and to the Mortgage Loans, including all interest and principal received or
receivable by the Seller on or with respect to the Mortgage Loans after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including payments of principal and interest
due and payable on the Mortgage Loans on or before the Cut-off Date. On or prior
to the Closing Date, the Seller shall deliver to the Depositor or, at the
Depositor's direction, to the Trustee or other designee of the Depositor, the
Mortgage File for each Mortgage Loan listed in the Mortgage Loan Schedule. Such
delivery of the Mortgage Files shall be made against payment by the Depositor of
the purchase price, previously agreed to by the Seller and Depositor, for the
Mortgage Loans. With respect to any Mortgage Loan that does not have a first
payment date on or before the Due Date in the month of the first Distribution
Date, the Seller shall deposit into the Distribution Account on the first
Distribution Account Deposit Date an amount equal to one month's interest at the
related Adjusted Net Mortgage Rate on the Cut-off Date Principal Balance of such
Mortgage Loan. If the Seller shall fail to deposit such amount by the first
Distribution Account Deposit Date, the Trustee shall deposit such amount.
(b) The Depositor, concurrently with the execution and
delivery hereof, hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trustee for the benefit of the Certificateholders, without
recourse, all the right, title and interest of the Depositor in and to the Trust
Fund, together with the Depositor's right to require the Seller to cure any
breach of a representation or warranty made herein by the Seller or to
repurchase or substitute for any affected Mortgage Loan in accordance herewith.
In addition, on or prior to the Closing Date, the Depositor shall cause MBIA to
deliver the Class A-6 Policy to the Trustee.
(c) In connection with the transfer and assignment set forth
in clause (b) above, the Depositor has delivered or caused to be delivered to
the Trustee for the benefit of the Certificateholders the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) (A) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to
the order of without recourse", with all intervening
endorsements showing a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each
such endorsement being sufficient to transfer all right, title
and interest of the party so endorsing, as noteholder or
assignee thereof, in and to that Mortgage Note); or
(B) with respect to any Lost Mortgage Note,
a lost note affidavit from the Seller stating that the
original Mortgage Note was lost or destroyed, together with a
copy of such Mortgage Note;
(ii) except as provided below, the original recorded Mortgage
or a copy of such Mortgage certified by the Seller (or, in the case of a
Mortgage for which the related Mortgaged Property is located in the Commonwealth
of Puerto Rico, a copy of such Mortgage certified by the applicable notary) as
being a true and complete copy of the Mortgage;
(iii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments), together with, except as
provided below, all interim recorded assignments of such mortgage (each such
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which the assignment relates); provided that, if the
related Mortgage has not been returned from the applicable public recording
office, such assignment of the Mortgage may exclude the information to be
provided by the recording office; provided, further that such assignment of
Mortgage need not be delivered in the case of a Mortgage for which the related
Mortgage Property is located in the Commonwealth of Puerto Rico.
(iv) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(v) except as provided below, the original or duplicate
original lender's title policy and all riders thereto; and
(vi) in the case of a Cooperative Loan, the originals of the
following documents or instruments:
(A) The Cooperative Shares, together with a stock
power in blank;
(B) The executed Security Agreement;
(C) The executed Proprietary Lease;
(D) The executed Recognition Agreement;
(E) The executed assignment of Recognition Agreement;
(F) The executed UCC-1 financing statement with
evidence of recording thereon which have been filed in all places required to
perfect the Seller's interest in the Cooperative Shares and the Proprietary
Lease; and
(G) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by state law, evidencing a
complete and unbroken line from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for recordation).
In the event that in connection with any Mortgage Loan the
Depositor cannot deliver (a) the original recorded Mortgage, (b) all interim
recorded assignments or (c) the lender's title policy (together with all riders
thereto) satisfying the requirements of clause (ii), (iii) or (v) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (ii) or (iii) above, or because the title
policy has not been delivered to either the Master Servicer or the Depositor by
the applicable title insurer in the case of clause (v) above, the Depositor
shall promptly deliver to the Trustee, in the case of clause (ii) or (iii)
above, such original Mortgage or such interim assignment, as the case may be,
with evidence of recording indicated thereon upon receipt thereof from the
public recording office, or a copy thereof, certified, if appropriate, by the
relevant recording office, but in no event shall any such delivery of the
original Mortgage and each such interim assignment or a copy thereof, certified,
if appropriate, by the relevant recording office, be made later than one year
following the Closing Date, or, in the case of clause (v) above, no later than
120 days following the Closing Date; provided, however, that in the event the
Depositor is unable to deliver by such date each Mortgage and each such interim
assignment by reason of the fact that any such documents have not been returned
by the appropriate recording office, or, in the case of each such interim
assignment, because the related Mortgage has not been returned by the
appropriate recording office, the Depositor shall deliver such documents to the
Trustee as promptly as possible upon receipt thereof and, in any event, within
720 days following the Closing Date. The Depositor shall forward or cause to be
forwarded to the Trustee (a) from time to time additional original documents
evidencing an assumption or modification of a Mortgage Loan and (b) any other
documents required to be delivered by the Depositor or the Master Servicer to
the Trustee. In the event that the original Mortgage is not delivered and in
connection with the payment in full of the related Mortgage Loan and the public
recording office requires the presentation of a "lost instruments affidavit and
indemnity" or any equivalent document, because only a copy of the Mortgage can
be delivered with the instrument of satisfaction or reconveyance, the Master
Servicer shall execute and deliver or cause to be executed and delivered such a
document to the public recording office. In the case where a public recording
office retains the original recorded Mortgage or in the case where a Mortgage is
lost after recordation in a public recording office, the Seller shall deliver to
the Trustee a copy of such Mortgage certified by such public recording office to
be a true and complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to such transfer and
assignment, and in any event, within thirty (30) days thereafter, the Trustee
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof, (ii) cause such assignment to be in proper form for recording
in the appropriate public office for real property records within thirty (30)
days after receipt thereof and (iii) cause to be delivered for recording in the
appropriate public office for real property records the assignments of the
Mortgages to the Trustee, except that, with respect to any assignment of a
Mortgage as to which the Trustee has not received the information required to
prepare such assignment in recordable form, the Trustee's obligation to do so
and to deliver the same for such recording shall be as soon as practicable after
receipt of such information and in any event within thirty (30) days after the
receipt thereof, and the Trustee need not cause to be recorded any assignment
which relates to a Mortgage Loan (a) the Mortgaged Property and Mortgage File
relating to which are located in California or (b) in any other jurisdiction
(including Puerto Rico) under the laws of which, as evidenced by an Opinion of
Counsel delivered by the Seller (at the Seller's expense) to the Trustee, the
recordation of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan.
In the case of Mortgage Loans that have been prepaid in full
as of the Closing Date, the Depositor, in lieu of delivering the above documents
to the Trustee, will deposit in the Certificate Account the portion of such
payment that is required to be deposited in the Certificate Account pursuant to
Section 3.08.
(d) The Seller intends to treat the transfer of the Mortgage
Loans to the Depositor as a sale for all tax, accounting and regulatory
purposes.
Section 2.02. Acceptance by the Trustee of the Mortgage Loans.
The Trustee acknowledges receipt of the documents identified
in the Initial Certification in the form annexed hereto as Exhibit G 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 as are included in the Trust Fund, in trust for the exclusive
use and benefit of all present and future Certificateholders. The Trustee
acknowledges that it will maintain possession of the Mortgage Notes in the State
of California, unless otherwise permitted by the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date
to the Depositor, the Master Servicer and the Seller an Initial Certification in
the form annexed hereto as Exhibit G. Based on its review and examination, and
only as to the documents identified in such Initial Certification, the Trustee
acknowledges that such documents appear regular on their face and relate to such
Mortgage Loan. The Trustee shall be under no duty or obligation to inspect,
review or examine said documents, instruments, certificates or other papers to
determine that the same are genuine, enforceable or appropriate for the
represented purpose or that they have actually been recorded in the real estate
records or that they are other than what they purport to be on their face.
Not later than 90 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer and the Seller a Final
Certification in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
If, in the course of such review, the Trustee finds any
document constituting a part of a Mortgage File which does not meet the
requirements of Section 2.01, the Trustee shall list such as an exception in the
Final Certification; provided, however, that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Seller shall
promptly correct or cure such defect within 90 days from the date it was so
notified of such defect and, if the Seller does not correct or cure such defect
within such period, the Seller shall either (a) substitute for the related
Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
the date the Seller was notified of such defect in writing at the Purchase Price
of such Mortgage Loan; provided, however, that in no event shall such
substitution or purchase occur more than 540 days from the Closing Date, except
that if the substitution or purchase of a Mortgage Loan pursuant to this
provision is required by reason of a delay in delivery of any documents by the
appropriate recording office, and there is a dispute between either the Master
Servicer or the Seller and the Trustee over the location or status of the
recorded document, then such substitution or purchase shall occur within 720
days from the Closing Date. The Trustee shall deliver written notice to each
Rating Agency within 270 days from the Closing Date indicating each Mortgage
Loan (a) which has not been returned by the appropriate recording office or (b)
as to which there is a dispute as to location or status of such Mortgage Loan.
Such notice shall be delivered every 90 days thereafter until the related
Mortgage Loan is returned to the Trustee. Any such substitution pursuant to (a)
above or purchase pursuant to (b) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05, if
any, and any substitution pursuant to (a) above shall not be effected prior to
the additional delivery to the Trustee of a Request for Release substantially in
the form of Exhibit N. No substitution is permitted to be made in any calendar
month after the Determination Date for such month. The Purchase Price for any
such Mortgage Loan shall be deposited by the Seller in the Certificate Account
on or prior to the Distribution Account Deposit Date for the Distribution Date
in the month following the month of repurchase and, upon receipt of such deposit
and certification with respect thereto in the form of Exhibit N hereto, the
Trustee shall release the related Mortgage File to the Seller and shall execute
and deliver at the Seller's request such instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
vest in the Seller, or a designee, the Trustee's interest in any Mortgage Loan
released pursuant hereto.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. The Master Servicer shall promptly deliver to the Trustee, upon
the execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller
to substitute for or to purchase any Mortgage Loan which does not meet the
requirements of Section 2.01 shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder against
the Seller.
Section 2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer.
(a) IndyMac, in its capacities as Seller and Master Servicer,
hereby makes the representations and warranties set forth in Schedule II hereto,
and by this reference incorporated herein, to the Depositor and the Trustee, as
of the Closing Date, or if so specified therein, as of the Cut-off Date.
(b) The Seller, in its capacity as Seller, hereby makes the
representations and warranties set forth in Schedule III hereto, and by this
reference incorporated herein, to the Depositor and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date.
(c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty made pursuant to Section 2.03(b) that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan, the party discovering such breach shall give prompt notice thereof to the
other parties. The Seller hereby covenants that within 90 days of the earlier of
its discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Section 2.03(b) which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
it shall cure such breach in all material respects, and if such breach is not so
cured, shall, (i) if such 90 day period expires prior to the second anniversary
of the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from
the Trust Fund and substitute in its place a Substitute Mortgage Loan, in the
manner and subject to the conditions set forth in this Section 2.03; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price in the manner set forth below; provided, however, that any such
substitution pursuant to (i) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05, if any, and a
Request for Release substantially in the form of Exhibit N, and the Mortgage
File for any such Substitute Mortgage Loan; and provided, further, that,
anything to the contrary herein notwithstanding, Seller shall have no obligation
to cure any such breach or to repurchase or substitute for such affected
Mortgage Loan if the substance of such breach constitutes fraud in the
origination of such affected Mortgage Loan and the Seller, at the time of such
origination and on the Closing Date, did not have actual knowledge of such
fraud. The Seller shall promptly reimburse the Master Servicer and the Trustee
for any expenses reasonably incurred by the Master Servicer or the Trustee in
respect of enforcing the remedies for such breach.
With respect to any Substitute Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the Certificateholders
the Mortgage Note, the Mortgage, the related assignment of the Mortgage, and
such other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mortgage
Loan for such month and thereafter the Seller shall be entitled to retain all
amounts received in respect of such Deleted Mortgage Loan.
The Master Servicer shall amend the Mortgage Loan Schedule for
the benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans and
the Master Servicer shall deliver the amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, the Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Seller shall be
deemed to have made with respect to such Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties made pursuant to
Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution
and the deposit to the Certificate Account of the amount required to be
deposited therein in connection with such substitution as described in the
following paragraph, the Trustee shall release the Mortgage File held for the
benefit of the Certificateholders relating to such Deleted Mortgage Loan to the
Seller and shall execute and deliver at the Seller's direction such instruments
of transfer or assignment prepared by the Seller, in each case without recourse,
as shall be necessary to vest title in the Seller, or its designee, the
Trustee's interest in any Deleted Mortgage Loan substituted for pursuant to this
Section 2.03.
For any month in which the Seller substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of the scheduled principal portion of the monthly
payments due in the month of substitution). The amount of such shortage (the
"Substitution Adjustment Amount") plus an amount equal to the aggregate of any
unreimbursed Advances and Servicer Advances with respect to such Deleted
Mortgage Loans shall be deposited into the Certificate Account by the Seller on
or before the Distribution Account Deposit Date for the Distribution Date in the
month succeeding the calendar month during which the related Mortgage Loan
became required to be purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.08 on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which the Seller
became obligated hereunder to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of the Opinion of Counsel
required by Section 2.05 and receipt of a Request for Release in the form of
Exhibit N hereto, the Trustee shall release the related Mortgage File held for
the benefit of the Certificateholders to such Person, and the Trustee shall
execute and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Person to cure, repurchase or replace
any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against such Persons respecting such breach available
to Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders.
Section 2.04. Representations and Warranties of the Depositor as
to the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the date hereof or such other date set
forth herein that as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the Mortgage
Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Depositor hereby assigns, transfers and conveys to the
Trustee all of its rights with respect to the Mortgage Loans including, without
limitation, the representations and warranties of the Seller made pursuant to
Section 2.03(b), together with all rights of the Depositor to require the Seller
to cure any breach thereof or to repurchase or substitute for any affected
Mortgage Loan in accordance with this Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee.
Section 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement,
no substitution pursuant to Section 2.02 or 2.03 shall be made more than 90 days
after the Closing Date unless the Seller delivers to the Trustee an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup Date, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause either REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer, or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within five (5) Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(c) with
respect to substitutions are satisfied, a Substitute Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty made pursuant to Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06. Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of
the Trust Fund and, concurrently with such transfer and assignment, has executed
and delivered to or upon the order of the Depositor, the Certificates in
authorized denominations evidencing directly or indirectly the entire ownership
of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement to the
best of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
Section 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Day" for purposes of the REMIC Provisions shall be
the Closing Date. The "tax matters person" with respect to each REMIC hereunder
shall be the Trustee and the Trustee shall hold the Tax Matters Person
Certificate. Each REMIC's fiscal year shall be the calendar year.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in accordance with the
terms of this Agreement and the Servicing Standard. In connection with such
servicing and administration, the Master Servicer shall have full power and
authority, acting alone and/or through Servicers as provided in Section 3.02, to
do or cause to be done any and all things that it may deem necessary or
desirable in connection with such servicing and administration, including but
not limited to, the power and authority, subject to the terms hereof, (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages (but only in the manner provided in this Agreement),
(iii) to collect any Insurance Proceeds and other Liquidation Proceeds, and (iv)
to effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan. The Master Servicer shall not make or
permit any modification, waiver or amendment of any term of any Mortgage Loan
which would cause either REMIC to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860F(a) or Section 860G(d) of the Code.
Without limiting the generality of the foregoing, the Master Servicer, in its
own name or in the name of any Servicer or the Depositor and the Trustee, is
hereby authorized and empowered by the Depositor and the Trustee, when the
Master Servicer or the Servicer, as the case may be, believes it appropriate in
its reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
either or both of them as are necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans to the extent that the
Master Servicer is not permitted to execute and deliver such documents pursuant
to the preceding sentence. Upon receipt of such documents, the Depositor and/or
the Trustee shall execute such documents and deliver them to the Master
Servicer.
In accordance with and to the extent of the Servicing
Standard, 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. The costs incurred by the Master
Servicer, if any, in effecting the timely payments of taxes and assessments on
the Mortgaged Properties and related insurance premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be added
to the Stated Principal Balances of the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.
Section 3.02. Subservicing; Enforcement of the Obligations
of Servicers.
(a) The Master Servicer may arrange for the subservicing of
any Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
subservicing agreement must provide for the servicing of such Mortgage Loans in
a manner consistent with the servicing arrangements contemplated hereunder. Each
Servicer of a Mortgage Loan shall be entitled to receive and retain, as provided
in the related Servicing Agreement and in Section 3.17, the related Servicing
Fee from payments of interest received on such Mortgage Loan after payment of
all amounts required to be remitted to the Master Servicer in respect of such
Mortgage Loan. Unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Master Servicer in servicing
the Mortgage Loans include actions taken or to be taken by a Servicer on behalf
of the Master Servicer. Each Servicing Agreement will be based upon such terms
and conditions as are generally required or permitted by the Seller/Servicer
Guide and are not inconsistent with this Agreement and as the Master Servicer
and the Servicer have agreed. With the approval of the Master Servicer, a
Servicer may delegate its servicing obligations to third-party servicers, but
such Servicer will remain obligated under the related Servicing Agreement. The
Master Servicer and Servicer may enter into amendments to the related Servicing
Agreement or a different form of Servicing Agreement; provided, however, that
any such amendments or different forms shall be consistent with and not violate
the provisions of either this Agreement or the Seller/Servicer Guide in a manner
which would materially and adversely affect the interests of the
Certificateholders.
(b) For purposes of this Agreement, the Master Servicer shall
be deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a Servicer regardless of whether such
payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts to enforce the obligations of each Servicer under
the related Servicing Agreement, to the extent that the non-performance of any
such obligation would have material and adverse effect on a Mortgage Loan. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Servicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
Section 3.03. Successor Servicers.
The Master Servicer shall be entitled to terminate any
Servicing Agreement that may exist in accordance with the terms and conditions
of such Servicing Agreement and without any limitation by virtue of this
Agreement; provided, however, that in the event of termination of any Servicing
Agreement by the Master Servicer or the Servicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Servicing
Agreement with a successor Servicer which will be bound by the terms of the
related Servicing Agreement. If the Master Servicer or any affiliate of the
Master Servicer acts as servicer, it will not assume liability for the
representations and warranties of the Servicer which it replaces. If the Master
Servicer enters into a Servicing Agreement with a successor Servicer, the Master
Servicer shall use reasonable efforts to have the successor Servicer assume
liability for the representations and warranties made by the terminated Servicer
in respect of the related Mortgage Loans and, in the event of any such
assumption by the successor Servicer, the Master Servicer may, in the exercise
of its business judgment, release the terminated Servicer from liability for
such representations and warranties.
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer or a Servicer or references to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and 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 Servicing Agreements or arrangements
or by virtue of indemnification from the 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. The Master Servicer shall be
entitled to enter into any agreement with a Servicer or Seller for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Servicers
and the Trustee.
Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer in
its capacity as such and not as an originator shall be deemed to be between the
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 Servicer in its capacity
as such except as set forth in Section 3.07.
Section 3.06. Rights of the Depositor and the Trustee in Respect
of the Master Servicer.
The Depositor 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 and in connection with any such defaulted obligation to
exercise the related 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 Depositor or its designee. Neither the Trustee
nor the Depositor shall have any responsibility or liability for any action or
failure to act by the Master Servicer nor shall the Trustee or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
Section 3.07. Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its successor shall thereupon assume all of the rights
and obligations of the Master Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Master Servicer pursuant
to Section 3.12 or any acts or omissions of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including but not limited to repurchases or
substitutions pursuant to Section 2.02 or 2.03, (iv) responsible for expenses of
the Master Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties of the Master Servicer hereunder. Any such
assumption shall be subject to Section 7.02. If the Master Servicer shall for
any reason no longer be the Master Servicer (including by reason of any Event of
Default), the Trustee or its successor shall succeed to any rights and
obligations of the Master Servicer under each Servicing Agreement. The Trustee
or the successor 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 any Servicing Agreement entered into by the Master Servicer as
contemplated by Section 3.02 to the same extent as if the Servicing Agreement
had been assigned to the assuming party except that the Master Servicer shall
not be relieved of any liability or obligations under any such Servicing
Agreement.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Servicing Agreement or substitute servicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of the substitute Servicing
Agreement to the assuming party.
Section 3.08. Collection of Mortgage Loan Payments; Servicing
Accounts; Collection Account; Certificate Account;
Distribution Account, Class A-6 Reserve Fund.
(a) In accordance with and to the extent of the Servicing
Standard, the Master Servicer shall make reasonable efforts in accordance with
the customary and usual standards of practice of prudent mortgage servicers to
collect all payments called for under the terms and provisions of the Mortgage
Loans to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Required Insurance Policy. Consistent
with the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or any prepayment charge or penalty interest in connection with
the prepayment of a Mortgage Loan and (ii) extend the due dates for payments due
on a Mortgage Note for a period not greater than 125 days; provided, however,
that the Master Servicer cannot extend the maturity of any such Mortgage Loan
past the date on which the final payment is due on the latest maturing Mortgage
Loan as of the Cut-off Date. In the event of any such arrangement, the Master
Servicer shall make Advances on the related Mortgage Loan in accordance with the
provisions of Section 4.01 during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. 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 or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(b) In those cases where a Servicer is servicing Mortgage
Loans pursuant to a Servicing Agreement, the Master Servicer shall cause the
Servicer, pursuant to the Servicing Agreement, to establish and maintain one or
more Servicing Accounts, each of which shall be an Eligible Account. The
Servicer will be required under its Servicing Agreement to deposit into the
Servicing Account on a daily basis no later than the Business Day following
receipt, all proceeds of Mortgage Loans received by the Servicer, less its
Servicing Fees and unreimbursed Servicer Advances and expenses, to the extent
permitted by the Servicing Agreement. The Servicer shall not be required to
deposit in the Servicing Account payments or collections in the nature of
prepayment charges or late charges.
(c) The Master Servicer shall establish and maintain a
Collection Account into which the Master Servicer shall deposit or cause to be
deposited on or before each Withdrawal Date payments, collections and Servicer
Advances remitted by Servicers in respect of the Mortgage Loans.
(d) On or before the Withdrawal Date in each calendar month,
the Master Servicer shall cause the Servicer, pursuant to the Servicing
Agreement, to remit to the Master Servicer for deposit in the Collection Account
all funds held in the Servicing Account with respect to each Mortgage Loan
serviced by such Servicer that are required to be remitted to the Master
Servicer. The Servicer will also be required, pursuant to the Servicing
Agreement, to advance on or before each such Withdrawal Date amounts equal to
any Scheduled Payments (net of its Servicing Fees with respect thereto) not
received on any Mortgage Loans by the Servicer (such amount, a "Servicer
Advance"). The Servicer's obligation to advance with respect to each Mortgage
Loan will continue up to and including the first day of the month following the
date on which the related Mortgaged Property is sold at a foreclosure sale or is
acquired by the Trust Fund by deed in lieu of foreclosure or otherwise. All such
Servicer Advances received by the Master Servicer shall be deposited promptly by
it in the Collection Account or the Certificate Account, as appropriate.
Within five Business Days after the receipt by a Servicer of a
Principal Prepayment in Full or any Liquidation Proceeds or Insurance Proceeds
(not required to be applied to the restoration or repair of the related
Mortgaged Property), the Master Servicer shall cause such Servicer, pursuant to
the related Servicing Agreement, to remit such amounts to the Master Servicer
for deposit in the Collection Account.
(e) The Master Servicer shall establish and maintain a
Certificate Account into which the Master Servicer shall deposit or cause to be
deposited on a daily basis within one Business Day of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Servicers or received by it in respect of Mortgage Loans subsequent
to the Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts required
to be deposited hereunder:
(i) all payments on account of principal on the Mortgage
Loans, including Principal Prepayments and the principal component of any
Servicer Advance;
(ii) all payments on account of interest on the Mortgage
Loans, net of the sum of the related Master Servicing Fee and related Servicing
Fee, and the interest component of any Servicer Advance;
(iii) all Insurance Proceeds and Liquidation Proceeds (net of
any related expenses of the related Servicer), other than proceeds to be applied
to the restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Master Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Master
Servicer pursuant to Section 3.08(g) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Sections 3.12 and 3.14;
(vi) all Purchase Prices from the Master Servicer or Seller
and all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to
Section 4.01; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject
to a buydown agreement, on each Due Date for such Mortgage Loan, in addition to
the monthly payment remitted by the Mortgagor, the Master Servicer shall cause
funds to be deposited into the Certificate Account in an amount required to
cause an amount of interest to be paid with respect to such Mortgage Loan equal
to the amount of interest that has accrued on such Mortgage Loan from the
preceding Due Date at the Mortgage Rate net of the Master Servicing Fee on such
date.
The foregoing requirements for remittance by the Master
Servicer shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of prepayment
penalties, late payment charges or assumption fees, if collected, need not be
remitted by the Master Servicer. In the event that the Master Servicer shall
remit any amount not required to be remitted, it may at any time withdraw or
direct the institution maintaining the Certificate Account to withdraw such
amount from the Certificate Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by delivering
written notice thereof to the Trustee or such other institution maintaining the
Certificate Account which describes the amounts deposited in error in the
Certificate Account. The Master Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section 3.08. All funds
deposited in the Certificate Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.11.
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Master Servicer to
the Trustee pursuant to Section 3.11(a);
(ii) any amount deposited by the Master Servicer pursuant to
Section 3.08(g) in connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount
not required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.11. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Master Servicer.
(g) The Trustee shall establish and maintain the Class A-6
Reserve Fund which shall be an Eligible Account into which there shall have been
deposited the amount of $8,000 on the Closing Date. No additional funds will be
deposited in the Class A-6 Reserve Fund after the Closing Date. All funds
deposited in the Class A-6 Reserve Fund shall be held in trust for the benefit
of the Holders of the Class A-6 Certificates, until withdrawn in accordance with
Section 3.11. The Class A-6 Reserve Fund shall be an "outside reserve fund"
under the REMIC Provisions that is beneficially owned for all federal income tax
purposes by Lehman Brothers Inc.
(h) Each institution at which the Certificate Account, the
Class A-6 Reserve Fund or the Distribution Account is maintained shall invest
the funds therein as directed in writing by the Master Servicer in Permitted
Investments, which shall mature not later than (i) in the case of the
Certificate Account and the Class A-6 Reserve Fund, the second Business Day next
preceding the related Distribution Account Deposit Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
account, then such Permitted Investment shall mature not later than the Business
Day next preceding such Distribution Account Deposit Date) and (ii) in the case
of the Distribution Account, the Business Day next preceding the Distribution
Date (except that if such Permitted Investment is an obligation of the
institution that maintains such account, then such Permitted Investment shall
mature not later than such Distribution Date) and, in each case, shall not be
sold or disposed of prior to its maturity. All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders.
All income and gain (net of any losses) realized from any such investment of
funds on deposit in the Certificate Account or the Distribution Account shall be
for the benefit of the Master Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any realized losses in
the Certificate Account or the Distribution Account incurred in any such account
in respect of any such investments shall promptly be deposited by the Master
Servicer in the Certificate Account or paid to the Trustee for deposit into the
Distribution Account, as applicable. All income or gain (net of any losses)
realized from any such investment of funds on deposit in the Class A-6 Reserve
Fund shall be credited to the Class A-6 Reserve Fund. The Trustee in its
fiduciary capacity shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the Certificate
Account, the Class A-6 Reserve Fund or the Distribution Account and made in
accordance with this Section 3.08.
(i) The Master Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account not later than 30 days and not more than 45
days prior to any change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account not later than 30 days and
not more than 45 days prior to any change thereof.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent required by the related Mortgage Note and
not violative of current law, the Master Servicer shall cause each Servicer to
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Master Servicer or any Servicer to compel a Mortgagor to establish
an Escrow Account in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow
Accounts may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer or the related Servicer out of related collections
for any payments made pursuant to Sections 3.12 (with respect to taxes and
assessments and insurance premiums) and 3.13 (with respect to hazard insurance),
to refund to any Mortgagors any sums determined to be overages, to pay interest,
if required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01. The Escrow Accounts shall not be a part of the Trust Fund.
(c) The Master Servicer shall advance any payments referred to
in Section 3.09(a) that are not timely paid by the Mortgagors or advanced by the
Servicers on the date when the tax, premium or other cost for which such payment
is intended is due, but the Master Servicer shall be required so to advance only
to the extent that such advances, in the good faith judgment of the Master
Servicer, will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise.
Section 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford, or shall cause the Servicers
to afford, the Depositor and the Trustee reasonable access to all records and
documentation regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer
will provide, or will cause the Servicers to provide, to each Certificateholder
which is a savings and loan association, bank or insurance company certain
reports and reasonable access to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of the OTS or other regulatory authorities with respect
to investment in the Certificates; provided that the Master Servicer and any
Servicer shall be entitled to be reimbursed by each such Certificateholder for
actual expenses incurred by the Master Servicer or such Servicer in providing
such reports and access.
The Master Servicer shall provide to the OTS and the FDIC and
to comparable regulatory authorities supervising Holders of Subordinated
Certificates and the examiners and supervisory agents of the OTS, the FDIC and
such other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded only upon reasonable and prior written request and during normal
business hours at the offices designated by the Master Servicer. Unless
prohibited by applicable laws or regulations, the Master Servicer and any
Servicer shall be entitled to be reimbursed by the related Certificateholders
for actual expenses incurred by the Master Servicer or such Servicer in
providing such access. Nothing in this Section 3.10 shall limit 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 or
any Servicer to provide access as provided in this Section 3.10 as a result of
such obligation shall not constitute a breach of this Section 3.10.
Section 3.11. Permitted Withdrawals from the Certificate Account,
the Class A-6 Reserve Fund and the
Distribution Account.
(a) The Master Servicer may from time to time make withdrawals
from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer or the related Servicer (to
the extent not previously retained), the servicing compensation to which it is
entitled pursuant to Section 3.17, and to pay to the Master Servicer, as
additional master servicing compensation, earnings on or investment income with
respect to funds in or credited to the Certificate Account;
(ii) to reimburse the Master Servicer or the related Servicer
for unreimbursed Advances or Servicer Advances made by it, such right of
reimbursement pursuant to this subclause (ii) being limited to amounts received
on the Mortgage Loan(s) in respect of which any such Advance or Servicer Advance
was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(iv) to reimburse the Master Servicer for Insured Expenses
from the related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement pursuant to
this clause (a) with respect to any Mortgage Loan being limited to amounts
received on such Mortgage Loan(s) which represent late recoveries of the
payments for which such advances were made pursuant to Section 3.01 or Section
3.09 and (b) for unpaid Master Servicing Fees as provided in Section 3.14;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased pursuant to
Section 2.02, 2.03, 3.14(a), 3.14(b) or 3.14(c), all amounts received thereon
after the date of such purchase;
(vii) to reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them and reimbursable pursuant to
Section 6.03;
(viii) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds and the Trustee Fee for
such Distribution Date, to the extent on deposit, and remit such amount to the
Trustee for deposit in the Distribution Account; and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to such
subclauses (i), (ii), (iv), (v) and (vi). Prior to making any withdrawal from
the Certificate Account pursuant to subclause (iii), the Master Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Master Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s) and
their respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution
Account for distributions to Certificateholders and MBIA and deposits to the
Class A-6 Rounding Account, in the manner specified in this Agreement (and to
withhold from the amounts so withdrawn the amount of any taxes that it is
authorized to withhold pursuant to the last paragraph of Section 8.11). In
addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited therein;
and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01.
(c) The Trustee shall from time to time make withdrawals from
the Class A-6 Reserve Fund on behalf of the Trust Fund for the following
purposes:
(A) on or prior to each Distribution Account Deposit Date, to
withdraw from the Class A-6 Reserve Fund an amount equal to the lesser of (a)
any Class A-6 Net Interest Shortfall for the related Distribution Date, and (b)
the amount on deposit in the Class A-6 Reserve Fund, and remit such amount to
the Distribution Account for distribution to the Holders of the Class A-6
Certificates on such Distribution Date;
(B) on the earlier of (a) the Distribution Date on which the
Class Certificate Balance of the Class A-6 Certificates is reduced to zero and
(b) the termination of this Agreement pursuant to Section 9.01, to clear and
terminate the Class A-6 Reserve Fund and to pay all amounts on deposit therein
to MBIA at the address supplied by it to the Trustee for such purpose.
Section 3.12. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.
(a) The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (y) the outstanding principal
balance of the Mortgage Loan and (z) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the mortgagee from
becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. To the extent it may do so without breaching the related Servicing
Agreement, the Master Servicer shall replace any Servicer that does not cause
such insurance, to the extent it is available, to be maintained. Any amounts
collected by the Master Servicer under any such policies (other than the amounts
to be applied to the restoration or repair of the related Mortgaged Property or
amounts released to the Mortgagor in accordance with the Master Servicer's
normal servicing procedures) shall be deposited in the Certificate Account or
the related Servicing Account, as applicable. Any cost incurred by the Master
Servicer or any Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal balance
of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Master Servicer out of late
payments by the related Mortgagor or out of Liquidation Proceeds to the extent
permitted by Section 3.11. 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 other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property is located at the
time of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Master Servicer shall cause flood insurance to be maintained with
respect to such Mortgage Loan. Such flood insurance shall be in an amount equal
to the least of (i) the original principal balance of the related Mortgage Loan,
(ii) the replacement value of the improvements which are part of such Mortgaged
Property, and (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program.
In the event that the Master Servicer shall obtain and
maintain a blanket policy 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 sentence of this Section 3.12, it being understood and agreed
that such policy may contain a deductible clause on terms substantially
equivalent to those commercially available and maintained by comparable
servicers. If such policy contains a deductible clause, the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with the first sentence of this Section
3.12, and there shall have been a loss that 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. In connection with
its activities as Master Servicer of the Mortgage Loans, the Master Servicer
agrees to present, on behalf of itself, the Depositor, and the Trustee for the
benefit of the Certificateholders, claims under any such blanket policy.
(b) The Master Servicer shall not take, or permit any Servicer
to take, any action which would result in non-coverage under any applicable
Primary Insurance Policy of any loss which, but for the actions of the Master
Servicer or any Servicer, would have been covered thereunder. The Master
Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
that is in effect at the date of the initial issuance of the Certificates and is
required to be kept in force hereunder unless the replacement Primary Insurance
Policy for such canceled or non-renewed policy is maintained with a Qualified
Insurer. The Master Servicer shall not be required to maintain any Primary
Insurance Policy (i) with respect to any Mortgage Loan with a Loan-to-Value
Ratio less than or equal to 80% as of any date of determination or, based on a
new appraisal, the principal balance of such Mortgage Loan represents 80% or
less of the new Appraised Value or (ii) if maintaining such Primary Insurance
Policy is prohibited by applicable law. The Master Servicer agrees, to the
extent permitted by applicable law, to effect the timely payment of the premiums
on each Primary Insurance Policy, and such costs not otherwise recoverable shall
be recoverable by the Master Servicer from the related liquidation proceeds.
In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, or cause the related
Servicer to present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Insurance Policies
and, in this regard, to take such reasonable action in accordance with the
Servicing Standard as shall be necessary to permit recovery under any Primary
Insurance Policies respecting defaulted Mortgage Loans. Any amounts collected by
a Servicer or the Master Servicer under any Primary Insurance Policies shall be
deposited in the Servicing Account, the Collection Account or the Certificate
Account, as applicable.
Section 3.13. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.13, when
any property subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer or the related Servicer shall, to the extent that it has
knowledge of such conveyance and in accordance with the Servicing Standard,
enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to
the extent permitted under applicable law and governmental regulations, but only
to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy. Notwithstanding the foregoing,
neither the Master Servicer nor the related Servicer is required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that (i) the Master Servicer or the related Servicer
is prohibited by law from enforcing any such due-on-sale clause, (ii) coverage
under any Required Insurance Policy would be adversely affected, (iii) the
Mortgage Note does not include a due-on-sale clause or (iv) nonenforcement is
otherwise permitted hereunder, the Master Servicer is authorized, subject to
Section 3.13(b), to take or enter into an assumption and modification agreement
from or with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, unless prohibited by applicable state law, the Mortgagor remains liable
thereon, provided that the Mortgage Loan shall continue to be covered (if so
covered before the Master Servicer enters such agreement) by the applicable
Required Insurance Policies. The Master Servicer, subject to Section 3.13(b), is
also authorized with the prior approval of the insurers under any Required
Insurance Policies 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 Mortgagor and becomes liable under the Mortgage
Note. Notwithstanding the foregoing, the Master Servicer shall not be deemed to
be in default under this Section 3.13 by reason of any transfer or assumption
which the Master Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption agreement or modification agreement
or supplement to the Mortgage Note or Mortgage that requires the signature of
the Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master Servicer
shall prepare and deliver or cause to be prepared and delivered to the Trustee
for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance with
its underwriting standards as then in effect. Together with each such
substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met in connection therewith. The Master Servicer shall
notify, or cause the related Servicer to notify, the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original 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. Any fee
collected by the Master Servicer or any Servicer for entering into an assumption
or substitution of liability agreement will be retained by the Master Servicer
as additional master servicing compensation.
Section 3.14. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts in
accordance with the Servicing Standard to foreclose upon or otherwise comparably
convert the ownership of Mortgaged Properties in respect of which the related
Mortgage Loans come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Master Servicer shall follow the
Servicing Standard and shall follow the requirements of the insurer under any
Required Insurance Policy; provided, however, that the Servicer may enter into,
and shall give the Rating Agencies notice of, a special servicing agreement with
an unaffiliated holder of 100% Percentage Interest of one or more Classes of
Subordinated Certificates or a holder of a class of securities representing
interests in one or more Classes of Subordinated Certificates and provided,
further, that entering into such special servicing agreement shall not result in
the downgrading or withdrawal of the respective ratings when assigned to the
Certificates. Any such agreement may contain provisions whereby such holder may
instruct the Servicer to commence or delay foreclosure proceedings with respect
to delinquent Mortgage Loans and will contain provisions for the deposit 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 Servicer
acted in accordance with its normal procedures. Notwithstanding the foregoing,
the Master Servicer shall not be required to expend its own funds in connection
with any foreclosure or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself of
such expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Certificate Account). 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 liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If the Master
Servicer has knowledge that a Mortgaged Property which the Master Servicer is
contemplating acquiring in foreclosure or by deed in lieu of foreclosure is
located within a 1 mile radius of any site listed in the Expenditure Plan for
the Hazardous Substance Clean Up Bond Act of 1984 or other site with
environmental or hazardous waste risks known to the Master Servicer, the Master
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with its established environmental review
procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Master Servicer shall
ensure that the title to such REO Property references the Pooling and Servicing
Agreement and the Trustee's capacity hereunder. 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
accordance with the Servicing Standard and may, incident to its conservation and
protection of the interests of the Certificateholders, 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. The
Master Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Certificate Account no later than the close of business on each
Determination Date. The Master Servicer shall perform the tax reporting and
withholding required by Sections 1445 and 6050J of the Code with respect to
foreclosures and abandonments, the tax reporting required by Section 6050H of
the Code with respect to the receipt of mortgage interest from individuals and,
if required by Section 6050P of the Code with respect to the cancellation of
indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required, and delivering the
same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer shall dispose of such Mortgaged
Property prior to three years after its acquisition by the Trust Fund unless the
Trustee shall have been supplied with an Opinion of Counsel to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" on either REMIC as defined in section 860F of the Code or cause
either REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust Fund
in such a manner or pursuant to any terms that would (i) cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) subject either REMIC to the imposition of
any federal, state or local income taxes on the income earned from such
Mortgaged Property under Section 860G(c) of the Code or otherwise, unless the
Master Servicer has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a
defaulted Mortgage Loan shall be subject to a determination by the Master
Servicer that the proceeds of such foreclosure would exceed the costs and
expenses of bringing such a proceeding. The income earned from the management of
any REO Properties, net of reimbursement to the Master Servicer for expenses
incurred (including any property or other taxes) in connection with such
management and net of unreimbursed Master Servicing Fees, Servicing Fees,
Advances, Servicer Advances and Servicing Advances, shall be applied to the
payment of principal of and interest on the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current and
adjustments, if applicable, to the Mortgage Rate were being made in accordance
with the terms of the Mortgage Note) and all such income shall be deemed, for
all purposes in this Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the
Certificate Account. To the extent the net income received during any calendar
month is in excess of the amount attributable to amortizing principal and
accrued interest at the related Mortgage Rate on the related Mortgage Loan for
such calendar month, such excess shall be considered to be a partial prepayment
of principal of the related Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well
as any income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer or the related Servicer for
any related unreimbursed Servicing Advances, Master Servicing Fees and Servicing
Fees, as applicable; second, to reimburse the Master Servicer or the related
Servicer for any unreimbursed Advances or Servicer Advances, as applicable, and
to reimburse the Certificate Account for any Nonrecoverable Advances (or
portions thereof) that were previously withdrawn by the Master Servicer pursuant
to Section 3.11(a)(iii) that related to such Mortgage Loan; third, to accrued
and unpaid interest (to the extent no Advance or Servicer Advance has been made
for such amount or any such Advance or Servicer Advance has been reimbursed) on
the Mortgage Loan or related REO Property, at the Adjusted Net Mortgage Rate to
the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan. Excess
Proceeds, if any, from the liquidation of a Liquidated Mortgage Loan will be
retained by the Master Servicer as additional servicing compensation pursuant to
Section 3.17.
(b) The Master Servicer, in its sole discretion, shall have
the right to purchase for its own account from the Trust Fund any Mortgage Loan
which is 91 days or more delinquent at a price equal to the Purchase Price. The
Purchase Price for any Mortgage Loan purchased hereunder shall be deposited in
the Certificate Account and the Trustee, upon receipt of a certificate from the
Master Servicer in the form of Exhibit N hereto, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
(c) The Master Servicer may agree to a modification of any
Mortgage Loan (the "Relevant Mortgage Loan") upon the request of the related
Mortgagor, provided that the modification is in lieu of a refinancing and the
Mortgage Rate on the Relevant Mortgage Loan, as modified, is approximately a
prevailing market rate for newly-originated mortgage loans having similar terms
and (ii) the Master Servicer purchases the Relevant Mortgage Loan from the Trust
Fund as described below. Effective immediately after such modification, and, in
any event, on the same Business Day on which the modification occurs, all right,
title and interest of the Trustee in and to the Modified Mortgage Loan shall
automatically be deemed transferred and assigned to the Master Servicer and all
benefits and burdens of ownership thereof, including without limitation the
right to accrued interest thereon from and including the date of modification
and the risk of default thereon, shall pass to the Master Servicer. The Master
Servicer shall promptly deliver to the Trustee a certification of a Servicing
Officer to the effect that all requirements of the first paragraph of this
subsection (c) have been satisfied with respect to such Modified Mortgage Loan.
The Master Servicer shall deposit the Purchase Price for any
Modified Mortgage Loan in the Certificate Account pursuant to Section 3.08(e)
within one Business Day after the purchase of such Modified Mortgage Loan. Upon
receipt by the Trustee of written notification of any such deposit signed by a
Servicing Officer, the Trustee shall release 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 shall be necessary to vest in the
Master Servicer any Modified Mortgage Loan previously transferred and assigned
pursuant hereto.
The Master Servicer covenants and agrees to indemnify each
REMIC against any and all liability for any "prohibited transaction" taxes and
any related interest, additions and penalties imposed on either REMIC
established hereunder as a result of any modification of a Mortgage Loan
effected pursuant to this subsection (c), any holding of a Modified Mortgage
Loan by either REMIC or any purchase of a Modified Mortgage Loan by the Master
Servicer (but such obligation shall not prevent the Master Servicer or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Master Servicer from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The Master Servicer
shall have no right of reimbursement for any amount paid pursuant to the
foregoing indemnification, except to the extent that the amount of any tax,
interest and penalties, together with interest thereon, is refunded to either
REMIC or the Master Servicer.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by delivering, or causing to be delivered, a "Request for
Release" substantially in the form of Exhibit N. Upon receipt of such request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer's direction execute and
deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. Expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the related Mortgagor. From time to time and
as shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a
partial release of any Mortgaged Property from the lien of the Mortgage or the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Trustee shall, upon delivery
to the Trustee of a Request for Release in the form of Exhibit M signed by a
Servicing Officer, release the Mortgage File to the Master Servicer or, at the
Master Servicer's direction, to the related Servicer. Subject to the further
limitations set forth below, the Master Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee when the need therefor by
the Master Servicer no longer exists, unless the Mortgage Loan is liquidated and
the proceeds thereof are deposited in the Certificate Account, in which case the
Master Servicer shall deliver to the Trustee a Request for Release in the form
of Exhibit N, signed by a Servicing Officer.
If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as authorized by
this Agreement, the Master Servicer shall deliver or cause to be delivered to
the Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity.
Section 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee.
The Master Servicer shall account fully to the Trustee for any
funds received by the Master Servicer or which otherwise are collected by the
Master Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan. All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds,
including but not limited to, any funds on deposit in the Certificate Account,
shall be held by the Master Servicer for and on behalf of the Trustee and shall
be and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Master Servicer also agrees that it
shall not create, incur or subject any Mortgage File or any funds that are
deposited in the Certificate Account, Distribution Account or any Escrow Account
or Servicing Account, or any funds that otherwise are or may become due or
payable to the Trustee for the benefit of the Certificateholders, to any claim,
lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Master Servicer shall be entitled to
set off against and deduct from any such funds any amounts that are properly due
and payable to the Master Servicer under this Agreement.
Section 3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled out of each payment of interest on a Mortgage Loan
(or portion thereof) included in the Trust Fund to retain or withdraw from the
Certificate Account an amount equal to the Master Servicing Fee for such
Distribution Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments shall be
retained by the Master Servicer to the extent not required to be deposited in
the Certificate Account pursuant to Section 3.08. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance and
any Primary Insurance Policy and maintenance of the other forms of insurance
coverage required by this Agreement) and shall not be entitled to reimbursement
therefor except as specifically provided in this Agreement.
As compensation for its activities under its Servicing
Agreement, each Servicer shall be entitled to retain out of each payment of
interest on a Mortgage Loan (or portion thereof) included in the Trust Fund an
amount equal to interest at the applicable Servicing Fee Rate on the Stated
Principal Balance of the related Mortgage Loan for the period covered by such
interest payment.
Additional servicing compensation in the form of prepayment
penalties, assumption fees and late payment charges shall be retained by the
Servicers to the extent not required to be deposited in the Servicing Accounts
pursuant to the related Servicing Agreement. Each Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
under its Servicing Agreement (including payment of any premium for hazard
insurance and any Primary Insurance Policy and maintenance of the other forms of
insurance coverage required by this Agreement and its Servicing Agreement) and
shall not be entitled to reimbursement therefor except as specifically provided
in its Servicing Agreement and not inconsistent with this Agreement.
In the event of any Prepayment Interest Shortfall, the
aggregate Master Servicing Fee for such Distribution Date shall be reduced (but
not below zero) by an amount equal to such Prepayment Interest Shortfall.
Section 3.18. Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the
Trustee on or before 120 days after the end of the Master Servicer's fiscal
year, commencing with its 1999 fiscal year, an Officer's Certificate stating, as
to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of the performance of the Master
Servicer under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all 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 officer and the nature and status
thereof and (iii) to the best of such officer's knowledge, each Servicer has
fulfilled all its obligations under its Servicing Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall forward a copy of each such statement to each Rating
Agency.
Section 3.19. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before 120 days after the end of the Master Servicer's
fiscal year, commencing with its 1999 fiscal year, the Master Servicer at its
expense shall cause a nationally or regionally recognized firm of independent
public accountants (who may also render other services to the Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustee and the
Depositor to the effect that such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, 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
FNMA and FHLMC (rendered within one year of such statement) of independent
public accountants with respect to the related Subservicer. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon request
at the Master Servicer's expense, provided that such statement is delivered by
the Master Servicer to the Trustee.
Section 3.20. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall obtain and maintain in force, and
shall cause each Servicer to obtain and maintain in force, (a) a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder or as Servicer under its Servicing
Agreement, as the case may be, and (b) a fidelity bond in respect of its
officers, employees and 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 FNMA or FHLMC. In
the event that any such policy or bond ceases to be in effect, the Master
Servicer shall obtain a comparable replacement policy or bond from an insurer or
issuer meeting the requirements set forth above as of the date of such
replacement.
<PAGE>
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.
The Master Servicer shall determine on or before each Master
Servicer Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, either (i)
deposit into the Certificate Account an amount equal to the Advance or (ii) make
an appropriate entry in its records relating to the Certificate Account that any
Amount Held for Future Distribution has been used by the Master Servicer in
discharge of its obligation to make any such Advance. Any funds so applied shall
be replaced by the Master Servicer by deposit in the Certificate Account no
later than the close of business on the next Master Servicer Advance Date. The
Master Servicer shall be entitled to be reimbursed from the Certificate Account
for all Advances of its own funds made pursuant to this Section 4.01 as provided
in Section 3.11. The obligation to make Advances with respect to any Mortgage
Loan shall continue if such Mortgage Loan has been foreclosed or otherwise
terminated and the related Mortgaged Property has not been liquidated. The
Master Servicer shall inform the Trustee of the amount of the Advance to be made
on each Master Servicer Advance Date no later than the second Business Day
before the related Distribution Date.
The Master Servicer shall deliver to the Trustee on the
related Master Servicer Advance Date an Officer's Certificate of a Servicing
Officer indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
Section 4.02. Priorities of Distribution.
(a) The Trustee shall withdraw such Available Funds from the
Distribution Account and apply such funds to distributions on the specified
Classes of Senior Certificates and to payment of the MBIA Premium, in the
following order and priority and, in each case, to the extent of such funds
remaining:
(i) as long as no MBIA Default (as defined in
Section 4.04(l) herein) exists, to MBIA, the MBIA Premium;
(ii) to each interest-bearing Class of Senior
Certificates, an amount allocable to interest equal to the
related Class Optimal Interest Distribution Amount, any
shortfall being allocated pro rata among such Classes in
proportion to the amount of the Class Optimal Interest
Distribution Amount that would have been distributed in the
absence of such shortfall;
(iii) to each Class Senior Certificates concurrently as
follows:
(x) to the Class PO Certificates an amount
allocable to principal equal to the PO Formula
Principal Amount, up to the outstanding Class
Certificate Balance of the Class PO Certificates;
(y) on each Distribution Date prior to the
Senior Credit Support Depletion Date, the related
Non-PO Formula Principal Amount, up to the amount of
the applicable Senior Principal Distribution Amount
for such Distribution Date, will be distributed as
principal as follows:
(a) to the Class A-13, Class
A-14, Class A-15 and Class A-16
Certificates, pro rata based on
their respective Class
Certificate Balances, the
lesser of (i) the Priority
Amount and (ii) the product of
99.5% and the Senior Principal
Distribution Amount, until the
respective Class Certificate
Balances thereof have been
reduced to zero;
(b) to the Class A-R Certificates,
until the Class Certificate
Balance thereof has been
reduced to zero;
(c) 56.2478971453% of the Senior
Principal Distribution Amount
remaining after the
distribution in clause (b)
above in the following order of
priority:
(1) to the Class A-5
Certificates, until $68,580,000
has been distributed thereto
pursuant to this clause (c)(1);
(2) concurrently,
14.8386547346% to the Class A-5
Certificates, 70.9677877212% to
the Class A-9 Certificates and
14.1935575442% to the Class
A-10 Certificates, until the
Class Certificate Balances of
the Class A-9 and Class A-10
Certificates have been reduced
to zero;
(3) to the Class A-5
Certificate, until the Class
Certificate Balances
(4) concurrently, the Class
A-11 and Class A-12
Certificates, pro rata, based
on their respective Class
Certificate Balances, until the
respective Class Certificate
Balances thereof have been
reduced to zero;
(5) to the Class A-8
Certificates, until the Class
Certificate Balance thereof has
been reduced to zero;
(d) 43.7521028547% of the Senior
Principal Distribution Amount
remaining after the
distribution in clause (c)
above, in the following order
of priority:
(1) concurrently,
86.2075488354% to the Class A-2
Certificates and 13.7924511646%
to the Class A-3 Certificates,
until $41,016,000 has been
distributed to the Class A-2
Certificates pursuant to this
clause (d)(1);
(2) on each Distribution
Date after March 25, 2003,
concurrently 22.4138232217% to the
Class A-2 Certificates and
3.5861767783% to the Class A-3
Certificates, until $35,926,600 has
been distributed to the Class A-2
Certificates pursuant to this clause
(d)(2) and clause (d)(3)(ii)(B)
(3) the Senior Principal
Distribution Amount remaining after
the distribution in clause (d)
above, in the following order of
priority:
(i) 70% of the
Senior Principal
Distribution Amount to the
Class A-1 Certificates,
until the Class Certificate
Balance thereof has been
reduced to zero; and
(ii) the remaining
Senior Principal
Distribution Amount as
follows:
(A) concurrently,
86.2070008316% to the
Class A-2 Certificates
and 13.7929991684% to the
Class A-3 Certificates,
until $34,207,800 has
been distributed to the
Class A-2 Certificates
pursuant to this clause
(A);
(B) concurrently,
86.2070123912% to the
Class A-2 Certificates
and 13.7929876088% to the
Class A-3 Certificates,
until the Class
Certificate Balances
thereof have been reduced
to zero;
(C) to the Class A-4
Certificates, until the
Class Certificate Balance
has been reduced to zero;
(D) concurrently
52.2216913521% to the
Class A-8 Certificates
and 47.7783086479% to the
Class A-6 Certificates,
until the Class
Certificate Balances
thereof have been reduced
to zero;
(e) concurrently, to the Class
A-13, Class A-14, Class A-15 and
Class A-16 Certificates, pro
rata, based on their respective
Class Certificate Balances,
until the Class Certificate
Balances thereof have been
reduced to zero;
(iv) to the Class PO Certificates an amount allocable to
principal equal to the PO Formula Principal Amount, up to the outstanding Class
Certificate Balance of the Class PO Certificates;
(v) to each Class of Subordinated Certificates, subject to
paragraph (e) below, in the following order of priority:
(A) to the Class B-1 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date;
(B) to the Class B-1 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero;
(C) to the Class B-2 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date;
(D) to the Class B-2 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero;
(E) to the Class B-3 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date;
(F) to the Class B-3 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero;
(G) to the Class B-4 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date;
(H) to the Class B-4 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero;
(I) to the Class B-5 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date;
(J) to the Class B-5 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero;
(K) to the Class B-6 Certificates, an amount allocable to
interest equal to the Class Optimal Interest Distribution Amount for such Class
for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount allocable to
principal equal to its Pro Rata Share for such Distribution Date until the Class
Certificate Balance thereof is reduced to zero; and
(vi) to the Class A-R Certificates, in respect of the MR
Interest, any remaining funds in the Master REMIC and in respect of the SR
Interest, any remaining funds in the Subsidiary REMIC.
On any Distribution Date, amounts distributed in respect of
Class PO Deferred Amounts will not reduce the Class Certificate Balance of the
related Class PO Certificates.
On any Distribution Date, to the extent the Amount Available
for Senior Principal is insufficient to make the full distribution required to
be made pursuant to clause (iii)(x) above, (A) the amount distributable on the
Class PO Certificates in respect of principal shall be equal to the product of
(1) the Amount Available for Senior Principal and (2) a fraction, the numerator
of which is the PO Formula Principal Amount and the denominator of which is the
sum of the PO Formula Principal Amount and the Senior Principal Distribution
Amount and (B) the amount distributable on the Senior Certificates, other than
the Class PO Certificates, in respect of principal shall be equal to the product
of (1) the Amount Available for Senior Principal and (2) a fraction, the
numerator of which is the Senior Principal Distribution Amount and the
denominator of which is the sum of the Senior Principal Distribution Amount and
the PO Formula Principal Amount.
(b) [Reserved];
(c) On each Distribution Date on or after the Senior
Credit Support Depletion Date, notwithstanding the allocation and priority set
forth in Section 4.02(a)(iii)(y), the portion of Available Funds available to be
distributed as principal of the Senior Certificates (other than the Class PO
Certificates) shall be distributed concurrently, as principal, on such Classes,
pro rata, on the basis of their respective Class Certificate Balances, until the
Class Certificate Balances thereof are reduced to zero.
(d) On each Distribution Date, the amount referred to in
clause (i) of the definition of Class Optimal Interest Distribution Amount for
each Class of Certificates for such Distribution Date shall be reduced by (i)
the related Class' pro rata share of Net Prepayment Interest Shortfalls based on
such Class' Optimal Interest Distribution Amount for such Distribution Date
without taking into account such Net Prepayment Interest Shortfalls and (ii) the
related Class' Allocable Share of (A) after the Special Hazard Coverage
Termination Date, with respect to each Mortgage Loan that became a Special
Hazard Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the excess of one month's interest at the related Adjusted
Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan as of
the Due Date in such month over the amount of Liquidation Proceeds applied as
interest on such Mortgage Loan with respect to such month, (B) after the
Bankruptcy Coverage Termination Date, with respect to each Mortgage Loan that
became subject to a Bankruptcy Loss during the calendar month preceding the
month of such Distribution Date, the interest portion of the related Debt
Service Reduction or Deficient Valuation, (C) each Relief Act Reduction incurred
during the calendar month preceding the month of such Distribution Date and (D)
after the Fraud Coverage Termination Date, with respect to each Mortgage Loan
that became a Fraud Loan during the calendar month preceding the month of such
Distribution Date, the excess of one month's interest at the related Adjusted
Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan as of
the Due Date in such month over the amount of Liquidation Proceeds applied as
interest on such Mortgage Loan with respect to such month.
(e) Notwithstanding the priority and allocation contained
in Section 4.02(a), if, with respect to any Class of Subordinated Certificates,
on any Distribution Date the sum of the related Class Subordination Percentages
of such Class and of all Classes of Subordinated Certificates which have a
higher numerical Class designation than such Class (the "Applicable Credit
Support Percentage") is less than the Original Applicable Credit Support
Percentage for such Class, no distribution of Principal Prepayments will be made
to any such Classes (the "Restricted Classes") and the amount of such Principal
Prepayments otherwise distributable to the Restricted Classes shall be
distributed to the Classes of Subordinated Certificates having lower numerical
Class designations than such Class, pro rata, based on their respective Class
Certificate Balances immediately prior to such Distribution Date and shall be
distributed in the sequential order set forth in Section 4.02(a)(vi).
(f) On each Distribution Date, Available Funds shall be
distributed on the Subsidiary REMIC Regular Interests, in each case in an amount
sufficient to make the distributions to the Corresponding Classes of
Certificates on such Distribution Date in accordance with the provisions of
Section 4.02(a).
(g) On each Distribution Date, the Trustee shall
distribute the amount withdrawn from the Class A-6 Reserve Fund with respect to
such Distribution Date pursuant to Section 3.11(c), to the extent of funds on
deposit in the Class A-6 Reserve Fund and shall apply such funds to
distributions on the Class A-6 Certificates as interest thereon, in the amount
of the Class A-6 Net Interest Shortfalls with respect to such Distribution Date.
Section 4.03. Distributions in Reduction of the Class A-6 Certificates
(a) Except as provided in subclauses (d) and (f) below, on
each Distribution Date on which distributions in reduction of the Class
Certificate Balance of the Class A-6 Certificates are made, such distributions
will be made in the following priority:
(i) any request by the personal representative of a
Deceased Holder or by a surviving tenant by the entirety, by a surviving joint
tenant or by a surviving tenant in common or other Person empowered to act on
behalf of such Deceased Holder upon his or her death, in an amount up to but not
exceeding $100,000 per request; and
(ii) any request by a Living Holder, in an amount up
to but not exceeding $10,000 per request.
Thereafter, distributions will be made as provided in clauses
(i) and (ii) above up to a second $100,000 and $10,000 per request,
respectively. This sequence of priorities will be repeated for each request for
principal distributions made by the Certificate Owners of the Class A-6
Certificates until all such requests have been honored.
Requests for distributions in reduction of the Certificate
Balances of Class A-6 Certificates presented on behalf of Deceased Holders in
accordance with the provisions of clause (i) above will be accepted in the order
of their receipt by the Depository. Requests for distributions in reduction of
the Certificate Balances of Class A-6 Certificates presented in accordance with
the provisions of clause (ii) above will be accepted in the order of priority
established by the random lot procedures of the Depository after all requests
with respect to such Class presented in accordance with clause (i) have been
honored. All requests for distributions in reduction of the Certificate Balance
of the Class A-6 Certificates with respect to any Distribution Date shall be
made in accordance with Section 4.03(c) below and must be received by the
Depository and forwarded to, and received by, the Trustee no later than the
close of business on the related Record Date. Requests for distributions which
are received by the Depository and forwarded to the Trustee after the related
Record Date and requests, in either case, for distributions timely received but
not accepted with respect to any Distribution Date, will be treated as requests
for distributions in reduction of the Certificate Balances of the applicable
Class A-6 Certificates on the next succeeding Distribution Date, and each
succeeding Distribution Date thereafter, until each such request is accepted or
is withdrawn as provided in Section 4.03(c). Such requests as are not so
withdrawn shall retain their order of priority without the need for any further
action on the part of the appropriate Certificate Owner of the related Class A-6
Certificate, all in accordance with the procedures of the Depository and the
Trustee. Upon the transfer of beneficial ownership of any Class A-6 Certificate,
any distribution request previously submitted with respect to such Certificate
will be deemed to have been withdrawn only upon the receipt by the Trustee of
notification of such withdrawal using a form required by the Depository.
Distributions in reduction of the Certificate Balances of
Class A-6 Certificates will be applied, in the aggregate, to the Class A-6
Certificates in an amount equal to the portion of the Available Funds
distributable to the Class A-6 Certificates pursuant to Section 4.02(a)(iii),
plus any amounts available for distribution from the Class A-6 Rounding Account
pursuant to Section 4.03(e), provided that the aggregate distribution in
reduction of the Class Certificate Balance of the Class A-6 Certificates on any
Distribution Date is made in an integral multiple of $1,000.
(b) A "Deceased Holder" is a Certificate Owner of a Class
A-6 Certificate who was living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common or other person empowered to act on
behalf of such Certificate Owner upon his or her death, causes to be furnished
to the Trustee a certified copy of the death certificate of such Certificate
Owner and any additional evidence of death required by and satisfactory to the
Trustee and any tax waivers requested by the Trustee. Class A-6 Certificates
beneficially owned by tenants by the entirety, joint tenants or tenants in
common will be considered to be beneficially owned by a single owner. The death
of a tenant by the entirety, joint tenant or tenant in common will be deemed to
be the death of the Certificate Owner, and the Class A-6 Certificates so
beneficially owned will be eligible for priority with respect to distributions
in reduction of the Class Certificate Balance of the Class A-6 Certificates,
subject to the limitations stated above. Class A-6 Certificates beneficially
owned by a trust will be considered to be beneficially owned by each beneficiary
of the trust to the extent of such beneficiary's beneficial interest therein,
but in no event will a trust's beneficiaries collectively be deemed to be
Certificate Owners of a number of Individual Class A-6 Certificates greater than
the number of Individual Class A-6 Certificates of which such trust is the
beneficial owner. The death of a beneficiary of a trust will be deemed to be the
death of a Certificate Owner of the Class A-6 Certificates beneficially owned by
the trust to the extent of such beneficiary's beneficial interest in such trust.
The death of an individual who was a tenant by the entirety, joint tenant or
tenant in common in a tenancy which is the beneficiary of a trust will be deemed
to be the death of the beneficiary of the trust. The death of a person who,
during his or her lifetime, was entitled to substantially all of the beneficial
ownership interests in Class A-6 Certificates will be deemed to be the death of
the Certificate Owner of such Class A-6 Certificates regardless of the
registration of ownership of such Class A-6 Certificates, if such beneficial
interest can be established to the satisfaction of the Trustee. Such beneficial
interest will be deemed to exist in typical cases of street name or nominee
ownership, ownership by a trustee, ownership under the Uniform Gifts to Minors
Act and community property or other joint ownership arrangements between a
husband and wife. Beneficial interests shall include the power to sell, transfer
or otherwise dispose of a Class A-6 Certificate and the right to receive the
proceeds therefrom, as well as interest and distributions in reduction of the
Certificate Balances of the Class A-6 Certificates payable with respect thereto.
The Trustee shall not be under any duty to determine independently the
occurrence of the death of any deceased Certificate Owner. The Trustee may rely
entirely upon documentation delivered to it pursuant to Section 4.03(a) in
establishing the eligibility of any Certificate Owner to receive the priority
accorded Deceased Holders in Section 4.03(a).
(c) Requests for distributions in reduction of the
Certificate Balance of a Class A-6 Certificate must be made by delivering a
written request therefor to the Depository Participant or Indirect Participant
that maintains the account evidencing the Certificate Owner's interest in such
Class A-6 Certificate. Such Depository Participant or Indirect Participant
should in turn make the request of the Depository (or, in the case of an
Indirect Participant, such Indirect Participant must notify the related
Depository Participant of such request, which Depository Participant should make
the request of the Depository) on a form required by the Depository and provided
to the Depository Participant. Upon receipt of such request, the Depository will
date and time stamp such request and forward such request to the Trustee. The
Depository may establish such procedures as it deems fair and equitable to
establish the order of receipt or requests for such distributions received by it
on the same day. The Trustee shall not be liable for any delay in delivery of
requests for distributions or withdrawals of such requests by the Depository, a
Depository Participant or any Indirect Participant.
In the event any requests for distributions in reduction of
the Certificate Balances of Class A-6 Certificates are rejected by the Trustee
for failure to comply with the requirements of this Section 4.03, the Trustee
shall return such requests to the appropriate Depository Participant with a copy
to the Depository with an explanation as to the reason for such rejection.
The Trustee shall maintain a list of those Depository
Participants representing the Certificate Owners of Class A-6 Certificates that
have submitted requests for distributions in reduction of the Certificate
Balances of such Class A-6 Certificates, together with the order of receipt and
the amounts of such requests. The Trustee shall notify the Depository and the
appropriate Depository Participants as to which requests should be honored on
each Distribution Date. Requests shall be honored by the Depository in
accordance with the procedures, and subject to the priorities and limitations,
described in this Section 4.03. The exact procedures to be followed by the
Trustee and the Depository for purposes of determining such priorities and
limitations shall be those established from time to time by the Trustee or the
Depository, as the case may be. The decisions of the Trustee and the Depository
concerning such matters shall be final and binding on all affected Persons.
Payments in reduction of the Certificate Balances of Class A-6
Certificates shall be made on the applicable Distribution Date and the
Certificate Balances as to which such payments are made shall cease to bear
interest after the last day of the month preceding the month in which such
Distribution Date occurs.
Any Certificate Owner of a Class A-6 Certificate which has
requested a distribution may withdraw its request by so notifying in writing the
Depository Participant or Indirect Participant that maintains such Certificate
Owner's account. In the event that such account is maintained by an Indirect
Participant, such Indirect Participant must notify the related Depository
Participant which in turn must forward the withdrawal of such request, on a form
required by the Depository, to the Trustee. If such notice of withdrawal of a
request for distribution has not been received by the Depository and forwarded
to the Trustee on or before the Record Date for the next Distribution Date, the
previously made request for distribution will be irrevocable with respect to the
making of distributions in reduction of the Certificate Balance of such Class
A-6 Certificate on such Distribution Date.
(d) To the extent, if any, that distributions in reduction
of the Class Certificate Balance of Class A-6 Certificates on a Distribution
Date exceed the aggregate Certificate Balances of the Class A-6 Certificates
with respect to which distribution requests have been received by the related
Record Date, as provided in Section 4.03(a) above, distributions in reduction of
the Class Certificate Balance of the Class A-6 Certificates will be made by
mandatory distributions in reduction thereof. The Trustee shall notify the
Depository of the aggregate amount of the mandatory distribution in reduction of
the Class Certificate Balance of the Class A-6 Certificates to be made on the
next Distribution Date. The Depository shall then allocate such aggregate amount
among its Depository Participants on a random lot basis. Each Depository
Participant and, in turn, each Indirect Participant, will then select, in
accordance with its own procedures, Individual Class A-6 Certificates from among
those held in its accounts to receive mandatory distributions in reduction of
the Class Certificate Balance of the Class A-6 Certificates, such that the total
amount so selected is equal to the aggregate amount of such mandatory
distributions allocated to such Depository Participant by the Depository and to
such Indirect Participant by its related Depository Participant, as the case may
be. Depository Participants and Indirect Participants which hold Class A-6
Certificates selected for mandatory distributions in reduction of the Class
Certificate Balance are required to provide notice of such mandatory
distributions to the affected Certificate Owners.
(e) On the Closing Date, the Class A-6 Rounding Account
shall be established with the Trustee and Lehman Brothers Inc. shall cause to be
initially deposited the sum of $1,000 in the Class A-6 Rounding Account. On each
Distribution Date on which a distribution is made in reduction of the Class
Certificate Balance of the Class A-6 Certificates, funds on deposit in the Class
A-6 Rounding Account shall be, to the extent needed, withdrawn by the Trustee
and applied to round upward to an integral multiple of $1,000 the aggregate
distribution in reduction of the Class Certificate Balance to be made on the
Class A-6 Certificates. Rounding of such distribution on the Class A-6
Certificates shall be accomplished, on the first such Distribution Date, by
withdrawing from the Class A-6 Rounding Account the amount of funds, if any,
needed to round the amount otherwise available for such distribution in
reduction of the Class Certificate Balance of the Class A-6 Certificates upward
to the next integral multiple of $1,000. On each succeeding Distribution Date on
which distributions in reduction of the Class Certificate Balance of the Class
A-6 Certificates are to be made, the aggregate amount of such distributions
allocable to the Class A-6 Certificates shall be applied first to repay any
funds withdrawn from the Class A-6 Rounding Account and not previously repaid,
and then the remainder of such allocable amount, if any, shall be similarly
rounded upward and applied as distributions in reduction of the Class
Certificate Balance of the Class A-6 Certificates; this process shall continue
on succeeding Distribution Dates until the Class Certificate Balance of the
Class A-6 Certificates has been reduced to zero. The Class A-6 Rounding Account
shall be an "outside reserve fund" under the REMIC Provisions that is
beneficially owned for all federal income tax purposes by Lehman Brothers Inc.
Lehman Brothers Inc. shall report all income, gain, deduction or loss with
respect thereto. The Trustee shall distribute interest earnings, if any, on
amounts held in the Class A-6 Rounding Account as such interest is earned
pursuant to written instructions from Lehman Brothers Inc. to the Trustee.
Notwithstanding anything herein to the contrary, on the
Distribution Date on which distributions in reduction of the Class Certificate
Balance of the Class A-6 Certificates will reduce the Class Certificate Balance
thereof to zero or in the event that distributions in reduction of the Class
Certificate Balance of the Class A-6 Certificates are made in accordance with
the provisions set forth in Section 4.03(f), an amount equal to the difference
between $1,000 and the sum then held in the Class A-6 Rounding Account shall be
paid from the Available Funds for such Distribution Date to the Class A-6
Rounding Account. Any funds then on deposit in such Class A-6 Rounding Account
shall be distributed to Lehman Brothers Inc.
(f) Notwithstanding any provisions herein to the contrary,
on each Distribution Date following the first Distribution Date on or after the
Senior Credit Support Depletion Date, distributions in reduction of the Class
Certificate Balance of the Class A-6 Certificates (including amounts paid in
respect of Realized Losses under the Class A-6 Policy) will be made among the
Holders of the Class A-6 Certificates, pro rata, based on Certificate Balances,
and will not be made in integral multiples of $1,000 or pursuant to requested
distributions or mandatory distributions by random lot.
(g) In the event that Definitive Certificates representing
the Class A-6 Certificates are issued pursuant to Section 5.02(e), an amendment
to this Agreement, which may be approved without the consent of any
Certificateholders, shall establish procedures relating to the manner in which
distributions in reduction of the Class Certificate Balance of the Class A-6
Certificates are to be made; provided that such procedures shall be consistent,
to the extent practicable and customary for certificates similar to the Class
A-6 Certificates with the Certificates, with the provisions of this Section
4.03.
Section 4.04. Policy Matters.
(a) If, on the third Business Day before any Distribution
Date, the Trustee determines that the Available Funds for such Distribution Date
distributable to the Holders of the Class A-6 Certificates pursuant to Section
4.02 together with any amounts that may be distributable to the Holders of the
Class A-6 Certificates from the Class A-6 Reserve Fund pursuant to Section
4.02(g) will be insufficient to pay the Required Distributions on such
Distribution Date, the Trustee shall determine the amount of any such deficiency
and shall give notice to MBIA and the Fiscal Agent (as defined in the Class A-6
Policy), if any, by telephone or telecopy of the amount of such deficiency,
confirmed in writing by notice substantially in the form of Exhibit A to the
Class A-6 Policy by 12:00 noon, New York City time on such third Business Day.
The Trustee's responsibility for delivering the notice to MBIA as provided in
the preceding sentence is limited to the availability, timeliness and accuracy
of the information provided by the Master Servicer.
(b) In the event the Trustee receives a certified copy of an
order of the appropriate court that any scheduled payment of principal or
interest on a Class A-6 Certificate has been voided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall (i)
promptly notify MBIA and the Fiscal Agent, if any, and (ii) comply with the
provisions of the Class A-6 Policy to obtain payment by MBIA of such voided
scheduled payment. In addition, the Trustee shall mail notice to all Holders of
the Class A-6 Certificates so affected that, in the event that any such Holder's
scheduled payment is so recovered, such Holder will be entitled to payment
pursuant to the terms of the Class A-6 Policy a copy of which shall be made
available to such Holders by the Trustee. The Trustee shall furnish to MBIA and
the Fiscal Agent, if any, its records listing the payments on the affected Class
A-6 Certificates, if any, that have been made by the Trustee and subsequently
recovered from the affected Holders, and the dates on which such payments were
made by the Trustee.
(c) At the time of the execution hereof, and for the purposes
hereof, the Trustee shall establish a separate special purpose trust account in
the name of the Trustee for the benefit of Holders of the Class A-6 Certificates
(the "Class A-6 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class A-6 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount paid
under the Class A-6 Policy into the Class A-6 Policy Payments Account and
distribute such amount only for the purposes of making the payments to Holders
of the Class A-6 Certificates in respect of the Required Distribution for which
the related claim was made under the Class A-6 Policy. Such amounts shall be
allocated by the Trustee to Holders of Class A-6 Certificates affected by such
shortfalls in the same manner as principal and interest payments are to be
allocated with respect to such Certificates pursuant to Section 4.02. It shall
not be necessary for such payments to be made by checks or wire transfers
separated from the checks or wire transfers used to make regular payments
hereunder with funds withdrawn from the Distribution Account. However, any
payments made on the Class A-6 Certificates from funds in the Class A-6 Policy
Payments Account shall be noted as provided in subsection (e) below. Funds held
in the Class A-6 Policy Payments Account shall not be invested by the Trustee.
(d) Any funds received from MBIA for deposit into the Class
A-6 Policy Payments Account pursuant to the Class A-6 Policy in respect of a
Distribution Date or otherwise as a result of any claim under such Policy shall
be applied by the Trustee directly to the payment in full (i) of the Required
Distribution due on such Distribution Date on the Class A-6 Certificates, or
(ii) of other amounts payable under the Class A-6 Policy. Funds received by the
Trustee as a result of any claim under the Class A-6 Policy shall be used solely
for payment to the Holders of the Class A-6 Certificates and may not be applied
for any other purpose, including, without limitation, satisfaction of any costs,
expenses or liabilities of the Trustee, the Master Servicer or the Trust Fund.
Any funds remaining in the Class A-6 Policy Payments Account on the first
Business Day after each Distribution Date shall be remitted promptly to MBIA
pursuant to the written instruction of MBIA.
(e) The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by MBIA and deposited into the Class A-6
Policy Payments Account and (ii) the allocation of such funds to (A) payments of
interest on and principal in respect of any Class A-6 Certificates, (B) Realized
Losses allocated to the Class A-6 Certificates (C) the Net Prepayment Interest
Shortfalls allocated to the Class A-6 Certificates and (D) the amount of funds
available to make distributions on the Class A-6 Certificates pursuant to
Section 4.02(a) including all amounts in the Class A-6 Reserve Fund. MBIA shall
have the right to inspect such records at reasonable times during normal
business hours upon three Business Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A-6
Certificate by its acceptance of the Class A-6 Certificate agrees, that, without
the need for any further action on the part of MBIA or the Trustee, to the
extent MBIA makes payments, directly or indirectly, on account of principal of
or interest on any Class A-6 Certificates, MBIA will be fully subrogated to the
rights of the Holders of such Class A-6 Certificates to receive such principal
and interest from the Trust Fund. The Holders of the Class A-6 Certificates, by
acceptance of the Class A-6 Certificates, assign their rights as Holders of the
Class A-6 Certificates to the extent of MBIA's interest with respect to amounts
paid under the Class A-6 Policy. Anything herein to the contrary
notwithstanding, solely for purposes of determining MBIA's rights, as
applicable, as subrogee for payments distributable pursuant to Section 4.02, any
payment with respect to distributions to the Class A-6 Certificates which is
made with funds received pursuant to the terms of the Class A-6 Policy, shall
not be considered payment of the Class A-6 Certificates from the Trust Fund and
shall not result in the distribution or the provision for the distribution in
reduction of the Class Certificate Balance of the Class A-6 Certificates within
the meaning of Article IV.
(g) Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify MBIA of such Event of Default.
(h) The Trustee shall promptly notify MBIA of either of the
following as to which it has actual knowledge: (A) the commencement of any
proceeding by or against the Depositor commenced under the United States
bankruptcy code or any other applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding") and (B) the making of
any claim in connection with any Insolvency Proceeding seeking the avoidance as
a preferential transfer (a "Preference Claim") of any distribution made with
respect to the Class A-6 Certificates as to which it has actual knowledge. Each
Holder of a Class A-6 Certificate, by its purchase of Class A-6 Certificates,
and the Trustee hereby agrees that MBIA (so long as no MBIA Default exists) may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, MBIA shall be subrogated to the rights of the Trustee and each Holder
of a Class A-6 Certificate in the conduct of any Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
(i) The Master Servicer shall designate an MBIA Contact Person
who shall be available to MBIA to provide reasonable access to information
regarding the Mortgage Loans. The initial MBIA Contact Person is to the
attention of Secondary Marketing.
(j) The Trustee shall surrender the Class A-6 Policy to MBIA
for cancellation upon the reduction of the Class Certificate Balance of the
Class A-6 Certificates to zero.
(k) The Trustee shall send to MBIA the reports prepared
pursuant to Sections 3.16 and 3.17 and the statements prepared pursuant to
Section 4.06, as well as any other statements or communications sent to Holders
of the Class A-6 Certificates, in each case at the same time such reports,
statements and communications are otherwise sent.
(l) For so long as there is no default by MBIA under its
obligations under the Class A-6 Policy (an "MBIA Default"), each Holder of a
Class A-6 Certificate agrees that MBIA shall be treated by the Depositor and the
Trustee as if MBIA were the Holder of all of the Class A-6 Certificates for the
purpose (and solely for the purpose) of the giving of any consent, the making of
any direction or the exercise of any voting or other control rights otherwise
given to the Holders of the Class A-6 Certificates hereunder.
With respect to this Section 4.04, (i) the terms "Receipt" and
"Received" shall mean actual delivery to MBIA and MBIA's Fiscal Agent, if any,
if any, prior to 12:00 noon, New York City time, on a Business Day; delivery
either on a day that is not a Business Day or after 12:00 noon, New York City
time, shall be deemed to be Receipt on the next succeeding Business Day. If any
notice or certificate given under the Class A-6 Policy by the Trustee is not in
proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received. MBIA or its Fiscal Agent, if any, shall
promptly so advise the Trustee and the Trustee may submit an amended notice and
(ii) "Business Day" means any day other than (A) a Saturday or Sunday (B) a day
on which MBIA is closed or (C) a day on which banking institutions in the City
of New York, New York, the State of California, or the city in which the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.
Section 4.05. Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Trustee
shall determine the total amount of Realized Losses, including Excess Losses,
with respect to the related Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized Loss,
including any Excess Loss, shall be allocated to the Class PO Certificates until
the Class Certificate Balance thereof is reduced to zero; and
(ii) (A) the applicable Non-PO Percentage of any Realized
Loss (other than an Excess Loss) shall be allocated first, to the Subordinated
Certificates in reverse order of their respective numerical Class designations,
until the respective Class Certificate Balance of each such Class is reduced to
zero and second, to the Senior Certificates (other than the Class PO and Class X
Certificates), pro rata, on the basis of their respective Class Certificate
Balances, in each case immediately prior to the related Distribution Date, until
the respective Class Certificate Balance of each such Class is reduced to zero;
(B) the applicable Non-PO Percentage of any Excess
Losses on the Mortgage Loans shall be allocated to the Classes of Senior
Certificates (other than the Class PO and Class X Certificates) and the
Subordinated Certificates then outstanding, pro rata, on the basis of their
respective Class Certificate Balances in each case until the respective Class
Certificate Balances thereof have been reduced to zero.
(b) The Class Certificate Balance of the Class of
Subordinated Certificates then outstanding with the highest numerical Class
designation shall be reduced on each Distribution Date by the amount, if any, by
which the aggregate of the Class Certificate Balances of all outstanding Classes
of Certificates exceeds the Pool Stated Principal Balance for the following
Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates
or any reduction in the Class Certificate Balance of a Class of Certificates
pursuant to Section 4.05(b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or
to any Component or any reduction in the Certificate Balance of a Certificate
pursuant to Section 4.05(b) shall be accomplished by reducing the Certificate
Balance or Component Balance thereof, as applicable, immediately following the
distributions made on the related Distribution Date in accordance with the
definition of "Certificate Balance" or "Component Balance," as the case may be.
Any payment under the Class A-6 Policy pursuant to Section 4.04 in respect of a
Realized Loss allocated to the Class A-6 Certificates shall not result in a
further reduction to the Certificate Balances of the Class A-6 Certificates.
(e) Any Realized Loss allocated to the Class A-6
Certificates will be covered by the Class A-6 Policy.
Section 4.06. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee
shall prepare and cause to be forwarded by first class mail to each
Certificateholder, MBIA, the Master Servicer, the Depositor and each Rating
Agency a statement setting forth with respect to the related distribution:
(i) the amount thereof allocable to principal,
separately identifying the aggregate amount of any Principal
Prepayments and Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any
Class Unpaid Interest Shortfall included in such distribution and
any remaining Class Unpaid Interest Shortfall after giving effect
to such distribution;
(iii) if the distribution to the Holders of such Class
of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds
available therefor, the amount of the shortfall and the
allocation thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal
on such Distribution Date;
(v) the Pool Stated Principal Balance for the
following Distribution Date;
(vi) the Senior Percentage and Subordinated Percentage
for the following Distribution Date;
(vii) the amount of the Master Servicing Fees and
Servicing Fees paid to or retained by the Master Servicer and the
Servicers (with respect to the Servicers, in the aggregate) with
respect to such Distribution Date;
(viii) the Pass-Through Rate for each such Class of
Certificates with respect to such Distribution Date;
(ix) the amount of Advances included in the
distribution on such Distribution Date and the aggregate amount
of Advances outstanding as of the close of business on such
Distribution Date;
(x) the number and aggregate principal amounts of
Mortgage Loans (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days
and (4) 91 or more days and (B) in foreclosure and delinquent (1)
1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or
more days, as of the close of business on the last day of the
calendar month preceding such Distribution Date;
(xi) for each of the preceding 12 calendar months, or
all calendar months since the Cut-off Date, whichever is less,
the aggregate dollar amount of the Scheduled Payments (A) due on
all Outstanding Mortgage Loans on each of the Due Dates in each
such month and (B) delinquent 60 days or more on each of the Due
Dates in each such month;
(xii) with respect to any Mortgage Loan that became an
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 Determination Date preceding such
Distribution Date and the date of acquisition thereof;
(xiii) the total number and principal balance of any
REO Properties (and market value, if available) as of the close
of business on the Determination Date preceding such Distribution
Date;
(xiv) the Senior Prepayment Percentage for the
following Distribution Date;
(xv) the aggregate amount of Realized Losses incurred
during the preceding calendar month and aggregate Realized Losses
through such Distribution Date;
(xvi) the Special Hazard Loss Coverage Amount, the
Fraud Loss Coverage Amount and the Bankruptcy Loss Coverage
Amount, in each case as of the related Determination Date;
(xvii) the amount of any withdrawal from the Class A-6
Reserve Fund since the prior Distribution Date; and
(xviii) the amount remaining in the Class A-6 Reserve
Fund after taking into account amounts withdrawn from the Class
A-6 Reserve Fund for such Distribution Date.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability, timeliness
and accuracy of the information derived from the Master Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this
Section 4.06 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 as from time to time in effect.
Section 4.07. Determination of Pass-Through Rates for COFI
Certificates.
The Pass-Through Rate for each Class of COFI Certificates for
each Interest Accrual Period after the initial Interest Accrual Period shall be
determined by the Trustee as provided below on the basis of the Index and the
applicable formulae appearing in footnotes corresponding to the COFI
Certificates in (1) to the table relating to the Certificates in the Preliminary
Statement.
Except as provided below, with respect to each Interest
Accrual Period following the initial Interest Accrual Period, the Trustee shall
not later than two Business Days following the publication of the applicable
Index determine the Pass-Through Rate at which interest shall accrue in respect
of the COFI Certificates during the related Interest Accrual Period.
Except as provided below, the Index to be used in determining
the respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any Interest
Accrual Period, COFI for the second calendar month preceding such Interest
Accrual Period has not been published, the Trustee shall use COFI for the third
calendar month preceding such Interest Accrual Period. If COFI for neither the
second nor third calendar months preceding any Interest Accrual Period has been
published on or before the related Outside Reference Date, the Index for such
Interest Accrual Period and for all subsequent Interest Accrual Periods shall be
the National Cost of Funds Index for the third calendar month preceding such
Interest Accrual Period (or the fourth preceding calendar month if such National
Cost of Funds Index for the third preceding calendar month has not been
published by such Outside Reference Date). In the event that the National Cost
of Funds Index for neither the third nor fourth calendar months preceding an
Interest Accrual Period has been published on or before the related Outside
Reference Date, then for such Interest Accrual Period and for each succeeding
Interest Accrual Period, the Index shall be LIBOR, determined in the manner set
forth below.
On each Interest Determination Date so long as the COFI
Certificates are outstanding and the applicable Index therefor is LIBOR, the
Trustee shall either (i) request each Reference Bank to inform the Trustee of
the quotation offered by its principal London office for making one-month United
States dollar deposits in leading banks in the London interbank market, as of
11:00 a.m. (London time) on such Interest Determination Date or (ii) in lieu of
making any such request, rely on such Reference Bank quotations that appear at
such time on the Reuters Screen LIBO Page (as defined in the International Swap
Dealers Association Inc. Code of Standard Wording, Assumptions and Provisions
for Swaps, 1986 Edition), to the extent available.
With respect to any Interest Accrual Period for which the
applicable Index is LIBOR, LIBOR for such Interest Accrual Period will be
established by the Trustee on the related Interest Determination Date as
follows:
(a) If on any Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the next Interest
Accrual Period shall be the arithmetic mean of such offered quotations (rounding
such arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of
the Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR as
determined on the previous Interest Determination Date or (ii) the Reserve
Interest Rate. The "Reserve Interest Rate" shall be the rate per annum which the
Trustee determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 1/32%) of the one-month United States
dollar lending rates that New York City banks selected by the Trustee are
quoting, on the relevant Interest Determination Date, to the principal London
offices of at least two of the Reference Banks to which such quotations are, in
the opinion of the Trustee, being so made, or (ii) in the event that the Trustee
can determine no such arithmetic mean, the lowest one-month United States dollar
lending rate which New York City banks selected by the Trustee are quoting on
such Interest Determination Date to leading European banks.
From such time as the applicable Index becomes LIBOR until all
of the COFI Certificates are paid in full, the Trustee will at all times retain
at least four Reference Banks for the purposes of determining LIBOR with respect
to each interest Determination Date. The Master Servicer initially shall
designate the Reference Banks. Each "Reference Bank" shall be a leading bank
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market, shall not control, be controlled by, or be under common control with,
the Trustee and shall have an established place of business in London. If any
such Reference Bank should be unwilling or unable to act as such or if the
Master Servicer should terminate its appointment as Reference Bank, the Trustee
shall promptly appoint or cause to be appointed another Reference Bank. The
Trustee shall have no liability or responsibility to any Person for (i) the
selection of any Reference Bank for purposes of determining LIBOR or (ii) any
inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control.
In determining LIBOR and any Pass-Through Rate for the COFI
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely and
shall be protected in relying upon the offered quotations (whether written, oral
or on the Reuters Screen) from the Reference Banks or the New York City banks as
to LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to
time. The Trustee shall not have any liability or responsibility to any Person
for (i) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (ii) its inability, following a
good-faith reasonable effort, to obtain such quotations from the Reference Banks
or the New York City banks or to determine such arithmetic mean, all as provided
for in this Section 4.07.
The establishment of LIBOR and each Pass-Through Rate for the
COFI Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the Trustee.
Section 4.08. Determination of Pass-Through Rates for LIBOR
Certificates.
On each Interest Determination Date so long as the LIBOR
Certificates are outstanding, the Trustee shall either (i) request each
Reference Bank to inform the Trustee of the quotation offered by its principal
London office for making one-month United States dollar deposits to leading
banks in the London interbank market, as of 11:00 a.m. (London time) on such
Interest Determination Date or (ii) in lieu of making any such request, rely on
such Reference Bank quotations that appear at such time on the Reuters Screen
LIBO Page (as defined in the International Swap Dealers Association Inc. Code of
Standard Wording, Assumptions and provisions for Swaps, 1986 Edition), to the
extent available.
LIBOR for the next Interest Accrual Period will be established
by the Trustee on each interest Determination Date as follows:
(a) If on any interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the next Interest
Accrual Period shall be the arithmetic mean of such offered quotations (rounding
such arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of
the Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR as
determined on the previous Interest Determination Date or (ii) the Reserve
Interest Rate. The "Reserve Interest Rate" shall be the rate per annum which the
Trustee determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 1/32%) of the one-month United States
dollar lending rates that New York City banks selected by the Trustee are
quoting, on the relevant Interest Determination Date, to the principal London
offices of at least two of the Reference Banks to which such quotations are, in
the opinion of the Trustee, being so made, or (ii) in the event that the Trustee
can determine no such arithmetic mean, the lowest one-month United States dollar
lending rate which New York City banks selected by the Trustee are quoting on
such Interest Determination Date to leading European banks.
(c) If on any interest Determination Date the trustee is
required but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (b) above, LIBOR shall be LIBOR as determined on the
preceding Interest Determination Date, or, in the case of the first Interest
Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the
Trustee will at all times retain at least four Reference Banks for the purpose
of determining LIBOR with respect to each Interest Determination Date. The
Master Servicer initially shall designate the Reference Banks. Each "Reference
Bank" shall be a leading bank engaged in transactions in Eurodollar deposits in
the international Eurocurrency market, shall not control, be controlled by, or
be under common control with, the Trustee and shall have an established place of
business in London. If any such Reference Bank should be unwilling or unable to
act as such or if the Master Servicer should terminate its appointment as
Reference Bank, the Trustee shall promptly appoint or cause to be appointed
another Reference Bank. The Trustee shall have no liability or responsibility to
any Person for (i) the selection of any Reference Bank for purposes of
determining LIBOR or (ii) any inability to retain at least four Reference Banks
which is caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for
each Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR
Certificates or any Reserve Interest Rate, the Trustee may conclusively rely and
shall be protected in relying upon the offered quotations (whether written, oral
or on the Reuters Screen) from the Reference Banks or the New York City banks as
to LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to
time. The Trustee shall not have any liability or responsibility to any Person
for (i) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (ii) its inability, following a
good-faith reasonable effort, to obtain such quotations from the Reference Banks
or the New York City banks or to determine such arithmetic mean, all as provided
for in this Section 4.08.
The establishment of LIBOR and each Pass-Through Rate for the
LIBOR Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the Trustee.
<PAGE>
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Certificates shall be issuable in registered form, in
the minimum denominations, integral multiples in excess thereof (except that one
Certificate in each Class may be issued in a different amount which must be in
excess of the applicable minimum denomination) and aggregate denominations per
Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on
the Certificates, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either (x) by
wire transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if (i) such Holder
has so notified the Trustee at least five Business Days prior to the related
Record Date and (ii) such Holder shall hold (A) a Notional Amount Certificate,
(B) 100% of the Class Certificate Balance of any Class of Certificates or (C)
Certificates of any Class with aggregate principal Denominations of not less
than $1,000,000 or (y) by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
such signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the countersignature and delivery of any
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 countersigned by the Trustee by manual signature,
and such countersignature upon any Certificate shall be conclusive evidence, and
the only evidence, that such Certificate has been duly executed and delivered
hereunder. All Certificates shall be dated the date of their countersignature.
On the Closing Date, the Trustee shall countersign the Certificates to be issued
at the direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
Section 5.02. Certificate Register; Registration of Transfer
and Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c) below
and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of transfer of
any Certificate, the Trustee shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall 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 to the Certificateholders shall be made for
any registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless
such transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In the
event that a transfer is to be made in reliance upon an exemption from the
Securities Act and such laws, in order to assure compliance with the Securities
Act and such laws, the Certificateholder desiring to effect such transfer and
such Certificateholder's prospective transferee shall each certify to the
Trustee in writing the facts surrounding the transfer in substantially the form
set forth in Exhibit J (the "Transferor Certificate") and (i) deliver a letter
in substantially the form of either Exhibit K (the "Investment Letter") or
Exhibit L (the "Rule 144A Letter") or (ii) there shall be delivered to the
Trustee at the expense of the transferor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act. The
Depositor shall provide to any Holder of a Private Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Mortgage Loans and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee and the Master Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor, the 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
federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate or a Residual Certificate, such requirement is satisfied only by the
Trustee's receipt of a representation letter from the transferee substantially
in the form of Exhibit K or Exhibit L), to the effect that such transferee is
not an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such
ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel shall
not be an expense of either the Trustee or the Trust Fund, addressed to the
Trustee, to the effect that the purchase or holding of such ERISA-Restricted
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. For purposes of the
preceding sentence, with respect to an ERISA-Restricted Certificate that is not
a Private Certificate or a Residual Certificate, in the event the representation
letter referred to in the preceding sentence is not furnished, such
representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee as
described above shall be void and of no effect.
To the extent permitted under applicable law (including, but
not limited to, ERISA), the Trustee shall be under no liability to any Person
for any registration of transfer of any ERISA-Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted
Transferee and shall promptly notify the Trustee of any change
or impending change in its status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate
may be registered on the Closing Date or thereafter
transferred, and the Trustee shall not register the Transfer of
any Residual Certificate unless, in addition to the
certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished
with an affidavit (a "Transfer Affidavit") of the initial owner
or the proposed transferee in the form attached hereto as
Exhibit I.
(iii) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (A) to obtain a
Transfer Affidavit from any other Person to whom such Person
attempts to Transfer its Ownership Interest in a Residual
Certificate, (B) to obtain a Transfer Affidavit from any Person
for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual
Certificate or to cause the Transfer of an Ownership Interest
in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any
Ownership Interest in a Residual Certificate in violation of
the provisions of this Section 5.02(c) shall be absolutely null
and void and shall vest no rights in the purported Transferee.
If any purported transferee shall become a Holder of a Residual
Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the
date of registration of Transfer of such Residual Certificate.
The Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in
fact not permitted by Section 5.02(b) and this Section 5.02(c)
or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such
Holder under the provisions of this Agreement so long as the
Transfer was registered after receipt of the related Transfer
Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled
but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it
became other than a Permitted Transferee, all payments made on
such Residual Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make
available, upon receipt of written request from the Trustee,
all information necessary to compute any tax imposed under
Section 860E(e) of the Code as a result of a Transfer of an
Ownership Interest in a Residual Certificate to any Holder who
is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee,
the Seller or the Master Servicer, to the effect that the elimination of such
restrictions will not cause either REMIC hereunder to fail to qualify as a REMIC
at any time that the Certificates are outstanding or result in the imposition of
any tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Residual Certificate hereby
consents to any amendment of this Agreement which, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that the
record ownership of, or any beneficial interest in, a Residual Certificate is
not transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and
opinions referred to above in this Section 5.02 in connection with transfer
shall be at the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Book-Entry Certificates; (iii)
ownership and transfers of registration of the Book-Entry Certificates on the
books of the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository, Depository Participants and indirect participating
firms as representatives of the Certificate Owners of the Book-Entry
Certificates for purposes of exercising the rights of holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Depositor is unable to locate a qualified successor, (y) the Depositor at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Depository or (z) after the occurrence of an Event of
Default, Certificate Owners representing at least 51% of the Certificate Balance
of the Book-Entry Certificates together advise the Trustee and the Depository
through the Depository Participants in writing that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
definitive, fully-registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
related Class of Certificates by the Depository, accompanied by the instructions
from the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall
be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions.
The Master Servicer shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations
become liable to any party for any act or failure to act of the Depository.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Master Servicer and the Trustee such security or indemnity as may be required by
them to hold each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, countersign and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the contrary.
Section 5.05. Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Master Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of such Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 5.06. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its Corporate Trust Office for such purposes. The
Trustee will give prompt written notice to the Certificateholders of any change
in such location of any such office or agency.
<PAGE>
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer.
The Depositor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicer.
The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation under the laws of
the United States or under the laws of one of the states thereof and will each
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, or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may
be merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, FNMA or FHLMC.
Section 6.03. Limitation on Liability of the Depositor, the
Seller, the Master Servicer and Others.
None of the Depositor, the Seller, the Master Servicer or any
of the directors, officers, employees or agents of the Depositor, the Seller or
the Master Servicer shall be under any liability to the Certificateholders for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Seller, the Master Servicer or any such
Person from any liability which would otherwise be imposed by reasons 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 Depositor,
the Seller, the Master Servicer and any director, officer, employee or agent of
the Depositor, 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 Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Seller or the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its respective duties hereunder and
which in its opinion may involve it in any expense or liability; provided,
however, that any of the Depositor, the Seller or the Master Servicer may in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Seller and the Master Servicer shall be entitled to be reimbursed
therefor out of the Certificate Account.
Section 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 result in a downgrading of the rating of
any of the Certificates, without regard to the guaranty provided by the Class
A-6 Policy, or (b) upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination under clause (b)
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a successor master servicer shall
have assumed the Master Servicer's responsibilities, duties, liabilities and
obligations hereunder.
<PAGE>
ARTICLE VII
DEFAULT
Section 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 deposit in
the Certificate Account or remit to the Trustee any payment
required to be made under the terms of this Agreement, which
failure shall continue unremedied for five days after the date
upon which written notice of such failure shall have been given
to the Master Servicer by the Trustee or the Depositor or to
the Master Servicer and the Trustee by the Holders of
Certificates having not less than 25% of the Voting Rights
evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement that materially affects the rights of
Certificateholders, which failure shall continue unremedied for
a period of 60 days after the date on which written notice of
such failure shall have been given to the Master Servicer by
the Trustee or the Depositor, or to the Master Servicer and the
Trustee by the Holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for
the appointment of a 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 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
all or substantially all of the property of the Master
Servicer; 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 commence a voluntary case
under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations.
If an Event of Default described in clauses (i) to (v) of this
Section 7.01 shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, or at the
direction of the Holders of Certificates evidencing not less than 66 2/3% of the
Voting Rights evidenced by the Certificates, the Trustee shall by notice in
writing to the Master Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Certificateholder hereunder. On and after the receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. The Trustee shall make any Advance which the
Master Servicer failed to make subject to Section 3.04, whether or not the
obligations of the Master Servicer have been terminated pursuant to this
Section. The Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article VIII. 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 of all cash amounts which shall at the
time be credited to the Certificate Account, or thereafter be received with
respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the
Master Servicer hereunder, the Master Servicer shall be entitled to receive, out
of any late collection of a Scheduled Payment on a Mortgage Loan which was due
prior to the notice terminating such Master Servicer's rights and obligations as
Master Servicer hereunder and received after such notice, that portion thereof
to which such Master Servicer would have been entitled pursuant to Sections
3.11(a)(i) through (viii), and any other amounts payable to such Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Section 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 shall, subject to and to the
extent provided in Section 3.07, be the successor to the Master Servicer in its
capacity as master servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to make Advances
pursuant to Section 4.01. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans that the Master Servicer
would have been entitled to charge to the Certificate Account or Distribution
Account if the Master Servicer had continued to act hereunder. Notwithstanding
the foregoing, if the Trustee has become the successor to the Master Servicer in
accordance with Section 7.01, the Trustee may, if it shall be unwilling to so
act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect
the then current rating of the Certificates, without regard to the Class A-6
Policy, by each Rating Agency, 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. Any successor to the Master
Servicer shall be an institution which is a FNMA and FHLMC approved
seller/servicer in good standing, which has a net worth of at least $15,000,000,
which is willing to service the Mortgage Loans and which executes and delivers
to the Depositor and the Trustee an agreement accepting such delegation and
assignment, containing an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
(other than liabilities of the Master Servicer under Section 6.03 incurred prior
to termination of the Master Servicer under Section 7.01), with like effect as
if originally named as a party to this Agreement; provided that each Rating
Agency acknowledges that its rating of the Certificates in effect immediately
prior to such assignment and delegation will not be qualified or reduced as a
result of such assignment and delegation, without regard to the Class A-6
Policy. Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.07, 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 the Master Servicing Fee permitted the Master Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other successor master servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Master Servicer as master servicer shall
give notice to the Mortgagors of such change of servicer and shall, during the
term of its service as master servicer, maintain in force the policy or policies
that the Master Servicer is required to maintain pursuant to Section 6.05.
Section 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
<PAGE>
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument.
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) unless an Event of Default known to the Trustee
shall have occurred and be continuing, 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 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 which it believed in good faith
to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be finally
proven that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of Holders of
Certificates evidencing not less than 25% of the Voting Rights
of Certificates 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.
Section 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) 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 believed by it to be genuine and to have been
signed or presented by the proper party or parties and the
Trustee shall have no responsibility to ascertain or confirm
the genuineness of any signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial
advisers or accountants and the advice of any such counsel,
financial advisers or accountants and any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) the Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do
by Holders of Certificates evidencing not less than 25% of the
Voting Rights allocated to each Class of Certificates;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents, accountants or attorneys;
(vi) the Trustee shall not be required to risk or
expend its own funds or otherwise incur any financial liability
in the performance of any of its duties or in the exercise of
any of its rights or powers hereunder if it shall have
reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not
assured to it;
(vii) the Trustee shall not be liable for any loss on
any investment of funds pursuant to this Agreement (other than
as issuer of the investment security);
(viii) the Trustee shall not be deemed to have
knowledge of an Event of Default until a Responsible Officer of
the Trustee shall have received written notice thereof; and
(ix) the Trustee shall be under no obligation to
exercise any of the trusts, rights or powers vested in it by
this Agreement 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 satisfactory to the Trustee against the
costs, expenses and liabilities which may be incurred therein
or thereby.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be
taken as the statements of the Depositor or the Seller, as the case may be, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any Mortgage Loan or related document other than with respect
to the Trustee's execution and countersignature of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor or the
Master Servicer of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Certificate
Account by the Depositor or the Master Servicer.
Section 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 as it would have if it
were not the Trustee.
Section 8.05. Trustee's Fees and Expenses.
The Trustee, as compensation for its activities hereunder,
shall be entitled to withdraw from the Distribution Account on each Distribution
Date an amount equal to the Trustee Fee for such Distribution Date. The Trustee
and any director, officer, employee or agent of the Trustee shall be indemnified
by the Master Servicer and held harmless against any loss, liability or expense
(including reasonable attorney's fees) (i) incurred in connection with any claim
or legal action relating to (a) this Agreement, (b) the Certificates, or (c) the
performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of any of the Trustee's duties hereunder or
incurred by reason of any action of the Trustee taken at the direction of the
Certificateholders and (ii) resulting from any error in any tax or information
return prepared by the Master Servicer. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder. Without limiting the foregoing, the Master Servicer covenants and
agrees, except as otherwise agreed upon in writing by the Depositor and the
Trustee, and except for any such expense, disbursement or advance as may arise
from the Trustee's negligence, bad faith or willful misconduct, to pay or
reimburse the Trustee, for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement with respect to (A) the reasonable compensation and the expenses and
disbursements of its counsel not associated with the closing of the issuance of
the Certificates, (B) the reasonable compensation, expenses and disbursements of
any accountant, engineer or appraiser that is not regularly employed by the
Trustee, to the extent that the Trustee must engage such persons to perform acts
or services hereunder and (C) printing and engraving expenses in connection with
preparing any Definitive Certificates. Except as otherwise provided herein, the
Trustee shall not be entitled to payment or reimbursement for any routine
ongoing expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any
other expenses.
Section 8.06. Eligibility Requirements for the Trustee.
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to reduce their
respective then current ratings of the Certificates without regard to the Class
A-6 Policy (or having provided such security from time to time as is sufficient
to avoid such reduction) as evidenced in writing by each Rating Agency. If such
corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.06 the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07. The
entity serving as Trustee may have normal banking and trust relationships with
the Depositor and its affiliates or the Master Servicer and its affiliates;
provided, however, that such entity cannot be an affiliate of the Seller, the
Depositor or the Master Servicer other than the Trustee in its role as successor
to the Master Servicer.
Section 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 written notice of resignation to the Depositor,
the Master Servicer and each Rating Agency not less than 60 days before the date
specified in such notice, when, subject to Section 8.08, such resignation is to
take effect, and acceptance by a successor trustee in accordance with Section
8.08 meeting the qualifications set forth in Section 8.06. If no successor
trustee meeting such qualifications shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request thereto by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged as 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 a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Master Servicer
may remove the Trustee and appoint a successor trustee by written instrument, in
triplicate, one copy of which shall be delivered to the Trustee, one copy to the
Master Servicer and one copy to the successor trustee.
The Holders of Certificates entitled to at least 51% of the
Voting Rights 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 shall be
delivered by the successor Trustee to the Master Servicer, one complete set to
the Trustee so removed and one complete set to the successor so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency by the
successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08.
Section 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The Depositor, 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 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 and its appointment shall
not adversely affect the then current rating of the Certificates, without regard
to the Class A-6 Policy.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the Depositor shall mail notice of the succession
of such trustee hereunder to all Holders of Certificates. If the Depositor fails
to mail such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Depositor.
Section 8.09. Merger or Consolidation of the 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 that such corporation shall be
eligible under the provisions of Section 8.06 without the execution or filing of
any paper or further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may at
the time be located, the Master Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders, such title to the Trust Fund or any
part thereof, whichever is applicable, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in the 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 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) To the extent necessary to effectuate the purposes
of this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee, except for
the obligation of the Trustee under this Agreement to advance
funds on behalf of the Master Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except
to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the
applicable Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Trustee;
(ii) No trustee hereunder shall be held personally
liable by reason of any act or omission of any other trustee
hereunder and such appointment shall not, and shall not be
deemed to, constitute any such separate trustee or co-trustee
as agent of the Trustee;
(iii) The Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee;
and
(iv) The Master Servicer, and not the Trustee, shall be
liable for the payment of reasonable compensation,
reimbursement and indemnification to any such separate trustee
or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the separate trustees and
co-trustees, when and 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 and a copy thereof given to the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Tax Matters.
It is intended that the assets with respect to which any REMIC
election pertaining to the Trust Fund is to be made, as set forth in the
Preliminary Statement, shall constitute, and that the conduct of matters
relating to such assets shall be such as to qualify such assets as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants and
agrees that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of the REMICs and that in such capacity it shall: (a) 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 or any successor
form adopted by the Internal Revenue Service) 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 the REMICs, 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 furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
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 Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code; (c) make or cause to be made an
election that such assets be treated as a REMIC on the federal tax return for
its first taxable year (and, if necessary, under applicable state law); (d)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Residual Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding so as
to maintain the status as a REMIC under the REMIC Provisions; (g) not knowingly
or intentionally take any action or omit to take any action that would cause the
termination of the REMIC status; (h) pay, from the sources specified in the last
paragraph of this Section 8.11, the amount of any federal or state tax,
including prohibited transaction taxes as described below, imposed on either
REMIC prior to its termination when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings); (i) ensure that federal, state or
local income tax or information returns shall be signed by the Trustee or such
other person as may be required to sign such returns by the Code or state or
local laws, regulations or rules; (j) maintain records relating to the REMICs,
including but not limited to the income, expenses, assets and liabilities
thereof and the fair market value and adjusted basis of the assets determined at
such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the REMICs in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any REMIC, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of any REMIC, and
otherwise act on behalf of the REMICs in relation to any tax matter or
controversy involving it.
In order to enable the Trustee to perform its duties as set
forth herein, the Depositor 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 requests in writing and determines to be relevant for tax purposes
to the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor any such additional
information or data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.
In the event that any tax is imposed on "prohibited
transactions" of either REMIC as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of either REMIC as defined in Section
860G(c) of the Code, on any contribution to either REMIC after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including,
without limitation, any minimum tax imposed upon either REMIC pursuant to
Sections 23153 and 24874 of the California Revenue and Taxation Code, if not
paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee, if any such other tax arises out of or results from a breach by the
Trustee of any of its obligations under this Agreement, (ii) the Master Servicer
or the Seller, in the case of any such minimum tax, if such tax arises out of or
results from a breach by the Master Servicer or Seller of any of their
obligations under this Agreement or (iii) the Seller, if any such tax arises out
of or results from the Seller's obligation to repurchase a Mortgage Loan
pursuant to Section 2.02 or 2.03 or (iv) in all other cases, or in the event
that the Trustee, the Master Servicer or the Seller fails to honor its
obligations under the preceding clauses (i), (ii) or (iii), any such tax will be
paid with amounts otherwise to be distributed to the Certificateholders, as
provided in Section 3.11(b).
Section 8.12. Periodic Filings.
Pursuant to written instructions from the Depositor, the
Trustee shall prepare, execute and file all periodic reports required under the
Securities Exchange Act of 1934 in conformity with the terms of the relief
granted to the Depositor in CWMBS, Inc. (February 3, 1994), a copy of which has
been supplied to the Trustee by the Issuer. In connection with the preparation
and filing of such periodic reports, the Depositor and the Master Servicer shall
timely provide to the Trustee all material information available to them which
is required to be included in such reports and not known to them to be in the
possession of the Trustee and such other information as the Trustee reasonably
may request from either of them and otherwise reasonably shall cooperate with
the Trustee. The Trustee shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Trustee's inability or failure to obtain any information not resulting from its
own negligence or willful misconduct.
<PAGE>
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation or Purchase of all
Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities
of the Depositor, the Master Servicer and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the purchase
by the Master Servicer of all Mortgage Loans (and REO Properties) remaining in
the Trust Fund at the price equal to the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan (other than in respect of REO Property) plus one
month's accrued interest thereon at the applicable Adjusted Mortgage Rate and
(ii) the lesser of (x) the appraised value of any REO Property as determined by
the higher of two appraisals completed by two independent appraisers selected by
the Master Servicer at the expense of the Master Servicer and (y) the Stated
Principal Balance of each Mortgage Loan related to any REO Property, in each
case plus accrued and unpaid interest thereon at the applicable Adjusted
Mortgage Rate and (b) the later of (i) the maturity or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date hereof and (ii) the Latest Possible
Maturity Date. The right to purchase all Mortgage Loans and REO Properties
pursuant to clause (a) above shall be conditioned upon the Pool Stated Principal
Balance, at the time of any such repurchase, aggregating less than ten percent
of the Cut-off Date Pool Principal Balance.
Section 9.02. Final Distribution on the Certificates.
If on any Determination Date, the Master Servicer determines
that there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Certificate Account, the Master Servicer
shall direct the Trustee promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders the Master Servicer
shall notify the Depositor and the Trustee of the date the Master Servicer
intends to terminate the Trust Fund and of the applicable repurchase price of
the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 15th
day and not later than the 10th day of the month next preceding the month of
such final distribution. Any such notice shall specify (a) the Distribution Date
upon which final distribution on the Certificates will be made upon presentation
and surrender of Certificates at the office therein designated, (b) the amount
of such final distribution, (c) the location of the office or agency at which
such presentation and surrender must be made, and (d) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distributions
being made only upon presentation and surrender of the Certificates at the
office therein specified. The Master Servicer will give such notice to each
Rating Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Trustee shall cause all
funds on deposit in the Class A-6 Reserve Fund in excess of amounts to be
distributed to the Holders of the Class A-6 Certificates on the final
Distribution Date, to be distributed to Lehman Brothers Inc., the beneficial
owner of the Class A-6 Reserve Fund, and all funds on deposit in the Class A-6
Rounding Account to be distributed to Lehman Brothers Inc., the beneficial owner
of the Class A-6 Rounding Account, at the addresses supplied by Lehman Brothers
Inc. to the Trustee for such purpose, and the Master Servicer shall cause all
funds in the Certificate Account to be remitted to the Trustee for deposit in
the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the Mortgage
Loans.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to the Certificateholders of each Class,
in each case on the final Distribution Date and in the order set forth in
Section 4.02, in the case of the Certificateholders, in proportion to their
respective Percentage Interests, with respect to Certificateholders of the same
Class, an amount equal to (i) as to each Class of Regular Certificates, the
Certificate Balance thereof plus accrued interest thereon (or on their Notional
Amount, if applicable) and (ii) as to the Residual Certificates, the amount, if
any, which remains on deposit in the Distribution Account (other than the
amounts retained to meet claims) after application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate 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 a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class A-R Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund which remain subject hereto.
Section 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase
option as provided in Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the Master Servicer,
to the effect that the failure to comply with the requirements of this Section
9.03 will not (i) result in the imposition of taxes on "prohibited transactions"
on either REMIC as defined in Section 860F of the Code, or (ii) cause either
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(1) Within 90 days prior to the final Distribution Date
set forth in the notice given by the Master Servicer under
Section 9.02, the Master Servicer shall prepare and the
Trustee, at the expense of the "tax matters person", shall
adopt a plan of complete liquidation within the meaning of
Section 860F(a)(4) of the Code which, as evidenced by an
Opinion of Counsel (which opinion shall not be an expense of
the Trustee, the Tax Matters Person or the Trust Fund), meets
the requirements of a qualified liquidation; and
(2) Within 90 days after the time of adoption of such a
plan of complete liquidation, the Trustee shall sell all of the
assets of the Trust Fund to the Master Servicer for cash in
accordance with Section 9.01.
(b) The Trustee as agent for the REMICs hereby agrees to adopt
and sign such a plan of complete liquidation upon the written request of the
Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as may
be reasonably requested by the Master Servicer.
(c) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to prepare and the Trustee to adopt
and sign a plan of complete liquidation.
<PAGE>
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee without the consent of any of the
Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any
defective provision herein or to supplement any provision herein which may be
inconsistent with any other provision herein, (iii) to add to the duties of the
Depositor, the Seller or the Master Servicer, (iv) to add any other provisions
with respect to matters or questions arising hereunder or (v) to modify, alter,
amend, add to or rescind any of the terms or provisions contained in this
Agreement; provided that any action pursuant to clauses (iv) or (v) above shall
not, as evidenced by an Opinion of Counsel (which Opinion of Counsel shall not
be an expense of the Trustee or the Trust Fund), adversely affect in any
material respect the interests of any Certificateholder; provided, however, that
no such Opinion of Counsel shall be required if the Person requesting the
amendment obtains a letter from each Rating Agency stating that the amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates, without regard to the Class A-6 Policy; it being
understood and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating.
The Trustee, the Depositor and the Master Servicer also may at
any time and from time to time amend this Agreement without the consent of the
Certificateholders to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or helpful to (i) maintain the qualification of
either REMIC as a REMIC under the Code, (ii) avoid or minimize the risk of the
imposition of any tax on either REMIC pursuant to the Code that would be a claim
at any time prior to the final redemption of the Certificates or (iii) comply
with any other requirements of the Code, provided that the Trustee has been
provided an Opinion of Counsel, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee
or the Trust Fund, to the effect that such action is necessary or helpful to, as
applicable, (i) maintain such qualification, (ii) avoid or minimize the risk of
the imposition of such a tax or (iii) comply with any such requirements of the
Code.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of a Majority in Interest of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments 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 Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing, as
to such Class, Percentage Interests aggregating 66%, or (iii) reduce the
aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding.
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, which opinion shall not be an expense
of the Trustee or the Trust Fund, to the effect that such amendment will not
cause the imposition of any tax on either REMIC or the Certificateholders or
cause either REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance or a copy of such amendment to each
Certificateholder, MBIA and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 10.01 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 authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel (which Opinion shall
not be an expense of the Trustee or the Trust Fund), satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect
the interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
Section 10.02. Recordation of Agreement; Counterparts.
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 at its expense, but only
upon direction by the Trustee 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.
Section 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04. Intention of Parties.
It is the express intent of the parties hereto that the
conveyance (i) of the Mortgage Loans by the Seller to the Depositor and (ii) of
the Trust Fund by the Depositor to the Trustee each be, and be construed as, an
absolute sale thereof. It is, further, not the intention of the parties that
such conveyances be deemed a pledge thereof. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Seller or Depositor, as the case may be, or if for any other
reason this Agreement is held or deemed to create a security interest in either
such assets, then (i) this Agreement shall be deemed to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York and
(ii) the conveyances provided for in this Agreement shall be deemed to be an
assignment and a grant (i) by the Seller to the Depositor or (ii) by the
Depositor to the Trustee, for the benefit of the Certificateholders, of a
security interest in all of the assets transferred, whether now owned or
hereafter acquired.
The Seller and the Depositor for the benefit of the
Certificateholders 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 the Trust Fund, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement. The
Depositor shall arrange for filing any Uniform Commercial Code continuation
statements in connection with any security interest granted or assigned to the
Trustee for the benefit of the Certificateholders.
Section 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency 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 and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans pursuant
to Section 2.03; and
5. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
1. Each report to Certificateholders described in
Section 4.06;
2. Each annual statement as to compliance described in
Section 3.16;
3. Each annual independent public accountants'
servicing report described in Section 3.17; and
4. Any notice of a purchase of a Mortgage Loan pursuant
to Section 2.02, 2.03 or 3.11.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in the
case of the Depositor, CWMBS, Inc., 155 North Lake Avenue, Pasadena, California
91101, Attention: David A. Spector, (b) in the case of the Master Servicer,
IndyMac, Inc., 155 North Lake Avenue, Pasadena, California 91101, Attention:
Michael W. Perry or such other address as may be hereafter furnished to the
Depositor and the Trustee by the Master Servicer in writing, (c) in the case of
the Trustee, The Bank of New York, 101 Barclay Street, 12E, New York, New York
10286, Attention: Mortgage-Backed Securities Group Series 1998-L, or such other
address as the Trustee may hereafter furnish to the Depositor or Master
Servicer, and (d) in the case of each of the Rating Agencies, the address
specified therefor in the definition corresponding to the name of such Rating
Agency. Notices to Certificateholders shall be deemed given when mailed, first
class postage prepaid, to their respective addresses appearing in the
Certificate Register.
Section 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Assignment.
Notwithstanding anything to the contrary contained herein,
except as provided in Section 6.02, this Agreement may not be assigned by the
Master Servicer without the prior written consent of the Trustee and Depositor.
Section 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the trust created hereby, nor entitle
such Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third 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 or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as herein
provided, and unless the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates shall also have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.09. Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice,
it will permit and will cause each Subservicer to permit any representative of
the Depositor or the Trustee during the Master Servicer's normal business hours,
to examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes said accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 10.09
shall be borne by the party requesting such inspection; all other such expenses
shall be borne by the Master Servicer or the related Subservicer.
Section 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificate-holders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and
the Master Servicer have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.
CWMBS, INC.
as Depositor
By: /s/ Celia Coulter
-----------------------
Name: Celia Coulter
Title: Vice President
THE BANK OF NEW YORK
as Trustee
By: /s/ Kelly A. Sheahan
-------------------------
Name: Kelly A. Sheahan
Title: Assistant Treasurer
INDYMAC, INC.
as Seller and Master Servicer
By: /s/ John Kim
--------------------------
Name: John Kim
Title: Vice President
<PAGE>
SCHEDULE I
Mortgage Loan Schedule
[Delivered at Closing to Trustee]
<PAGE>
SCHEDULE II
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1998-L
Representations and Warranties of the Seller/Master Servicer
------------------------------------------------------------
IndyMac, Inc. ("IndyMac") hereby makes the representations and
warranties set forth in this Schedule II to the Depositor and the Trustee, as of
the Closing Date, or if so specified herein, as of the Cut-off Date. Capitalized
terms used but not otherwise defined in this Schedule II shall have the meanings
ascribed thereto in the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") relating to the above-referenced Series, among IndyMac, as
seller and master servicer, CWMBS, Inc., as depositor, and The Bank of New York,
as trustee.
(1) IndyMac is duly organized as a Delaware
corporation and is validly existing and in good standing under the laws
of the State of Delaware and is duly authorized and qualified to
transact any and all business contemplated by the Pooling and Servicing
Agreement to be conducted by IndyMac in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the
Mortgage Loans in accordance with the terms of the Pooling and
Servicing Agreement and to perform any of its other obligations under
the Pooling and Servicing Agreement in accordance with the terms
thereof.
(2) IndyMac has the full corporate power and
authority to sell and service each Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the transactions
contemplated by the Pooling and Servicing Agreement and has duly
authorized by all necessary corporate action on the part of IndyMac the
execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, constitutes a legal, valid and binding obligation of IndyMac,
enforceable against IndyMac in accordance with its terms, except that
(a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and
Servicing Agreement by IndyMac, the sale and servicing of the Mortgage
Loans by IndyMac under the Pooling and Servicing Agreement, the
consummation of any other of the transactions contemplated by the
Pooling and Servicing Agreement, and the fulfillment of or compliance
with the terms thereof are in the ordinary course of business of
IndyMac and will not (A) result in a material breach of any term or
provision of the charter or by-laws of IndyMac or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which IndyMac is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to IndyMac of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over IndyMac; and IndyMac is not in breach or violation of
any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair IndyMac's
ability to perform or meet any of its obligations under the Pooling and
Servicing Agreement.
(4) No litigation is pending or, to the best of
IndyMac's knowledge, threatened against IndyMac that would prohibit the
execution or delivery of, or performance under, the Pooling and
Servicing Agreement by IndyMac.
<PAGE>
SCHEDULE III
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 1998-L
Representations and Warranties as to the Mortgage Loans
-------------------------------------------------------
IndyMac, Inc. ("IndyMac") hereby makes the representations and
warranties set forth in this Schedule III to the Depositor and the Trustee, as
of the Closing Date, or if so specified herein, as of the Cut-off Date or date
of origination of the Mortgage Loan. Capitalized terms used but not otherwise
defined in this Schedule III shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") relating
to the above-referenced Series, among IndyMac, as seller and master servicer,
CWMBS, Inc., as depositor, and The Bank of New York, as trustee.
(1) The information set forth on Schedule I to the
Pooling and Servicing Agreement with respect to each Mortgage Loan is
true and correct in all material respects as of the Closing Date.
(2) As of the Closing Date, all regularly scheduled
monthly payments due with respect to each Mortgage Loan up to and
including the Due Date immediately prior to the Cut-off Date have been
made; and as of the Cut-off Date, no Mortgage Loan had a regularly
scheduled monthly payment that was 60 or more days Delinquent during
the twelve months prior to the Cut-off Date.
(3) With respect to any Mortgage Loan that is not a
Cooperative Loan, each Mortgage is a valid and enforceable first lien
on the Mortgaged Property subject only to (a) the lien of nondelinquent
current real property taxes and assessments and liens or interests
arising under or as a result of any federal, state or local law,
regulation or ordinance relating to hazardous wastes or hazardous
substances and, if the related Mortgaged Property is a unit in a
condominium project or planned unit development, any lien for common
charges permitted by statute or homeowner association fees, (b)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being generally
acceptable to mortgage lending institutions in the area wherein the
related Mortgaged Property is located or specifically reflected in the
appraisal made in connection with the origination of the related
Mortgage Loan, and (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of
the security intended to be provided by such Mortgage.
(4) Immediately prior to the assignment of the
Mortgage Loans to the Depositor, the Seller had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any pledge,
lien, encumbrance or security interest and had full right and
authority, subject to no interest or participation of, or agreement
with, any other party, to sell and assign the same pursuant to the
Pooling and Servicing Agreement.
(5) As of the date of origination of each Mortgage
Loan, there was no delinquent tax or assessment lien against the
related Mortgaged Property.
(6) There is no valid offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(7) There are no mechanics' liens or claims for work,
labor or material affecting any Mortgaged Property which are or may be
a lien prior to, or equal with, the lien of such Mortgage, except those
which are insured against by the title insurance policy referred to in
item (11) below.
(8) To the best of the Seller's knowledge, no
Mortgaged Property has been materially damaged by water, fire,
earthquake, windstorm, flood, tornado or similar casualty (excluding
casualty from the presence of hazardous wastes or hazardous substances,
as to which the Seller makes no representation) so as to affect
adversely the value of the related Mortgaged Property as security for
such Mortgage Loan.
(9) Each Mortgage Loan at origination complied in all
material respects with applicable state and federal laws, including,
without limitation, usury, equal credit opportunity, real estate
settlement procedures, truth-in-lending and disclosure laws or any
noncompliance does not have a material adverse effect on the value of
the related Mortgage Loan.
(10) As of the Closing Date, the Seller has not
modified the Mortgage in any material respect (except that a Mortgage
Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and which has been delivered to the
Trustee); satisfied, cancelled or subordinated such Mortgage in whole
or in part; released the related Mortgaged Property in whole or in part
from the lien of such Mortgage; or executed any instrument of release,
cancellation, modification or satisfaction with respect thereto.
(11) A lender's policy of title insurance together
with a condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date Stated
Principal Balance of each such Mortgage Loan or a commitment (binder)
to issue the same was effective on the date of the origination of each
Mortgage Loan, each such policy is valid and remains in full force and
effect.
(12) Each Mortgage Loan was originated (within the
meaning of Section 3(a)(41) of the Securities Exchange Act of 1934, as
amended) by an entity that satisfied at the time of origination the
requirements of Section 3(a)(41) of the Securities Exchange Act of
1934, as amended.
(13) To the best of the Seller's knowledge, all of
the improvements which were included for the purpose of determining the
Appraised Value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged
Property, unless such failure to be wholly within such boundaries and
restriction lines or such encroachment, as the case may be, does not
have a material effect on the value of such Mortgaged Property.
(14) To the best of the Seller's knowledge, as of the
date of origination of each Mortgage Loan, no improvement located on or
being part of the Mortgaged Property is in violation of any applicable
zoning law or regulation unless such violation would not have a
material adverse effect on the value of the related Mortgaged Property.
To the best of the Seller's knowledge, 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, unless the lack thereof
would not have a material adverse effect on the value of such Mortgaged
Property.
(15) The Mortgage Note and the related Mortgage are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms and under
applicable law.
(16) The proceeds of the Mortgage Loan have been
fully disbursed and there is no requirement for future advances
thereunder.
(17) The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security, including, (i) in the case of
a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure.
(18) With respect to each Mortgage constituting a
deed of trust, a trustee, duly qualified under applicable law to serve
as such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
Mortgagor.
(19) At the Cut-off Date, the improvements upon each
Mortgaged Property are covered by a valid and existing hazard insurance
policy with a generally acceptable carrier that provides for fire and
extended coverage and coverage for such other hazards as are
customarily required by institutional single family mortgage lenders in
the area where the Mortgaged Property is located, and the Seller has
received no notice that any premiums due and payable thereon have not
been paid; the Mortgage obligates the Mortgagor thereunder to maintain
all such insurance including flood insurance at the Mortgagor's cost
and expense. Anything to the contrary in this item (19)
notwithstanding, no breach of this item (19) shall be deemed to give
rise to any obligation of the Seller to repurchase or substitute for
such affected Mortgage Loan or Loans so long as the Master Servicer
maintains a blanket policy pursuant to the second paragraph of Section
3.12(a) of the Pooling and Servicing Agreement.
(20) If at the time of origination of each Mortgage
Loan, related the Mortgaged Property was in an area then identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form
meeting the then-current requirements of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property
with a generally acceptable carrier.
(21) To the best of the Seller's knowledge, there is
no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring.
(22) To best of the Seller's knowledge, there is no
material event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a material
non-monetary default, breach, violation or event of acceleration under
the Mortgage or the related Mortgage Note; and the Seller has not
waived any material non-monetary default, breach, violation or event of
acceleration.
(23) Each Mortgage File contains an appraisal of the
related Mortgaged Property in a form acceptable to FNMA or FHLMC.
(24) Any leasehold estate securing a Mortgage Loan
has a stated term at least as long as the term of the related Mortgage
Loan.
(25) Each Mortgage Loan was selected from among the
outstanding fixed-rate one- to four-family mortgage loans in the
Seller's portfolio at the Closing Date as to which the representations
and warranties made with respect to the Mortgage Loans set forth in
this Schedule III can be made. No such selection was made in a manner
intended to adversely affect the interests of the Certificateholders.
(26) No more than 0.50% of the Mortgage Loans (by
aggregate Stated Principal Balance of the Mortgage Loans) are
Cooperative Loans.
(27) Each Cooperative Loan is secured by a valid,
subsisting and enforceable perfected first lien and security interest
in the related Mortgaged Property, subject only to (i) the rights of
the Cooperative Corporation to collect Maintenance and assessments from
the Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer
charges, rents and assessments on the Cooperative Property not yet due
and payable, and (iii) other matters to which like Cooperative Units
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to
create or preserve the perfection and priority of the first priority
lien and security interest in the Cooperative Shares and Proprietary
Lease has been timely and properly made. Any security agreement,
chattel mortgage or equivalent document related to the Cooperative Loan
and delivered to the Sponsor or its designee establishes in the Seller
a valid and subsisting perfected first lien on and security interest in
the property described therein, and the Seller has full right to sell
and assign the same.
(28) Each Cooperative Corporation qualifies as a
"cooperative housing corporation" as defined in Section 216 of the
Code.
